Monopoly and Oligopoly Economic Concepts

The video tutorial emphasizes the importance of diagrams in economic analysis, particularly for exams. It covers seven key diagrams: monopoly, economies of scale, game theory in oligopoly, tax and subsidy impacts, price elasticity, and trade unions in monopsony. Each diagram is explained in detail, highlighting their diverse applications and significance in economic evaluation and analysis.

Why are diagrams considered fundamental in writing essays and analyzing economic concepts?

• They help in memorizing facts.

• They are required by examiners.

• They are easier to draw than write.

• They provide visual representation of data.

What can the monopoly diagram illustrate besides basic monopoly outcomes?

• The objectives of firms and competition comparisons.

• Only the price and quantity.

• Only the impact of competition policy.

• Only the deadweight welfare loss.

In the monopoly diagram, what does the area of the deadweight welfare loss represent?

• Consumer surplus only.

• Producer surplus only.

• Government revenue.

• Both consumer and producer surplus losses.

What is the key evaluation point of the monopoly economies of scale diagram?

• Competitive firms always outperform monopolists.

• Monopolists are always inefficient.

• Monopolists can have lower prices and higher quantities due to economies of scale.

• Monopolists cannot achieve economies of scale.

In the game theory payoff matrix for oligopoly, what is the Nash equilibrium?

• Both firms charging a high price.

• No equilibrium exists.

• Both firms charging a low price.

• One firm charging high and the other low.

What does the vertical distance between the two supply curves represent in the indirect tax diagram?

• The government revenue.

• The quantity of the good.

• The price of the good.

• The value of the tax per unit.

How is the government revenue from an indirect tax calculated?

• By adding the tax per unit to the old equilibrium quantity.

• By multiplying the tax per unit by the new equilibrium quantity.

• By dividing the tax per unit by the new equilibrium quantity.

• By subtracting the tax per unit from the new equilibrium quantity.

What is the effect of a subsidy on the supply curve?

• It shifts the supply curve to the left.

• It shifts the supply curve to the right.

• It shifts the demand curve to the right.

• It does not affect the supply curve.

What should a business do if it knows that demand is price elastic?

• Increase the price to increase total revenue.

• Decrease the price to increase total revenue.

• Increase the quantity to increase total revenue.

• Keep the price constant.

In a monopsony labor market, what is the impact of a trade union?

• It only increases wages but not employment.

• It decreases wages and employment.

• It increases wages and employment.

• It has no impact on wages and employment.