Chapter #15 Quiz

Figure 15-5. Based upon the information shown, how many units will Bearclaws produce to maximize profits?

70

When regulators use a marginal-cost pricing strategy to regulate a natural monopoly, the regulated monopoly

will experience loss

Figure 15-5. The following graph depicts the market situation for a monopoly pastry shop called Bearclaws. Refer to Figure 15-5. Given that Bearclaws chooses the profit-maximizing price and quantity, what profit level will it obtain? WRONG

$280

Scenario 15-2. What is Vincent's total revenue on. typical day?

$2,170

15-1. What is the maximum profit that the monopolists can earn?

$20

Monopolies are socially inefficient because the price they charge is

above marginal cost

For a firm to price discriminate,

it must have some market power

Suppose most people regard emeralds, rubies, and sapphires as close substitutes for diamonds. Then DeBeers, a large diamond company, has

less market power than it would otherwise have

Figure 15-5. Based upon the information shown, what price will Bearclaws charge to maximize profits?

$14

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 summer

Which of the following is not an example of a barrier to entry?

An entrepreneur opens a popular new hair salon

Figure 15-8. What is the socially efficient price and quantity for this natural monopolist?

F and V

In order for antitrust laws to raise social welfare, the government must

be able to determine which mergers are desirable and which are not.

Price discrimination

can maximize profits if the seller can prevent the resale of goods between customers

A movie theater can increase its profits through price discrimination by charging a higher price to adults and a lower price to children if it

can prevent children from buying the lower-priced tickets and selling then to adults

If a monopolist is able to perfectly price discriminate,

consumer surplus and deadweight losses are transformed into monopoly profits.

Monopoly firms face

downward-sloping demand curves, so they can sell as much output as they desire at the market price

If a profit-maximizing monopolist faces a downward-sloping market demand curve, its

marginal revenue is less than the price of the product

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

price equals marginal cost

A natural monopoly occurs when

there are economies of scale over the relevant range of output