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Exam 15: Monopoly

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Question 91

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A monopolist's profit is equal to (Price - Marginal Cost) × Quantity.

A) True
B) False

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Question 92

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Scenario 15-3 Vincent operates a scenic tour business in Boston. He has one bus which can fit 50 people per tour and each tour lasts 2 hours. His total cost of operating one tour is fixed at $450. Vincent's cost is not reduced if he runs a tour with a partially full bus. While his cost is the same for all tours, Vincent charges each passenger his/her willingness to pay: adults $18 per trip, children $10 per trip, and senior citizens $12 per trip. At those rates, on a typical day Vincent's demand is: $\begin{array} { | l | l | l | } \hline \text { Passen ger Type } & \text { Willingness to Pay } & \text { Demand per day } \\\hline \text { Adults } & \$ 18 & 70 \\\hline \text { Children } & \$ 10 & 25 \\\hline \text { Senior Citizens } & \$ 12 & 55 \\\hline\end{array}$ Assume that Vincent's customers are always available for the tour; therefore, he can fill his bus for each tour as long as there is sufficient total demand for the day. -Refer to Scenario 15-3. One of Vincent's friends tells him he would be more profitable if he charged a single price of $12. Assuming no changes in consumer demand, what would Vincent's profit be if he charged every customer $12?

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Question 93

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The distribution of water to residents of a town and an infrequently used bridge are examples of

Figure 15-11 ​ ​ -Refer to Figure 15-11. Use the letters in the figure to identify the profit area if this firm were able to perfectly price discriminate.

Figure 15-10 ​ ​ -Refer to Figure 15-10. What type of monopoly is shown in the figure?

If the government deems a newly-invented drug to be truly original, the pharmaceutical company is given the exclusive right to manufacture and sell the drug for 50 years.

In order to sell more of its product, a monopolist must

Figure 15-1 -Refer to Figure 15-1. The shape of the average total cost curve in the figure suggests an opportunity for a profit-maximizing monopolist to take advantage of

Graphically depict the deadweight loss caused by a monopoly. How is this similar to the deadweight loss from taxation?

Price discrimination is prohibited by antitrust laws.

Figure 15-9 ​ ​ -Refer to Figure 15-9. If the monopolist uses perfect price discrimination, how much profit does the firm earn?

Monopolists can achieve any level of profit they desire because they have unlimited market power.

Selling the same good at different prices to different customers is known as

Table 15-3 Tommy's Tie Company, a monopolist, has the following cost and revenue information. Assume that Tommy's is able to engage in perfect price discrimination. ​ ​ ​ -Refer to Table 15-3. If the monopolist can engage in perfect price discrimination, what is the average revenue when 7 ties are sold?

Figure 15-5 The following graph depicts the market situation for a monopoly pastry shop called Bearclaws. -Refer to Figure 15-5. Based upon the information shown, what are total costs for Bearclaws, given that it maximizes profits?

The deadweight loss for a monopolist equals one-half of its profits for any given level of output.

A perfectly price-discriminating monopolist is able to

The social cost of a monopoly is equal to its

A monopolist can sell 300 units of output for $50 per unit. Alternatively, it can sell 301 units of output for $49.60 per unit. The marginal revenue of the 301^st unit of output is

Figure 15-11 ​ ​ -Refer to Figure 15-11. Which letter represents the profit-maximizing price chosen by the single price monopolist?