Exam 13: Monopoly

Price discrimination can never occur in perfect competition.

If a monopolist is producing a quantity that generates MC > MR, then profit:

Use the following to answer questions: Figure: PPV -(Figure: PPV) Look at the figure PPV, which shows the demand and marginal revenue for a pay-per-view football game on cable TV. Assume that the marginal cost and average cost are a constant $40. If the cable company is a single-price monopoly and maximizes profit, deadweight loss will be:

Use the following to answer questions: Figure: A Rock Climbing Shoe Monopoly -(Figure: A Rock Climbing Shoe Monopoly) Look at the figure A Rock Climbing Shoe Monopoly. If the firm acts to maximize profit, the firm will earn profit equal to:

A monopoly is a market characterized by:

Use the following to answer questions: -(Table: Prices and Demand) The New Orleans Saints have a monopoly on Saints logo hats. The marginal cost of producing a hat is $18. If the Saints increase the number of hats they sell from four to five, their total revenue changes from _____ to _____.

To increase profits with price discrimination, different groups of an oligopolist's customers must respond differently to prices of the good.

After the first unit sold, the marginal revenue a monopolist receives from selling one more unit of a good is less than the price of that unit because of:

Use the following to answer questions: Figure: Demand, Revenue, and Cost Curves -(Figure: Demand, Revenue, and Cost Curves) Look at the figure Demand, Revenue, and Cost Curves. Figglenuts-R-Us is a monopolist in the figglenut market. If the government regulated the figglenut market by setting a price ceiling of $40, Figglenuts-R-Us might:

When a monopolist practices price discrimination, compared to a single-price monopolist, deadweight loss will:

Monopoly is inefficient because some consumer surplus is transferred to producer surplus.

Wendy has a monopoly in the retailing of motor homes. She can sell five per week at $21,000 each. If she wants to sell six, she can only charge $20,000 each. The price effect of selling the sixth motor home is:

At a monopoly's profit-maximizing level of output:

Price discrimination is the practice of:

Use the following to answer questions: Figure: Monopoly Model -(Figure: Monopoly Model) Look at the figure Monopoly Model. When the firm is in equilibrium (that is, maximizing its economic profit), its profit is the area of rectangle:

Use the following to answer questions: Scenario: Monopolist The demand curve for a monopolist is P = 75 - 0.5Q, and the monopolist has the following MC expressed as P = 2Q. Assume also that ATC at the profit-maximizing level of production is equal to $12.50. -(Scenario: Monopolist) Look at the scenario Monopolist. The profit-maximizing output is _____ units and the profit-maximizing price is _____.

Use the following to answer questions: Figure: The Monopolist -(Figure: The Monopolist) Look at the figure The Monopolist. If this monopolist attempts to profit-maximize, it will produce _____ units and sell them at _____.

Suppose that a profit-maximizing monopoly firm undergoes a substantial technological change that reduces its marginal and average total costs by $40. If in response to its reduction in cost the firm changes its price in a profit-maximizing way, then we can predict that its total economic profit will:

In 1999, a judge declared that Microsoft was a monopolist. Assuming that Microsoft has a linear demand curve and that it is maximizing its profits at its current level of output, we may conclude that if Microsoft were to increase its price, its total revenue would:

Usually when a monopoly that isn't a natural monopoly is broken up, the losses to the producer outweigh the gains to consumers.