Section 9
If a monopoly has a linear demand curve and is producing at the profit-maximizing level of output, at that level of output, demand is:
price-elastic.
Use Figure: PPV. The figure shows the demand and marginal revenue for a pay-per-view football game on cable TV. Assume that the marginal cost and average cost are a constant $20. If the cable company is a monopoly, how much deadweight loss is there when the monopolist maximizes profit?
$80
Use Figure: PPV. The figure shows the demand and marginal revenue for a pay-per-view football game on cable TV. Assume that the marginal cost and average cost are a constant $40. If the cable company practices perfect price discrimination, consumer surplus will be:
0
Use Figure: The Monopolist II. The deadweight loss associated with this monopoly can be measured as the area:
0.5 (P2- P4)(Q4- Q2).
Use Scenario: A Small-Town Monopolist. If this monopolist must choose between selling 100 or 175 subscriptions, it will choose to sell _____ units at a price of _____ and earn economic profits equal to _____.
100; $15; $1,000
Use Figure: The Profit-Maximizing Output and Price. Assume that there are no fixed costs and AC = MC = $200. The monopolist who can perfectly price discriminate will produce an output of _____ diamonds.
16
Use Figure: A Profit-Maximizing Monopoly Firm. This firm's cost per unit at its profit-maximizing quantity is:
18
Use Figure: Demand, Revenue, and Cost Curves. Figglenuts-R-Us is a monopolist in the figglenut market. If the government wanted to regulate Figglenuts-R-Us such that the entire deadweight loss would be eliminated in the short run, it would impose a price ceiling of:
40
Use Table: Lunch. This table shows market demand for picnic lunches for people taking all-day rafting trips on the river. Joe has a firm providing this service, and his marginal cost and average cost for each lunch are a constant $4. If Joe is a monopolist, what is consumer surplus in the long run?
45
Use Figure: Short-Run Monopoly. The marginal cost of producing the profit-maximizing quantity is cost:
P
Which statement is not an example of price discrimination?
Street vendors increase the price of umbrellas when it is raining.
Which statement best reflects an evaluation of monopoly firms?
They are economically inefficient.
Price discrimination is the practice of:
charging different prices to buyers of the same good
The pricing in monopoly prevents some mutually beneficial trades. The value of these unrealized mutually beneficial trades is called:
deadweight loss.
Use Scenario: A Small-Town Monopolist. Compared with charging a single price, the deadweight loss:
decreases when this monopolist price-discriminates.
The main reason a monopoly engages in price discrimination is that:
doing so increases its profits.
Price discrimination leads to a _____ price for consumers with a _____ demand.
higher; less elastic
For a monopolist, the market demand curve:
is also the demand for the monopolist's product.
In contrast with perfect competition, a monopoly:
produces less at a higher price.
In the short run, if a monopoly is forced to charge a price equal to marginal cost:
the deadweight loss will decrease.
Suppose a monopoly can separate its customers into two groups. If the monopoly practices price discrimination, it will charge the lower price to the group with:
the higher price elasticity of demand.
The demand curve for a monopoly is:
the industry demand curve
Price discrimination can occur if:
the market structure is a monopolistic competition
The GoSports Company is a profit-maximizing firm with a monopoly in the production of school team pennants. The firm sells its pennants for $10 each. We can conclude that GoSports is producing a level of output at which:
marginal cost equals marginal revenue.
When a monopoly maximizes profit, the loss of surplus by consumers is _____ the monopolist's gain in profit.
more than
In general, economists are critical of monopoly where there is/are:
no natural monopoly.
Use Figure: Monopoly Model. When the firm is in equilibrium (that is, maximizing its economic profit), its total revenue is the area of rectangle:
not 0sbj spdb
Use Figure: A Rock Climbing Shoe Monopoly. If the firm is regulated such that it earns zero economic profit, the firm will sell _____ pairs of shoes at a price of _____ per pair.
not Q1 OR Q1
