Mater Academy/ Dual Enrollment / Principles of Microeconomics
Unit 4: Market Structures: Perfect Competition and Monopoly
Assignments
Support text: McConnell and Brue, Economics 18th Ed, Chapter 9 and 10
A. Pure Competition: Characteristics and Occurrence
B. Profit Maximization in the Short Run: Total-Revenue-Total-Cost Approach
C. Profit Maximization in the Short Run: Marginal-Revenue-Marginal-Cost Approach
D. Profit Maximization in the long Run
E. Pure Competition and Efficiency.
F. Pure monopoly: Introduction to Monopoly
G. Monopoly and Public Policy
H. Price Discrimination
Objective
In this section we are going to study how a business decides what price to charge and how much output
to produce according to the characteristics of the industry in which the firm is operating. After study this
sections students will be able to:
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Distinguish the four basic market structures
Identify pure competition conditions
Recognize how firms maximize profit in condition of perfect competition
Explain how industry entry and exit produce economic efficiency
Identify characteristic of pure monopoly
Understand how a pure monopoly sets its profit-maximizing output and price
Recognize economic effects of monopoly.
Assignments #1 “Pure Competition” / Classwork Grade
Support text: McConnell and Brue, Economics 18th Ed, Chapter 9
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Complete the Vocabulary and answer essential questions. Use additional sheets of paper for your
answers. Label axes (if it applied) and DO NOT type your answers. Work on time for a classwork
grade.
Vocabulary and Key Terms
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Market Structures / Four market models
Pure (perfect) competition Commodity
Monopolistic competition
Barriers to entry
Market power
Oligopoly
Imperfect competition
Price taker
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Average revenue
Total revenue
Marginal revenue
Break-even point
MR=MC rule
Productive efficiency
Allocative efficiency
Consume / producer surplus
Essential Questions
1.
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State the basic characteristics of perfect competition
State the basic characteristics of monopolistic competition
State the basic characteristics of oligopoly
Analyze the following cases and classify them in one of the basic four market structures. Justify
your classification
a. A supermarket in your hometown
b. Steel industry
c. A Florida orange farm
d. The commercial bank in which you has an account
5. Use the following demand schedule to determine total revenue and marginal revenue for each
possible level of sales
Product Price
Quantity Demanded
2
0
2
1
2
2
2
3
2
4
2
5
Total Revenue
Marginal Revenue
a) What could you conclude about the structure of the industry in which this firm is operating?
Explain
b) Is the demand curve elastic or inelastic? Explain
c) Graph the demand, total revenue, and marginal-revenue curves for this firm.
d) Why do the demand and marginal-revenue curves coincide?
6. Work on Qs 4, page 198 (Textbook)
7. Work on Qs 6, page 199 (Textbook)
Assignments #2 “Pure Monopoly”/ Classwork Grade
Support text: McConnell and Brue, Economics 18th Ed, Chapter 10
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Complete the Vocabulary and answer essential questions. Use additional sheets of paper for your
answers. Label axes (if it applied) and DO NOT type your answers. Work on time for a classwork
grade.
Vocabulary and Key Terms
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Pure monopoly
Barriers to entry
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Network effects
X-inefficiency
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Price discrimination
Essential Questions
1. By using the textbook, work on Qs 4,5, and 6, page 220-221
Assignments # 3 / Assigned Reading / For a Homework Grade
“What’s Behind the Music Industry’s Woes?
By using the book “Economics by Example”, student will read the Chapter 13, “What’s Behind
the Music Industry’s Woes, The sound of market power, pages 91-97. After reading the
chapter students will answer 6 questions (see page 97). Follow instruction for your assignment.
 The assessment is due by 3/17/2015 or 3/18/2015 (according to your class schedule) before
2:30 p.m. @ room 116.late work will not be accepted.
 Student absent to school must send the assessment to Ms. De la Torre before the due day
(by email, with other student, etc.).
 Explain and justify your answers. Include graphs in your answers (if applied).
 Type your paper on a computer and print it out on standard, white 8.5 x 11-inch paper.
 Double-space the text of your paper, and use a legible font (size 12)
 Set the margins of your document to 1 inch on all sides.
 In the upper left-hand corner of the first page, list your name, your FIU student ID, your
instructor's name (Ms. De la Torre), the course name “Principles of Macroeconomics”, and
the date . Again, be sure to use double-spaced text.
 Title your work.