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Exam 12: Monopoly

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Question 131

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Which of the following statements is true?

A) A monopolist faces an upward-sloping demand curve.
B) A perfectly competitive firm faces an upward-sloping demand curve.
C) A monopolist can increase the price of its product and not lose all of its business.
D) A perfectly competitive firm can increase the price of its product without losing its business.

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Question 132

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When the price of the same product varies based on locational attributes,it is an example of ________.

A) fair-returns pricing
B) first-degree price discrimination
C) second-degree price discrimination
D) third-degree price discrimination

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Question 133

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Scenario: Mr. Olivander has a monopoly on supplying magic wands. The table below shows the demand schedule for magic wands per day. -Refer to the scenario above.If the marginal cost of a magic wand is $10,what price should Mr.Olivander charge to maximize his profit?

Which of the following is not a barrier to entry?

Natural monopolies are characterized by facing a(n) ________.

Differentiate between the quantity effect and price effect of a price cut by a monopoly.

If a new seller enters a market to compete with an existing natural monopoly,it will ________.

The figure below shows the demand curve in a monopoly market. -Refer to the figure above.Which of the four dashed lines represent the marginal revenue of this monopoly firm?

The following figure shows the demand curve and the marginal revenue (MR)curve of a monopolist supplying petroleum. a)If the monopolist faces a constant marginal cost of $3,what is the optimal output that it should produce? b)If the monopolist faces a constant marginal cost of $3,at what price should it sell the optimal output? c)If the average total cost of the monopolist is $4 per gallon when it produces the optimal output,determine its profit or loss.

Scenario: When a monopolist charges $10 for its product, it sells 500 units of the product. When it lowers the price to $6, it sells 1,400 units of the product. -Refer to the scenario above.What is the quantity effect of the price change?

The following table shows the quantities of a good sold by a monopolist at different prices. -Refer to the table above.What is the total revenue of the monopolist when it charges a price of $3?

For a firm with market power,the price effect is the ________.

Which of the following statements correctly differentiates between a monopoly and a perfectly competitive firm?

Scenario: Tobac Co. is a monopolist in the cigarette market in Nicotiana Republic, where the U.S. dollar is used as the official currency. The firm faces the demand curve shown below. The firm has a constant marginal cost of $2.00 per pack. The fixed cost of the firm is $50 million. To answer the questions below, it is useful to know that the equation of the (inverse) demand curve is P = 8 - 0.04Q, where Q is the quantity demanded (in millions of packs) and P is the price per pack (in $) . Also, you should draw in the marginal revenue curve. -Refer to the scenario above.The firm's maximum profit is ________.

As a firm increases its output,its average total cost decreases.This is an outcome of ________.

Scenario: Tobac Co. is a monopolist in cigarette market in Nicotiana Republic, where the U.S. dollar is used as the official currency. The firm has a constant marginal cost of $2.00 per pack and the fixed cost is $20 million. Through market research, the firm has found that there are two types of customer, Type 1 and Type 2. The demand curves of the two types of customers, and the total market demand curve, along with respective marginal revenue curves, are shown in the following figure. -Refer to the scenario above.If Tobac Co.could not carry out price discrimination,the firm's maximum profit would be ________.

The following figure shows the demand (D) , marginal cost (MC) , and marginal revenue (MR) for a monopolist firm. -Refer to the figure above.How much of the loss in consumer surplus generated by the single-price profit-maximizing monopoly remains part of social surplus?

As a monopolist expands its output,________.

The following figure shows the marginal revenue (MR) , marginal cost (MC) , and demand (D) curves for a firm operating as a monopoly. -Refer to the figure above.Compared to the competitive market outcome,when the monopolists sets its price to the optimal price,by how much is the quantity traded diminished?

A certain amusement park offers a 50 percent discount to kids between the ages of 8 and 14 years.This is an example of ________.