ECN 104 Study Guide - Quiz Guide: Demand Curve, Fishing Tackle, Deadweight Loss

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8 Dec 2014

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Identify the choice that best completes the statement or answers the question. ___: suppose a certain firm has a monopoly on electricity. It will be less than its average fixed cost. It will be less than the price per unit of its product. ___: when a monopolist increases the amount of output that it produces and sells, what happens to the price of its output? a. b. c. d. It may only increase if the demand is elastic. It may only decreases if the demand is inelastic. It decreases regardless of the elasticity of demand. It increases regardless of the elasticity of demand. The figure below reflects the cost and revenue structure for a monopoly firm: refer to figure 15-3. What is a profit-maximizing monopoly"s total cost: p0 q1, p0 q2, p0 q3 d. (p1 p0) q2, refer to figure 15-3.

Related Questions

If a monopolist or a perfectly competitive firm is producing at a break-even point, then:
i. average revenue is equal to average variable cost
ii. average revenue is equal to average total cost
iii. total revenue is equal to total variable cost
iv. total revenue is equal to total cost

iii

i and iii

ii and iv

A natural monopoly, such as a local electricity provider, is the result of:
i. a firm owning or controlling a key input used in the production process
ii. economies of scale existing over a wide range of output
iii. long-run average total costs declining continuously as output increases
iv. long-run total costs declining continuously as output increases

What do economies of scale, the exclusive ownership of essential raw materials used in the production process, and patents have in common?

they are all barriers to entry

they all help explain why a monopolists demand and marginal revenue curves are identical

they must all be present before a monopolist may practice price discrimination

they all help explain why a firms short run average total cost curve is U-shaped

#10

The principle that a firm should produce up to the point where the marginal revenue (MR) from the sale of an extra unit of output is equal to the marginal cost (MC) of producing the extra unit applies:

to both perfectly competitive firms and monopolies

only to monopolies

only to perfectly competitive firms

only to firms that can employ discriminatory pricing strategies

#11

A monopoly is producing a level of output such that marginal revenue is equal to marginal cost. The firm is selling its output at a price of $8 per unit and is incurring average variable costs of $5 per unit and average total costs of $10 per unit. Given this information, it may be concluded that the firm:

is operating at maximum total profit

is operating at a loss that could be reduced by shutting down

is operating at a profit that could be increased by producing more output

is operating at a loss that is less than the loss incurred by shutting down

#12

Suppose the demand function for a profit maximizing monopolists good is P = 120 - 0.2Q, its total cost function is TC = 40 + 4Q + Q2, and its marginal cost function is MC = 4 + 2Q. If the firm uses a uniform pricing strategy, then rounded to the nearest unit of output and to the nearest dollar the firm will:

produce 48 units of output, charge a price of $110, and earn a total profit of $5280

produce 48 units of output, charge a price of $110, and earn a total profit of $2744

produce 52 units of output, charge a price of $134, and earn a total profit of $5322

produce 52 units of output, charge a price of $134, and earn a total profit of $4016

magentabuffalo597

1.
When a monopoly charges a higher price, fewer of its goods aresold.
A) True
B) False
2.
A firm can price discriminate if it operates in a competitivemarket.
A) True
B) False
3.
Declining average total cost with increased production is one ofthe defining characteristics of a natural monopoly.
A) True
B) False
4.
In a natural monopoly,if the government requires marginal costpricing, it must pay the monopolist a subsidy.
A) True
B) False
5.
A discriminating monopolist will produce a larger output than anon-discriminating monopolist.
A) True
B) False
6.
By selling hardcover books to die-hard fans and paperback books toless enthusiastic readers, the publisher is able to pricediscriminate and raise its profit.
A) True
B) False
7.
For a monopoly, marginal revenue is often greater than the pricethey charge for their good.
A) True
B) False
8.
A monopoly that engages in perfect price discrimination produces asmuch as a firm in perfect competition
A) True
B) False
9.
The monopolist is a price maker
A) True
B) False
10.
A monopolist will always pick a price in the elastic region of thedemand curve
A) True
B) False

burgundyhare679

1. A perfectly competitive firm will continue producing in the short run as long as it can cover its:

A.total cost.
B.average total cost.
C.average variable cost.
D.average fixed cost.

2. A perfectly competitive firm will earn a profit and will continue producing the profit-maximizing quantity of output in the short run if price is:

A.greater than marginal cost.
B.less than marginal cost.
C.less than average variable cost.
D.greater than average total cost.

3. Monopolistic competition is an industry characterized by:

A.a product with many close substitutes.
B.a horizontal demand curve.
C.a small number of firms.
D.barriers to entry and exit.

4. If a perfectly competitive firm increases production from 10 units to 11 units, and the market price is $20 per unit, total revenue for 10 units is:

A.$10.
B.$20
C.$200.
D.$210.

5. The demand curve facing a monopolist is:

A.horizontal, the same as that facing a perfectly competitive firm.
B.downward sloping, the same as that facing a perfectly competitive firm.
C.upward sloping, the same as that facing a perfectly competitive firm.
D.downward sloping, unlike the horizontal demand curve facing a perfectly competitive firm.

6. Suppose that a monopolist increases production from 10 units to 11 units. If the market price declines from $30 per unit to $29 per unit, marginal revenue for the eleventh unit is:

A.$1.
B.$9.
C.$19.
D.$29.

7. Most electric, gas, and water companies are examples of:

A.unregulated monopolies.
B.natural monopolies.
C.restricted-input monopolies.
D.sunk-cost monopolies.

8.If a perfectly competitive firm is producing a quantity that generates P > MC, then profit:

A.is maximized.
B.can be increased by increasing the price.
C.can be increased by decreasing the price.
D.can be increased by increasing production.

ECN 104 Study Guide - Quiz Guide: Demand Curve, Fishing Tackle, Deadweight Loss

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