Eco chapter 10 quiz
Which of the following is a barrier to entry in a monopoly market?
A patent on a new product.
The marginal revenue curve is below the demand curve
If a firm must lower its price to sell additional output.
A profit-maximizing monopolist produces the rate of output where
MR = MC and determines price based on the demand curve.
Suppose a monopoly firm produces bicycles and can sell 10 bicycles per month at a price of $700 per bicycle. In order to increase sales by one bicycle per month, the monopolist must lower the price of its bicycles by $50 to $650 per bicycle. The marginal revenue of the 11th bicycle is
$150.
A barrier to entry is
An obstacle that makes it difficult for new firms to enter a market.
All of the following can be used to increase monopoly power except
Antitrust laws.
Monopolists set prices
At the output where marginal revenue equals marginal cost.
Which of the following is not an example of price discrimination by the only movie theater in town?
Charging one price at all times for all customers.
Price discrimination does not allow a producer to
Designate a point above the market demand curve as the new equilibrium.
Which of the following is a barrier to entry in a monopoly market?
Economies of scale.
If a monopolist is producing a level of output where MR exceeds MC, then it should
Increase its output.
If the entire output of a market is produced by a single seller, the firm
Is a monopoly.
If a firm can raise market price by reducing its output, then
It faces a downward-sloping demand curve.
Which of the following rules is satisfied when a monopoly maximizes profits?
MR = MC.
Monopolists are price
Makers, but competitive firms are price takers.
Which of the following is an argument in favor of a competitive market structure rather than monopoly?
Monopolies produce less at a higher price than competitive markets, ceteris paribus.
Price discrimination allows a producer to
Reap the highest possible average price for the quantity supplied.
A monopoly realizes larger profits than a comparable competitive market by
Reducing production and pushing prices up.
Which of the following markets best illustrates the practice of price discrimination?
The airline market.
For a monopolist, marginal revenue equals
The change in total revenue divided by the change in quantity.
Price discrimination is best defined as
The selling of an identical good at different prices to different consumers by a single seller.
Price-discriminating firms that sell in two markets will charge higher prices in the market, ceteris paribus,
With the more price-inelastic demand.
