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Exam 15: Monopoly

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Question 61

Multiple Choice

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

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Question 62

Multiple Choice

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The economic inefficiency of a monopolist can be measured by the

A) number of consumers who are unable to purchase the product because of its high price.
B) excess profit generated by monopoly firms.
C) poor quality of service offered by monopoly firms.
D) deadweight loss.

E) All of the above
F) None of the above

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Question 63

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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

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

Table 15-20 A monopolist faces the following demand curve: -Refer to Table 15-20. If a monopolist faces a constant marginal cost of $10, how much output should the firm produce in order to maximize profit?

A natural monopoly arises when

Which of the following is an example of price discrimination?

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

If a product can be produced by a natural monopoly, society will benefit in the form of lower prices if the monopolist is broken up into several smaller firms.

When regulators use a marginal-cost pricing strategy to regulate a natural monopoly, the regulated monopoly

In the majority of cases where there is a natural monopoly in the United States, the government usually deals with the problem

Which of the following is an example of price discrimination?

A firm cannot price discriminate if it

Suppose a firm has a monopoly on the sale of a computer game and faces a downward-sloping demand curve. When selling the 50^th game, the firm will always receive

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

Scenario 15-6 The concert promoters of a heavy-metal band, WeR2Loud, know that there are two types of concert-goers: die- hard fans and casual fans. For a particular WeR2Loud concert, there are 1,000 die-hard fans who will pay $150 for a ticket and 500 casual fans who will pay $50 for a ticket. There are 1,500 seats available at the concert venue. Suppose the cost of putting on the concert is $50,000, which includes the cost of the band, lighting, security, etc. -Refer to Scenario 15-6. How much profit will the concert promoters earn if they set the price of each ticket at $150?

Figure 15-18 -Refer to Figure 15-18. If there are no fixed costs of production, monopoly profit with perfect price discrimination equals

Figure 15-6 -Refer to Figure 15-6. How much output will the monopolist produce?

Figure 15-23 -Refer to Figure 15-23. If the firm profit-maximizes, how much profit will it earn?

The De Beers Diamond company is not worried about differentiating its product from all other gemstones.