QUIZ #4 MONOPOLIES

(Figure: Maximum Willingness to Pay) Refer to the figure. What is the profit-maximizing quantity for this monopolist?

110

Figure: Monopoly 6) If the market in this figure is a competitive market, consumer surplus is given by area(s):

A + B + C

(Figure: Monopoly 6) If the market in this figure is a monopoly, the consumer surplus is area ______, and the deadweight loss is area ______.

A; C

Economies of scale are:

the advantages of large-scale production that reduce average cost as quantity increases.

If this figure represents the demand and cost curves for a firm with market power, what price should the firm charge to maximize profits?

$60

Which of the following is always TRUE for monopolies?

P > MR

(Figure: Maximum Willingness to Pay) Refer to the figure. What is the profit that the monopolist is earning?

There is not enough information to answer the question.

Refer to the figure. Deadweight loss caused by monopoly pricing is represented by the area:

def

To maximize, a monopolist will produce the level of output where:

marginal revenue is equal to marginal cost.

Generating electricity:

no longer requires a natural monopoly, but the transmission and distribution of electricity remains a natural monopoly.