ECON Ch. 12
Refer to the diagram. At the profit-maximizing level of output, total cost will be a) 0BHE b) 0AJE c) NM times 0M d) 0CGC
0BHE
Refer to the graph for a profit-maximizing monopolist. The firm will set its price at a) 0H b) 0K c) 0G d) 0J
0J
Which of the following is correct?
A purely competitive firm is a "price taker," while a monopolist is a "price maker."
Confronted with the same unit cost data, a monopolistic producer will charge
a higher price and produce a smaller output than a competitive firm
Refer to the diagram. At the profit-maximizing level of output, the firm will realize a) an economic profit of ABHJ b) a loss of JH per unit c) a loss of GH per unit d) an economic profit of ACGJ
an economic profit of ABHJ
If a regulatory commission wants to provide a natural monopoly with a fair return, it should establish a price that is equal to
average total cost
A profit-maximizing firm should shut down in the short run if the average revenue it receives is less than
average variable cost
Barriers to entry
can result from government regulation
Natural monopolies result from
extensive economies of scale in production
X-inefficiency refers to a situation in which a firm
fails to achieve the minimum average total costs attainable at each level of output
Refer to the diagram for a non discriminating monopolist. Demand is elastic
for all levels of output less than q2
The demand curve faced by a pure monopolist
is less elastic than that faced by a single purely competitive firm
Pure monopolists may obtain economic profits in the long run because
of barriers to entry
A profit-maximizing monopolist facing the situation shown in the graph should
shut down in the short run
Price discrimination refers to
the selling of a given product to different customers at different prices that do not reflect cost differences