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Exam 15: Monopoly

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Question 161

Multiple Choice

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Suppose a firm has a monopoly on the sale of a computer game and faces a downward-sloping demand curve. When selling the 50^th game, the firm will always receive

A) less marginal revenue on the 50th game than it received on the 49th game.
B) more average revenue on the 50th game than it received on the 49th game.
C) more total revenue on the 50 games than it received on the first 49 games.
D) Both b and c are correct.

E) A) and B)
F) B) and D)

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Question 162

Multiple Choice

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As a monopolist increases the quantity of output it sells, the price consumers are willing to pay for the good

A) is unaffected.
B) decreases.
C) increases.
D) There is not enough information given in answer the question.

E) B) and D)
F) A) and B)

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Question 163

Multiple Choice

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A profit-maximizing monopolist charges a price of $12. The intersection of the marginal revenue and marginal cost curves occurs where output is 10 units and marginal cost is $6. Average total cost for 10 units of output is $5. What is the monopolist's profit?

The first major piece of antitrust legislation was the

Table 15-21 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 15-21. What are Tommy's Ties Company's fixed costs?

Price discrimination

Figure 15-19 -Refer to Figure 15-19. If the monopoly firm perfectly price discriminates, then consumer surplus amounts to

Which of the following is not a reason for the existence of a monopoly?

Drug companies are allowed to be monopolists in the drugs they discover in order to

A natural monopoly occurs when

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.

Encouraging firms to invest in research and development and individuals to engage in creative endeavors such as writing novels is one justification for

The socially efficient quantity is found where the demand curve intersects the marginal cost curve.

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

Table 15-4 A monopolist faces the following demand curve: -Refer to Table 15-4. In order to maximize total revenues, the monopolist should produce

Patent and copyright laws are major sources of

Which of the following would be most likely to have monopoly power?

One solution to the problems of marginal-cost pricing of a regulated natural monopolist is average cost pricing. In this model, the monopolist is allowed to price its production at average total cost. How does average-cost pricing differ from marginal-cost pricing? Does this solution maximize social well-being?

Scenario 15-4 Suppose a monopolist has a demand curve that can be expressed as P=90-Q. The monopolist's marginal revenue curve can be expressed as MR=90-2Q. The monopolist has constant marginal costs and average total costs of $10. -Refer to Scenario 15-4. The profit-maximizing monopolist will have a deadweight loss of

Figure 15-5 -Refer to Figure 15-5. A profit-maximizing monopoly's total revenue is equal to