Imperfect Competition Review Questions

Refer to Table 15-1. If the monopolist sells 8 units of its product, how much total revenue will it receive from the sale?

$112

Refer to Table 15-3. To maximize profit, the monopolist sets price at

$15

4. When a certain monopoly sets its price at $8 it sells 64 units. When the monopoly sets its price at $10 it sells 60 units. The marginal revenue for the firm over this range is

$22

Refer to Table 15-3. The marginal revenue of the 2nd unit is

$25

Refer to Table 15-3. The maximum profit this monopolist can earn is

$28

Refer to Table 15-1. What is the marginal revenue for the monopolist for the sixth unit sold?

$3

Refer to Table 15-3. The marginal cost of the 4th unit is (MC=change in TC/Change in Q)

$7

2. If the distribution of water is a natural monopoly, then (i) multiple firms would likely each have to pay large fixed costs to develop their own network of pipes. (ii) allowing for competition among different firms in the water-distribution industry is efficient. (iii) a single firm can serve the market at the lowest possible average total cost.

(i) and (iii) only

3. A monopolist can sell 300 units of output for $45 per unit. Alternatively, it can sell 301 units of output for $44.60 per unit. The marginal revenue of the 301st unit of output is (MR=PxQ)

-$75.40

Refer to Table 15-1. If the monopolist wants to maximize its revenue, how many units of its product should it sell?

6

Refer to Figure 15-4. The marginal revenue curve for a monopoly firm is depicted by curve

A

Refer to Figure 15-4. The demand curve for a monopoly firm is depicted by curve

B

Refer to Figure 15-4. The average total cost curve for a monopoly firm is depicted by curve

C

Refer to Figure 15-4. The marginal cost curve for a monopoly firm is depicted by curve

D

Refer to Figure 15-4. Profit will be maximized by charging a price equal to

P5

Refer to Figure 15-4. A profit-maximizing monopoly's total revenue is equal to

P5xQ3

Refer to Figure 16-5. Which of the graphs depicts a short-run equilibrium that will not encourage either the entry or exit of firms in a monopolistically competitive industry?

Panel A

Refer to Figure 15-4. If the monopoly firm wants to maximize its profit, it should operate at a level of output equal to

Q3

5. If the monopolist's linear demand curve intersects the quantity axis at Q = 30, then the monopolist's marginal Revenue will be equal to zero at

Q=15

Refer to Table 15-1. Assume this monopolist's marginal cost is constant at $12. What quantity of output (Q) will it produce and what price (P) will it charge?

Q=4 P=$26

Refer to Figure 16-5. Which of the graphs depicts a short-run equilibrium that will encourage the entry of other firms into a monopolistically competitive industry?

TBA

Refer to Figure 15-4. If the monopoly firm is currently producing Q3 units of output, then a decrease in output will necessarily cause profit to

decrease

Refer to Figure 16-5. Panel a shows a profit-maximizing monopolistically competitive firm that is

earning 0 economic profit

Refer to Figure 15-4. If the monopoly firm is currently producing Q4 units of output, then a decrease in output will necessarily cause profit to

increase as long as the new level of output is at least Q2

Refer to Figure 16-5. Panel b is consistent with a firm in a monopolistically competitive market that is

not in long-run equilibrium

Refer to Figure 16-5. Which of the graphs depicts a short-run equilibrium that will encourage the exit of some firms from a monopolistically competitive industry?

panel B

Refer to Figure 16-5. Which of the panels depicts a firm in a monopolistically competitive market earning positive economic profits?

panel C

Refer to Figure 16-5. Which of the panels shown could illustrate the short-run situation for a monopolistically competitive firm?

panel a, b, and c

6. If a monopolist's marginal costs increase by $1 for all levels of output, then the monopoly price will

rise by more than $1

1. Refer to Figure 15-2. Which of the following reasons describes the fundamental barrier to entry for the monopoly in the figure?

the production process