ECON chapter 13

(Figure: Maximum Willingness to Pay) Refer to the figure. What is the maximum price that the consumer is willing to pay for 100 units?

-$100

(Figure: Regulated versus Unregulated Monopolist) Refer to the figure. Calculate the change in consumer surplus from an unregulated monopoly to a regulated monopoly.

-$2,800

(Figure: Regulated versus Unregulated Monopolist) Refer to the figure. Calculate the deadweight loss when this monopoly is unregulated.

-$400

(Figure: Regulated versus Unregulated Monopolist) Refer to the figure. Calculate consumer surplus when this monopoly is regulated.

-$6,400

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

-110

In which of the following scenarios will automobile prices be the lowest?

-A competitive automobile company buys its steel from a competitive steel producer.

What is the profit maximization condition for a monopolist?

-MR = MC

Which of the following statements is TRUE?

-Monopolies create incentives for additional research and development.

Which of the following is always TRUE for monopolies?

-P > MR

Which of the following represents the nature of a monopolist's deadweight loss?

-Some consumers are willing to pay more than the monopolist's marginal cost of production, but the monopolist does not produce these units.

(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.

When a single firm can supply the entire market at lower cost than two or more firms, we say that the industry is:

-a natural monopoly.

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

-def

The more inelastic the demand curve for a product is, the:

-higher is the monopolist's price markup.

Apple's iPod provides an example that market power may arise from:

-innovation.

The power to raise price above marginal cost without fear that other firms will enter the market is:

-market power.

In a monopoly market:

-the lure of above-normal profits may give a firm an incentive to develop new products and technologies.

When comparing a monopoly with a competitive industry, monopoly quantity:

-will be lower, and monopoly price will be higher, than that of a competitive firm.