Micro Chapter 12 Monopolies

Refer to the diagram. If this industry is purely monopolistic, the profit-maximizing price and quantity will be

P3 and Q3

Refer to the diagrams. Diagram (A) represents

equilibrium price and quantity in a purely competitive industry.

The nondiscriminating monopolist's demand curve

is less elastic than a purely competitive firm's demand curve

In the short run, a monopolist's economic profits

may be positive or negative depending on market demand and cost conditions

Refer to the diagrams. Firm A is a

pure competitor and Firm B is a pure monopoly

If a nondiscriminating imperfectly competitive firm is selling its 100th unit of output for $35, its marginal revenue

will be less than $35

A nondiscriminating profit-maximizing monopolist

will never produce in the output range where demand is inelastic

1 100 100 100.00 30 2 90 80 63.00 26 3 80 60 52.67 32 ...... 10 10 -80 67.60 130 Refer to the data for a nondiscriminating monopolist. At its profit-maximizing output, this firm's total costs will be

$198

1 100 100 100.00 30 2 90 80 63.00 26 3 80 60 52.67 32 ...... 10 10 -80 67.60 130 Refer to the data. At its profit-maximizing output, this firm's total revenue will be

$280

1 100 100 100.00 30 2 90 80 63.00 26 3 80 60 52.67 32 ...... 10 10 -80 67.60 130 Refer to the data for a nondiscriminating monopolist. At its profit-maximizing output, this firm's price will exceed its marginal cost by ____ and its average total cost by ____

$30; $20.50

1 100 100 100.00 30 2 90 80 63.00 26 3 80 60 52.67 32 ...... 10 10 -80 67.60 130 Refer to the data for a nondiscriminating monopolist. At its profit-maximizing output, this firm's total profit will be

$82

1 100 100 100.00 30 2 90 80 63.00 26 3 80 60 52.67 32 ...... 10 10 -80 67.60 130 Refer to the data for a nondiscriminating monopolist. This firm will maximize its profit by producing

4 units

Which of the following is correct?

A purely competitive firm is a "price taker," while a monopolist is a "price maker"

Which of the following is a characteristic of pure monopoly?

Barriers to entry

What do economies of scale, the ownership of essential raw materials, and patents have in common?

They are all barriers to entry

Which of the following is not a barrier to entry?

X-inefficiency

Pure monopoly refers to

a single firm producing a product for which there are no close substitutes

Barriers to entering an industry

are the basis for monopoly

A single-price pure monopoly is economically inefficient

because it produces short of minimum average total cost and price is greater than marginal cost

The marginal revenue curve for a monopolist

becomes negative when output increases beyond some particular level

Refer to the diagram for a pure monopolist. Monopoly price will be

c.

Refer to the diagram for a pure monopolist. Monopoly profit

cannot be determined from the information given

1 100 100 100.00 30 2 90 80 63.00 26 3 80 60 52.67 32 ...... 10 10 -80 67.60 130 Refer to the data for a nondiscriminating monopolist. At its profit-maximizing output, this firm will be operating in the

elastic portion of its demand curve

Refer to the diagram for a pure monopolist. Monopoly output will be

f.

Refer to the diagrams. In diagram (B) the profit-maximizing quantity is

g and the profit-maximizing price is d

The demand curve faced by a pure monopolist

is less elastic than that faced by a single purely competitive firm

The nondiscriminating pure monopolist's demand curve

is the industry demand curve

A natural monopoly occurs when

long-run average costs decline continuously through the range of demand

For a pure monopolist the relationship between total revenue and marginal revenue is such that

marginal revenue is positive when total revenue is increasing, but marginal revenue becomes negative when total revenue is decreasing

At its profit-maximizing output, a pure nondiscriminating monopolist achieves

neither productive efficiency nor allocative efficiency

Pure monopolists may obtain economic profits in the long run because

of barriers to entry

Comparing a pure monopoly and a purely competitive firm with identical costs, we would find in long-run equilibrium that the pure monopolist's

price and average total cost would be higher, but output would be lower

The profit-maximizing output of a pure monopoly is not socially optimal because in equilibrium

price exceeds marginal cost

Because the monopolist's demand curve is downsloping

price must be lowered to sell more output