Micro Chapter 12 Monopolies
Refer to the diagram. If this industry is purely monopolistic, the profit-maximizing price and quantity will be
P3 and Q3
Refer to the diagrams. Diagram (A) represents
equilibrium price and quantity in a purely competitive industry.
The nondiscriminating monopolist's demand curve
is less elastic than a purely competitive firm's demand curve
In the short run, a monopolist's economic profits
may be positive or negative depending on market demand and cost conditions
Refer to the diagrams. Firm A is a
pure competitor and Firm B is a pure monopoly
If a nondiscriminating imperfectly competitive firm is selling its 100th unit of output for $35, its marginal revenue
will be less than $35
A nondiscriminating profit-maximizing monopolist
will never produce in the output range where demand is inelastic
1 100 100 100.00 30 2 90 80 63.00 26 3 80 60 52.67 32 ...... 10 10 -80 67.60 130 Refer to the data for a nondiscriminating monopolist. At its profit-maximizing output, this firm's total costs will be
$198
1 100 100 100.00 30 2 90 80 63.00 26 3 80 60 52.67 32 ...... 10 10 -80 67.60 130 Refer to the data. At its profit-maximizing output, this firm's total revenue will be
$280
1 100 100 100.00 30 2 90 80 63.00 26 3 80 60 52.67 32 ...... 10 10 -80 67.60 130 Refer to the data for a nondiscriminating monopolist. At its profit-maximizing output, this firm's price will exceed its marginal cost by ____ and its average total cost by ____
$30; $20.50
1 100 100 100.00 30 2 90 80 63.00 26 3 80 60 52.67 32 ...... 10 10 -80 67.60 130 Refer to the data for a nondiscriminating monopolist. At its profit-maximizing output, this firm's total profit will be
$82
1 100 100 100.00 30 2 90 80 63.00 26 3 80 60 52.67 32 ...... 10 10 -80 67.60 130 Refer to the data for a nondiscriminating monopolist. This firm will maximize its profit by producing
4 units
Which of the following is correct?
A purely competitive firm is a "price taker," while a monopolist is a "price maker"
Which of the following is a characteristic of pure monopoly?
Barriers to entry
What do economies of scale, the ownership of essential raw materials, and patents have in common?
They are all barriers to entry
Which of the following is not a barrier to entry?
X-inefficiency
Pure monopoly refers to
a single firm producing a product for which there are no close substitutes
Barriers to entering an industry
are the basis for monopoly
A single-price pure monopoly is economically inefficient
because it produces short of minimum average total cost and price is greater than marginal cost
The marginal revenue curve for a monopolist
becomes negative when output increases beyond some particular level
Refer to the diagram for a pure monopolist. Monopoly price will be
c.
Refer to the diagram for a pure monopolist. Monopoly profit
cannot be determined from the information given
1 100 100 100.00 30 2 90 80 63.00 26 3 80 60 52.67 32 ...... 10 10 -80 67.60 130 Refer to the data for a nondiscriminating monopolist. At its profit-maximizing output, this firm will be operating in the
elastic portion of its demand curve
Refer to the diagram for a pure monopolist. Monopoly output will be
f.
Refer to the diagrams. In diagram (B) the profit-maximizing quantity is
g and the profit-maximizing price is d
The demand curve faced by a pure monopolist
is less elastic than that faced by a single purely competitive firm
The nondiscriminating pure monopolist's demand curve
is the industry demand curve
A natural monopoly occurs when
long-run average costs decline continuously through the range of demand
For a pure monopolist the relationship between total revenue and marginal revenue is such that
marginal revenue is positive when total revenue is increasing, but marginal revenue becomes negative when total revenue is decreasing
At its profit-maximizing output, a pure nondiscriminating monopolist achieves
neither productive efficiency nor allocative efficiency
Pure monopolists may obtain economic profits in the long run because
of barriers to entry
Comparing a pure monopoly and a purely competitive firm with identical costs, we would find in long-run equilibrium that the pure monopolist's
price and average total cost would be higher, but output would be lower
The profit-maximizing output of a pure monopoly is not socially optimal because in equilibrium
price exceeds marginal cost
Because the monopolist's demand curve is downsloping
price must be lowered to sell more output