Assignment #11 (Chapter 13)

This diagram shows cost and revenue curves for a monopolist. ​1.) Using the point drawing tool​, identify the profit maximizing price and quantity. Label this point​ 'A'. ​2.) Using the point drawing tool​, identify the​ per-unit cost at this profit maximizing level of output. Label this point​ 'B'. ​Note: Carefully follow the instructions above and only draw the required objects. The profit earned by this firm is ​$______. ​(Enter your response as an integer and include a minus sign for​ losses.)

10,500. For A find where MR and MC intersect and go up . to demand. For B find where MR and MC intersect and go up to ATC

The graph on the right illustrates the demand and marginal revenue curves facing a monopoly in an industry with no economies or diseconomies of scale. In the short and long run MC equals ATC. The value of profit is ​$_______. The value of consumer surplus is ​$________. The value of deadweight loss is ​$______ Review the graph to your right and identify the area of the graph each label represents. Label A __________ Label B __________ Label C __________

4,500 ; 2,250 ; 2,250 Consumer Surplus Monopoly Profit Deadweight Loss

​Normally, a monopoly produces less output than the same industry would if it were competitive. Suppose that output is decreased from 60 to 30 units. The loss to society that results from this output restriction is equal to ​$___. ​(Enter your response as an integer do not include the plus or minus​ sign.)

450. Find Area of .triangle and half it

The​ profit-maximizing level of output for this monopolist is​ _____ units of output. A. 22 B. 20 C. 26 D. 24

A. 22

The demand curve facing Microsoft is most likely represented by A. Panel A. B. Panel B. C. Panel C. D. Panel D.

A. Panel A

In 1914 Congress passed the Clayton Act and The Federal Trade Commission Act. A. The Clayton Act outlaws certain specific​ behavior, and the FTC Act prohibits​ "unfair methods of​ competition." B. The Clayton Act allows Congress to prohibit misleading​ advertising, and the FTC investigates tying contracts. C. The Clayton Act creates a government agency to investigate business​ behavior, and the FTC Act forbids mergers. D. The Clayton​ Act, like the Sherman​ Act, is​ vague, while the FTC Act outlaws very specific behavior.

A. The Clayton Act outlaws certain specific​ behavior, and the FTC Act prohibits​ "unfair methods of​ competition."

The term​ "rent seeking" refers to A. any actions taken to protect positive profits. B. a coalition of tenants who act together to reduce the rents they pay. C. an organization of landlords who jointly raise the rents they charge. D. efforts to acquire ownership of real estate which will generate rental income.

A. any actions taken to protect positive profits.an

If a perfectly competitive firm with constant returns to scale was reorganized as a​ monopoly, its monopoly price would be​ ________ the perfectly competitive price and its monopoly output would be​ ________ the perfectly competitive output. A. greater​ than; less than B. greater​ than; greater than C. less​ than; less than D. less​ than; greater than

A. greater​ than; less than

Between 1890 and​ 1920, antitrust legislation was passed in response to the A. increasing importance of very large firms and​ trusts, which were groups of firms that acted like monopolists. B. growing strength of​ trusts, which were associations of buyers. C. very slow growth of the economy. D. growing importance of agricultural trusts. E. growing role of banking trusts.

A. increasing importance of very large firms and​ trusts, which were groups of firms that acted like monopolists.

The demand for Ben​ & Jerry's ice cream will likely be ​ ________ the demand for dessert. A. more price elastic than B. equally price elastic as C. less price elastic than D. indeterminate from the given information.

A. more price elastic than

In interpreting the Sherman​ Act, the Supreme Court developed the Rule of​ Reason, which says that a firm may be found guilty of violating the law A. only if both its conduct and the structure of the industry are unreasonable. B. only if its share of industry output is unreasonably large. C. even if its conduct is reasonable. D. on the basis of industry structure alone. E. only if its conduct is unreasonable.

A. only if its conduct is unreasonable

Market power refers to a​ firm's ability to A. raise price without losing all sales of its product. B. charge any price it likes. C. monopolize a market completely. D. sell any amount of output it desires at the​ market-determined price.

A. raise price without losing all sales of its products

One of the major characteristics of pure monopoly is A. there are severe barriers to entering the industry. .B. there are only a few firms in the industry. C. the total amount produced by the industry is large. D. similar products are made by other industries.

A. there are severe barriers to entering the industry

Taylor Swift is a​ singer-songwriter whose pop album 1989 was the​ top-selling album of​ 2014, with 3.66 million copies sold in just its first 9 weeks of release. The path to success for pop musicians involves reducing the elasticity of demand that they face and building barriers to entry. That sounds like economic​ babble, but it has a lot of meaning. Using the language of economics and the concepts presented in this​ chapter, explain why lowering the elasticity of demand and building barriers to entry are exactly what Taylor Swift is trying to do. Lowering the elasticity of demand and building barriers to entry will benefit Taylor Swift because​ ____________ A. it increases her market competition and makes it possible to earn normal profits over time. B. it increases her market power and makes it possible to earn economic profits over time. C. a smaller number of pop musicians allows more coordination among other musicians. D. the lower the elasticity of​ demand, the more revenue she can make by lowering the price.

B. it increases her market power and makes it possible to earn economic profits over time

If a monopolist is at a point on its demand curve such that marginal revenue is less than marginal​ cost, then it can increase profit by A. increasing both price and output. B. increasing price and decreasing output. C. decreasing both price and output. D. decreasing price and increasing output.

B. Increasing price and decreasing output

An industry with a single firm in which the entry of new firms is blocked is called A. monopolistic competition. B. monopoly. C. oligopoly. D. perfect competition.

B. monopoly

Voss Calculator Company has a monopoly on the sale of graphing calculators. If it sells two of these calculators its total revenue is​ $600, and if it sells three calculators its total revenue is​ $750. The marginal revenue of the third calculator sold is A. ​ $50. B. ​ $75. C. ​ $150. .D. ​ $250.

C. $150

When a monopolist sells two units of output its total revenue is​ $150. When a monopolist sells three units of output its total​ revenue, is​ $210. When the monopolist sells three units of​ output, the price per unit isA. ​ $50. B. ​ $60. C. ​ $70. D. ​ $75.

C. $70

A monopolist maximizes profit by setting output where A. MR is maximized. B. MC is minimized. C. MR​ = MC. D. All of the above are correct. For a​ profit-maximizing monopolist, A. marginal revenue is equal to price. B. marginal revenue is less than price. C. marginal revenue is greater than price. D. marginal revenue is unrelated to price.

C. MR​ = MC. B. marginal revenue is less than price

A monopolist will not produce A. a positive level of output when its price is less than average total cost but greater than average variable cost. B. in the perfectly competitive level of output when it engages in perfect price discrimination. C. a positive level of output when its marginal revenue is declining. D. in the inelastic portion of its demand​ curve, where marginal revenue is negative.

C. a positive level of output when its marginal revenue is declining.

Actions to enforce the antitrust laws are initiated A. only by the FTC. B. only by the Antitrust Division of the Justice Dept. C. by the Antitrust Division of the Justice​ Dept, the​ FTC, and private firms or citizens. D. by the Antitrust Division of the Justice Dept or by the​ FTC, but not by private firms or citizens

C. by the Antitrust Division of the Justice​ Dept, the​ FTC, and private firms or citizens.

​Monopolies, oligopolies, and monopolistic competitive industries all A. earn positive profits in the long run. B. are completely unconstrained in their pricing. C. have market power. D. raise price and quantity over what would occur in perfect competition in order to maximize their profits.

C. have market power

The​ ________ broadly a market is​ defined; the more difficult it becomes to find​ ________. A. ​ more; complements B. ​ less; goods independent of each other C. ​ more; substitutes D. ​ less; substitutes

C. more; substitutes

For a​ monopoly, the marginal revenue curve has​ ________ point(s) in common with the​ firm's linear demand curve. A. all B. no C. one D. Indeterminate from the given information.

C. one

Imperfect competitionA. should always be regulated by the government B. is a major cause of externalities in the market. C. results in less efficient market outcomes. D. means there is no competition in the market.

C. results in less efficient market outcomes

When the demand curve is a downward sloping straight​ line, the quantity at which the demand curve intersects the horizontal​ (quantity) axis is​ ________ the quantity at which the marginal revenue curve intersects the horizontal​ (quantity) axis. A. four times B. equal to C. twice D. less than

C. twice

When the demand curve is a downward sloping straight​ line, the slope of the marginal revenue curve is A. half as steep as the demand curve. B. the same as the slope of the demand curve. C. always equal to one. D. twice as steep as the demand curve.

D. twice as steep as the demand curve.

When a firm engages in perfect price​ discrimination, A. consumer surplus is zero. B. they produce the same output level as a competitive firm. C. there is no deadweight loss. D. All of the above are true.

D. All of the above are true

Explain why the marginal revenue curve facing a competitive firm differs from the marginal revenue curve facing a monopolist. Unlike for perfectly competitive​ firms, whose marginal revenue curves are the same as their individual demand​ curves, a​ monopolist's marginal revenue curve differs from its demand curve because A. a​ monopoly's demand curve is upward dash sloping. B. a monopoly can sell all the output it wants without having any impact on market price. C. a monopoly has no market power. D. a monopoly must lower the price on all units to sell one more unit of output. E. the demand curve for a monopoly has half the slope of the market demand curve.

D. a monopoly must lower the price on all units to sell one more unit of output

In an imperfectly competitive industry A. a single firm will be able to sell all of its output at whatever price it wants to charge. B. the government will always regulate the output price. C. a single firm has no control over the price of its output. D. a single firm has some control over the price of its output.

D. a single firm has some control over the price of its output

Which of the following is least likely to be considered a firm in an imperfectly competitive​ industry? A. Ohio Bell Telephone Company B. the only locally owned and operated bank in​ Severn, MD. C. a Burger King in​ Pittsburgh, PA. D. a wheat farmer in Kansas

D. a wheat farmer in Kansas

For a​ monopoly, marginal revenue A. is more than​ price, because a monopolist cannot control price. B. is more than​ price, because a monopolist controls price. C. is less than​ price, because a monopolist can increase both sales and price at the same time. D. is less than​ price, because a monopolist can increase sales without reducing price. E. is less than​ price, because a monopolist must lower its price in order to sell more.

D. is less than ​ price, because a monopolist must lower its price in order to sell more

If a monopolist is protected by barriers that prevent other firms from selling the same​ product, then the monopolist A. will pass on to its customers any increase in production cost. B. can charge any price without fear of losing customers. C. can always increase profit by raising its price. D. is still constrained by the demand curve for its product.

D. is still constrained by the demand curve for its product.

One of the major characteristics of pure monopoly is A. there are no major barriers to entering the industry. B. there are only a few firms in the industry. C. similar products are made by other industries. D. there is only one firm in the industry.

D. there is only one firm in the industry

A market where there is only one buyer for a good or service is called a monopoly. True False`

false

When​ ________ substitutes​ exist, a firm in an imperfectly competitive industry has​ ________ power to raise price. A. ​ more; less B. ​ more; more C. ​ no; infinite D. ​ fewer; less

​A. more; less