Exam 15: Monopoly

Which of the following statements is true? (i) When a competitive firm sells an additional unit of output, its revenue increases by an amount less than the price. (ii) When a monopoly firm sells an additional unit of output, its revenue increases by an amount less than the price. (iii) Average revenue is the same as price for both competitive and monopoly firms.

Figure 15-8 -Refer to Figure 15-8. What is the monopoly price and quantity?

A monopolist produces

Figure 15-12 -Refer to Figure 15-12. Which area represents the deadweight loss from monopoly?

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

Monopoly profit is not a social problem because

In a market characterized by monopoly, the market demand curve is

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

A firm that is a natural monopoly

Table 15-6 A monopolist faces the following demand curve: -Refer to Table 15-6. If the monopolist has a constant marginal cost for her product equal to $7, what is her profit- maximizing price?

For a monopoly firm, the shape and position of the demand curve play a role in determining the (i) profit-maximizing price. (ii) shape and position of the marginal-cost curve. (iii) shape and position of the marginal-revenue curve.

Because a monopolist is the sole producer in its market, it can necessarily alter the price of its good (i) without affecting the quantity sold. (ii) without affecting its average total cost. (iii) by adjusting the quantity it supplies to the market.

Government intervention is always preferable to doing nothing when reducing the social inefficiencies of monopoly.

Figure 15-22 -Refer to Figure 15-22. If the monopolist uses perfect price discrimination, how much output does the firm produce?

Which of the following statements is correct?

For a monopoly firm,

Table 15-10 The monopolist faces the following demand curve: -Refer to Table 15-10. If the monopolist has total fixed costs of $40 and a constant marginal cost of $5, how much profit can the firm earn at the profit-maximizing level of output?

Most markets are not monopolies in the real world because

Price discrimination adds to social welfare in the form of (i) increased total surplus. (ii) reduced costs of production. (iii) increased consumer surplus.

Figure 15-24 -Refer to Figure 15-24. Use the letters in the figure to identify the profit area if this firm were able to perfectly price discriminate.