Question 1

Monopolistic firms do not have supply curves because

Accepted Answer

Monopolists have market power, which means they can choose the price-quantity combination they want to sell at. Thus, they do not have a supply curve that shows a direct relationship between price and quantity supplied. Instead, they choose the output level that maximizes their profits.

Question 2

Suppose that a single-price monopolist calculates that at its present output,marginal revenue is $2 and marginal cost is $1.If the price of the product is $3,the monopolist could maximize its profits by

Accepted Answer

To maximize profits, a monopolist should produce until marginal revenue (MR) equals marginal cost (MC). Since MR ($2) is greater than MC ($1), the monopolist can increase profits by increasing output, which typically involves lowering the price to sell more units.

Question 3

The diagram below shows total revenue for a single-price monopolist.
  FIGURE 10-3
-A single-price monopolist is currently producing an output level where P = $320,MR = $260,ATC = $280,and MC = $200.In order to maximize profits,this monopolist should

Accepted Answer

To maximize profits, a monopolist should produce where marginal revenue (MR) equals marginal cost (MC). Since MR ($260) is greater than MC ($200), the firm should increase production to align MR and MC, which typically involves reducing price to sell the additional output.

Question 4

At the profit-maximizing level of output for a single-price monopolist,price

Accepted Answer

A single-price monopolist maximizes profits by producing where marginal revenue equals marginal cost. However, since a monopolist faces a downward sloping demand curve, the price charged will be higher than the marginal cost. Thus, the correct choice is (C).

Question 5

Which of the following statements about single-price monopolists is correct?

Accepted Answer

The answer of Which of the following statements about single-price...

Question 6

Consider the following AR and MR curves for a single-price monopolist.
  FIGURE 10-2
-Refer to Figure 10-2.If marginal costs were positive and constant but less than A,the profit-maximizing output for this single-price monopolist would be

Accepted Answer

The profit-maximizing output for a single-price monopolist is where marginal revenue (MR) equals marginal cost (MC). In this case, since marginal cost is positive and constant but less than price A, the monopolist will choose a level of output where MR=MC and this occurs at output level Q2. Therefore, the answer is C, greater than zero, but less than Q2.

Question 7

A single-price monopolist is currently producing an output level where price equals marginal cost,and profits are positive.In order to maximize profits,this monopolist should

Accepted Answer

A single-price monopolist maximizes profits where marginal revenue equals marginal cost. Since the current output level has price equal to marginal cost, the monopolist must be pricing above marginal cost and earning positive profits. To maximize profits, the monopolist should decrease production and increase price until marginal revenue equals marginal cost. Therefore, choice C is the best option.

Question 8

If a monopolistʹs marginal revenue is MR = 12 - 2Q and its marginal cost is MC = 3,then the profit-maximizing quantity is

Accepted Answer

To find the profit-maximizing quantity, we need to set marginal revenue equal to marginal cost and solve for Q. 
12 - 2Q = 3 
9 = 2Q 
Q = 4.5 
Therefore, the best choice is C, 4.5. At this quantity, the monopolist will produce and sell units where MR = MC, resulting in maximum profit.

Question 9

The diagram below shows total revenue for a single-price monopolist.
  FIGURE 10-3
-Refer to Figure 10-3.The profit-maximizing output for this single-price monopolist is

Accepted Answer

The correct answer cannot be determined without seeing Figure 10-3, as the explanation requires specific details from the diagram such as where marginal cost intersects marginal revenue, demand curves, and potentially other factors depicted in the figure.

Question 10

The diagram below shows total revenue for a single-price monopolist.
  FIGURE 10-3
-A single-price monopolist is currently producing an output level where P = $20,MR = $13,ATC = $15,and MC = $14.In order to maximize profits,this monopolist should

Accepted Answer

The monopolist is currently producing where MC = MR, but at this output level, the price ($20) is greater than the marginal cost ($14), indicating that the monopolist is not yet maximizing profits. To maximize profits, the monopolist should decrease production to decrease supply and increase the price. This will result in a higher price (greater than $20) and a lower output level, leading to higher profit. Therefore, the choice is to decrease production and increase price.

Question 11

The diagram below shows the demand curve facing a single -price monopolist.
  FIGURE 10-4
-Refer to Figure 10-4.At what level of quantity does the marginal revenue curve for this firm intersect the horizontal axis?

Accepted Answer

The marginal revenue curve intersects the horizontal axis at quantity level of 350. This is where marginal revenue equals zero, and any quantity level beyond this point would result in negative marginal revenue, indicating a loss for the firm. Therefore, the profit maximizing quantity level for this firm is 350.

Question 12

Consider the following AR and MR curves for a single-price monopolist.
  FIGURE 10-2
-Refer to Figure 10-2.For this single-price monopolist,the profit-maximizing level of output is

Accepted Answer

The correct answer cannot be determined without seeing Figure 10-2, as the explanation requires specific details from the diagram such as where marginal cost intersects marginal revenue, which are not provided in the question.

Question 13

For a monopolist,the profit-maximizing level of output occurs where

Accepted Answer

A monopolist maximizes profit by producing where marginal revenue (MR) equals marginal cost (MC). This is because MR represents the additional revenue generated from selling one more unit, while MC represents the additional cost of producing one more unit. At the profit-maximizing level of output, the monopolist is producing the quantity at which the incremental revenue from selling one more unit is exactly equal to the incremental cost of producing that unit. Therefore, the correct choice is A where MR = MC.

Question 14

Economic profit for a monopolistic firm will equal zero when

Accepted Answer

Economic profit for a monopolistic firm will equal zero when the price it charges for its product equals its average total cost. This is because economic profit is calculated as total revenue minus total cost, where total cost includes both explicit and implicit costs. When price equals average total cost, the firm covers all its costs including a normal return on investment, leaving no economic profit.

Question 15

If a single-price monopoly is presently producing an output at which marginal revenue is less than marginal cost,it can increase its profits by

Accepted Answer

If the monopoly is producing an output where marginal revenue is less than marginal cost, it means that it is not maximizing profits. By reducing output, the monopoly can shift the marginal revenue curve upwards, increasing the price it can charge and reducing marginal costs. As a result, profits increase.

Question 16

The diagram below shows the demand curve facing a single -price monopolist.
  FIGURE 10-4
-Refer to Figure 10-4.What is the firmʹs marginal revenue per unit as it moves from point C to point D on the demand curve?

Accepted Answer

The answer of The diagram below shows the demand curve...

Question 17

A monopolist will be earning positive economic profits

Accepted Answer

A monopolist will earn positive economic profits when the price charged is greater than its average total cost. At the profit-maximizing output level, the marginal revenue equals marginal cost. However, the monopolist sets the price higher than the marginal cost, which results in a price greater than average total cost and hence, positive economic profits.

Question 18

Consider the following AR and MR curves for a single-price monopolist.
  FIGURE 10-2
-Refer to Figure 10-2.If marginal costs were zero,the profit-maximizing output for this single-price monopolist would be

Accepted Answer

With zero marginal costs, the profit-maximizing output for the monopolist is where MR = 0, which is at Q2. At Q2, the monopolist charges a price of P2 and earns a profit equal to the shaded rectangle. Both Q1 and Q3 generate losses for the monopolist. At Q1, the monopolist incurs a loss equal to the shaded triangle, while at Q3, the monopolist incurs a loss equal to the shaded rectangle. At Q4, the monopolist would not produce any output, so there would be no profit or loss.

Question 19

The diagram below shows total revenue for a single-price monopolist.
  FIGURE 10-3
-A single-price monopolist is currently producing an output level where P = $320,MR = $200,AVC = $327,and MC = $200.In order to maximize profits,this firm should

Accepted Answer

Since the average variable cost (AVC) is higher than the price (P), the firm is not covering its variable costs at this output level, indicating it should cease production to minimize losses.

Question 20

If a single-price monopolistʹs price equals marginal cost,the firm

Accepted Answer

A single-price monopolist maximizes profits by producing at the level where marginal revenue (MR) equals marginal cost (MC). If the price (which equals AR, average revenue, for a monopolist) equals MC, the firm is not at the profit-maximizing output because, for a monopolist, MR < Price due to the downward-sloping demand curve. Therefore, the firm could increase profits by reducing output and increasing price, moving closer to where MR = MC.

Quiz 10: Monopoly, cartels, and Price Discrimination

Monopolistic firms do not have supply curves because

Suppose that a single-price monopolist calculates that at its present output,marginal revenue is $2 and marginal cost is $1.If the price of the product is $3,the monopolist could maximize its profits by

The diagram below shows total revenue for a single-price monopolist. FIGURE 10-3 -A single-price monopolist is currently producing an output level where P = $320,MR = $260,ATC = $280,and MC = $200.In order to maximize profits,this monopolist should

At the profit-maximizing level of output for a single-price monopolist,price

Which of the following statements about single-price monopolists is correct?

Consider the following AR and MR curves for a single-price monopolist. FIGURE 10-2 -Refer to Figure 10-2.If marginal costs were positive and constant but less than A,the profit-maximizing output for this single-price monopolist would be

A single-price monopolist is currently producing an output level where price equals marginal cost,and profits are positive.In order to maximize profits,this monopolist should

If a monopolistʹs marginal revenue is MR = 12 - 2Q and its marginal cost is MC = 3,then the profit-maximizing quantity is

The diagram below shows total revenue for a single-price monopolist. FIGURE 10-3 -Refer to Figure 10-3.The profit-maximizing output for this single-price monopolist is

The diagram below shows total revenue for a single-price monopolist. FIGURE 10-3 -A single-price monopolist is currently producing an output level where P = $20,MR = $13,ATC = $15,and MC = $14.In order to maximize profits,this monopolist should

The diagram below shows the demand curve facing a single -price monopolist. FIGURE 10-4 -Refer to Figure 10-4.At what level of quantity does the marginal revenue curve for this firm intersect the horizontal axis?

Consider the following AR and MR curves for a single-price monopolist. FIGURE 10-2 -Refer to Figure 10-2.For this single-price monopolist,the profit-maximizing level of output is

For a monopolist,the profit-maximizing level of output occurs where

Economic profit for a monopolistic firm will equal zero when

If a single-price monopoly is presently producing an output at which marginal revenue is less than marginal cost,it can increase its profits by

The diagram below shows the demand curve facing a single -price monopolist. FIGURE 10-4 -Refer to Figure 10-4.What is the firmʹs marginal revenue per unit as it moves from point C to point D on the demand curve?

A monopolist will be earning positive economic profits

Consider the following AR and MR curves for a single-price monopolist. FIGURE 10-2 -Refer to Figure 10-2.If marginal costs were zero,the profit-maximizing output for this single-price monopolist would be

The diagram below shows total revenue for a single-price monopolist. FIGURE 10-3 -A single-price monopolist is currently producing an output level where P = $320,MR = $200,AVC = $327,and MC = $200.In order to maximize profits,this firm should

If a single-price monopolistʹs price equals marginal cost,the firm