Microeconomics, Exam 3; Chapter 15

Which of the following would be most likely to have monopoly power?

A local cable TV provider

Refer to Table 15-1. Assume this monopolist's marginal cost is constant at $12. What quantity of output (Q) will it produce and what price (P) will it charge?

Q=4, P=$26

Due to the nature of the patent laws on pharmaceuticals, the market for such drugs

switches from monopolistic to competitive once the firm's patent runs out

Many movie theaters allow discount tickets to be sold to senior citizens because

that increases the theaters' profits

The figure below depicts the demand, marginal revenue, and marginal cost curves of a profit-maximizing monopolist.

$0

The figure below depicts the demand, marginal revenue, and marginal cost curves of a profit-maximizing monopolist.

$1,000

If a monopolist sells 100 units at $8 per unit and realizes an average total cost of $6 per unit, what is the monopolist's profit?

$200

Refer to Table 15-1. When 4 units of output are produced and sold, what is average revenue?

$26

Scenario 15-2 A monopoly firm maximizes its profit by producing Q = 500 units of output. At that level of output, its marginal revenue is $30, its average revenue is $60, and its average total cost is $34. Refer to Scenario 15-2. At Q = 500, the firm's marginal cost is

$30

Refer to Figure 15-3. A profit-maximizing monopoly's profit is equal to

(P3-P0)XQ2

Refer to Table 15-1. If the monopolist wants to maximize its revenue, how many units of its product should it sell?

6

Refer to Figure 15-2. The marginal revenue curve for a monopoly firm is depicted by curve

B

In the diagram below, which area represents the deadweight loss from monopoly?

E+H

Young Johnny inherited the only local cable TV company in town after his father passed away. Assuming that Johnny understands the power of his new monopoly (and that the company is unregulated), he would be most excited about which of the following?

He will be able to set the price of cable TV service at whatever level he wishes.

Refer to Figure 15-1. The shape of the average total cost curve reveals information about the nature of the barrier to entry that might exist in a monopoly market. Which of the following monopoly types best coincides with the figure?

Natural monopoly

Monopoly pricing prevents some mutually beneficial trades from taking place. These unrealized mutually beneficial trades are

a deadweight loss to society

The collection of statutes aimed at curbing monopoly power is called

antitrust law

The fundamental cause of monopoly is

barriers to entry

When a monopolist increases the amount of output that it produces and sells, its average revenue

decreases and its marginal revenue decreases

For a typical natural monopoly, average total cost is

falling and marginal cost is below average total cost

Refer to Figure 15-2. If the monopoly firm is currently producing Q3 units of output, then a decrease in output will necessarily cause profit to

increase as long as the new level of output is at least Q2

For a monopolist,

marginal revenue is always less than the price of the good.

For a monopolist, when does marginal revenue exceed average revenue?

never

In the majority of cases where there is a natural monopoly, the U. S. government usually deals with the problem

through regulation