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Exam 13: Monopoly

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Question 101

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A natural monopoly exists whenever a single firm:

A) is owned and operated by the government.
B) is investor-owned but has been granted the exclusive right by the government to operate in a market.
C) has economies of scale over the entire range of production that is relevant to its market.
D) has gained control over a strategic input of an important production process.

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

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Question 102

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If a firm has market power,the marginal revenue curve always lies below the demand curve.

A) True
B) False

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Question 103

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Large barriers to entry are one reason that a monopoly:

Use the following to answer questions : Figure: The Profit-Maximizing Output and Price -(Figure: The Profit-Maximizing Output and Price) Use Figure: The Profit-Maximizing Output and Price.Assume there are no fixed costs and AC = MC.At the profit-maximizing quantity of production for the monopolist,total revenue is _____,total cost is _____,and profit is _____.

Use the following to answer questions : $\begin{array}{l}\text { Table: Prices and Demand }\\\begin{array} { l c } \hline \begin{array} { l } \text { Quantity } \\\text { of Hats } \\\text { Demanded }\end{array} & \begin{array} { c } \text { Price } \\\text { per Hat }\end{array} \\\hline 0 & \$ 30 \\1 & 28 \\2 & 26 \\3 & 24 \\4 & 22 \\5 & 20 \\6 & 18 \\7 & 16 \\8 & 14 \\\hline\end{array}\end{array}$ -(Table: Prices and Demand) Use Table: Prices and Demand.The Toronto Maple Leafs have a monopoly on Leafs logo hats.The Leafs sell at most 1 hat to each customer,and the table shows each customer's willingness to pay.The marginal cost of producing a hat is $18,and there are no fixed costs.How much is the Leafs' profit at the profit-maximizing output?

Use the following to answer questions : Figure: A Profit-Maximizing Monopoly Firm -In the short run,a monopoly will stop producing if:

Use the following to answer questions : Figure: Monopoly Model -(Figure: Monopoly Model) Use Figure: Monopoly Model.When the firm is in equilibrium (that is,maximizing its economic profit) ,its total cost is the area of rectangle:

To engage in price discrimination,a firm must be:

Bob owns a trout farm with monopoly power in British Columbia.Bob's optimal output occurs where marginal revenue _____ marginal cost.Because of monopoly power,Bob's supply curve _____.

Use the following to answer questions : $\begin{array}{l}\text { Table: Lunch }\\\begin{array} { r c } \hline \text { Price } & \begin{array} { c } \text { Quantity } \\\text { Demanded }\end{array} \\\hline \$ 10 & 0 \\9 & 10 \\8 & 20 \\7 & 30 \\6 & 40 \\5 & 50 \\4 & 60 \\\hline\end{array}\end{array}$ -(Table: Lunch) Use Table: Lunch.This table shows market demand for picnic lunches for people taking all-day rafting trips on the river.Suppose that the marginal cost and average cost of each lunch are a constant $4 for all firms in the market.What is producer surplus in this market in the long run?

Use the following to answer questions : Figure: Demand,Revenue,and Cost Curves -(Figure: Demand,Revenue,and Cost Curves) Use Figure: Demand,Revenue,and Cost Curves.Figglenuts-R-Us is a monopolist in the figglenut market.Figglenuts-R-Us will sell _____ figglenuts and set a price of _____ to maximize profits.

When a monopolist practices price discrimination,compared with a single-price monopolist,deadweight loss will:

Use the following to answer question 328: Figure: The Monopolist IV -(Figure: The Monopolist IV) Use Figure: The Monopolist IV.Assume this monopolist has no fixed costs.If this monopolist profit-maximizes,it will produce _____ units and charge a price equal to _____.Its profit will be _____,its consumer surplus will be _____,and the deadweight loss is _____.

Network externalities exist when a good's value to the consumer rises as:

In perfect competition,the firm produces the output such that _____,and in monopoly,the firm produces the output such that _____.

Use the following to answer questions : Figure: The Profit-Maximizing Output and Price -(Figure: The Profit-Maximizing Output and Price) Use Figure: The Profit-Maximizing Output and Price.Assume that there are no fixed costs and AC = MC = $200.At the profit-maximizing output and price for a perfectly competitive industry,economic profit for the firms in the industry is:

Consumer surplus is higher under a single-price monopoly than it is under a perfectly price-discriminating monopoly.

Use the following to answer questions : Figure: Monopoly Model -(Figure: Monopoly Model) Use Figure: Monopoly Model.The profit-maximizing quantity is at point:

Because monopoly firms are price setters,they:

A monopoly is a market characterized by a: