Ch. 13 - Monopoly Competition
(Figure: Maximum What is the Willingness to Pay) Refer to the figure. What is the profit-maximizing quantity for this monopolist? a. 110 b. 100 c. 75 d. 125
110 (MR=MC)
Price discrimination can be defined as: a. selling the same product in two different markets. b. exporting goods to foreign countries. c. selling different products to the same consumers in the same market. d. selling the same product at two different prices in two different markets.
selling the same product at two different prices in two different markets.
What is the profit or loss for this monopoly? a. $250,000 b. $100,000 c. -$200,000 d. $10,000
$100,000
The more inelastic the demand curve for a product is, the: a. smaller is the monopolist's price markup. b. more responsive buyers are to a change in the price. c. Higher is the monopolist's price markup. d. less chance monopolists will have to earn above-normal profits.
Higher is the monopolist's price markup.
Which of the following statements is TRUE? a. Monopolies create incentives for additional research and development. b. Consumers typically lose less than producers gain in monopoly markets. c. Monopolies are always inefficient since they create higher prices for consumers. d. Monopolies decrease consumer surplus but increase total surplus in an economy.
Monopolies create incentives for additional research and development.
Refer to the figure. Deadweight loss caused by monopoly pricing is represented by the area: a. bedf b. acdf c. def d. abd
def
Which of the following is NOT a reason that monopolies arise? a. economies of scale b. excess competition c. control of natural resources d. patents
excess competition (a, c & d are the barriers to entry)
When a single firm can supply the entire market at lower cost than two or more firms, we say that the industry is: a. a bilateral monopoly. b. natural monopoly c. protit maximizing. d. a natural competitor.
natural monopoly
When comparing a monopoly with a competitive industry, monopoly quantity: a. and monopoly price will be lower than that of a competitive firm. b. will be lower, and monopoly price will be higher, then that of a competitive firm. c. will be higher, and monopoly price will be lower, than that of a competitive firm d. and monopoly price will be higher than that of a competitive firm
will be lower, and monopoly price will be higher, than that of a competitive firm. (Pm, Qm vs. MC pricing)
(Figure: Monopoly Profits) Refer to the figure. The monopolist earns a profit of: a. $540 b. $420 c. $480 d. $630.
π = (P-ATC)•Q π = (16.50-6)•40 π = $420