question
Aisha is willing to spend $5 for a haircut. If she finds a salon where the price of a haircut is only $2, she will receive ______ in consumer surplus from this transaction.
answer
$3
question
Jeanette is willing to pay $100 for the first pair of shoes, $80 for the second pair, $50 for the third, and $30 for the fourth. If shoes cost $50, Jeanette will buy ________ pairs of shoes and her total consumer surplus equals ________.
answer
3;$80
question
The diagram above shows the effect of a tax in the market for good X. Assume the following are the values for the prices and quantities identified in the diagram:
P4 = 811
P3 = 646
P2 = 478
P1 = 151
QA = 185
QB = 311
What is the value of Consumer Surplus (CS) wheh the market has a tax?
P4 = 811
P3 = 646
P2 = 478
P1 = 151
QA = 185
QB = 311
What is the value of Consumer Surplus (CS) wheh the market has a tax?
answer
CS tax = $15262
question
Ahmed is willing to mow lawns for $10 each, Boris is willing to mow lawns for $20 each, and Chelsea is willing to mow lawns for $30 each. If the going rate for lawn mowing is $26, what is the total producer surplus received by the 3 of them?
answer
$22
((26-10) + (26-20))
((26-10) + (26-20))
question
Alex is willing to buy the last ticket to the Billy Bragg concert for $15, while Jake is willing to pay $25. Alex is first in line and buys a ticket for $15. He then resells his ticket to Jake for $20. By reselling the ticket instead of going to the concert himself, Alex caused:
answer
total surplus to increase
question
Oil is an input in the production of gasoline, and gasoline and cars are complements. An increase in the price of oil will _________ the producer surplus in the market for cars.
answer
decrease
question
Natasha, Nelson, and Nikolai are all looking to buy flashlights for a camping trip. Natasha is willing to pay $4, Nelson is willing to pay $10, and Nikolai is willing to pay $20. If the actual price of a flashlight turns out to be $12, what is the total consumer surplus for these three shoppers?
answer
$8
question
Ahmed is willing to mow lawns for $10 each, Boris is willing to mow lawns for $20 each, and Chelsea is willing to mow lawns for $30 each. If the going rate for lawn mowing is $23, what is the total producer surplus received by the three of them?
answer
$16
question
Suppose you own a firm that produces widgets and is a monopoly. The market demand is given by the equation P = 231 - 4Q, where P is the price of gadgets and Q is the quantity of gadgets sold per week. The firm's total cost function is given by the equation. TC = 4710 + 6Q^2
what's the profit-maximizing level of output for this firm?
Notice that MC = 2(6)Q, and MR = 231 - 2(4)Q
what's the profit-maximizing level of output for this firm?
Notice that MC = 2(6)Q, and MR = 231 - 2(4)Q
answer
12
question
Assume that there are 100 customers in the market for Vanity Wagons (VWs), each with the demand curve q = 10 − P/2, where P is the price of VWs, and q is the quantity of VWs demanded by the consumer per day.
a) Assume that the VW market is a monopoly and that the average variable cost of producing VWs is constant at $10. What is the monopolist's profit maximizing output of VWs?
Qm =
Remember that when demand is: P = a - bQ; MR = a - 2bQ
What is the loss to society as a result of the VW market being a monopoly?
DWL =
a) Assume that the VW market is a monopoly and that the average variable cost of producing VWs is constant at $10. What is the monopolist's profit maximizing output of VWs?
Qm =
Remember that when demand is: P = a - bQ; MR = a - 2bQ
What is the loss to society as a result of the VW market being a monopoly?
DWL =
answer
Qm = 250
DWL = 625
*see notes for how to do this problem
DWL = 625
*see notes for how to do this problem
question
If a monopolist knows its price elasticity of demand is elastic, then a(n):
answer
decrease in price will increase total revenue
question
Compared to a perfectly competitive market, a monopolist will produce ________ and charge a ________ price.
answer
less; higher
question
The deadweight loss associated with a monopoly will decrease if:
answer
the monopolist is forced to change a price equal to the marginal cost
question
Suppose that a monopoly firm invest in very expensive form of capital. In response to the investment, the firm will:
answer
not change its price
question
The demand curve for a monopoly is:
answer
above the MR curve
question
If a monopoly is producing at the profit-maximizing level of output, then we can assume that at that level of output, demand is:
answer
price-elastic
question
If a monopolist is producing a quantity that generates MC = P, then profit:
answer
can be increased by decreasing production
question
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 level of output?
Q = 200 - 2P
MR = 100 - Q
TC = 5Q
MC = 5
Refer to Scenario 10.2. What is the profit maximizing level of output?
answer
95
question
The demand curve and marginal revenue curve for red herrings are given as follows:
Q = 250 - 5P
MR = 50 - 0.4Q
What level of output maximizes revenue?
Q = 250 - 5P
MR = 50 - 0.4Q
What level of output maximizes revenue?
answer
125
question
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
At the profit maximizing level of output, what is the deadweight loss?
P = 360 - 4Q MR = 360 - 8Q MC = 4Q
At the profit maximizing level of output, what is the deadweight loss?
answer
900
question
The See TV Company is a monopolist in two neighboring countries, East Egg and West Egg. The elasticity of demand for TVs is 4 in East Egg and 10 in West Egg. The price of a TV in East Egg is $60. If the company can successfully separate these two markets, how much should it charge for a TV in West Egg?
answer
Pw = $50
question
A Japanese steel firm sells steel in the United States and in Japan. Since the United States buys steel from a number of sources, the U.S. demand for Japanese steel is more price-elastic than the Japanese demand for Japanese steel. If the Japanese steel firm wishes to maximize its profits, it should:
answer
charge a lower price in the US and a higher price in Japan
question
You produce stereo components for sale in two markets, foreign and domestic, and the two groups of consumers cannot trade with one another. You will charge the higher price in the market with the
answer
lower own price elasticity of demand (more inelastic demand)
question
Which of the following is not an example of price discrimination?
a. Ladies receive free admission into a nightclub, while men must pay a cover charge.
b. Street vendors increase the price of umbrellas when it is raining.
c. College students receive a discount at the ice cream store when they show their college ID cards.
d. A country club requires members to pay annual dues, but members receive discounted prices to golf.
a. Ladies receive free admission into a nightclub, while men must pay a cover charge.
b. Street vendors increase the price of umbrellas when it is raining.
c. College students receive a discount at the ice cream store when they show their college ID cards.
d. A country club requires members to pay annual dues, but members receive discounted prices to golf.
answer
b. Street vendors increase the price of umbrellas when it is raining.
question
A tennis pro charges $15 per hour for tennis lessons for children and $30 per hour for tennis lessons for adults. The tennis pro is practicing
answer
third-degree price discrimination
question
Milk is an input in the production of cheese, and cheese and bagels are complements. A decrease in the price of milk will _________ the producer surplus in the market for bagels.
answer
increase
question
If a monopolist knows its price elasticity of demand is equal to one, then a(n):
answer
increase in price will have no impact on total revenue
question
If a monopolist knows its price elasticity of demand is greater than one, then a(n):
answer
decrease in price will increase total revenue
question
If a monopolist knows its price elasticity of demand is less than one, then a(n):
answer
increase in price will increase total revenue
question
Suppose a perfectly competitive industry is suddenly transformed into a monopoly industry. We can assume that monopoly output will be ________ than the competitive output and that ________.
answer
lower, deadweight loss will emerge
question
The demand curve facing a monopolist is always:
answer
the same as the industry's demand curve
question
The demand curve for a monopoly is:
answer
above the MR curve
question
The marginal revenue of green ink pads is given as follows:
MR = 2500 - 5Q
The marginal cost of green ink pads is 5Q.
Refer to Scenario 10.7. How many ink pads will be produced to maximize profit?
MR = 2500 - 5Q
The marginal cost of green ink pads is 5Q.
Refer to Scenario 10.7. How many ink pads will be produced to maximize profit?
answer
250
5Q = 2500 - 5Q
5Q = 2500 - 5Q
question
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
how much profit does a monopolist earn?
Q = 200 - 2P
MR = 100 - Q
TC = 5Q
MC = 5
how much profit does a monopolist earn?
answer
$4512.50
question
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. What level of output maximizes the sum of consumer surplus and producer surplus?
P = 360 - 4Q MR = 360 - 8Q MC = 4Q
Refer to Scenario 10.9. What level of output maximizes the sum of consumer surplus and producer surplus?
answer
Q=45
its the perfectly competitive output, where price = MC
(360 - 4Q = 4Q)
its the perfectly competitive output, where price = MC
(360 - 4Q = 4Q)
question
A firm sells an identical product to two groups of consumers, A and B. The firm has decided that third-degree price discrimination is feasible and wishes to set prices that maximize profits. Which of the following best describes the price and output strategy that will maximize profits?
answer
MRa = MRb = MC
question
If there are open first-class seats available on a particular flight, some airlines allow customers with coach (discount) tickets to upgrade to first-class tickets during the electronic check-in process. Which of the following statements must be true for the airline to justify this practice?
answer
MR must be the same for both full-fare and upgraded customers
question
Which of the following is not an example of price discrimination?
a. a special Fourth of July sale
b. a lower price charged to the grandfather who bought his airline ticket to Chicago three weeks in advance and will stay over a Saturday night than to the businesswoman who bought her ticket the day of the flight and will not stay over Saturday night
c. a coupon in the newspaper offering a 10% discount on a product
d. a higher price charged for front row seats at a concert than charged for seats at the back
a. a special Fourth of July sale
b. a lower price charged to the grandfather who bought his airline ticket to Chicago three weeks in advance and will stay over a Saturday night than to the businesswoman who bought her ticket the day of the flight and will not stay over Saturday night
c. a coupon in the newspaper offering a 10% discount on a product
d. a higher price charged for front row seats at a concert than charged for seats at the back
answer
a. a special fourth of july sale
question
An electric power company uses block pricing for electricity sales. Block pricing is an example of
answer
second-degree price discrimination
question
A doctor charges two different prices for medical services, and the price level depends on the patients' income such that wealthy patients are charged more than poorer ones. This pricing scheme represents a form of
answer
third-degree price discrimination
question
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?
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?
answer
CS = 1800
(30 x (360-240)) / 2
(30 x (360-240)) / 2
question
Adriana is a monopolist producing green calculators. The average and marginal cost curves and average and marginal revenue curves for her product are given as follows:
AC = Q + (10,000/Q) MC = 2Q AR = 30 - (Q/2) MR = 30 - Q
AC = Q + (10,000/Q) MC = 2Q AR = 30 - (Q/2) MR = 30 - Q
answer
DWL = 5
she'll break even too
she'll break even too
question
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 producer surplus?
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 producer surplus?
answer
5400
question
Suppose that the demand equations of women and men for admission to Los Angeles Dodger baseball games are given by:
Pw = 6 - (1/8,000)Qw
Pm = 10 - (1/8,000)Qm
respectively. Moreover, suppose that the total seating capacity of Dodger Stadium is fixed at 56,000. If the ball club elects to practice third-degree price discrimination and would like to fill the stadium, what prices should men and women be charged for a ticket?
Pw = 6 - (1/8,000)Qw
Pm = 10 - (1/8,000)Qm
respectively. Moreover, suppose that the total seating capacity of Dodger Stadium is fixed at 56,000. If the ball club elects to practice third-degree price discrimination and would like to fill the stadium, what prices should men and women be charged for a ticket?
answer
Pm = 5.5
Pw = 3.5
*see notes
Pw = 3.5
*see notes
question
The demand curve and marginal revenue curve for red herrings are given as follows:
Q = 250 - 5P
MR = 50 - 0.4Q
Refer to Scenario 10.3. At the profit-maximizing level of output, demand is
Q = 250 - 5P
MR = 50 - 0.4Q
Refer to Scenario 10.3. At the profit-maximizing level of output, demand is
answer
elastic, but not infinitely elastic
question
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. How much profit will she make?
Q = 160 - 4P TR = 40Q - 0.25Q2 MR = 40 - 0.5Q TC = 4Q MC = 4
Refer to Scenario 10.1. How much profit will she make?
answer
1,296
question
The diagram above shows the effect of a tax in the market for good X. Assume the following are the values for the prices and quantities identified in the diagram:
P4 = 865
P3 = 651
P2 = 482
P1 = 171
QA = 138
QB = 347
What is the Government Revenue (GR) from the tax?
P4 = 865
P3 = 651
P2 = 482
P1 = 171
QA = 138
QB = 347
What is the Government Revenue (GR) from the tax?
answer
GR = $66240
question
Aisha is willing to spend $16 for a haircut. If she finds a salon where the price of a haircut is only $12, she will receive ______ in consumer surplus from this transaction.
answer
$4
question
Adie wants to take some online classes this semester. She is willing to pay $1,000 for the first class, $800 for the second, $700 for the third, and $500 for the fourth. If online classes cost $750, Adie will take ________ online classes and her consumer surplus will equal ________.
answer
2; $300
question
Ahmed is willing to mow lawns for $10 each, Boris is willing to mow lawns for $20 each, and Chelsea is willing to mow lawns for $30 each. If the going rate for lawn mowing is $15, what is the total producer surplus received by the 3 of them?
answer
$5
question
Milk is an input in the production of cheese, and cheese and humus are substitutes. A decrease in the price of milk will _________ the producer surplus in the market for humus.
answer
decrease
question
Suppose a perfectly competitive market is suddenly transformed into one that operates as a monopoly market. We would expect:
answer
price to rise, output to fall, consumer surplus to fall, producer surplus to rise, deadweight loss to rise
question
If a monopolist is producing a quantity that generates MC = MR, then profit:
answer
is maximized
question
The city bus system charges lower fares to senior citizens than to other passengers. Assuming that this pricing strategy increases the profits of the bus system, we can conclude that senior citizens must have a ________ for bus service than other passengers.
answer
more elastic demand
question
Because business travelers' demand for airline flights is relatively ________, small increases in price will result in relatively ________ in additional business travelers.
answer
price-inelastic; small decreases
question
Which of the following is not an example of price discrimination?
answer
a special fourth of july sale
question
The See TV Company is a monopolist in two neighboring countries, East Egg and West Egg. The elasticity of demand for TVs is 4 in East Egg and 10 in West Egg. The price of a TV in East Egg is $60. If the company can successfully separate these two markets, how much should it charge for a TV in West Egg?
answer
Pw = $50
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
