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Exam 15: Monopoly

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Question 141

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Table 15-19 A monopolist faces the following demand curve: -Refer to Table 15-19. If a monopolist faces a constant marginal cost of $9, how much output should the firm produce?

A) 2 units
B) 3 units
C) 4 units
D) 5 units

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

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Question 142

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Which of the following is not an example of a barrier to entry?

A) John owns the only parcel of lakeside property with a beach that is safe for swimming. He charges admission to neighbors who want to use the beach.
B) Jackie owns the copyright to a popular song. She receives royalties every time a radio station plays her song.
C) John Jr. owns the best seafood restaurant in a popular resort area. He charges high prices because the quality of the food is so good.
D) Caroline owns the patent for a new running shoe. She receives payments from the company who manufactures the shoes.

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

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Question 143

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Table 15-15 A monopolist faces the following demand curve: -Refer to Table 15-15. The monopolist has total fixed costs of $40 and a constant marginal cost of $5. At the profit-maximizing level of output, the monopolist's profit is

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

Suppose a monopolist charges a price of $27 for its product and sells 10 units at that price. At 10 units of production the firm has average fixed cost equal to $10 and average variable cost equal to $12. How much total profit is the firm earning at this price?

What do economists call the business practice of selling the same good at difference prices to different customers?

A patent gives a single person or firm the exclusive right to sell some good or service for a specific period of time.

Scenario 15-6 The concert promoters of a heavy-metal band, WeR2Loud, know that there are two types of concert-goers: die- hard fans and casual fans. For a particular WeR2Loud concert, there are 1,000 die-hard fans who will pay $150 for a ticket and 500 casual fans who will pay $50 for a ticket. There are 1,500 seats available at the concert venue. Suppose the cost of putting on the concert is $50,000, which includes the cost of the band, lighting, security, etc. -Refer to Scenario 15-6. How much additional profit can the concert promoters earn by charging each customer their willingness to pay relative to charging a flat price of $50 per ticket?

Many movie theaters allow discount tickets to be sold to senior citizens because

Figure 15-14 -Refer to Figure 15-14. A benevolent social planner would have the monopoly operate at an output level

One solution to the problems of marginal-cost pricing of a regulated natural monopolist is average cost pricing. In this model, the monopolist is allowed to price its production at average total cost. How does average-cost pricing differ from marginal-cost pricing? Does this solution maximize social well-being?

When a firm experiences continually declining average total costs, the firm is a

If a profit-maximizing monopolist faces a downward-sloping market demand curve, its

Scenario 15-10 Vincent operates a scenic tour business in Boston. He has one bus which can fit 50 people per tour and each tour lasts 2 hours. His total cost of operating one tour is fixed at $450. Vincent's cost is not reduced if he runs a tour with a partially full bus. While his cost is the same for all tours, Vincent charges each passenger his/her willingness to pay: adults $18 per trip, children $10 per trip, and senior citizens $12 per trip. At those rates, on a typical day Vincent's demand is: Assume that Vincent's customers are always available for the tour; therefore, he can fill his bus for each tour as long as there is sufficient total demand for the day. -Refer to Scenario 15-10. What is Vincent's profit on a typical day?

One method used to control the ability of firms to capture monopoly profit in the United States is through

Figure 15-17 -Refer to Figure 15-17. Which of the following areas represents the deadweight loss from this profit-maximizing monopolist?

When a monopolist decreases the price of its good, consumers

Table 15-2 Tanya has the following demand curve for selling taffy. Assume that Tanya has a marginal cost of $3 per unit. -Refer to Table 15-2. What is Tanya's profit-maximizing price?

When a monopolist increases the quantity that it sells, price decreases, which, all else equal, decreases total revenue; this is called the price effect.

Competitive firms have