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Exam 15: Monopoly

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Question 21

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One problem with regulating a monopolist on the basis of cost is that

A) by focusing on costs,the regulators ignore profits.
B) it does not provide an incentive for the monopolist to reduce its cost.
C) a monopolist's costs,by definition,are higher than costs of perfectly competitive firms.
D) a monopolist is still able to generate excessive economic profits.

E) All of the above
F) C) and D)

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Question 22

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Which of the following statements comparing monopoly with competition is correct?

A) A monopolist produces a higher level of output and charges a lower price than a competitive firm would.
B) With perfect price discrimination,the total surplus under monopoly can be the same as under competition.
C) With or without price discrimination,the consumer surplus under monopoly is at least as large as it would be under competition.
D) The deadweight loss associated with monopoly is caused by the positive economic profits of the monopolist; competitive firms do not earn a positive economic profit so there is no deadweight loss under competition.

E) B) and C)
F) A) and D)

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Question 23

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Figure 15-3 -Refer to Figure 15-3.If the monopoly firm wants to maximize its profit,it should operate at a level of output equal to

Which of the following statements is correct?

Monopoly pricing prevents some mutually beneficial trades from taking place.These unrealized,mutually beneficial trades are

Figure 15-3 -Refer to Figure 15-3.The demand curve for a monopoly firm is depicted by curve

Table 15-1 $\begin{array} { | c | c | c | c | c | } \hline \text { Quantity } & \begin{array} { c } \text { Price } \\\text { (Dinar) }\end{array} & \begin{array} { c } \text { Total } \\\text { Revenue } \\\text { (Dinar) }\end{array} & \begin{array} { c } \text { Average } \\\text { Revenue } \\\text { (Dinar) }\end{array} & \begin{array} { c } \text { Marginal } \\\text { Revenue } \\\text { (Dinar) }\end{array} \\\hline 1 & 35 & 35 & & \\\hline 2 & & 64 & 32 & 29 \\\hline 3 & 29 & & & \\\hline 4 & & & & 17 \\\hline 5 & 23 & & & 11\\\hline 6 & & 120 & & \\\hline 7 & 17 & & & - 1 \\\hline 8 & & & & - 7 \\\hline 9 & & 99 & 11 & - 13\\\hline 10 & & 80 & 8& \\\hline\end{array}$ -Refer to Table 15-1.Assume this monopolist's marginal cost is constant at 12 dinar.What quantity of output (Q) will it produce and what price (P) will it charge?

Suppose a firm has a monopoly on the sale of a computer game and faces a downward-sloping demand curve.When selling the 50^th game,the firm will always receive

Describe how government is involved in creating a monopoly.Why might the government create one? Give an example.

The fundamental cause of monopolies is barriers to entry.

A monopolist does not have a supply curve because the firm's decision about how much to supply is impossible to separate from the demand curve it faces.

Table 15-1 $\begin{array} { | c | c | c | c | c | } \hline \text { Quantity } & \begin{array} { c } \text { Price } \\\text { (Dinar) }\end{array} & \begin{array} { c } \text { Total } \\\text { Revenue } \\\text { (Dinar) }\end{array} & \begin{array} { c } \text { Average } \\\text { Revenue } \\\text { (Dinar) }\end{array} & \begin{array} { c } \text { Marginal } \\\text { Revenue } \\\text { (Dinar) }\end{array} \\\hline 1 & 35 & 35 & & \\\hline 2 & & 64 & 32 & 29 \\\hline 3 & 29 & & & \\\hline 4 & & & & 17 \\\hline 5 & 23 & & & 11\\\hline 6 & & 120 & & \\\hline 7 & 17 & & & - 1 \\\hline 8 & & & & - 7 \\\hline 9 & & 99 & 11 & - 13\\\hline 10 & & 80 & 8& \\\hline\end{array}$ -Refer to Table 15-1.If the monopolist sells 8 units of its product,how much total revenue will it receive from the sale?

Figure 15-1 -Refer to Figure 15-1.The shape of the average total cost curve reveals information about the nature of the barrier to entry that might exist in a monopoly market.Which of the following monopoly types best coincides with the figure?

Patent and copyright laws encourage

Give some examples of the benefits and costs of antitrust laws.

Figure 15-5 -Refer to Figure 15-5.How much output will the monopolist produce?

For a long while,electricity producers were thought to be a classic example of a natural monopoly.People held this view because

Graphically depict the deadweight loss caused by a monopoly.How is this similar to the deadweight loss from taxation?

With perfect price discrimination the monopoly

Price discrimination