question
A perfectly competitive firm produces where
answer
marginal cost equals price, while a monopolist produces where price exceeds marginal cost.
question
A monopoly
answer
can set the price it charges for its output but faces a downward-sloping demand curve so it
cannot earn unlimited profits.
cannot earn unlimited profits.
question
A monopoly can earn positive profits because it
answer
can maintain a price such that total revenues will exceed total costs.
question
Which of the following is not a characteristic of a monopoly?
answer
one buyer
question
A benefit of a monopoly is
answer
greater creativity by authors who can copyright their novels.
question
Which of the following statements is not correct?
answer
Monopolists typically produce larger quantities of output than competitive firms.
question
Which of the following statements is (are) true of a monopoly?
answer
A monopoly has the ability to set the price of its product at whatever level it desires.
question
Because a monopolist is the sole producer in its market, it can necessarily alter the price of its
good
good
answer
by adjusting the quantity it supplies to the market.
question
Which of the following is not a difference between monopolies and perfectly competitive
markets?
markets?
answer
Monopolies choose to produce the quantity at which marginal revenue equals marginal cost while perfectly competitive firms do not.
question
The price effect describes the situation when a monopolist lowers the price of output and, all
else equal, total revenue
else equal, total revenue
answer
decreases.
question
Suppose a monopolist charges a price of $27 for its product and sells 10 units at that price. At 10 units of production the firm has average fixed cost equal to $10 and average variable cost equal
to $12. How much total profit is the firm earning at this price?
to $12. How much total profit is the firm earning at this price?
answer
$50
question
The practice of selling the same goods to different customers at different prices, but with the
same marginal cost, is known as
same marginal cost, is known as
answer
price discrimination.
question
Perfect price discrimination describes a situation in which the monopolist
answer
knows the exact willingness to pay of each of its customers.
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