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20 terms

Micro Q9

STUDY
PLAY
Which of the following prevents potential competitors from entering a monopolist's market?
legal restrictions
Natural monopolies form when
long-run average cost declines as a firm expands output
The demand curve faced by a firm with a patent on a marketable product
slopes downward
In Exhibit 9-1, the marginal revenue of the sixth unit is
-$40
As a monopolist increases the quantity of output produced, what happens to price (P) and marginal revenue (MR)?
both P and MR decrease, but MR falls faster than P
For a nondiscriminating monopolist, describe the relationship between market price (P), average revenue (AR), and marginal revenue (MR).
P = AR > MR
Which of the following is true at the profit-maximizing quantity for both a perfectly competitive firm and a monopoly?
Marginal revenue equals marginal cost.
Optimal output and price for the nondiscriminating monopolist in Exhibit 9-5 are
1,100 and $28
The nondiscriminating monopolist at its profit-maximizing quantity in Exhibit 9-5 is making a profit of
$11,000
Consider Exhibit 9-8. What is the profit-maximizing price?
$23.33
In the short run, how will a profit-maximizing monopolist react if its marginal cost suddenly increases? It will
restrict output to extract a higher price from customers
Suppose Arf n' Barf restaurant has a monopoly on restaurant food in a certain small town. Their rent, which is one of several fixed costs they pay whether they sell food or not, has gone up. In the short run, the Arf n' Barf should
pay the higher rent and leave menu prices unchanged
In the short run, the monopolist depicted in Exhibit 9-13 should
continue producing because P > AVC at some output levels
A monopolist's short-run supply curve is
nonexistent
Which of the following falsely describes a nondiscriminating monopolist at profit maximization?
Economic profit is always positive.
Which of the following is true in both perfect competition and monopoly?
Firms go out of business in the long run if total revenue cannot cover total cost.
If the government breaks up a constant-cost, nondiscriminating monopoly into a perfectly competitive industry, what would we expect with regard to output and price?
Output will increase and price will decrease.
In Exhibit 9-11, for a monopolist that does not price discriminate, consumer surplus at the profit-maximizing level of output is
the area under the demand curve bounded above a price of $136
In Exhibit 9-11, the level of output that would achieve allocative efficiency is
884 units
What area in Exhibit 9-17 represents consumer surplus under monopoly without price discrimination?
area a