Monopoly

If a monopolist increases quantity by one unit, but sells the increased output at a slightly lower price: marginal revenue is affected by adding one additional unit sold at the new price. because of higher output the marginal revenue curve is above the demand curve. the marginal revenue of selling a unit is more than the price of the unit. all the previous units, which used to sell at a higher price, now sell for more.

marginal revenue is affected by adding one additional unit sold at the new price.

When the regulator sets a price that a firm cannot exceed over the next few years, the regulator is enforcing: deregulation. regulatory capture rules. price cap regulation. costplus regulation.

price cap regulation.

Which of the following are barriers to entry that are directly enforced by government? A permit required to conduct business operations. A well-respected brand name built up over many years. An established reputation for slashing prices in response to new entry.

A permit required to conduct business operations.

Which of the following are barriers to entry that are directly enforced by government? An established reputation for slashing prices in response to new entry. A well-respected brand name built up over many years. A permit required to conduct business operations.

A permit required to conduct business operations.

If a firm holds a pure monopoly in the market and is able to sell 5 units of output at $4.00 per unit and 6 units of output at $3,90 per unit, it will produce and sell the sixth unit if its marginal cost is: $3.90 or less. $3.50 or less. $3.40 or less. $4.00 or less.

$3.40 or less.

Suppose demand for a monopoly's product falls so that it's profit-maximizing price is below average variable cost. How much output should the firm supply? Hint: Draw the graph. It should shut down and produce no output. It should increase output. It should decrease output.

It should shut down and produce no output.

If Congress reduced the period of patent protection from 20 years to 10 years, what would likely happen to the amount of private research and development? It would make innovation more lucrative, so the amount of research and development would likely increase. It would make innovation less lucrative, so the amount of research and development would likely decline.​ It would have no impact on the amount of research and development.

It would make innovation less lucrative, so the amount of research and development would likely decline.​

If a monopolist increases quantity by one unit, but sells the increased output at a slightly lower price: The marginal revenue of selling is more than the price of the unit. Because of highest output the marginal revenue curve is above the demand curve. All the previous units, which used to sell at a higher price, now sell for more. Marginal revenue is affected by adding one additional unit sold at the new price.

Marginal revenue is affected by adding one additional unit sold at the new price.

Following the assumption that firms maximize profits, how will the price and output policy of an unregulated monopolist compare with ideal market efficiency? Output will be too small and its price too high. Output will be too small and its price too low. Output will be too large and its price too low. Output will be too large and its price too high.

Output will be too small and its price too high.

Why is a monopoly allocatively inefficient? Because price is greater than marginal cost at the profit-maximizing level of output. Because price is equal to marginal cost. Because price is less than marginal cost.

Because price is greater than marginal cost at the profit-maximizing level of output.

If two companies are seeking regulatory approval to merge their respective businesses, which of the following will most likely be the focus of the arguments that they will present in favor of the merger? Consumers can purchase better quality goods or services at a lower price. The newly created firm is able to take advantage of economies of scale. The newly created firm will benefit consumers by operating more efficiently.

Consumers can purchase better quality goods or services at a lower price. The newly created firm is able to take advantage of economies of scale. The newly created firm will benefit consumers by operating more efficiently.

Price discrimination occurs when a: Monopoly enters a market with low income customers. Firm charges different price to different customers based on their willingness to pay. Firm is able to conceal its pricing policies.

Firm charges different price to different customers based on their willingness to pay.

If an industry is perfectly competitive or monopolistically competitive, then the government has relatively little reason for concern about: The extent of competition Taking advantage of economies of scale Regulatory recapture New ways of pleasing customers

The extent of competition

Select all the following examples that are considered monopolies: Airlines US postal service Electric utility companies

US postal service Electric utility companies

Regulations that permit a regulated firm to cover its costs and to make a normal level of profit are commonly referred to as: price cap regulations. profit regulation. regulatory capture. costplus regulation.

costplus regulation.

Price discrimination occurs when a: firm is able to conceal its pricing policies. firm charges different prices to different customers based on their willingness to pay. monopoly enters a market with low income customers.

firm charges different prices to different customers based on their willingness to pay.