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    total utility of money

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    a. A barrier to entry creates an advantage for incumbents over new arrivals. True or false, explain.

    b. Rent control in New York is a prominent example of price floor. True or false, explain.

    c. When price is higher than the marginal revenue but lower than the average variable cost, the monopolist makes losses.

    d. The demand curve faced by a firm in a monopolistically competitive industry is more elastic than the perfectly competitive firm's demand curve. True or false, explain.

    e. An informal agreement to set prices and output is called a cartel. True or false, explain.

    f. When price elasticity of demand is -2, the optimal markup on cost is 50. True or false, explain.

    g. The consumer surplus represents the excess revenues above the cost of output to producers. True or false, explain.

    h. The firm's ability to price discriminate does not depend on how many consumer groups it can identify. True or false, explain.

    i. A natural monopoly exists if marginal revenue is falling as output expands. True or false, explain.

    j. The total utility of money increases for risk averters, risk seekers, and indifferent to risk. However, their marginal utility of money varies. True or false, explain.

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    Solution Summary

    A barrier to entry and other terms are defined and assessed.