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Exam 10: Market Power: Monopoly and Monopsony

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Question 21

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Which of the following is NOT true regarding monopoly?

A) Monopoly is the sole producer in the market.
B) Monopoly price is determined from the demand curve.
C) Monopolist can charge as high a price as it likes.
D) Monopoly demand curve is downward sloping.

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Question 22

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Scenario 10.2: A monopolist faces the following demand curve, marginal revenue curve, total cost curve and marginal cost curve for its product: Q = 200 - 2P MR = 100 - Q TC = 5Q MC = 5 -Refer to Scenario 10.2. What is the profit maximizing price?

A) $95.00
B) $5.00
C) $52.50
D) $10.00

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Question 23

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Scenario 10.2: A monopolist faces the following demand curve, marginal revenue curve, total cost curve and marginal cost curve for its product: Q = 200 - 2P MR = 100 - Q TC = 5Q MC = 5 -Refer to Scenario 10.2. What level of output maximizes total revenue?

Scenario 10.1: Barbara is a producer in a monopoly industry. Her demand curve, total revenue curve, marginal revenue curve and total cost curve are given as follows: Q = 160 - 4P TR = 40Q - 0.25Q² MR = 40 - 0.5Q TC = 4Q MC = 4 -Refer to Scenario 10.1. The price of her product will be ________.

Bancroft Pharmaceuticals has a patent on a new medication used to treat high blood pressure, so it is the monopoly seller of this new drug product. The marginal cost of producing one dose of the drug is $10, and the elasticity of demand for the product is -3. What is the profit maximizing monopoly price for this patented drug product?

Which of the following is NOT associated with a high degree of monopoly power?

T-Galaxy has market power in the market for Iowa State University Big XII Championship 2000 T-shirts. The demand for T-Galaxy's product is: Q_D = 10 - 0.4P $\iff$ P = 25 - 2.5Q_D. The resulting marginal revenue curve is MR(Q) = 25 - 5Q. T-Galaxy's marginal costs are MC(Q) = 3 + 6Q. Determine T-Galaxy's profit maximizing price. Calculate T-Galaxy's elasticity of demand at this price. What is T-Galaxy's mark-up over marginal cost as a percentage of price?

Suppose Orange Inc. sells MP3 players and initially has monopoly power because there are only a few close substitutes available to consumers. As more types of MP3 players are introduced into the market, the demand facing Orange becomes ________ elastic and the Lerner index achieved by the firm in this market ________.

Figure 10.2 -Refer to Figure 10.2. In moving from the competitive level of output and price to the monopoly level of output and price, the monopolist is able to add to producer surplus:

Scenario 10.9: Maui Macadamia Inc. has a monopoly in the macadamia nut industry. The demand curve, marginal revenue and marginal cost curve for macadamia nuts are given as follows: P = 360 - 4Q MR = 360 - 8Q MC = 4Q -Refer to Scenario 10.9. At the profit maximizing level of output, what is the level of consumer surplus?

Which of the following is true of the antitrust laws in the United States? They are

The degree of monopsony power that a firm enjoys is determined by

In an oligopsony market:

The demand curve and marginal revenue curve for red rubber balls are given as follows: Q = 16 - P MR = 16 - 2Q What level of output maximizes profit?

Unlike a competitive buyer,

The monopolist has no supply curve because

Which curve is analogous to the monopsonist's demand curve?

Suppose the marginal value curve for a monopsonist is MV = 70 - Q, and the marginal expenditure curve is ME = 10 + 2Q. What is the optimal price paid by the monopsonist?

Bridge Coal Company is the only employer in a remote and mountainous region of the country, so the firm is the monopsony buyer of labor in the market. If the local population declines and there are fewer qualified coal miners available, which one of the curves used to determine the monopsony outcome in this market shifts?

At the profit-maximizing level of output, demand is