question
Which of the followings a characteristic of a monopoly?
answer
Barriers to entry
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Suppose most people regard emeralds, rubies, and sapphires as close substitutes for diamonds. Then DeBeers, a large diamond company, has...
answer
Less market power than it would otherwise have
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Exclusive ownership of a key resource...
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Is a potential but rare cause of a monopoly
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Which of the following would be most likely to have monopoly power?
answer
A municipal water company
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Most markets are not monopolies in the real world because...
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There are reasonable substitutes for most goods
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Which of the following is not an example of a barrier to entry?
answer
An entrepreneur opens a popular new restaurant
question
Patents, copyrights, and trademarks...
answer
All of the above
are examples of barriers to entry; are examples of government-created monopolies; allow their owners to charge higher prices
are examples of barriers to entry; are examples of government-created monopolies; allow their owners to charge higher prices
question
Encouraging firms to invest in research and development and individuals to engage in creative endeavors such as writing novels is one justification for...
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Government-created monopolies
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In order to sell more of its product, a monopolist must...
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Lower its price
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Monopolies use their market power to...
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Charge a price that is higher than marginal cost
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If a profit-maximizing monopolist faves a downward-sloping market demand curve, its...
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Marginal revenue is less than the price of the product
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A monopoly firm can sell 150 units of output for $10 per unit. Alternatively, it can sell 151 units of output for $9.98 per unit. The marginal revenue of the 151st unit of output is...
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$6.98
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Figure 15-7. In order to maximize profits, the monopolist should produce...
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12 units
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Figure 15-7. In order to maximize profits, the monopolist should charge a price of...
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$20
question
Figure 15-7. A profit-maximizing monopolist would earn total revenues of...
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$240
question
Figure 15-7. A profit-maximizing monopolist would incur total costs of...
answer
$120
question
Figure 15-7. A profit-maximizing monopolist would earn profits of...
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$120
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Table 15-3. The maximum profit this monopolist can earn is...
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$28
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Table 15-3. To maximize sets price at...
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$20
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A monopolist maximizes profits by...
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Producing an output level where marginal revenue equals marginal cost
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A monopoly is an inefficient way to produce a product because...
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It produces a smaller level of output than would be produced in a competitive market
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Price discrimination is the business practice...
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Selling the same good at different prices to different customers
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A rational pricing strategy for a profit-maximizing monopolist is...
answer
Price Discrimination
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A movie theater can increase its profits through price discrimination by charging a higher price to adults and a lower price to children if it...
answer
All of the above are correct
has some degree of monopoly pricing power; can prevent children from buying the lower-priced tickets and selling them to adults; can easily distinguish between the two groups of customers
has some degree of monopoly pricing power; can prevent children from buying the lower-priced tickets and selling them to adults; can easily distinguish between the two groups of customers
question
An airline knows that there are two types of travelers: business travelers and vacationers. For a particular flight, there are 100 business travelers who will pay $600 for a ticket while there are 50 vacationers who will pay $300 for a ticket. There are 150 seats available on the plane. Suppose the cost to the airline of providing the flight is $20,000, which includes the cost of the pilots, flight attendants, fuel, etc.
How much profit will the airline earn if its sets the price of each ticket at $600?
How much profit will the airline earn if its sets the price of each ticket at $600?
answer
$40,000
question
An airline knows that there are two types of travelers: business travelers and vacationers. For a particular flight, there are 100 business travelers who will pay $600 for a ticket while there are 50 vacationers who will pay $300 for a ticket. There are 150 seats available on the plane. Suppose the cost to the airline of providing the flight is $20,000, which includes the cost of the pilots, flight attendants, fuel, etc.
How much profit will the airline earn if its sets the price of each ticket at $300?
How much profit will the airline earn if its sets the price of each ticket at $300?
answer
$25,000
question
An airline knows that there are two types of travelers: business travelers and vacationers. For a particular flight, there are 100 business travelers who will pay $600 for a ticket while there are 50 vacationers who will pay $300 for a ticket. There are 150 seats available on the plane. Suppose the cost to the airline of providing the flight is $20,000, which includes the cost of the pilots, flight attendants, fuel, etc.
How much profit will the airline earn if it engages in price discrimination?
How much profit will the airline earn if it engages in price discrimination?
answer
$55,000
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Figure 15-18. If there are no fixed costs of production, monopoly profit without price discrimination equals...
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$2,000
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Figure 15-18. If there are no fixed costs of production, monopoly profit with perfect price discrimination equals...
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$4,000
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A monopolistically competitive market has characteristics that are similar to...
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both a monopoly and a competitive firm
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