question
If the entire output of a market is produced by a single seller, the firm
answer
Is a monopoly.
question
Which of the following rules is satisfied when a monopoly maximizes profits?
answer
MR = MC.
question
A profit-maximizing monopolist produces the rate of output where
answer
MR = MC and determines price based on the demand curve.
question
Price-discriminating firms that sell in two markets will charge higher prices in the market, ceteris paribus,
answer
With the more price-inelastic demand.
question
Price discrimination does not allow a producer to
answer
Designate a point above the market demand curve as the new equilibrium.
question
Price discrimination allows a producer to
answer
Reap the highest possible average price for the quantity supplied.
question
Which of the following is a barrier to entry in a monopoly market?
answer
A patent on a new product.
question
Monopolists set prices
answer
At the output where marginal revenue equals marginal cost.
question
Price discrimination is best defined as
answer
The selling of an identical good at different prices to different consumers by a single seller.
question
Which of the following is not an example of price discrimination by the only movie theater in town?
answer
Charging one price at all times for all customers.
question
All of the following can be used to increase monopoly power except
answer
Antitrust laws.
question
A monopoly realizes larger profits than a comparable competitive market by
answer
Reducing production and pushing prices up.
question
For a monopolist, marginal revenue equals
answer
The change in total revenue divided by the change in quantity.
question
Which of the following is a barrier to entry in a monopoly market?
answer
Economies of scale.
question
The marginal revenue curve is below the demand curve
answer
If a firm must lower its price to sell additional output.
question
A barrier to entry is
answer
An obstacle that makes it difficult for new firms to enter a market.
question
Which of the following is an argument in favor of a competitive market structure rather than monopoly?
answer
Monopolies produce less at a higher price than competitive markets, ceteris paribus.
question
Monopolists are price
answer
Makers, but competitive firms are price takers.
question
If a firm can raise market price by reducing its output, then
answer
It faces a downward-sloping demand curve.
question
Which of the following markets best illustrates the practice of price discrimination?
answer
The airline market.
question
If a monopolist is producing a level of output where MR exceeds MC, then it should
answer
Increase its output.
question
Suppose a monopoly firm produces bicycles and can sell 10 bicycles per month at a price of $700 per bicycle. In order to increase sales by one bicycle per month, the monopolist must lower the price of its bicycles by $50 to $650 per bicycle. The marginal revenue of the 11th bicycle is
answer
$150.
question
Which of the following rules is satisfied when a monopoly maximizes profits?
answer
...
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