Exam 13: Monopoly

Use the following to answer questions: Figure: Regulated versus Unregulated Monopolist -(Figure: Regulated versus Unregulated Monopolist) Refer to the figure. Calculate the deadweight loss when this monopoly is unregulated.

Deregulation of cable TV led to:

High prices charged by monopolists will cause the monopolists':

Use the following to answer questions: Figure: Monopoly 8 -(Figure: Monopoly 8) The natural monopolist in this figure would produce:

Monopolies can arise naturally when:

Economies of scale are:

Deregulation of cable TV rates led to:

When demand is inelastic, revenues increase and production costs decrease as the quantity produced declines, total profits will always increase with a higher price. Therefore, monopolists:

Which of the following firms most likely possesses the most monopoly power?

Because Colgate owns patent number 5,547,091, only Colgate sells toothpaste with a flip-top cap, while others use the more traditional screw top. A patent probably wasn't a necessary incentive for Colgate to develop the flip-top cap, so why did it patent the cap?

Figure: Monopoly Markup Refer to the figure. The monopolist's price markup is:

The only company in the United States that can deliver small envelopes (for example, greeting cards and bank statements) is the U.S. Postal Service. What is the source of this monopoly?

For a monopoly, marginal revenue is often less than the price it charges for its good.

Monopolies and competitive firms pursuing profit maximization both choose to produce at the quantity where marginal revenue equals marginal cost but the optimal output level of the two will differ.

If the government sets a natural monopolist's price equal to marginal cost, the:

Which one of the following statements is correct?

Which of the following is NOT a reason that monopolies arise?

There have been a number of states in the United States deregulating the generation of electricity. Using your understanding of monopolies, discuss the likely effect of deregulation on prices in the industry.

Which statement is TRUE?

A monopolist has a demand function that is described by Q_d = 100 - P. The monopolist's cost function is simply described by TC = 10 + 2Q. Therefore MC is constant at 2. The marginal revenue function for the monopolist is 100 - 2P. What is the profit-maximizing price and quantity for the monopolist? What is the profit that the monopolist earns at this output level?