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Exam 13: Monopoly

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Question 1

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Which of the following is not an example of price discrimination? A.College students receive a discount at the ice cream store when they show their college ID cards. B.Ladies receive free admission into a nightclub, while men must pay a cover charge. C.A country club requires members to pay annual dues, but members receive discounted prices to golf. D.Street vendors increase the price of umbrellas when it is raining.

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Street vendors incre...

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Question 2

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Explain why the marginal revenue curve lies below the monopolist's demand curve.

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Assuming a monopolist does not us...

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When regulating a natural monopoly, the government always sets a price ceiling where marginal cost intersects the demand curve.

Mr.Porter sells 10 bottles of champagne per week at a price of $50 per bottle.He can sell 11 bottles per week if he lowers the price to $45 per bottle.The quantity and the price effects on total revenue would be, respectively: A.an increase of $450 and a decrease of $500. B.an increase of $495 and a decrease of $550. C.an increase of $45 and a decrease of $5. D.an increase of $45 and a decrease of $50.

(Table: Prices and Demand) The New Orleans Saints have a monopoly on Saints logo baseball hats.The Saints sell at most one hat to each customer, and the table shows each customer's willingness to pay.The marginal cost of producing a hat is $18.If the Saints were a perfectly competitive firm in a perfectly competitive industry, their profit-maximizing price and output total surplus would be _.If the Saints were a profit-maximizing monopoly, total surplus would be _. A.$0; $0 B.$27; $36 C.$36; $27 D.$18; $27

Which of the following is true?

Scenario: Monopolist The demand curve for a monopolist is as follows: P = 75 - 0.5Q, and the monopolist has the following MC expressed as P = 2Q.Assume also that ATC at the profit-maximizing level of production is equal to $12.50. (Scenario: Monopolist) Using the information from the scenario Monopolist, the MR curve is: A.P = 150 - 0.5Q. B.P = 75 - Q. C.P = 150 - Q. D.P = 225 - Q.

The pricing in monopoly prevents some mutually beneficial trades.The value of these unrealized mutually beneficial trades is called: A.sunk costs. B.opportunity costs. C.a deadweight loss. D.inequities.

Suppose that you build a new jumbo jet that can carry five times more passengers than any other competitor.You have high fixed costs due to the quantity of capital used to build the jets.There's decreasing average cost for all levels of demand.In this case, your monopoly would result from which of the following?

The land you own has the only known source of aloe needed to make anti-itch lotion.In this case, your monopoly results from which of the following?

Amtrak is a publicly owned company that provides rail service.This means that Amtrak's prices tend to be than if it were a private company, and the quality of service tends to be ________ than if it were a private company. A.higher; worse B.higher; better C.lower; worse D.lower; better

Figure: A Rock Climbing Shoe Monopoly (Figure: A Rock Climbing Shoe Monopoly) Look at the figure A Rock Climbing Shoe Monopoly.If the firm is regulated such that it earns zero economic profit, the firm will sell ________ pairs of shoes at a price of per pair. A.Q₁; P₁ B.Q₂; P₁ C.Q4; P₃ D.Q₃; P₂

Figure: The Monopolist III (Figure: The Monopolist III) Look at the figure The Monopolist III.If this monopolist profit- maximizes, it will produce ________units and charge a price equal to _.Its producer surplus will be equal to ________, its consumer surplus will equal , and the deadweight loss is equal to _. A.50; $30; $1,200; $600; $100 B.35; $65; $1,225; $612.50; $612.50 C.100; $65; $1,500; $615.50; $1,000 D.70; $35; $1,225; $615.50; $615.50

(Table: Prices and Demand) Look at the table Prices and Demand.The New Orleans Saints have a monopoly on Saints logo baseball hats.The Saints sell at most one hat to each customer, and the table shows each customer's willingness to pay.The marginal cost of producing a hat is $18.If the Saints increase the number of hats they sell from 4 to 5, marginal revenue is:

Figure: Demand, Revenue, and Cost Curves (Figure: Demand, Revenue, and Cost Curves) Look at the figure Demand, Revenue, and Cost Curves.The figure shows the demand, marginal revenue, marginal cost, and average total cost curves for Figglenuts-R-Us, a monopolist in the figglenut market.If the government wanted to regulate Figglenuts-R-Us such that it would minimize the deadweight loss while allowing the firm to break even, it would impose a price ceiling of in the market.

(Table: Demand for Economics Tutoring) Look at the table Demand for Economics Tutoring.Suppose Eric is the only economics tutor in town and therefore holds a monopoly on the sale of economics tutoring.The table shows the demand schedule for his services.Eric can offer additional hours of tutoring at a constant marginal cost of $2 per hour, and he has no fixed costs.Suppose Eric can perfectly price-discriminate by charging his customers exactly their willingness to pay.How many hours will he offer, and how much profit will he earn by price- discriminating?

Temporary monopolies via the provision of sole ownership rights to profit from the production, use, or sale of a good are provided by: A.patents and copyrights. B.natural monopolies. C.profit-maximizing behavior. D.network externalities.

(Table: Demand for Lenny's Coffee) Look at the table Demand for Lenny's Coffee.Lenny's Café is the only source of coffee for hundreds of miles in any direction.If Lenny's marginal cost of selling coffee is a constant $2 and the government forced Lenny to charge a price that eliminated deadweight loss, Lenny would charge a price of per cup and sell ________ cups. A.$0; 10 B.$2; 8 C.$4; 6 D.$5; 5

(Table: Demand and Total Cost) Look at the table Demand and Total Cost.Lenoia runs a natural monopoly producing electricity for a small mountain village.The table shows Lenoia's demand and total cost of producing electricity.The profit-maximizing quantity of electricity for her to produce is: 2

(Figure: The Profit-Maximizing Output and Price) Look at the figure The Profit-Maximizing Output and Price.Assume that there are no fixed costs and AC = MC = $200.If the monopolist can use price discrimination perfectly, the monopolist will produce an output of _______ diamonds. A.0 B.6 C.16 D.20