question
The following graph depicts the market situation for a monopoly pastry shop called Bearclaws.
Refer to Figure 15-5. Based upon the information shown, what price will Bearclaws charge to maximize profits?
Refer to Figure 15-5. Based upon the information shown, what price will Bearclaws charge to maximize profits?
answer
$14.
question
The following graph depicts the market situation for a monopoly pastry shop called Bearclaws.
Refer to Figure 15-5. Based upon the information shown, how many units will Bearclaws produce to maximize profits?
Refer to Figure 15-5. Based upon the information shown, how many units will Bearclaws produce to maximize profits?
answer
70.
question
The following graph depicts the market situation for a monopoly pastry shop called Bearclaws.
Refer to Figure 15-5. Based upon the information shown, what are total costs for Bearclaws, given that it maximizes profits?
Refer to Figure 15-5. Based upon the information shown, what are total costs for Bearclaws, given that it maximizes profits?
answer
$700.
question
A monopolist's profits with price discrimination will be
answer
higher than if the firm charged just one price because the firm will capture more consumer surplus.
question
A perfectly price-discriminating monopolist is able to
answer
maximize profit and produce a socially optimal level of output.
question
Refer to Figure 15-1. The shape of the average total cost curve in the figure suggests an opportunity for a profit-maximizing monopolist to take advantage of
answer
economies of scale.
question
Refer to Figure 15-4.What area measures the monopolist's profit?
answer
(K − B) × W
question
Refer to Figure 15-6. What is the monopoly price and quantity?
answer
Price = A; quantity = X
question
Refer to Figure 15-6. What is the socially efficient price and quantity?
answer
Price = B; quantity = Y
question
Refer to Figure 15-6.What is the area of deadweight loss?
answer
The triangle 1/2[(A − C) × (Y − X)]
question
Refer to Figure 15-8.What is the socially efficient price and quantity for this natural monopolist?
answer
H and L
question
For a monopolist, when the price effect is greater than the output effect, an increase in output sold causes marginal revenue to be
answer
negative.
question
If a profit-maximizing monopolist faces a downward-sloping market demand curve, its
answer
marginal revenue is less than the price of the product.
question
If government regulation sets the maximum price for a natural monopoly equal to its marginal cost, then the natural monopolist will
answer
earn economic losses.
question
Monopolies are socially inefficient because the price they charge is
answer
above marginal cost.
question
Price discrimination is a rational strategy for a profit-maximizing monopolist when
answer
there is no opportunity for arbitrage across market segments.
question
A monopoly firm maximizes its profit by producing Q = 500 units of output. At that level of output, its marginal revenue is $30, its average revenue is $60, and its average total cost is $34.
Refer to Scenario 15-1. At Q = 500, the firm's marginal cost is
Refer to Scenario 15-1. At Q = 500, the firm's marginal cost is
answer
$30.
question
The following table provides information on the price, quantity, and average total cost for a monopoly.
Refer to Table 15-1. At what price will the monopolist maximize his profit?
Refer to Table 15-1. At what price will the monopolist maximize his profit?
answer
$18
question
When a firm has a natural monopoly, the firm's
answer
average total cost curve is downward sloping.
question
When a monopolist increases the amount of output that it produces and sells, average revenue
answer
decreases, and marginal revenue decreases.
question
Which of the following can defeat the profit-maximizing strategy of price discrimination?
answer
Arbitrage
question
Which of the following is a necessary characteristic of a monopoly?
answer
The firm is the sole seller of its product.
question
Which of the following is not an example of a barrier to entry?
answer
An entrepreneur opens a popular new restaurant.
question
Which of the following is not an example of price discrimination by a firm?
answer
A natural gas company charging all customers a higher rate in the winter than in the summer
question
Which of the following statements is true?
answer
When a monopoly firm sells an additional unit of output, its revenue increases by an amount less than the price.
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