Exam 11: Monopoly

Since the Red Cross supplies 95 percent of the blood in the United States, it can be considered a monopolist.Assume that it, in fact, operates like a monopolist.The Red Cross currently charges hospitals and other users $21 for a pint of blood.In order to increase the supply of blood, the government offers the Red Cross a $10 million, lump-sum subsidy.How much more blood supply will the subsidy generate?

At his current level of output, a monopolist has an MR of $10, an MC of $6, and an economic profit of zero.If the market demand curve is downward sloping and his marginal cost curve upward sloping, the monopolist

A monopolist firm may be more innovative than a competitive firm.

The product supplied by a monopoly firm has

Economists object to monopoly because

Monopolies are always large firms with great economies of scale.

An increase in fixed cost will, in the long run, alter the industry output of

Technical superiority can be a source of entry barriers.

Price discrimination allows a monopolist to make higher profits.

Figure 11-9 -In Figure 11-9, how much more than the short-run competitive price will the profit-maximizing monopolist charge?

Explain why marginal revenue is less than price for a monopolist.

Assume that a firm has measured demand carefully and thinks that the following table accurately displays this.The total cost has been measured and can be given as TC = 20 + Q + Q₂ where Q is the level of output.Complete the table and determine the profit-maximizing level of output.

-In Table 11-2, the price at the profit-maximizing output is how much?

Figure 11-5 -In Figure 11-5, Crown Theater, a monopolist movie theater, will make a profit of ____ at its profit-maximizing price and quantity of theater tickets.

In cases of natural monopoly, it is best to have only one firm producing all of the output in a market.

A monopoly firm

____ mean that the costs involved cannot be recouped for a considerable period of time.

Under what conditions might a monopoly be more efficient than a perfectly competitive firm?

In perfect competition, one result of the model was that there were no economic profits in the long run.In a monopoly, the firm typically earns a positive economic profit.Why is there this difference?

Bargain airline fares in which airlines charge varying rates to passengers for the same flight and service is an example of