microecon ch 12
Refer to the above graph showing the revenue curves for a monopolist. The elastic portion of the demand curve ranges from quantity:
0 to Q3
One feature of pure monopoly is that the firm is:
A price maker
A monopoly results in productive inefficiency because at the profit-maximizing output level:
ATC is not at its minimum level
X-inefficiency is said to occur when a monopolist's
Average cost is greater than the minimum possible average cost at a given output level
A firm will earn economic profits whenever:
Average revenue exceeds average total costs
Which of the above shows the correct relationship between demand and marginal revenue?
B
A non-discriminating pure monopolist is generally viewed as:
Both productively and allocatively inefficient
Barriers to entry
Can result from government regulation
The economic incentive for price discrimination is based upon
Differences among buyers' elasticities of demand
Under pure monopoly, a profit-maximizing firm will produce
In the elastic range of its demand curve
With a natural monopoly, the fair return price:
Is allocatively inefficient; the socially optimal price is allocatively efficient
A non-discriminating monopolist will find that marginal revenue
Is less than average revenue or price
An argument for making regulated monopolies adopt marginal cost pricing is that this would:
Make the marginal cost equal to society's valuation of the marginal benefit
Many people believe that monopolies charge any price they want to without affecting sales. Instead, the output level for a profit-maximizing monopoly is determined by:
Marginal cost = marginal revenue
The non-discriminating pure monopolist must decrease price on all units of a product sold in order to sell more units. This explains why:
Marginal revenue is less than average revenue
In the short run equilibrium, a monopolist's profits:
May be positive, negative, or zero
When the value of a product to each user, including existing users, increases due to an increase in the total number of users, we refer to this as:
Network effects
Allocative inefficiency happens in a monopoly because at the profit-maximizing output level
P > MC
Refer to the above graph showing the revenue curves for a monopolist. If it wants to sell quantity Q1, it must charge a price
P1
An exclusive legal right as sole producer for 20 years granted to an inventor of a product is called a
Patent
Refer to the above graph showing the revenue curves for a monopolist. Total revenue will be greatest at what output level?
Q3
Refer to the above graph showing the revenue curves for a monopolist. At what output level is demand inelastic?
Q4
Which phrase would be most characteristic of pure monopoly
Sole seller
With non-rivalrous consumption such as in the case of online music and movies, as more consumers buy the product:
The average cost of the output declines because the marginal cost is very small
Which is true of a price discriminating pure monopolist?
The average price will be higher than in the nondiscriminating case