Chapter 15

A benefit of a monopoly is

greater creativity by authors who can copyright their novels.

Refer to Table 15-7. What is the average revenue when Sally sells 7 pairs of shoes?

$100

Table 15-13The following table gives information on the price, quantity, and total cost of production for a monopolist. Price Output Total Costs $5 0 $3 $4 5 $8 $3 10 $20 $2 15 $33 $1 20 $53 $0 25 $78 Refer to Table 15-13. How much profit will the firm earn at the profit-maximizing price?

$12

Scenario 15-9Suppose executives at an art museum know that 100 adults are willing to pay $12 for admission to the museum on a weekday. Suppose the executives also know that 200 students are willing to pay $8 for admission on a weekday. The cost of operating the museum on a weekday is $2,000. Refer to Scenario 15-9. How much profit will the museum earn if it charges all customers $8 for admission?

$400

Table 15-21Tommy's Tie Company, a monopolist, has the following cost and revenue information. Assume that Tommy's is able to engage in perfect price discrimination. Refer to Table 15-21. If the monopolist can engage in perfect price discrimination, what is total profit at the profit-maximizing quantity?

$435

A profit-maximizing monopolist charges a price of $12. The intersection of the marginal revenue and marginal cost curves occurs where output is 10 units and marginal cost is $6. Average total cost for 10 units of output is $5. What is the monopolist's profit?

$70

Refer to Figure 15-22. Based upon the information shown, what is the deadweight loss created by Bearclaws?

$70.

Table 15-4A monopolist faces the following demand curve: Price Quantity $30 0 $25 2.5 $20 5 $15 7.5 $10 10 $5 12.5 $0 15 Refer to Table 15-4. The monopolist will not produce

10 units or more under any circumstances.

Refer to Figure 15-5. A profit-maximizing monopoly will charge a price of

P2.

Refer to Figure 15-5. A profit-maximizing monopoly's total cost is equal to

P5 x Q3.

For a monopolist, when does marginal revenue exceed average revenue?

never

Which of the following are necessary characteristics of a monopoly? (i) The firm is the sole seller of its product. (ii) The firm's product does not have close substitutes. (iii) The firm generates a large economic profit. (iv) The firm is located in a small geographic market.

(i) and (ii) only

The marginal revenue curve for a monopoly firm starts at the same point on the vertical axis as the (i) average revenue curve. (ii) marginal cost curve. (iii) demand curve.

(i) and (iii) only

Economic welfare is generally measured by (i) profit. (ii) total surplus. (iii) the price consumers pay for the product.

(ii) only

Table 15-10The monopolist faces the following demand curve: Price Quantity $10 5 $9 10 $8 16 $7 23 $6 31 $5 45 $4 52 $3 60 Refer to Table 15-10. If the monopolist has total fixed costs of $40 and a constant marginal cost of $5, what is the profit-maximizing level of output?

16 units

Table 15-5A monopolist faces the following demand curve: Price Quantity $51 1 $47 2 $42 3 $36 4 $29 5 $21 6 $12 7 Refer to Table 15-5. The monopolist has total fixed costs of $60 and has a constant marginal cost of $15. What is the profit-maximizing level of production?

4 units

Which of the following statements is not correct?

Antitrust laws automatically prevent mergers between companies that produce similar products.

Bob's Butcher Shop is the only place within 100 miles that sells bison burgers. Assuming that Bob is maximizing his profit, which of the following statements is true?

The price of Bob's bison burgers will exceed Bob's marginal cost.

Patents, copyrights, and trademarks

are examples of government-created monopolies. are examples of barriers to entry. allow their owners to charge higher prices.

Natural monopolies differ from other forms of monopoly because they are

are generally not worried about competition eroding their monopoly position in the market.

For a firm to price discriminate,

it must have some market power.

Perfect price discrimination describes a situation in which the monopolist

knows the exact willingness to pay of each of its customers.

A monopoly chooses to supply the market with a quantity of a product that is determined by the intersection of the

marginal revenue and marginal cost curves.

A government-created monopoly arises when

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