Monopolies

charge a price that is higher than marginal cost

Monopolies use their market power to

P = $16.50; Q = 40

Refer to the figure. What is the monopolist's optimal price and output level? (Note: Average Cost=ATC)

10,5

Suppose marginal cost is constant at $10 per unit. The monopolist's patent expires. If the market is now a Perfectly Competitive Market, what will be the new equilibrium price and quantity?

3 units

Suppose marginal cost is constant at $8 per unit. The monopolist's profit-maximizing level of output is (find the output level where MC<=MR)

$22

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

John Jr. owns the best seafood restaurant in a popular resort area. He charges high prices because the quality of the food is so good.

Which of the following is not an example of a barrier to entry? a. Caroline owns the patent for a new running shoe. She receives payments from the company who manufactures the shoes. b.John Jr. owns the best seafood restaurant in a popular resort area. He charges high prices because the quality of the food is so good. c.John owns the only parcel of lakeside property with a beach that is safe for swimming. He charges admission to neighbors who want to use the beach. d. Jackie owns the copyright to a popular song. She receives royalties every time a radio station plays her song.

local cable TV provider

Which of the following would be most likely to have monopoly power? a. long-distance telephone service provider b. gas station c. department stored d. local cable TV provider