CHP15 MONOPOLIES MULTIPLE CHOICE

Which of the following statements is (are) true of a monopoly?

A monopoly has the ability to set the price of its product at whatever level it desires

Let P = price; MR = marginal revenue; and MC = marginal cost. For a profit-maximizing monopolist,

P > MR = MC.

The practice of selling the same goods to different customers at different prices, but with the same marginal cost, is known as

arbitrage.

The De Beers diamond monopoly is a classic example of a monopoly thaT

arises from the ownership of a key resource

. For a typical natural monopoly, average total cost is

falling and marginal cost is below average total cost.

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

lower its price.

A government-created monopoly arises when

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

The key difference between a competitive firm and a monopoly firm is the ability to select?

the price of its output.

Many movie theaters allow discount tickets to be sold to senior citizens because

the theaters are profit maximizers.

A monopoly firm can sell 150 units of output for $12.00 per unit. Alternatively, it can sell 151 units of output for $11.95 per unit. The marginal revenue of the 151st unit of output is

$4.45.

Which of the following is an example of a barrier to entry?

-A key resource is owned by a single firm. (ii) The costs of production make a single producer more efficient than a large number of producers. (iii) The government has given the existing monopoly the exclusive right to produce the good.

Discount coupons have the ability to help a grocery store

-price discriminate. -target its customers based on their individual willingness to pay. -maximize its profit.

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

-will experience a loss. b. --will experience a price below average total cost. --may rely on a government subsidy to remain in business.

The socially efficient level of production occurs where the marginal cost curve intersects which of the following curves?

. demand

The legislation passed by Congress in 1890 to reduce the market power of large and powerful "trusts" is called the

Clayton Act.

Angelo is a wholesale meatball distributor. He sells his meatballs to all the finest Italian restaurants in town. Nobody can make meatballs like Angelo. As a result, his is the only business in town that sells meatballs

Meatball prices will exceed marginal cost

Monopoly pricing prevents some mutually beneficial trades from taking place. These unrealized mutually beneficial trades are

a deadweight loss to society.

A monopoly's marginal cost will

be less than the price per unit of its product.

The monopolist's profit-maximizing quantity of output is determined by the intersection of which of the following two curves?

marginal cost and marginal revenue

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

marginal revenue is less than the price of the product.

When a natural monopoly exists, it is

never cost effective for two or more private firms to produce the product.

Price discrimination requires the firm to

separate customers according to their willingness to pay.