Exam 15: Monopoly

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?

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 marginal revenue from selling the 2nd pair of shoes?

Table 15-3 Consider the following demand and cost information for a monopoly. -Refer to Table 15-3. To maximize profit, the monopolist sets price at

Round-trip airline tickets are usually cheaper if you stay over a Saturday night before you fly back. What is the reason for this price discrepancy?

Table 15-5 A monopolist faces the following demand curve: -Refer to Table 15-5. The monopolist has total fixed costs of $60 and has a constant marginal cost of $15. What is the profit-maximizing level of production?

Competitive firms differ from monopolies in which of the following ways? (i)Competitive firms do not have to worry about the price effect lowering their total revenue. (ii)Marginal revenue for a competitive firm equals price, while marginal revenue for a monopoly is less than the price it is able to charge. (iii)Monopolies must lower their price in order to sell more of their product, while competitive firms do not.

Figure 15-1 -Refer to Figure 15-1. If the monopolist uses perfect price discrimination, how much profit does the firm earn?

A firm that is a natural monopoly

Figure 15-4 -Refer to Figure 15-4. A profit-maximizing monopoly's total revenue is equal to

Without price discrimination, the monopolist sells every unit at the same price. As a consequence,

Figure 15-14 -Refer to Figure 15-14. If the monopoly operates at an output level less than Q0, then an increase in output toward (but not exceeding) Q0 would

The social cost of a monopoly is equal to its

What do economists call the business practice of selling the same good at difference prices to different customers?

Figure 15-8 -Refer to Figure 15-8. What area represents the total surplus lost due to monopoly pricing?

Figure 15-17 -Refer to Figure 15-17. Which of the following areas represents the consumer surplus from this profit-maximizing monopolist?

Table 15-6 A monopolist faces the following demand curve: -Refer to Table 15-6. What is the marginal revenue from the sale of the 4th unit?

Figure 15-9 -Refer to Figure 15-9. To maximize total surplus, a benevolent social planner would choose which of the following outcomes?

Perfect price discrimination

Natural monopolies differ from other forms of monopoly because they are

By offering lower prices to customers who buy a large quantity, a monopoly is price discriminating.