question
A monopoly is an inefficient way to produce a product because
answer
it produces a smaller level of output than would be produced in a competitive market.
question
If a monopolist is able to perfectly price discriminate,
answer
consumer surplus and deadweight losses are transformed into monopoly profits.
question
A monopolist can sell 300 units of output for $45 per unit. Alternatively, it can sell 301 units of output for $44.60 per unit. The marginal revenue of the 301st unit of output is
answer
b.-$75.40.
question
a monopolist average revenue is always
answer
equal to the price of its product
question
A competitive firm
answer
is a price taker, whereas a monopolist is a price maker
question
What is the shape of the monopolist's marginal revenue curve?
answer
a downward-sloping line that lies below the demand curve
question
For a firm to price discriminate
answer
it must have some market power.
question
Monopolies use their market power to
answer
charge a price that is higher than marginal cost.
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
Economic welfare is generally measured by
answer
total surplus
question
Because a monopolist is the sole producer in its market, it can necessarily alter the price of its good
answer
by adjusting the quantity it supplies to the market.
question
Price discrimination is the business practice of
answer
selling the same good at different prices to different customers
question
Antitrust laws allow the government to
answer
prevent mergers.
break up companie
promote competition.
break up companie
promote competition.
question
Which of the following is not a difference between monopolies and perfectly competitive markets
answer
Monopolies choose to produce the quantity at which marginal revenue equals marginal cost while perfectly competitive firms do not.
question
Which of the following are necessary characteristics of a monopoly?
answer
(i)
The firm is the sole seller of its product.
(ii)
The firm's product does not have close substitutes.
The firm is the sole seller of its product.
(ii)
The firm's product does not have close substitutes.
question
The socially efficient level of production occurs where the marginal cost curve intersects
answer
demand
question
Monopolies are inefficient because they
answer
restrict output below the socially efficient level of production.
question
In order to sell more of its product, a monopolist must
answer
lower its price.
question
Marginal revenue for a monopolist is computed as
answer
change in total revenue per one unit increase in quantity sold.
question
The economic inefficiency of a monopolist can be measured by the
answer
a.
deadweight loss.
b.
value of the unrealized trades that could be made if the monopolist produced the socially-efficient output.
c.
area above marginal cost but beneath demand from the monopoly output to the socially-efficient output
deadweight loss.
b.
value of the unrealized trades that could be made if the monopolist produced the socially-efficient output.
c.
area above marginal cost but beneath demand from the monopoly output to the socially-efficient output
question
Patents, copyrights, and trademarks
answer
are examples of government-created monopolies.
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
Granting a pharmaceutical company a patent for a new medicine will lead to
answer
a product that is priced higher than it would be without the exclusive rights.
(ii)
incentives for pharmaceutical companies to invest in research and development.
(ii)
incentives for pharmaceutical companies to invest in research and development.
question
Which of the following statements is not correct?
answer
The government may break up a natural monopoly to lower the price charged to customers.
question
. A perfectly competitive firm produces where
answer
marginal cost equals price, while a monopolist produces where price exceeds marginal cost.
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