Demand curves faced by monopolists and competitive firms
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3. How does the demand curve faced by a purely monopolistic seller differ from that confronting a purely competitive firm? Why does it differ? Of what significance is the difference? Why is the pure monopolistâ??s demand curve typically not perfectly elastic?
5. Suppose a pure monopolist is faced with the demand schedule that follows and the same cost data as the competitive producer discussed in question #3 (above).
Calculate the missing total-revenue and marginal-revenue amounts, and determine the profit-maximizing price and profit-earning output for his monopolist. What is the monopolistâ??s profit?
Price ($) Quantity demanded Total Revenue ($) Marginal Revenue ($)
115 0
100 1
83 2
71 3
63 4
55 5
48 6
42 7
37 8
33 9
29 10
9. U.S. Pharmaceutical companies charge different prices for prescription drugs to buyers in different nations, depending of the elasticity of demand and government-imposed price ceilings. Explain why these companies, for profit reason, oppose laws allowing reimportation of their drugs back into the United States.
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Demand curves faced by monopolists and competitive firms; pharmaceuticals and price discrimination
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3. How does the demand curve faced by a purely monopolistic seller differ from that confronting a purely competitive firm? Why does it differ? Of what significance is the difference? Why is the pure monopolistâ??s demand curve typically not perfectly elastic?
The demand curve for monopolistically competitive firms is downward sloping instead of horizontal. These firms have products that are somewhat different, and so they can some ability to control their profitability. The more market power a firm has, the more steeply sloped its demand curve. However, a perfectly elastic demand curve would indicate that no matter what price the firm charged, consumers would always buy the same amount. Consumers ...
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