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Exam 15: Monopoly

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Question 171

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When a monopolist decreases the price of its good, consumers

A) continue to buy the same amount.
B) buy more.
C) buy less.
D) may buy more or less, depending on the price elasticity of demand.

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

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Question 172

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Perfect price discrimination describes a situation in which the monopolist

A) knows the exact willingness to pay of each of its customers.
B) charges exactly two different prices to exactly two different groups of customers.
C) maximizes consumer surplus.
D) experiences a zero economic profit.

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

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Question 173

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Price discrimination is prohibited by antitrust laws.

Figure 15-21 -Refer to Figure 15-21. What is the price and quantity for this natural monopolist under socially optimal pricing?

Which of the following is an example of a barrier to entry? (i) A key resource is owned by a single firm. (ii) The costs of production make a single producer more efficient than a large number of producers. (iii) The government has given the existing monopolist the exclusive right to produce the good.

Figure 15-2 -Refer to Figure 15-2. If the firm profit-maximizes, how much profit will it earn?

Table 15-11 The following table shows quantity, price, and marginal cost information for a monopoly: -Refer to Table 15-11. What would be the firm's marginal revenue at the profit-maximizing level of output?

Scenario 15-9 Suppose executives at an art museum know that 100 adults are willing to pay $12 for admission to the museum on a weekday. Suppose the executives also know that 200 students are willing to pay $8 for admission on a weekday. The cost of operating the museum on a weekday is $2,000. -Refer to Scenario 15-9. How much profit will the museum earn if it charges all customers $8 for admission?

Price discrimination is a rational strategy for a profit-maximizing monopolist when

When a certain monopoly sets its price at $8 it sells 64 units. When the monopoly sets its price at $10 it sells 60 units. The marginal revenue for the firm over this range is

Table 15-7 Sally owns the only shoe store in town. She has the following cost and revenue information. -Refer to Table 15-7. What is the total variable cost of production when Sally produces six pairs of shoes?

One method used to control the ability of firms to capture monopoly profit in the United States is through

Because monopoly firms do not have to compete with other firms, the outcome in a market with a monopoly

State two examples of government-created monopolies.

Figure 15-11 -Refer to Figure 15-11. Which area represents the deadweight loss from monopoly?

Figure 15-8 -Refer to Figure 15-8. What is the area of deadweight loss?

Which of the following is not a reason for the existence of a monopoly?

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?

Table 15-4 A monopolist faces the following demand curve: -Refer to Table 15-4. If the monopolist increases production from 7.5 to 10 units, what is its marginal revenue?

One problem with regulating a monopolist on the basis of cost is that