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Exam 15: Monopoly

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Question 81

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Table 15-4 $\begin{array} { | l | l | } \hline \text { Quantity } & \text { Price } \\\hline 10 & \$ 46 \\\hline 20 & \$ 42 \\\hline 30 & \$ 38 \\\hline 40 & \$ 34 \\\hline 50 & \$ 30 \\\hline 60 & \$ 26 \\\hline 70 & \$ 22 \\\hline 80 & \$ 18 \\\hline 90 & \$ 14 \\\hline 100 & \$ 10 \\\hline\end{array}$ -Refer to Table 15-4. The marginal revenue becomes negative with the production of which unit of output?

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Question 82

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

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Question 83

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

Arbitrage is

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

The De Beers Diamond company advertises heavily to promote the sale of all diamonds, not just its own. This is evidence that it has a monopoly position to some degree.

For a long while, electricity producers were thought to be a classic example of a natural monopoly. People held this view because

Movie theatres charge different prices to different groups of people based on the differing marginal costs that exist from group to group.

A monopoly creates a deadweight loss to society because it earns both short-run and long-run positive economic profits.

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

Suppose most people regard emeralds, rubies, and sapphires as close substitutes for diamonds. Then DeBeers, a large diamond company, has

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

Figure 15-10 ​ ​ -Refer to Figure 15-10. If the firm profit-maximizes, how much profit will it earn?

A monopolist produces where P > MC = MR.

University financial aid can be viewed as a type of price discrimination.

Figure 15-12 ​ ​ -Refer to Figure 15-12. If a regulator requires this firm to charge a socially optimal price, how much deadweight loss results?

Scenario 15-3 Vincent operates a scenic tour business in Boston. He has one bus which can fit 50 people per tour and each tour lasts 2 hours. His total cost of operating one tour is fixed at $450. Vincent's cost is not reduced if he runs a tour with a partially full bus. While his cost is the same for all tours, Vincent charges each passenger his/her willingness to pay: adults $18 per trip, children $10 per trip, and senior citizens $12 per trip. At those rates, on a typical day Vincent's demand is: $\begin{array} { | l | l | l | } \hline \text { Passen ger Type } & \text { Willingness to Pay } & \text { Demand per day } \\\hline \text { Adults } & \$ 18 & 70 \\\hline \text { Children } & \$ 10 & 25 \\\hline \text { Senior Citizens } & \$ 12 & 55 \\\hline\end{array}$ Assume that Vincent's customers are always available for the tour; therefore, he can fill his bus for each tour as long as there is sufficient total demand for the day. -Refer to Scenario 15-3. What is Vincent's cost of serving all passengers demanding a tour on a typical day?

Scenario 15-1 A monopoly firm maximizes its profit by producing Q = 500 units of output. At that level of output, its marginal revenue is $40, its average revenue is $80, and its average total cost is $44. -Refer to Scenario 15-1. At Q = 500, the firm's profit is

It is difficult in a natural monopoly market for the firm to achieve both efficiency and zero economic profit simultaneously, even with regulation. ​

A patent gives a single person or firm the exclusive right to sell some good or service forever.