Name:_________________________

ECO 101 830 Principles of Microeconomics Homework #5, due Friday 4/20

1. Consider the graph below of a monopoly firm.

a) What is the profit maximizing output and price of the monopoly?

b) Is the firm earning an economic profit? What area(s) (A, B and/or C) denote the economic profit?

c) What area(s) (A, B and/or C) denote the deadweight loss?

2. Describe an economic argument for laws that prohibit and/or strictly limit monopolies.

3. Contrast perfect competition and monopoly. Be sure to include differences in characteristics, profit-maximizing price and output, consumer surplus and the ability to earn long-run economic profits.

4. [based on chapter 9, problem #3] Consider the market for higher education. Which of the four market structures studied best fits the market for higher education? Explain your answers using the characteristics of that market structure.