Chapter 12 microeconomics

Buyers Willingness-to-Pay Marginal Cost Jay $3 $1 Phillip $2 $1 Johnson $1.5 $1 Kylie ​$1.5 $1 Sofia $0.8 $1 Based on the information provided in the above chart answer the following question. A monopolist decides to sell its product at a​ profit-maximizing price of ​$3. The marginal cost of the product for the monopolist is ​$1. In order to restore social​ efficiency, the social planner chooses the​ monopolist's quantity and price. In this​ case, the social surplus increases by ​$_____. The​ monopolist's price and quantity chosen by the social planner will _____ profits for the monopolist and ______ the social surplus. A​ monopolist's decision to perfectly price discriminate will_________ profit and __________ the social surplus.

$2; lower, maximize ​maximize,maximize

Eliminating a monopoly A.increases market quantity. B.increases marginal cost. C.redistributes deadweight loss. D.reduces consumer surplus.

A.increases market quantity.

All of the following describe a monopoly market​ structure, except A.seller is a​ price-taker. B.good or service with no close substitutes. C.a single producer. D.a​ downward-sloping demand curve.

A.seller is a​ price-taker.

Which of the following is not a characteristic of​ monopoly? A.Market power. B.A single seller. C.Produces identical goods. D.Price-maker.

C.Produces identical goods.

Suppose the government grants an individual or company the exclusive right to intellectual propertyexclusive right to intellectual property. In this​ case, the government is granting a ___________________ Which of the following is not likely covered by a​ copyright? A. work of art B. A new drug. C. A movie script. D. A photograph.

copyright; B. A new drug.

When compared to​ competition, monopoly prices are ____________ and quantity produced is ___________ . The purpose of antitrust policy is to _______________ this situation.

higher, lower, reverse

Compared to a perfectly competitive​ market, the price in a monopoly market is _________ and quantity is ____________. If a monopolist loses its monopoly​ power, what happens to price and​ surplus? If the monopolist loses its monopoly​ power, price ______________​, consumer surplus _________________​, producer surplus _________________​, and social surplus _____________. Social surplus increases because​ ____________. A.consumers now capture all surplus. B.the marginal cost drops. C.demand increases. D.deadweight loss is eliminated.

higher,lower decreases,increases,decreases,increases D.deadweight loss is eliminated.

Show how the demand curve faced by a monopolist differs from the demand curve faced by a perfectly competitive firm. ​1.) Using the line drawing​ tool, draw the demand curve faced by a perfectly competitive firm. Label your curve ​'Upper D Subscript CompetitiveDCompetitive​.' ​2.) Using the line drawing​ tool, draw the demand curve faced by a monopolist. Label your curve ​'Upper D Subscript MonopolyDMonopoly​.' Carefully follow the instructions above and only draw the required objects.

https://quizlet.com/278677280/lesson-14-monopoly-and-strategic-pricing-flash-cards/ D monopoly going down D competitive horizontal

A monopoly has ____________ and ________________. Price is set _________________ marginal cost.

one seller many buyers greater than

A social planner would choose the same outcome as that which results in _____________________ equilibrium, because that outcome_________________ social surplus.

the perfectly competitive; maximizes

Data for Jones​ Pharmaceuticals, a pharmaceutical​ monopoly, is shown in the table below. Use the data to graph​ Jones's demand and marginal revenue curves. Quantity Price 0 $40 100 $30 200 $20 300 $10 400 $0 ​1.) Using the line drawing​ tool, depict the demand curve for Jones Pharmaceuticals. Label your curve​ 'D.' ​(Be sure your line passes through all the points in the table​.) ​2.) Using the line drawing​ tool, depict the marginal revenue curve for Jones Pharmaceuticals. Label your curve​ 'MR.' ​(Make sure your line touches both the​ x-axis and ​y-axis.​) Carefully follow the instructions above and only draw the required objects. Given the demand and marginal revenue curves from your​ graph, total revenue for Jones Pharmaceuticals is maximized when output is​ ____________. A.100. B.200. C.300. D.400.

40,400 demand 40,200 MR B.200.

If a profit maximizing monopolist sells 75 paintings at a price of ​$1,500 each, having bought them from various artists for a total cost of ​$82,500​, the monopolist has a profit of _______________.

75x1500=112500 112500-82500=300,000.00

Which of the following are properties of a​ monopoly? ​(Check all that apply​.) A.There are high barriers to entry. B.There is only one seller. C.Price-taker. D.There are a few close substitutes for the goods and services produced. E.Price-maker.

A.There are high barriers to entry. B.There is only one seller. E.Price-maker.

For a market to be characterized as a monopolya monopoly​, there must be​ ___________. A.a single seller that sets the price of a gooda single seller that sets the price of a good. B.identical productsidentical products. C.no barriers to entryno barriers to entry. D.all of the above.

A.a single seller that sets the price of a gooda single seller that sets the price of a good.

Network externalities and economies of scale both can contribute to the formation of a monopoly.​ However, they differ in that network externalities deal with A.increasing benefits and economies of scale deal with decreasing costs. B.decreasing costs and economies of scale deal with increasing costs. C.increasing costs and economies of scale deal with decreasing costs. D.decreasing costs and economies of scale deal with increasing benefits.

A.increasing benefits and economies of scale deal with decreasing costs.

A monopoly is selling workbooks to students in a college town and is currently maximizing profits by charging ​$70.0070.00 per book. The marginal cost of textbooks A.is less than ​$70 B.is greater than ​$70. C.equals ​$70. D.is less than marginal revenue.

A.is less than ​$70.

Which of the following equations calculates economic profits for a​ monopoly? A.Profits equals Upper P times Upper QProfits=P×Q. B.Profits equals left parenthesis Upper P minus ATC right parenthesis times Upper QProfits=(P−ATC)×Q. C.Profits equals Upper P plus ATC divided by Upper QProfits=P+ATC/Q. D.Profits equals ATC times Upper QProfits=ATC×Q. The graph on the right illustrates the demand ​(D​), marginal revenue ​(MR​), marginal cost ​(MC​), and average total cost ​(ATC​) curves for a monopoly. Use these curves to show a​ firm's profits. ​1.) Using the point drawing​ tool, place a point at the output and price combination that would maximize profits for this monopoly. Label your point​ 'A.' ​2.) Using the point drawing​ tool, place a point on the average total cost curve at the​ profit-maximizing output level. Label your point​ 'B.' ​3.) Using the rectangle drawing​ tool, depict the area that would represent the profit this monopoly is earning. Label your area​ 'Profit.' Carefully follow the instructions above and only draw the required objects.

B.Profits equals left parenthesis Upper P minus ATC right parenthesis times Upper QProfits=(P−ATC)×Q. A at 6 on demand B at 3.5 in ATC profit box created by this, see screen shot

According to the Copyright Act of​ 1790, a​ copyright's life was limited to 28​ years, including extensions.​ Today, copyrights are valid for the entire period of the​ author's life plus another 70 years. A copyright for a book that was published before 1923 is likely to have expired by​ now, but books published after 1923 are still under copyright protection. Research has shown​ that, of all the books that are in print​ today, a larger proportion were published before 1923. This is despite the fact that the number of books being published every year has been steadily increasing. What do you think could explain the fact that most of the books available today are from the period before​ 1923? A.A copyright is granted to an individual or firm by the federal government and comes with a maximum quantity that the government will allow the copyright holder to produce. B.The costs of the inputs used to make books has increased sharply over​ time, including paper and ink costs. C.A copyright gives the owner an exclusive right to a piece of intellectual​ property, thus allowing them to act as a monopoly. Monopolists typically reduce quantity supplied to drive up the price of the good that they produce. D.All of the above.

C.A copyright gives the owner an exclusive right to a piece of intellectual​ property, thus allowing them to act as a monopoly. Monopolists typically reduce quantity supplied to drive up the price of the good that they produce.

A significant difference between monopolies and competitive firms is that A.the competitive firm must drop its price to sell more while the monopolist can keep price constant. B.competitive firms control market​ supply, but monopolies do not. C.a​ monopoly's demand curve is the​ industry's demand​ curve, while the competitive​ firm's demand curve is perfectly elastic. D.low entry barriers exist for​ monopolies, but not for competitive firms.

C.a​ monopoly's demand curve is the​ industry's demand​ curve, while the competitive​ firm's demand curve is perfectly elastic

First degree price discrimination A.creates a greater loss of social surplus. B.reduces producer surplus by increasing quantity. C.eliminates deadweight loss by producing to where marginal cost equals price. D.increases consumer surplus by increasing quantity.

C.eliminates deadweight loss by producing to where marginal cost equals price.

The two types of market power that arise from barriers to entry are​ ____________. A.innate market power and natural market power. B.legal market power and competitive market power. C.legal market power and natural market power. D.leading market power and lagging market power.

C.legal market power and natural market power.

Identify the legal source of market power for each of the following​ examples: Example Source Richard carves​ sculptures, for which he is granted an exclusive right. ________________ Lily is granted an exclusive right to the poems written by her late father. _______________ Mr.​ D'Souza invented product A and is granted an exclusive right to manufacture and sell it. ________________ The exclusivity laws in the form of patents and copyrights make_______________better off and __________ worse off. Which of the following factors can be considered as a bright side to those types of​ laws? ​(Check all that apply.​) A.Such laws offer incentives to innovators. B.Such laws discourage the innovators from making expensive investments in research and development. C.Such laws do not provide permanent protection to innovators. D.Such laws never allow other producers to distribute protected goods.

Copyright Copyright Patent innovators consumers A.Such laws offer incentives to innovators. C.Such laws do not provide permanent protection to innovators.

he graph on the right illustrates a marginal cost ​(MC​) curve and marginal revenue ​(MR​) curve for a monopolist. If the firm produces at a quantity of 4040 ​units, then marginal revenue would be​ ____________ marginal​ cost, and this firm would​ ____________. A.less thanless than​; produce more to enhance profitsproduce more to enhance profits. B.less thanless than​; not change production levels. C.equal​ to; reduce output to enhance profitsreduce output to enhance profits. D.greater thangreater than​; produce more to enhance profits

D.greater thangreater than​; produce more to enhance profits

Suppose you are an​ "all-knowing" government planner. Your goal is to regulate a​ monopolist's price and quantity in order to maximize social welfare but still allow the monopolist to produce. To accomplish your​ goal, you would have the monopoly produce where​ ____________. ​(Assume costs are such that the firm would not incur a​ loss) A.demand is​ highest, and you would price the good at zero. B.marginal cost equals marginal​ revenue, and you would price the good at marginal cost. C.marginal cost equals marginal​ revenue, and you would price the good at demand. D.marginal cost equals​ demand, and you would price the good at marginal cost.

D.marginal cost equals​ demand, and you would price the good at marginal cost.

Total revenue for a monopolist is maximized A.only if the slope is positive. B.where marginal revenue and demand are equal. C.on the elastic portion of the demand curve. D.only if marginal revenue is zero.

D.only if marginal revenue is zero.

In recent​ years, some online firms have offered different consumers different prices for the same good. These firms use the​ consumer's IP address to find what city they are in and then charge a higher price to people in wealthier cities. This type of pricing behavior is​ ____________. A.​second-degree price discrimination. B.first-degree price discrimination. C.location discrimination. D.third-degree price discrimination. Consider the standard monopoly graph on the right that illustrates a​ monopoly's demand, marginal​ revenue, and marginal cost curves. If this monopoly is able to engage in perfect price​ discrimination, what area would be considered producer​ surplus? Using the triangle drawing​ tool, illustrate the area that would represent producer surplus if this monopoly was able to engage in perfect price discrimination. Label your area​ 'PS.' Carefully follow the instructions above and only draw the required object. Compared to a monopoly that does not price​ discriminate, a monopolist who engages in perfect price discrimination will produce ______ output and have _____deadweight

D.third-degree price discrimination. see image more, no

A monopolist stops increasing production when it reaches the point where _____________. When _______________​, the monopolist would decrease production. In the long run for a quantity where MC=​MR, the monopolist _________ profit. Consider the given market demand curve and the steps followed by a monopolist in making production and pricing decisions. Starting at MRequals=MC draw two arrows that show the path to the price charged by a monopolist. Using the Arrow drawing​ tool, draw the two arrows in the graph that a monopolist would follow to arrive at the​ profit-maximizing price. Carefully follow the instructions above and only draw the required objects with the correct arrowheads. ​Therefore, the​ profit-maximizing price of a monopolist for the product is ​$____. In the above​ scenario, suppose the average total cost​ (ATC) at the profit maximizing quantity for the monopolist is​ $2.05 ​Therefore, in this case the profit earned by the monopolist is _______.

MC = MR MC > MR can earn see image for graph(https://www.chegg.com/homework-help/questions-and-answers/monopolist-stops-increasing-production-reaches-point-mc-m-graph-mc-mr-monopolist-would-dec-q36555427) $4 ($4-2.05)x400=780

If Nike developed a particularly strong weave to the fabric used in their running​ shoes, they could petition the government for a _______________. in order to protect their profits. If a competitor tried to promote their brand of running shoes by using​ Nike's theme song in their​ commercial, Nike could sue for ____________infringement.

patent copyright

The graph on the right shows the​ demand, marginal​ revenue, marginal​ cost, and average total cost curves for a monopolist. Show the impact if this firm was regulated to charge the socially optimal price. On graph​ 1: ​1.) Using the point drawing​ tool, place a point at the output and price combination that would result from regulation if the monopoly was required to charge the socially optimal price. ​2.) Using the rectangle drawing​ tool, indicate the profit or loss that would result from this monopoly charging the socially optimal price. Label your area​ 'Profit' or​ 'Loss.' Carefully follow the instructions above and only draw the required objects.

see image

Assume the graph on the right represents the marginal cost and demand curves for a perfectly competitive industry. What area represents consumer​ surplus? ​1.) Using the point drawing​ tool, place a point at the output and price combination that would exist in equilibrium for a perfectly competitive industry. ​2.) Using the triangle drawing​ tool, depict the area that represents consumer surplus in this competitive industry. Label your area​ 'CS.' Carefully follow the instructions above and only draw the required objects. Consumer surplus is ______​(Round your response to two decimal places.​) Now assume your graph represents the marginal cost and demand curves for a monopolist. Illustrate the marginal revenue curve and equilibrium price and output levels. ​1.) Using the line drawing​ tool, illustrate the marginal revenue curve that would exist if this were a monopoly producer. Label your curve​ 'MR.' ​2.) Using the point drawing​ tool, place a point at the output and price combination that would exist if the monopoly produced at its​ profit-maximizing level. Carefully follow the instructions above and only draw the required objects. Consumer surplus is 180180. ​(Round your response to two decimal places.​) Producer surplus is 360360. ​(Round your response to two decimal places.​) Deadweight loss is 180180. ​(Round your response to two decimal places.​)

see image part 1 CS= 1/2(12x120)=720 part 2 Consumer surplus is= 1/2(6x60)= 180. Producer surplus is=60x6= 360 Deadweight loss is= 1/2(6x60)= 180