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Exam 14: Monopoly

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Question 311

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For a monopoly, the level of output at which marginal revenue equals zero is also the level of output at which

A) average revenue is zero.
B) profit is maximized.
C) total revenue is maximized.
D) marginal cost is zero.

E) A) and D)
F) A) and C)

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Question 312

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In a natural monopoly,

A) society would be better off if antitrust laws were used to create many different firms in the market.
B) the marginal cost curve is positively sloped.
C) if the government requires marginal cost pricing, it will likely have to subsidize the firm.
D) the marginal revenue curve is horizontal.

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

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Question 313

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When there are economies of scale over the relevant range of output for a monopoly, the monopoly

For a monopoly, marginal revenue is often greater than the price it charges for its good.

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

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. If the monopolist can engage in perfect price discrimination, what is the quantity that maximizes economic profit?

When an industry is a natural monopoly,

When a firm operates under conditions of monopoly, its price is

Assume that a monopolist decides to maximize revenue rather than profit. How does this operating objective change the size of the deadweight loss? If you are a "benevolent" manager of a monopoly firm and are interested in reducing the deadweight loss of monopoly, should you maximize profits or maximize revenue? Explain your answer.

Figure 15-24 -Refer to Figure 15-24. Use the letters in the figure to identify the profit area if this firm were able to perfectly price discriminate.

Which of the following is not an example of a barrier to entry?

Scenario 15-9 Suppose executives at an art museum know that 100 adults are willing to pay $12 for admission to the museum on a weekday. Suppose the executives also know that 200 students are willing to pay $8 for admission on a weekday. The cost of operating the museum on a weekday is $2,000. -Refer to Scenario 15-9. How much profit will the museum earn if it charges all customers $8 for admission?

Figure 15-4 -Refer to Figure 15-4. The marginal cost curve for a monopoly firm is depicted by curve

Which of the following is an example of a barrier to entry? i) A key resource is owned by a single firm. Ii) The costs of production make a single producer more efficient than a large number of producers. Iii) The government has given the existing monopolist the exclusive right to produce the good.

Table 15-9 Consider the following demand and cost information for a monopoly. -Refer to Table 15-9. What price should the monopoly charge to maximize profit?

Table 15-19 A monopolist faces the following demand curve: -Refer to Table 15-19. If a monopolist faces a constant marginal cost of $3, how much output should the firm produce?

Figure 15-22 -Refer to Figure 15-22. Which is more efficient, single price profit maximization or perfect price discrimination?

A monopolist's supply curve is vertical.

Table 15-6 A monopolist faces the following demand curve: -Refer to Table 15-6. Suppose the monopolist has total fixed costs equal to $5 and a variable cost equal to $4 per unit for all units produced. What is the profit-maximizing price?

When a single firm can supply a good or service to an entire market at a lower cost than could two or more firms, the industry is known as a