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Exam 12: Monopoly

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Question 161

Multiple Choice

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Use the following to answer questions: Figure: The Profit-Maximizing Output and Price -(Figure: The Profit-Maximizing Output and Price) Look at the figure The Profit-Maximizing Output and Price. Assume that there are no fixed costs and AC = MC = $200. At the profit-maximizing output and price for a perfectly competitive industry, producer surplus is:

A) $0.
B) $200.
C) $1,600.
D) $3,200.

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Question 162

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Use the following to answer questions: Figure: Water Works -(Figure: Water Works) Look at the figure Water Works, which describes a small town's water works, a natural monopoly. If regulators require the water works to charge the price that eliminates deadweight loss, the water works will serve _____ customers.

A) 200
B) 300
C) 375
D) 400

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Question 163

Multiple Choice

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Which of the following is NOT a barrier to entry?

Use the following to answer questions: -(Table: Lunch) Look at the figure Lunch. Joe makes and sells picnic lunches to people taking all-day rafting trips on the river. The marginal cost and average cost of each lunch are a constant $4. If Joe is one of many firms in a competitive industry, what is producer surplus in the long run?

Use the following to answer questions: Figure: PPV -(Figure: PPV) Look at the figure PPV, which shows the demand and marginal revenue for a pay-per-view football game on cable TV. Assume that the marginal cost and average cost are a constant $20. If the cable company is a monopoly, how much is deadweight loss when the monopolist maximizes profit?

An industry with a single producer that sells a single product with no substitutes is a:

When a firm finds that its ATC of production decreases as it increases production, this firm is said to be experiencing:

Use the following to answer questions: -(Table: Lunch) Look at the figure Lunch. Joe makes and sells picnic lunches to people taking all-day rafting trips on the river. The marginal cost and average cost of each lunch are a constant $4. If Joe is one of many firms in a competitive industry, what is consumer surplus in the long run?

A monopoly is most likely to be temporary if the monopoly power is derived from:

Use the following to answer questions Figure: Short-Run Monopoly -(Figure: Short-Run Monopoly) Look at the figure Short-Run Monopoly. The profit-maximizing price is price:

Use the following to answer questions Figure: Short-Run Monopoly -(Figure: Short-Run Monopoly) Look at the figure Short-Run Monopoly. The profit-maximizing rule is satisfied by the intersection at point:

Use the following to answer questions: Figure: PPV -(Figure: PPV) Look at the figure PPV, which shows the demand and marginal revenue for a pay-per-view football game on cable TV. Assume that the marginal cost and average cost are a constant $20. If the cable company is a monopoly, how much will it produce?

Although price discrimination never occurs in perfect competition, it may occur in monopolistic competition.

Suppose that a profit-maximizing monopoly firm undergoes a substantial technological change that reduces its marginal and average total costs by $40. If in response to its reduction in cost the firm changes its price in a profit-maximizing way, then we can predict that its total economic profit will:

Use the following to answer questions: -(Table: Prices and Demand) Look at the table Prices and Demand. The New Orleans Saints have a monopoly on Saints logo hats. The marginal cost of producing a hat is $18. How many hats should the Saints produce, and what price should the organization charge to maximize its profits?

An oligopoly that engages in price discrimination will charge higher prices to customers with the most elastic demand.

The De Beers company is described as a monopolist in the production of:

Price discrimination leads to a _____ price for consumers with a _____ demand.

If the state government gave you the exclusive right to sell cement to municipalities, your monopoly would result from:

Consumer surplus is higher under a single-price monopoly than under a perfectly price-discriminating monopoly.