micro week 7

A monopolist sells in two different markets and charges the same price of $10 in both markets. In Market A, the demand curve is described by Qd= 50 -2P. In Market B, the demand curve is described by Qd= 60 -P. If the monopolist lowers prices by $1 in the market with the more elastic demand and raises prices by $1 in the market with the more inelastic demand curve, by how much does its total revenue change? A)-$27 B)$459 C)$767 D)$308

-$27

If the monopolist's demand is given by P= 100 -Q, marginal revenue is given by: A)MR= 100 -2Q. B)MR= 100 -Q. C)MR= 100Q. D)MR= 100Q-Q2

100-2Q

(Figure: Paint Market 2) What is the deadweight loss (if any) from the monopoly in this diagram relative to its optimum quantity? A)$125,000B)$250,000C)$300,000D)No deadweight loss

125000

What is the profit-maximizing price and output level for the monopolist in this figure? A)P= $8; Q= 6 B)P= $14; Q= 6 C)P= $8; Q= 12 D)P= $10; Q= 10

14 & 6

Which of the following statements is TRUE? I. The deadweight loss from a monopoly refers to the loss in consumer surplus that is captured by the monopolist as profit. II. According to theory, if the government sets a natural monopolist's price equal to marginal cost, the socially optimum quantity of output will result. III. Deregulation of cable television caused higher prices and fewer programming choices for customers.

2 only

(Figure: Regulated versus Unregulated Monopolist) Refer to the figure. Calculate the change in consumer surplus from an unregulated monopoly to a regulated monopoly A)$6,400B)$2,800C)$400D)$3,600

2800

(Figure: Regulated versus Unregulated Monopolist) Refer to the figure. Calculate the deadweight loss when this monopoly is unregulated. A)$6,400 B)$2,800 C)$850 D)$400

400

(Figure: Monopoly Profits) Refer to the figure. The monopolist earns a profit of: A)$630 .B)$420. C)$540. D)$480

420

GlaxoSmithKline (GSK) maximizes profit by producing a quantity of 800 pills where marginal cost is $2 and average cost is $4. Consumers are willing to pay as much as $10 per pill when the quantity supplied is 800 pills. What is the maximum amount of profit that GSK can earn under these conditions? A)$3,200B)$4,800C)$6,400D)$8,000

4800

Under Michael Kremer's patent-buyout proposal, the government would buy the rights to the firm in this figure's patent for at least: A)$30.B)$40.C)$10.D)$50.

50

In these figures, the markup of price over marginal cost for the relatively inelastic demand is ______, and the markup of price over marginal cost for the relatively elastic demand is ______. A)$10; $2 B)$15; $7.50 C)$7.50; $3 D)$5; $1

7.50; $3

Rex Pharma produces anti-acid medication that is sold in a monopoly market. ' Rex Pharma sells 10,000,000 pills for $12.50 per pill. If the pills were sold for the marginal cost of production of $0.50, Rex Pharma would be able to sell 25,000,000 pills. What is the deadweight loss of this monopoly market? A)$90,000,000B)$120,000,000C)$5,000,000D)$12,500,000

90,000,000

A firm with monopoly power is able to set a markup price that is: A)lower than prices on similar goods sold by competitive firms. B)the same as the prices on similar goods sold by competitive firms .C)higher than prices on similar goods sold by competitive firms. D)the maximum price all market participants will pay for similar goods

higher

Which statement is TRUE? A)If the monopolist's marginal revenue is greater than its marginal cost, the monopolist can increase profit by selling more units at a lower price per unit .B)If the monopolist's marginal revenue is greater than its marginal cost, the monopolist can increase profit by selling fewer units at a higher price per unit. C)When a monopolist produces where MR< MCit always earns a positive economic profit. D)A monopolist is guaranteed monopoly profits by the government

if the monopolist's marginal revenue is greater than its marginal cost, the monopolist can increase profit by selling more units at a lower price per unit.

(Table: Profit-Maximizing Monopolist) Refer to the table. When this monopolist is producing 9 units,: A)its marginal cost is below the marginal revenue level. B)its average revenue is greater than the price it receives for the product. C)it could increase its profit by raising the price and selling fewer units. D)it is producing at the socially optimal level

it could increase its profit by raising the price and selling fewer units

'When a single firm can supply the entire market at a lower cost than two or more firms, the firm can be said to have which of the following characteristics? A)It must be producing at the socially optimal level of output.B)It is a natural monopoly.C)The marginal cost curve rises at an increasing rate.D)It is one of two firms in the industry

nat monop

A monopolist increased output by 100 units but cut prices by $20 to sell this additional output at $1,000 per unit. What is TRUE about marginal revenue? A)MRtotals $2,000. B)MRtotals $100,000. C)MRtotals -$2,000. D)MRcannot be calculated with the information given

not calcable

When a regulated monopolist maximizes consumer surplus, it produces at an optimal Qwhere: A)P= MC. B)MR= MC. C)D= AC. D)AR= AC.

p=MC

Which of the following is always TRUE for monopolies?A)MR> D B)P > MR C)P> AC D)TR< TC

p>MR

When demand is inelastic, revenues increase and production costs decrease as the quantity produced declines, total profits will always increase with a higher price. Therefore, monopolists: A)can't exist. B)can't exist for industries in which demand is relatively inelastic. C)can't maximize profits if they face a relatively inelastic demand. D)will always raise their price until they get to an elastic portion of the demand curve

will always raise their price until they get to an elastic portion of the demand curve