micro ch 15
For a monopolist, when the output effect is greater than the price effect, marginal revenue is
positive
Antitrust laws have economic benefits that outweigh the costs if they
prevent mergers that would decrease competition and raise the costs of production.
A benefit of a monopoly is
greater creativity by authors who can copyright their novels.
Patents, copyrights, and trademarks
All of the above are correct.
Refer to Figure 15-19. If the monopoly firm perfectly price discriminates, then consumer surplus amounts to
$0
The supply curve for the monopolist
does not exist
2. When a certain monopoly sets its price at $8 it sells 64 units. When the monopoly sets its price at $10 it sells 60 units. The marginal revenue for the firm over this range is
$22
Refer to Figure 15-7. A profit-maximizing monopolist would earn total revenues of
$240
Refer to Table 15-21. If the monopolist can engage in perfect price discrimination, what is total profit at the profit-maximizing quantity?
$435
A monopolist can sell 300 units of output for $45 per unit. Alternatively, it can sell 301 units of output for $44.60 per unit. The marginal revenue of the 301st unit of output is
-$75.40.
Refer to Figure 15-7. In order to maximize profits, the monopolist should produce
12 units
The monopolist has fixed costs of $1,000 and has a constant marginal cost of $2 per unit. If the monopolist were able to perfectly price discriminate, how many units would it sell?
900
The market demand curve for a monopolist is typically
downward sloping.
Which of the following is not a characteristic of a monopoly?
free entry and exit
Suppose ABC Aluminum Inc. owns 80% of the world's bauxite, a mineral used in the production of aluminum. Which of the following reasons describes the fundamental barrier to entry for the aluminum industry?
monopoly resources
When a firm experiences continually declining average total costs,
society is better served by having one firm supply the product.
If a pharmaceutical company discovers a new drug and successfully patents it, patent law gives the firm
sole ownership of the right to sell the drug for a limited number of years.
Scenario 15-3 A monopoly firm maximizes its profit by producing Q = 500 units of output. At that level of output, its marginal revenue is $30, its average revenue is $60, and its average total cost is $34. Refer to Scenario 15-3. At Q = 500, the firm's marginal cost is
$30
A monopoly firm maximizes its profit by producing Q = 500 units of output. At that level of output, its marginal revenue is $30, its average revenue is $60, and its average total cost is $34. Refer to Scenario 15-3. At Q = 500, the firm's total revenue is
$30,000
Refer to Figure 15-19. If there are no fixed costs of production, monopoly profit without price discrimination equals
$3125
Consider a profit-maximizing monopoly pricing under the following conditions. The profit-maximizing price charged for goods produced is $12.The intersection of the marginal revenue and marginal cost curves occurs where output is 10 units and marginal cost is $6. The socially efficient level of production is 12 units. The demand curve and marginal cost curves are linear. What is the value of the deadweight loss created by the monopolist?
$6
Which of the following statements is correct for a monopolist? (i) The firm maximizes profits by equating marginal revenue with marginal cost. (ii) The firm maximizes profits by equating price with marginal cost. (iii) Demand equals marginal revenue. (iv) Average revenue equals price.
(i) and (iv) only
An industry is a natural monopoly when (i) the government assists the firm in maintaining the monopoly. (ii) a single firm owns a key resource. (iii) a single firm can supply a good or service to an entire market at a smaller cost than could two or more firms.
(iii) only
Monopolies are inefficient because they (i) eliminate barriers to entry. (ii) price their product at a level where marginal revenue exceeds marginal cost. (iii) restrict output below the socially efficient level of production.
(iii) only
The marginal revenue curve for a monopoly firm starts at the same point on the vertical axis as the (i) average revenue curve. (ii) marginal cost curve. (iii) demand curve.
(iii) only
How does a competitive market compare to a monopoly that engages in perfect price discrimination?
In both cases, total social welfare is the same.
Which of the following is an example of a barrier to entry?
Larry obtains a copyright for the new computer game that he invented.
The fundamental source of monopoly power is
barriers to entry.
Because natural monopolies have a declining average cost curve, regulating natural monopolies by setting price equal to marginal cost would
cause the monopolist to operate at a loss.
The reason to regulate utilities instead of using antitrust laws to promote competition is that a utility is usually a
natural monopoly.
4.For a monopolist, when does marginal revenue exceed average revenue?
never
When a local grocery store offers discount coupons in the Sunday paper it is most likely trying to
price discriminate.
The deadweight loss associated with a monopoly occurs because the monopolist
produces an output level less than the socially optimal level.
Which of the following governmental actions would eliminate some or all of the inefficiency that results from monopoly pricing? The government could
regulate the monopoly.
Price discrimination is the business practice of
selling the same good at different prices to different customers.