Midterm 3 part 2

MC^ refer to the scenario above. If the market is perfectly competitive, the equilibrium price of the hat is______ a. $2 b. $10 c. $6 d. %12

b. $10

MC^ refer to the scenario above. Suppose the equilibrium price in this market is $10. What is the amount of social surplus in this market? a. $30 b. $44 c. $15 d. $39

b. $44

MC^ refer to the figure above. What is the maximizing profit that the firm can make? a. $30 b. $60 c. $90 d. $180

b. $60

MC^ refer to the figure above. At what level of output does the firm maximize profits? a. 30 units b. 0 units c. 20 units d. 10 units

a. 30 units

When regulators use a marginal-cost pricing strategy to regulate a natural monopoly, the regulated monopoly a. will experience a loss b. all of the above are correct c. will experience a price below average total cost d. may rely on a government subsidy to remain in business

b. all of the above are correct

For a monopoly, the socially efficient level of output occurs where a. marginal revenue equals marginal cost b. average revenue equals marginal cost c. marginal revenue equals average total cost d. average revenue equals average total cost

b. average revenue equals marginal cost

When a monopoly increases its output and sales, a. both the output effect and the price effect work to increase total revenue b. the output effect works to increase total revenue, and the price effect works to decrease total revenue c. the output effect works to decrease total revenue, and the price effect works to increase total revenue d. both the output effect and price effect work to decrease total revenue

b. the output effect works to increase total revenue, and the price effect works to decrease total revenue

Price discrimination is a rational strategy for the profit maximizing monopolist when a. the monopolist finds itself able to produce only limited quantities of output b. there is no opportunity for arbitrage across market segments c. consumers are unable to be segmented into identifiable markets d. the monopolist wishes to increase the deadweight loss that results from profit maximizing behavior

b. there is no opportunity for arbitrage across market segments

MC^ refer to the figure above. What is the total cost of the trim when it produces the profit maximizing level of output? a. $60 b. $240 c. $180 d. $120

c. $180

MC^ refer to the figure above. What is the revenue of the firm when it sells the profit maximizing level of output> a. $180 b. $40 c. $240 d. $160

c. $240

MC^ refer to the scenario above. Suppose the equilibrium price in this market is $10. What is the amount of producer surplus in this market? a. $6 b. $10 c. $29 d. $15

c. $29

Which of the following strategies is not an effective strategy to reduce monopoly inefficiency? a. antitrust laws b. price discrimination c. breaking up a natural monopoly into more than one firm d. doing nothing

c. breaking up a natural monopoly into more than one firm

The practice of selling the same goods to different customers at different prices, but with the same marginal cost, is known as a. monopoly pricing b. arbitrage c. price discrimination d. price segregation

c. price discrimination

MC^ refer to the figure above. Which of the following statements is true? a. the firm maximizes profits if it produces 10 units of the good b. if the market price is $10, the firm will suffer losses c. the firm makes maximum profits if it produces 30 units d. if the market price is $2, the firm will make profits

c. the firm makes maximum profits if it produces 30 units

A monopolist can sell 200 units of output for $36 per unit. Alternatively, it can sell 202 units of output for $35.80 per unit. The marginal revenue of the 201st unit of output is a. $35.80 b. $4.20 c. $-0.20 d. $-4.20

d. $-4.20

MC^ refers to the scenario above. Suppose that equilibrium price in this market is $10. What is the amount of consumer surplus in this market? a. $6 b. $12 c. $10 d. $15

d. $15