Exam 15: Monopoly

Scenario 15-11 Vincent operates a scenic tour business in Boston. He has one bus which can fit 50 people per tour and each tour lasts 2 hours. His total cost of operating one tour is fixed at $450. Vincent's cost is not reduced if he runs a tour with a partially full bus. While his cost is the same for all tours, Vincent charges each passenger his/her willingness to pay: adults $18 per trip, children $10 per trip, and senior citizens $12 per trip. At those rates, on a typical day Vincent's demand is: Assume that Vincent's customers are always available for the tour; therefore, he can fill his bus for each tour as long as there is sufficient total demand for the day. -Refer to Scenario 15-11. One of Vincent's friends tells him he would be more profitable if he charged a single price of $12. Assuming no changes in consumer demand, what would Vincent's profit be if he charged every customer $12?

If the ABC company owns the exclusive rights to mine land in Afghanistan for Lapis Lazuli, a rare stone used in jewelry which is found only in Afghanistan, the company benefits from a barrier to entry.

Allowing an inventor to have the exclusive rights to market her new invention will lead to

Private ownership of a monopoly may benefit society because the monopoly will have an incentive to

A monopolist's profits with price discrimination will be

A rational pricing strategy for a profit-maximizing monopolist is

Which of the following statements is correct?

Figure 15-23 -Refer to Figure 15-23. If the firm profit-maximizes, what amount of output will it produce?

Microsoft faces very little competition from other firms for its Windows software. Why isn't the price of the software $1,000 per copy?

What is the defining characteristic of a natural monopoly? Give an example of a natural monopoly.

Additional firms often do not try to compete with a natural monopoly because

Table 15-7 Sally owns the only shoe store in town. She has the following cost and revenue information. -Refer to Table 15-7. What is the average revenue when Sally sells 7 pairs of shoes?

Table 15-6 A monopolist faces the following demand curve: -Refer to Table 15-6. What is the marginal revenue from the sale of the 4th unit?

For a monopoly market, total surplus can be defined as the value of the good to

Table 15-19 A monopolist faces the following demand curve: -Refer to Table 15-19. If a monopolist faces a constant marginal cost of $7, how much output should the firm produce?

Which of the following governmental actions would eliminate some or all of the inefficiency that results from monopoly pricing? The government could

Which of the following is a characteristic of a monopoly?

Table 15-8 The following table provides information on the price, quantity, and average total cost for a monopoly. -Refer to Table 15-8. What is the additional cost to the firm when the monopolist lowers the price from $18 to $12?

A monopolist produces where P = MC = MR.

Figure 15-5 -Refer to Figure 15-5. At the profit-maximizing level of output,