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Exam 15: Monopoly

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Question 31

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

A) A.
B) B.
C) C.
D) D.

E) All of the above
F) A) and C)

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Question 32

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Which of the following is not a difference between monopolies and perfectly competitive markets?

A) Monopolies can earn profits in the long run while perfectly competitive firms break even.
B) Monopolies charge a price higher than marginal cost while perfectly competitive firms charge a price equal to marginal cost.
C) Monopolies choose to produce the quantity at which marginal revenue equals marginal cost while perfectly competitive firms do not.
D) Monopolies face downward sloping demand curves while perfectly competitive firms face horizontal demand curves.

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

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Question 33

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Table 15-15 A monopolist faces the following demand curve: -Refer to Table 15-15. The monopolist has total fixed costs of $40 and a constant marginal cost of $5. At the profit-maximizing level of output, the monopolist's profit is

For a monopolist, marginal revenue is

Table 15-3 Consider the following demand and cost information for a monopoly. -Refer to Table 15-3. The marginal revenue of the 2nd unit is

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

Patent and copyright laws

If a monopolist is able to perfectly price discriminate,

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 produce an output level of

Scenario 15-1 Consider a transportation corporation named Reading's that has just completed the development of a new light rail system in Minneapolis. Currently, there are plenty of seats on the train, and it is never crowded. Its capacity far exceeds the needs of the city. After just a few years of operation, the shareholders of Reading's experienced incredibly high rates of return on their investment due to the profitability of the corporation. -Refer to Scenario 15-1. Which of the following statements is most likely to be true? (i) New entrants to the market know they will have a smaller market share than Reading's Currently has. (ii) Reading's is most likely experiencing decreasing average total cost. (iii) Reading's is a natural monopoly.

A movie theater can increase its profits through price discrimination by charging a higher price to adults and a lower price to children if it

Suppose a monopolist chooses the price and production level that maximizes its profit. From that point, to increase society's economic welfare, output would need to be increased as long as

Table 15-22 -Refer to Table 15-22. The average revenue of the 50th unit of output is

A monopoly chooses to supply the market with a quantity of a product that is determined by the intersection of the

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

Which of the following is an example of public ownership of a monopoly?

A firm that is a natural monopoly

A monopoly firm can sell 150 units of output for $10 per unit. Alternatively, it can sell 151 units of output for $9.90 per unit. The marginal revenue of the 151st unit of output is

The amount of power that a monopoly has depends on whether there are close substitutes for its product.

Suppose a profit-maximizing monopolist faces a constant marginal cost of $20, produces an output level of 100 units, and charges a price of $50. The socially efficient level of output is 200 units. Assume that the demand curve and marginal revenue curve are the typical downward-sloping straight lines. The monopoly deadweight loss equals $1,500.