Chapter 16

Which of the following would be most likely to have monopoly power?

A local cable TV provider

Which of the following is not an example of price discrimination by a firm?

A natural gas company charging all customers a higher rate in the winter than in the summer

Which of the following is not one of the ways that antitrust laws promote competition?

Antitrust laws allow the government to shut down a firm if the government believes the firm has monopoly power.

Refer to Figure 16-2. The demand curve for a monopoly firm is depicted by curve

B.

Refer to Figure 16-4. What price will the monopolist charge in order to maximize profit?

K

Refer to Figure 16-2. A profit-maximizing monopoly's total revenue is equal to

P5 × Q3

Refer to Figure 16-6. What is the monopoly price and quantity?

Price = A; quantity = X

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

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

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

U.S. Postal Service

Which of the following statements is true?

When a monopoly firm sells an additional unit of output, its revenue increases by an amount less than the price.

The fundamental source of monopoly power is

barriers to entry.

When a monopolist increases the amount of output that it produces and sells, average revenue

decreases, and marginal revenue decreases.

Monopoly firms face

downward-sloping demand curves, so they can sell only the specific price-quantity combinations that lie on the demand curve.

A monopolist's profits with price discrimination will be

higher than if the firm charged just one price because the firm will capture more consumer surplus.

Refer to Figure 16-2. If the monopoly firm is currently producing Q4 units of output, then a decrease in output will necessarily cause profit to

increase if the output is between Q3 and Q4

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

lower its price.

A perfectly price-discriminating monopolist is able to

maximize profit and produce a socially optimal level of output.

Antitrust laws have economic benefits that outweigh the costs if they

prevent mergers that would decrease competition and raise the costs of production.

For a monopoly, the socially efficient level of output occurs where

price equals marginal cost.

Refer to Scenario 16-1. At Q = 500, the firm's total revenue is

. $30,000.