Ch. 15-16
Refer to Figure 16-5. Suppose the firm represented in the diagram decides to practice perfect price discrimination. What is the total revenue collected by the firm?
$13440
Refer to Figure 16-5. Suppose the firm represented in the diagram decides to use a two-part pricing strategy such that it charges a fixed fee and a per-unit price equal to the competitive price. (This is also called an optimal two-part tariff.) What is the per-unit price it should charge, if any?
$16
Figure 15-4 shows the demand and cost curves for a monopolist.Refer to Figure 15-4. What is the amount of the monopoly's total cost of production?
$17700
Neem Products sells its Ayurvedic Neem toothpaste in two completely isolated markets with demand schedules as shown in Table 16-2. The average cost of production is constant at $2 per tube.Refer to Table 16-2. What are the total profits from both markets combined?
$18
A monopoly producer of foreign language translation software faces a demand and cost structure as given in Table 15-1.Refer to Table 15-1. What is the marginal revenue from the sale of the 12th unit?
$20
Figure 15-4 shows the demand and cost curves for a monopolist.Refer to Figure 15-4. What is the amount of the monopoly's total revenue?
$20400
Figure 15-9 shows the demand and cost curves for a monopolist.Refer to Figure 15-9. At the profit-maximizing quantity, what is the difference between the monopoly's price and the marginal cost of production?
$21
Refer to Figure 16-5. Suppose the firm represented in the diagram decides to use a two-part pricing strategy such that it charges a fixed fee and a per-unit price equal to the monopoly price. What is the revenue collected from the fixed fee portion of the price?
$2560
Figure 15-4 shows the demand and cost curves for a monopolist.Refer to Figure 15-4. What is the amount of the monopoly's profit?
$2700
Figure 15-4 shows the demand and cost curves for a monopolist.Refer to Figure 15-4. What is the price charged for the profit-maximizing output level?
$34
Neem Products sells its Ayurvedic Neem toothpaste in two completely isolated markets with demand schedules as shown in Table 16-2. The average cost of production is constant at $2 per tube.Refer to Table 16-2. What is the total revenue received from both markets combined?
$34
A monopoly producer of foreign language translation software faces a demand and cost structure as given in Table 15-1.Refer to Table 15-1. When producing the profit-maximizing output, what is the amount of the firm's profit?
$350
Refer to Table 13-1. What is the marginal revenue of the 3rd unit?
$5.50
Refer to Figure 16-5. Suppose the firm represented in the diagram decides to use a two-part pricing strategy such that it charges a fixed fee and a per-unit price equal to the competitive price. (This is also called an optimal two-part tariff.) What is the total revenue it can expect to collect from the fixed fee portion of the price?
$5760
Refer to Figure 16-5. Suppose the firm represented in the diagram decides to use a two-part pricing strategy such that it charges a fixed fee and a per-unit price equal to the monopoly price. What is the profit earned under this pricing scheme?
$6400
Figure 15-3 above shows the demand and cost curves facing a monopolist.Refer to Figure 15-3. Suppose the monopolist represented in the diagram above produces positive output. What is the price charged at the profit-maximizing/loss-minimizing output level?
$68
Refer to Figure 16-5. Suppose the firm represented in the diagram decides to use a two-part pricing strategy such that it charges a fixed fee and a per-unit price equal to the monopoly price. What is the per-unit price?
$8
Refer to Figure 16-1. What is the consumer surplus received under perfect price discrimination?
0
Refer to Figure 16-5. Suppose the firm represented in the diagram decides to use a two-part pricing strategy such that it charges a fixed fee and a per-unit price equal to the competitive price. (This is also called an optimal two-part tariff.) What is the value of the consumer surplus from this pricing strategy?
0
Refer to Figure 16-5. Suppose the firm represented in the diagram decides to use a two-part pricing strategy such that it charges a fixed fee and a per-unit price equal to the monopoly price. What is the quantity it should produce?
320 units
Figure 15-9 shows the demand and cost curves for a monopolist.Refer to Figure 15-9. What is the difference between the monopoly output and the perfectly competitive output?
340 units
Refer to Figure 16-5. Suppose the firm represented in the diagram decides to practice perfect price discrimination. What is the profit-maximizing quantity?
480 units
Refer to Figure 16-5. Suppose the firm represented in the diagram decides to use a two-part pricing strategy such that it charges a fixed fee and a per-unit price equal to the competitive price. (This is also called an optimal two-part tariff.) What is the quantity it should produce?
480 units
Figure 15-4 shows the demand and cost curves for a monopolist.Refer to Figure 15-4. What is the profit-maximizing/loss-minimizing output level?
600 units
Figure 15-3 above shows the demand and cost curves facing a monopolist.Refer to Figure 15-3. Suppose the monopolist represented in the diagram above produces positive output. What is the profit-maximizing/loss-minimizing output level?
630 units
Figure 15-9 shows the demand and cost curves for a monopolist.Refer to Figure 15-9. What is the economically efficient output level? (Hint: P=MC)
940 units
Figure 15-4 shows the demand and cost curves for a monopolist.Refer to Figure 15-4. What is likely to happen to this monopoly in the long run?
As long as there are entry barriers, this firm will continue to enjoy economic profits.
Which of the following describes two-part tariff pricing?
A buyer pays an initial price for entrance to the market and an additional fee for each unit of the product purchased.
Figure 15-2 above shows the demand and cost curves facing a monopolist.Refer to Figure 15-2. If the firm's average total cost curve is ATC1, the firm will
make a profit.
Refer to Figure 13-2. The marginal revenue from selling the additional unit Qb instead of Qa equals
the area (H-E)
Refer to Figure 15-10. The deadweight loss due to a monopoly is represented by the area
FHE
Refer to Figure 16-5. Suppose the firm represented in the diagram decides to practice perfect price discrimination. What is the profit-maximizing price it will charge?
It should charge a range of prices from $40 to $16.
If a monopolist's price is $50 per unit and its marginal cost is $25, then
Not enough information is given to say what the firm should do to maximize profit.
A monopoly producer of foreign language translation software faces a demand and cost structure as given in Table 15-1.Refer to Table 15-1. What is the firm's profit-maximizing output and what is the price charged to sell this output?
P = $70; Q = 13
For the monopoly
P = AR > MR
Figure 15-2 above shows the demand and cost curves facing a monopolist.Refer to Figure 15-2. The firm's profit-maximizing price is
P3
Refer to Figure 16-5. Suppose the firm represented in the diagram decides to act as a monopolist and charge a single price. What is the profit maximizing quantity produced and what is the price charged?
Q = 320 units; P = $24
Neem Products sells its Ayurvedic Neem toothpaste in two completely isolated markets with demand schedules as shown in Table 16-2. The average cost of production is constant at $2 per tube.Refer to Table 16-2. How many tubes of toothpaste will Neem sell in West Fall and at what price?
Q = 4 units; P = $3.50
Neem Products sells its Ayurvedic Neem toothpaste in two completely isolated markets with demand schedules as shown in Table 16-2. The average cost of production is constant at $2 per tube.Refer to Table 16-2. How many tubes of toothpaste will Neem sell in Middle Fall and at what price?
Q = 4 units; P = $5
Figure 15-2 above shows the demand and cost curves facing a monopolist.Refer to Figure 15-2. To maximize profit, the firm will produce at output level
Q2
Refer to Figure 16-1. What is the economically efficient output level?
Q3 units
Refer to Figure 16-1. With perfect price discrimination, the firm will produce and sell
Q3 units
Figure 15-9 shows the demand and cost curves for a monopolist.Refer to Figure 15-9. What is the difference between the monopoly's price and perfectly competitive industry's price?
The monopoly's price is higher by $13.
Which of the following is a necessary condition for successful price discrimination?
The seller must possess market power.
Consider the following pricing strategies:a. perfect price discriminationb. charging different prices to different groups of customersc. optimal two-part tariffd. single-price monopoly pricingWhich of the pricing strategies leads to the economically efficient output level?
a and c only
For a natural monopoly to exist
a firm's long-run average cost curve must exhibit economies of scale throughout the relevant range of market demand.
Refer to Figure 16-1. What is the price charged under perfect price discrimination?
a range of prices corresponding to the demand curve from P3 and above
Refer to Figure 15-10. Compared to a perfectly competitive market, consumer surplus is lower in a monopoly by an amount equal to the
area P1P2EF.
To have a monopoly in an industry there must be
barriers to entry so high that no other firms can enter the industry.
Why does a monopoly cause a deadweight loss?
because it does not produce some output for which marginal benefit exceeds marginal cost
Figure 15-2 above shows the demand and cost curves facing a monopolist.Refer to Figure 15-2. If the firm's average total cost curve is ATC2, the firm will
break even
When the government wants to give an exclusive right to one firm to produce a product, it
grants a patent or copyright to an individual or firm.
For a monopolist, marginal revenue
is less than the price.
Compared to perfect competition, the consumer surplus in a monopoly
is lower because price is higher and output is lower.
Figure 15-3 above shows the demand and cost curves facing a monopolist.Refer to Figure 15-3. Suppose the monopolist represented in the diagram above produces positive output. What is the profit/loss per unit?
loss of $7 per unit
If a firm charges different consumers different prices for the same product and the difference cannot be attributed to cost variations, then it is engaging in
price discrimination
Plato Playhouse, a theatre company in the university town of Wegg, caters to two groups of customers: students and the non-student population. Figure 16-2 shows the demand curves for the two groups of customers.Refer to Figure 16-2. What is the price charged in the two markets?
price in the student market = Pc; price in the non-student market = P
Plato Playhouse, a theatre company in the university town of Wegg, caters to two groups of customers: students and the non-student population. Figure 16-2 shows the demand curves for the two groups of customers.Refer to Figure 16-2. What is the quantity sold to each group of customers and what is the total quantity sold?
quantity sold to students = Qc; quantity sold to non-students = Qd; total sales = Qd + Qc
Figure 15-2 above shows the demand and cost curves facing a monopolist.Refer to Figure 15-2. If the firm's average total cost curve is ATC3, the firm will
suffer a loss
Refer to Figure 13-1. The marginal revenue from the increase in price from P0 to P1 equals
the area (A-D)
The demand curve for a monopoly's product is
the market demand for product
Because a monopoly's demand curve is the same as the market demand curve for its product
the monopoly must lower its price to sell more of its product.
Economic efficiency in a free market occurs when
the sum of consumer surplus and producer surplus is maximized.
Refer to Figure 15-10. What is the area that represents producer surplus under a monopoly?
the trapezium 0P1FH
Refer to Figure 15-10. What is the area that represents consumer surplus under a monopoly?
the triangle P0P1F
Firms price discriminate
to increase profits
If a monopolist's marginal revenue is $25 a unit and its marginal cost is $25, then
to maximize profit the firm should continue to produce the output it is producing.
A monopolist's profit-maximizing price and output correspond to the point on a graph
where marginal revenue equals marginal cost and charging the price on the market demand curve for that output.
If the demand curve for a firm is downward-sloping, its marginal revenue curve
will lie below the demand curve.