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Exam 15: Monopoly

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Question 271

Multiple Choice

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A benefit of a monopoly is

A) lower prices.
B) a wide variety of similar products.
C) decreasing long-run average total costs.
D) greater creativity by authors who can copyright their novels.

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

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Question 272

Multiple Choice

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Which of the following statements is correct?

A) The benefits that accrue to a monopoly's owners are equal to the costs that are incurred by consumers of that firm's product.
B) The deadweight loss that arises in monopoly stems from the fact that the profit-maximizing monopoly firm produces a quantity of output that exceeds the socially-efficient quantity.
C) The deadweight loss caused by monopoly is similar to the deadweight loss caused by a tax on a product.
D) The primary social problem caused by monopoly is monopoly profit.

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

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Question 273

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The best solution to the problem of welfare loss from monopoly is public ownership.

For a profit-maximizing monopolist,

Table 15-1 A monopolist faces the following demand curve: Marginal cost is constant at $8 per unit. -Refer to Table 15-1.When the price effect on revenue is greater than the output effect,marginal revenue is

Competitive firms have

The supply curve for the monopolist

If a monopolist is able to perfectly price discriminate,

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?

A monopolist maximizes profit by producing an output level where marginal cost equals price.

When a monopolist increases the quantity that it sells,all else equal,total revenue increases,which is called the output effect.

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

Monopoly pricing prevents some mutually beneficial trades from taking place.These unrealized,mutually beneficial trades are

Table 15-2 Tanya has the following demand curve for selling taffy.Assume that Tanya has a marginal cost of $3 per unit. -Refer to Table 15-2.What is Tanya's profit-maximizing level of output?

Table 15-1 A monopolist faces the following demand curve: Marginal cost is constant at $8 per unit. -Refer to Table 15-1.The monopolist's profit-maximizing level of output is

Figure 15-1 -Refer to Figure 15-1.If a regulator requires the firm to charge a marginal cost price,what quantity will the firm produce?

Which of the following is not a characteristic of a monopoly?

Figure 15-16 -Refer to Figure 15-16.If there are no fixed costs of production,monopoly profit with perfect price discrimination equals

In the market for "home heating" consumers typically have several options (e.g. ,electricity,heating fuel,natural gas,propane,etc. ),yet we often think of firms in this industry as behaving like monopolists.Discuss the context in which your electricity provider is a monopolist.Is this characterization universally applicable? Explain your answer.

Figure 15-7 -Refer to Figure 15-7.What is the socially efficient price and quantity?