Hacker- Unit 6
Which of the following is necessarily true of the profit maximizing equilibrium of s monopolist who sets a single price?
Price > marginal cost
Which of the following statements is true for a monopolist at the profit maximizing output level?
Price exceeds marginal revenue
A monopoly is different from a perfectly competitive firm in that a monopoly
has a marginal revenue curve that lies below its demand curve
Price discrimination occurs when
Differences in a product's price do not reflect differences in costs of production
If a monopoly is required to set quantity and price where demand equals marginal cost
It might require the payment of a subsidy to the firm
Generally monopolies are considered inefficient because they
Lead to an underallocation of resources in the affected market
A single price monopolist's marginal revenue is
Less than its price
The profit-maximizing output level produced by an unregulated monopoly is
Less than the socially optimal level, since the price paid by consumers exceeds the firm's marginal costs
In a competitive industry, equilibrium is when
Marginal Cost equals demand
An industry of 100 small firms, and the largest firm accounts for only two percent of sales. Brand names are considered a signal if quality. The industry described is best classified as
Oligopolistic
In a __________, it is sometimes assumed that the rival firms will match price decreases but not match price increased
Oligopoly
Interdependence among firms is a characteristic primarily associated with
Oligopoly
If a perfectly competitive industry were monopolized without any changes in cost conditions, the price and quantity produced would change in which of the following ways?
Price increases, quantity decreases
Assume that a profit-maximizing monopoly is charging a single price. If the monopoly can price discriminate and charge each consumer what j or she is will to pay, which of the following will occur?
The quantity of output produced will increase.
If the only two firms in an industry successfully collide to maximize their joint profit, the price for the product will be
Above the marginal cost of production
Monopolies are inefficient compared to perfectly competitive firms because monopolies
Charge a price greater than marginal cost
In the long run, a monopolistically competitive form is allocatively inefficient because the firm will
Charge a price higher than marginal cost
Which of the following best explains why it is difficult to maintain lasting collusive agreements?
Each firm realizes that its profits would increase if it were the only firm o violate the collusive agreement by increasing its production slightly
Which of the following statements is true for both monopolistically completive firms and a perfectly competitive firm in long-run, profit-maximizing equilibrium.
Economic profits equal zero, and marginal revenue equals marginal cost
A profit maximizing monopolist selects its output level in the
Elastic region of the demand curve
Which of the following best states the economic rationale for antitrust legislation?
A monopolist produces too little of the good, charging consumers a price that exceeds marginal cost of production
Assume that a monopolist is producing in the inelastic portion of the demand curve. Which of the following if the monopolist decreases its price?
Both total revenue and profits will decrease
Suppose the monopolistically competitive firm is producing 0M units of output. To maximize profits, it should do which if the following to output and price?
Decrease output and increase price
if a single firm can produce and supply an entire market at a lower unit cost than many small firms can, the long-run average total cost must be
Decreasing as the firm's output increases
Which of the following is true if a monopolist's marginal revenue is negative at the current level of output?
Demand for its product is price inelastic
Which of the following is true of a monopolistically completive firm in king run equilibrium?
Marginal revenue is equal to marginal cost, and price is equal to average total cost
A monopolist produces two unrelated goods, X and Y. The demand for X I'd currently price elastic and the demand for Y is currently price inelastic. To increase its total revenue, the firm should change the price of X and Y in which of the following ways?
Price of X decreases, Price of Y increases
monopolistically competitive firms are inefficient because they
Produce a lower level of output at a higher average cost than do perfectly competitive firms
Compared with firms in a perfectly competitive industry, firms in a monopolistically competitive industry are inefficient because they
Restrict their output level to maximize profits
Which of the following statements is true for perfectly competitive firms but not true for a monopoly?
The firm cannot affect the market price for its good
One justification for government regulation of a monopoly is that the unregulated monopoly
charges a price higher than a competitive market price
Which of the following is NOT a characteristic of monopolistically competitive markets?
long-run economic profits
