Micro Q9 Pract9

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A monopolist is

a single seller of a product with no close substitutes

Patent laws

increase incentive to innovate by restricting entry into a market

The demand curve a monopolist uses in making an output decision is

the same as the market demand curve

Which of the following is true of marginal revenue for a monopolist that charges a single price?

P > MR because the monopolist must decrease price on all units sold in order to sell an additional unit.

Exhibit 9-1

Price
Quantity Demanded
$50
2
40
3
30
4
20
5
10
6


In Exhibit 9-1, the marginal revenue of the third unit is

$20

If all of a monopolist's costs are fixed costs, it will produce where marginal revenue is zero.

True

The firm in Exhibit 9-3, which charges the same price to all customers, will produce where

MR = MC

The profit-maximizing output and price for the firm in Exhibit 9-3, which charges the same price to all customers, are

117 and $24

The firm in Exhibit 9-3, a monopolist that maximizes profit by charging all customers the same price, is making a profit of

$468

Exhibit 9-7

Q
P
Q
TC
1
$36
1
$ 20
2
32
2
32
3
28
3
50
4
24
4
80
5
20
5
120


In Exhibit 9-7, how much profit is the monopoly earning at the profit-maximizing quantity?

$34

A monopolist earning short-run economic profit determines that at its present level of output, marginal revenue is $23 and marginal cost is $30. Which of the following should the firm do to increase profit?

Raise price and lower output.

Which of the following is not true of a pure monopoly?

It is a price taker

Gilligan runs the only dry-cleaning business on a desert isle. If the cost of cleaning fluid falls, he can increase profit by

lowering price

In the short run, a monopolist will always shut down when

total variable cost is greater than total revenue at all output levels

A monopolist has no supply curve because

as demand changes, each output level can be consistent with more than one profit-maximizing price

Which of the following statements is true of a monopolist?

The firm might earn a profit in the long run.

What is true at the profit-maximizing quantity for a nondiscriminating monopolist but not true of a perfectly competitive firm?

Price is greater than marginal cost.

Exhibit 9-15 depicts a non-discriminating monopoly market. Consumer surplus is represented by area

eda

In Exhibit 9-15, deadweight loss to consumers from a monopolist that does not price discriminate is represented by area

abf

A profit-maximizing monopolist produces an output level that is allocatively inefficient because

price is greater than marginal cost

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