chapter 15

Which of the following is not an example of price discrimination?

A bakery charges a higher price for brownies than for cookies.

What price will the monopolist charge in order to maximize profit?

B

A monopoly firm maximizes its profit by producing Q = 500 units of output. At that level of output, its marginal revenue is $40, its average revenue is $80, and its average total cost is $44.

$18,000.

Based upon the information shown, what are total costs for Bearclaws, given that it maximizes profits?

$700.

A monopolist can sell 300 units of output for $50 per unit. Alternatively, it can sell 301 units of output for $49.60 per unit. The marginal revenue of the 301st unit of output is

-$70.40.

Refer to Figure 15-2. A profit-maximizing monopoly's total revenue is equal to

P5 × Q3.

Which of the following is a necessary characteristic of a monopoly?

The firm is the sole seller of its product.

Which of the following statements is not correct?

The government may break up a natural monopoly to lower the price charged to customers.

What is the area of deadweight loss?

The triangle 1/2[(X − Z) × (K − J)]

Which of the following is an example of public ownership of a monopoly?

U.S. Postal Service

The fundamental source of monopoly power is

barriers to entry.

Price discrimination

can maximize profits if the seller can prevent the resale of goods between customers.

A benefit to society of the patent and copyright laws is that those laws

encourage creative activity.

In a natural monopoly,

if the government requires marginal cost pricing, it will likely have to subsidize the firm.

For a firm to price discriminate,

it must have some market power.

A firm cannot price discriminate if

it operates in a competitive market.

In order to sell more of its product, a monopolist must

lower its price.

The deadweight loss associated with a monopoly occurs because the monopolist

produces an output level less than the socially optimal level.

A government-created monopoly arises when

the government gives a firm the exclusive right to sell some good or service.

A natural monopoly occurs when

there are economies of scale over the relevant range of output.