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20 terms

Micro Q9 Pract9

STUDY
PLAY
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