new stuff to be merged

A firm with no competition faces a perfectly inelastic demand curve.

False

A profit-maximizing monopolist chooses the output level where MR = MC and chooses the corresponding price from the marginal revenue curve.

False

When externalities are present in a market, social surplus is maximized.

False

How does price discrimination increase social surplus?

It expands the output that a firm would otherwise produce.

A government can maximize efficiency in monopoly markets by setting prices equal to the monopolist's average cost of production albeit at the cost of reduced long term innovation.

True

A tariff benefits domestic producers but hurts domestic consumers.

True

(Figure: Industry Firms) Refer to the figures. The market is characterized by demand curve D2 and supply curve S1. The firms in the industry are earning ________, which will cause the______________.

profit; supply curve to shift to S2

An efficient equilibrium occurs when:

social costs equals social benefits.

An efficient equilibrium occurs whenever:

social surplus is maximized

(Figure: Monopoly Markup) Refer to the figure. Consumer surplus under competition is represented by:

triangle adf.

(Figure: Monopoly Markup) Refer to the figure. The deadweight loss attributable to monopoly is:

triangle cef.

For a linear demand curve, the marginal revenue curve has:

twice the slope.

For a monopolist, MR is always less than P because:

when a monopolist lowers the price to sell more units, it must lower the prices of all units sold.

(Figure: Foreign Trade) Refer to the figure. What quantity would be traded in the absence of any international trade?

1,000

(Figure: Maximum Willingness to Pay) Refer to the figure. What is the profit-maximizing quantity for this monopolist?

110

(Figure: Monopoly 8) If the government set price equal to average cost, the natural monopolist in this figure would produce:

14 units of output.

(Figure: Monopoly 8) The natural monopolist in this figure would produce:

9 units of output.

(Figure: A Tariff on Imports) Refer to the figure. Suppose the government intervenes with a $2 tariff; the total cost of the tariff to the citizens in that country is:

$350 million

(Figure: Foreign Trade Market) Refer to the figure. What is the dollar value of the deadweight loss created by the loss of foreign trade?

$4,000

(Figure: Monopolist) Refer to the figure. Based on the demand curves for a monopolist's product in two different markets—Market A and Market B—through the process of price discrimination, how much profit is the monopolist making in Market A?

$450

(Figure: Foreign Trade 2) Refer to the figure. What is the dollar value of the deadweight loss created as a result of prohibiting trade in this market?

$5,000

(Figure: Monopolist) Refer to the figure. Based on the demand curves for a monopolist's product in two different markets—Market A and Market B—through the process of price discrimination, how much profit is the monopolist making in Market B?

$520

If this figure represents the demand and cost curves for a firm with market power, what price should the firm charge to maximize profits?

$60

(Figure: Monopolist) Refer to the figure. Based on the demand curves for a monopolist's product in two different markets—Market A and Market B—if the monopolist were to charge a uniform price PU between the two markets, in which range would the price fall?

$9 < PU < $10

(Figure: Monopoly 6) If the market in this figure is a monopoly, the consumer surplus is area ______, and the deadweight loss is area ______.

A; C

Refer to the figure. Which price and quantity combination represents the efficient equilibrium?

P2 and Q2

(Figure: Profits and Competitive Firms) Refer to the four panels in the figure. Which panel shows a competitive firm making positive economic profits?

Panel C

GlaxoSmithKline attempts to prevent arbitrage of its drug Combivir by selling different colored pills in special bar-coded packages, to identify and track distributors in different markets.

True

Refer to the figure. Which of the following would represent the wage and number of workers of unionized jobs?

W2; N1

How much profit is the firm making at the profit-maximizing quantity?

a profit of $300

Tradable allowances for pollution:

allow firms to reduce pollution levels at lower costs.

(Figure: Market for Vaccines) Refer to the figure. The figure represents the market for vaccines with external benefits. The market's outcome generates a(n):

deadweight loss of approximately $750.

Refer to the figure. Deadweight loss caused by monopoly pricing is represented by the area:

def.

A free market with externalities ______ social surplus.

does not maximize

An external benefit in a market will cause the market to produce:

less than is socially desirable.

A tariff on a good when the world price is lower than the domestic price leads to:

lower domestic consumption of the good than under free trade.

When external benefits are significant:

market output is too low

When external costs are present in a market:

market prices send incorrect signals

If a monopolist begins to perfectly price discriminate,:

the deadweight loss will be eliminated as output expands to its efficient level.

(Figure: Monopoly Markup) Refer to the figure. Consumer surplus under monopoly is represented by:

triangle abc