Exam 13: Monopoly

Use the following to answer questions: Figure: Monopoly 6 -(Figure: Monopoly 6) If the market in this figure is a monopoly, the consumer surplus is area ______, and the deadweight loss is area ______.

If the monopolist's demand is given by P = 100 - Q, marginal revenue is given by:

There are three reasons why HIV drugs are priced above cost: (1) monopoly power, (2) the "people before profits" effect, and (3) the "use it or lose it" effect.

Figure: Monopolist Profits Refer to the figure. Which of the following answers correctly indicates the profit earned by this monopolist at the profit-maximizing quantity?

Which of the following is the best example of a natural monopoly?

India has weak patent protection for pharmaceuticals, and Canada has price controls. The United States could adopt similar policies without any bad consequences to the future market for drugs.

If pharmaceutical patents are not enforced, the number of new drugs will decrease.

Which of the following statements is TRUE?

A monopoly maximizes profit by finding the output level where the difference between marginal revenue and marginal costs is as large as possible.

Which of the following statements is TRUE? I. Competitive markets channel the self-interest of business leaders toward social prosperity. II. Political structures often channel self-interest toward social destruction. III. Many monopolies are government-created.

Competitive markets channel the self-interest of business leaders toward social prosperity, whereas poor institutions that limit competition channel the self-interest of business leaders toward social destruction.

When an industry becomes monopolized:

California's "perfect storm," following the deregulation of its electricity industry, eventually resulted in an incredible rise in electricity prices. Which of the following is NOT a reason why this occurred?

When comparing a monopoly with a competitive industry, monopoly quantity:

Figure: Monopoly Demand Refer to the figure. The demand curve for a profit-maximizing monopolist can be described by the equation Q = 200 - P. The marginal revenue curve for the monopolist is described by the equation MR = 200 - 2Q. The marginal cost associated with producing this good is constant at $50. Calculate the consumer surplus that consumers enjoy in this market.

To maximize profit, the monopolist increases output:

Use the following to answer questions: Figure: Monopoly Markup -(Figure: Monopoly Markup) Refer to the figure. The deadweight loss attributable to monopoly is:

Use the following to answer questions: Figure: Monopoly Profits -(Figure: Monopoly Profits) Refer to the figure. What is the monopolist's optimal price and output level?

Economists call a single firm that can supply the entire market at a lower cost than two or more firms a __________ monopoly.

Use the following to answer questions: Figure: Maximum Willingness to Pay -(Figure: Maximum Willingness to Pay) Refer to the figure. What is the profit that the monopolist is earning?