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Exam 15: Monopoly

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Question 251

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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 average revenue when 7 ties are sold?

A) $90
B) $100
C) $110
D) $130

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

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Question 252

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Figure 15-20 -Refer to Figure 15-20. The consumer surplus at the monopolist's profit-maximizing price is

A) $450.
B) $900.
C) $1,350.
D) $2,025.

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

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Question 253

Multiple Choice

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During the holiday season, high-end retailers frequently place a high price on merchandise on weekends and discount the price during the week. They do this because they believe that two groups of customers exist: shoppers with little free time and bargain hunters. Bargain hunters have time to shop around and frequently shop during the week. What do economists call this price strategy used by high-end retailers?

When a local grocery store offers discount coupons in the Sunday paper it is most likely trying to

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

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

If the government regulates the price that a natural monopolist can charge to be equal to the firm's marginal cost, the firm will

Figure 15-3 -Refer to Figure 15-3. Which panel could represent the demand curve facing a local cable television provider if that firm in a monopolist?

Comparing firms in perfectly competitive markets to monopoly firms, which charges a price equal to marginal cost?

Table 15-11 The following table shows quantity, price, and marginal cost information for a monopoly: -Refer to Table 15-11. What level of output should the firm produce to maximize its profit?

State one benefit of government-granted monopolies like patents and copyrights.

In order for antitrust laws to raise social welfare, the government must

Suppose when a monopolist produces 75 units its average revenue is $10 per unit, its marginal revenue is $5 per unit, its marginal cost is $6 per unit, and its average total cost is $5 per unit. What can we conclude about this monopolist?

At the profit-maximizing quantity of output for a monopolist, average revenue, marginal revenue, and price are all equal.

Copyrights and patents are examples of barriers to entry that give firms monopoly pricing powers.

Marginal revenue can become negative for

If the distribution of water is a natural monopoly, then (i) Multiple firms would likely each have to pay large fixed costs to develop their own network of pipes. (ii) Allowing for competition among different firms in the water-distribution industry is efficient. (iii) A single firm can serve the market at the lowest possible average total cost.

Figure 15-9 -Refer to Figure 15-9. The deadweight loss caused by a profit-maximizing monopoly amounts to

Table 15-8 The following table provides information on the price, quantity, and average total cost for a monopoly. -Refer to Table 15-8. What is the additional cost to the firm when the monopolist lowers the price from $18 to $12?

A monopolist maximizes profits by