microecon ch15 (final)

Refer to Table 15-7. What is the average revenue when Sally sells 7 pairs of shoes?

$100

Refer to Table 15-9. At the profit-maximizing price, how much profit will the monopoly earn?

$14

Refer to Table 15-8. At what price will the monopolist maximize his profit?

$18

Refer to Figure 15-7. In order to maximize profits, the monopolist should charge a price of

$20.

Refer to Table 15-7. What is the total variable cost of production when Sally produces six pairs of shoes?

$295

Refer to Scenario 15-3. At Q = 500, the firm's marginal cost is

$30.

A monopoly firm can sell 150 units of output for $10 per unit. Alternatively, it can sell 151 units of output for $9.98 per unit. The marginal revenue of the 151st unit of output is

$6.98.

Refer to Table 15-10. If the monopolist has total fixed costs of $40 and a constant marginal cost of $5, how much profit can the firm earn at the profit-maximizing level of output?

$8

Refer to Scenario 15-7. If Black Box Cable TV is able to price discriminate, what would be the maximum amount of profit it could generate?

$850,000

Refer to Figure 15-3. What area measures the monopolist's profit?

(B-G)*K

Refer to Scenario 15-1. Which of the following statements is most likely to be true? (i)New entrants to the market know they will have a smaller market share than Reading's currently has. (ii) Reading's is a natural monopoly. (iii) Reading's is most likely experiencing increasing average total cost.

(i) and (ii) only

Which of the following statements is (are) true of a monopoly? (i)A monopoly has the ability to set the price of its product at whatever level it desires. (ii) A monopoly's total revenue will always increase when it increases the price of its product. (iii) The more a monopoly increases output, the higher the profits.

(i) only

Refer to Table 15-19. If a monopolist faces a constant marginal cost of $9, how much output should the firm produce?

3 units

Refer to Table 15-20. If a monopolist faces a constant marginal cost of $5, how much output should the firm produce in order to maximize profit?

4 units

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

A soybean farmer is the first in her county to use a new brand of fertilizer.

Because monopoly firms do not have to compete with other firms, the outcome in a market with a monopoly is often

All of the above are correct.

A monopolist maximizes profits by

Both a and b are correct.

Refer to Figure 15-17. Which of the following areas represents the deadweight loss from this profit-maximizing monopolist?

EFG

Which of the following statements is correct?

If the monopolist's marginal revenue is greater than its marginal cost, the monopolist can increase profit by selling more units at a lower price per unit.

Refer to Figure 15-10. Which area represents the deadweight loss from monopoly?

J+H

Refer to Figure 15-3. How much output will the monopolist produce?

K

For a profit-maximizing monopolist,

P > MR and MR = MC.

Refer to Figure 15-3. Which of the following statements is correct?

Panel B represents the typical demand curve for a perfectly competitive firm, and Panel A represents the typical demand curve for a monopoly.

The first major piece of antitrust legislation was the

Sherman Act.

Suppose when a monopolist produces 50 units its average revenue is $8 per unit, its marginal revenue is $4 per unit, its marginal cost is $4 per unit, and its average total cost is $3 per unit. What can we conclude about this monopolist?

The monopolist is currently maximizing profits, and its total profits are $250.

Which of the following statements comparing monopoly with competition is correct?

With perfect price discrimination, the total surplus under monopoly can be the same as under competition.

Which of the following is a characteristic of a monopoly?

a product without close substitutes

For a monopoly,

average revenue exceeds marginal revenue.

The fundamental source of monopoly power is

barriers to entry.

Marginal revenue for a monopolist is computed as

change in total revenue per one unit increase in quantity sold.

Splitting up a monopoly is often justified on the grounds that

competition is inherently efficient.

When a firm operates under conditions of monopoly, its price is

constrained by demand.

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 15-1. The shape of the average total cost curve in the figure suggests an opportunity for a profit-maximizing monopolist to take advantage of

economies of scale.

With perfect price discrimination the monopoly

eliminates deadweight loss.

Encouraging firms to invest in research and development and individuals to engage in creative endeavors such as writing novels is one justification for

government-created monopolies.

A monopoly is an inefficient way to produce a product because

it produces a smaller level of output than would be produced in a competitive market.

One difference between a perfectly competitive firm and a monopoly is that a perfectly competitive firm produces where

marginal cost equals price, while a monopolist produces where price exceeds marginal cost.

For a monopoly firm,

price always exceeds marginal revenue.

When a local grocery store offers discount coupons in the Sunday paper it is most likely trying to

price discriminate.

The laws governing patents and copyrights

promote monopolies.

Price discrimination is the business practice of

selling the same good at different prices to different customers.

When the government creates a monopoly, the social loss may include

the cost of lawyers and lobbyists hired to convince lawmakers to continue the monopoly.

A natural monopoly occurs when

there are economies of scale over the relevant range of output.