Question 1

NARRBEGIN: Exhibit 9-11-1
Exhibit 9-11
 
-If the monopolist in Exhibit 9-11 engages in perfect price discrimination, total revenue would be

Accepted Answer

The answer of NARRBEGIN: Exhibit 9-11-1
Exhibit 9-11
 
-If the monopolist...

Question 2

NARRBEGIN: Exhibit 9-11-1
Exhibit 9-11
 
-If the monopolist in Exhibit 9-11 does not price discriminate, the total amount consumers will spend on its profit-maximizing quantity of output is

Accepted Answer

The answer of NARRBEGIN: Exhibit 9-11-1
Exhibit 9-11
 
-If the monopolist...

Question 3

NARRBEGIN: Exhibit 9-11-1
Exhibit 9-11
 
-If the monopolist in Exhibit 9-11 engages in perfect price discrimination, price would be

Accepted Answer

The answer of NARRBEGIN: Exhibit 9-11-1
Exhibit 9-11
 
-If the monopolist...

Question 4

NARRBEGIN: Exhibit 9-11-1
Exhibit 9-11
 
-If the monopolist in Exhibit 9-11 engages in perfect price discrimination, profit-maximizing output would be

Accepted Answer

Perfect price discrimination occurs when the monopolist charges each customer their maximum willingness to pay. In this case, the monopolist's marginal revenue curve is the same as the demand curve. We can see from the graph that at an output of 884 units, the marginal revenue (MR) equals the marginal cost (MC). At any output level above or below 884 units, the MR is either greater or less than MC, respectively. Therefore, 884 units is the profit-maximizing output level for a monopolist engaging in perfect price discrimination.

Question 5

NARRBEGIN: Exhibit 9-11-1
Exhibit 9-11
 
-In Exhibit 9-11, which level of output maximizes profit for this nondiscriminating monopolist?

Accepted Answer

The answer of NARRBEGIN: Exhibit 9-11-1
Exhibit 9-11
 
-In Exhibit 9-11,...

Question 6

In the short run, how will a profit-maximizing monopolist react if its marginal cost suddenly increases? It will

Accepted Answer

A profit-maximizing monopolist will restrict output in response to an increase in marginal cost in order to maintain their profit margin. By producing less output, they can maintain a higher price and extract a higher price from customers. Lowering the price to expand revenue possibilities (A) may not be feasible as the cost of production has increased. Maintaining the current price if profit is still positive (C) may not be the most profitable decision if the increase in marginal cost has significantly reduced profits. Increasing plant size to lower marginal cost (D) or decreasing plant size to lower marginal cost (E) may not be possible in the short run as it takes time and resources to adjust the size of the plant.

Question 7

NARRBEGIN: Exhibit 9-11-1
Exhibit 9-11
 
-Maximum profit for the profit-maximizing (nondiscriminating) monopoly in Exhibit 9-11 will be

Accepted Answer

The answer of NARRBEGIN: Exhibit 9-11-1
Exhibit 9-11
 
-Maximum profit for...

Question 8

You are hired as a production analyst at Monopoly-R-Us and you estimate that, at current output, demand is inelastic and marginal cost is positive. You advise your superiors that they can increase profit by

Accepted Answer

Since demand is inelastic, raising the price will still result in an increase in total revenue. However, it is important to raise the price into the elastic range to maximize profit. If the price is raised too much, demand will decrease too significantly and overall revenue will decrease. Therefore, option B is the best choice.

Question 9

NARRBEGIN: Exhibit 9-11-1
Exhibit 9-11
 
-What price will be charged by the profit-maximizing monopolist in Exhibit 9-11 that does not price discriminate?

Accepted Answer

The answer of NARRBEGIN: Exhibit 9-11-1
Exhibit 9-11
 
-What price will...

Question 10

NARRBEGIN: Exhibit 9-11-1
Exhibit 9-11
 
-In Exhibit 9-11, for a monopolist that does not price discriminate, consumer surplus at the profit-maximizing level of output is

Accepted Answer

For a monopolist that does not practice price discrimination, the profit-maximizing level of output is where marginal revenue (MR) equals marginal cost (MC). In Exhibit 9-11, this occurs at a price of $136 and a quantity of 8 units. 
Consumer surplus is the area between the demand curve and the price that consumers actually pay. At the profit-maximizing level of output, the price is $136, so consumer surplus is the area under the demand curve bounded above a price of $136. Therefore, the correct choice is A.

Question 11

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

Accepted Answer

A pure monopoly is not a price taker as it has the power to set its own price due to its exclusive control over the market.

Question 12

NARRBEGIN: Exhibit 9-11-1
Exhibit 9-11
 
-If the monopolist in Exhibit 9-11 chooses to produce 1,000 units and does not price discriminate, its profit will be

Accepted Answer

The answer of NARRBEGIN: Exhibit 9-11-1
Exhibit 9-11
 
-If the monopolist...

Question 13

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

Accepted Answer

The answer of Gilligan runs the only dry-cleaning business on...

Question 14

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

Accepted Answer

The answer of Suppose Arf n' Barf restaurant has a...

Question 15

NARRBEGIN: Exhibit 9-11-1
Exhibit 9-11
 
-In Exhibit 9-11, the level of output that would achieve allocative efficiency is

Accepted Answer

Allocative efficiency occurs at the point where marginal cost (MC) equals marginal benefit (MB). At output level 884 units, MC intersects MB, indicating that this is the level at which allocative efficiency occurs. Any output level below or above 884 would result in a loss of allocative efficiency.

Question 16

NARRBEGIN: Exhibit 9-11-1
Exhibit 9-11
 
-Total cost for the profit-maximizing (nondiscriminating) monopoly in Exhibit 9-11 will be

Accepted Answer

The profit-maximizing (nondiscriminating) monopoly will produce where marginal revenue (MR) equals marginal cost (MC), which occurs at a quantity of 8 units. At this quantity, the monopolist will charge a price of $10, resulting in a total revenue of $80,000. The total cost can be calculated by adding the fixed cost of $77,000 and the variable cost of producing 8 units, which is $3,000. Therefore, the total cost for the monopolist is $80,000 + $3,000 + $77,000 = $160,000. Hence, the correct answer is option C, $77,000.

Question 17

For a monopolist that produces in the short run and does not price discriminate, price always has to be

Accepted Answer

A monopolist that does not price discriminate has market power, allowing them to charge a price higher than the marginal cost. This means that the profit-maximizing price would be greater than the marginal cost, resulting in a markup. Therefore, C is the correct answer.

Question 18

NARRBEGIN: Exhibit 9-11-1
Exhibit 9-11
 
-Total revenue for the profit-maximizing monopoly in Exhibit 9-11 that does not price discriminate will be

Accepted Answer

The answer of NARRBEGIN: Exhibit 9-11-1
Exhibit 9-11
 
-Total revenue for...

Question 19

A profit-maximizing monopolist that produces in the short run will

Accepted Answer

A profit-maximizing monopolist that produces in the short run will increase output as long as the marginal revenue exceeds the marginal cost of producing that unit. The monopolist will continue to produce as long as the price is greater than or equal to the average variable cost. The monopolist will not produce at a level where the marginal cost exceeds the marginal revenue because that would result in losses. The level of output where average total cost is at a minimum is the point of production efficiency, but the monopolist's goal is to maximize profits, not minimize costs. The monopolist may increase price if the demand is inelastic, but it is not based on whether average revenue exceeds average total cost.

Question 20

NARRBEGIN: Exhibit 9-11-1
Exhibit 9-11
 
-If the monopolist in Exhibit 9-11 engages in perfect price discrimination, price would

Accepted Answer

The answer of NARRBEGIN: Exhibit 9-11-1
Exhibit 9-11
 
-If the monopolist...

Quiz 9: A: Monopoly

NARRBEGIN: Exhibit 9-11-1 Exhibit 9-11 -If the monopolist in Exhibit 9-11 engages in perfect price discrimination, total revenue would be

NARRBEGIN: Exhibit 9-11-1 Exhibit 9-11 -If the monopolist in Exhibit 9-11 does not price discriminate, the total amount consumers will spend on its profit-maximizing quantity of output is

NARRBEGIN: Exhibit 9-11-1 Exhibit 9-11 -If the monopolist in Exhibit 9-11 engages in perfect price discrimination, price would be

NARRBEGIN: Exhibit 9-11-1 Exhibit 9-11 -If the monopolist in Exhibit 9-11 engages in perfect price discrimination, profit-maximizing output would be

NARRBEGIN: Exhibit 9-11-1 Exhibit 9-11 -In Exhibit 9-11, which level of output maximizes profit for this nondiscriminating monopolist?

In the short run, how will a profit-maximizing monopolist react if its marginal cost suddenly increases? It will

NARRBEGIN: Exhibit 9-11-1 Exhibit 9-11 -Maximum profit for the profit-maximizing (nondiscriminating) monopoly in Exhibit 9-11 will be

You are hired as a production analyst at Monopoly-R-Us and you estimate that, at current output, demand is inelastic and marginal cost is positive. You advise your superiors that they can increase profit by

NARRBEGIN: Exhibit 9-11-1 Exhibit 9-11 -What price will be charged by the profit-maximizing monopolist in Exhibit 9-11 that does not price discriminate?

NARRBEGIN: Exhibit 9-11-1 Exhibit 9-11 -In Exhibit 9-11, for a monopolist that does not price discriminate, consumer surplus at the profit-maximizing level of output is

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

NARRBEGIN: Exhibit 9-11-1 Exhibit 9-11 -If the monopolist in Exhibit 9-11 chooses to produce 1,000 units and does not price discriminate, its profit will be

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

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

NARRBEGIN: Exhibit 9-11-1 Exhibit 9-11 -In Exhibit 9-11, the level of output that would achieve allocative efficiency is

NARRBEGIN: Exhibit 9-11-1 Exhibit 9-11 -Total cost for the profit-maximizing (nondiscriminating) monopoly in Exhibit 9-11 will be

For a monopolist that produces in the short run and does not price discriminate, price always has to be

NARRBEGIN: Exhibit 9-11-1 Exhibit 9-11 -Total revenue for the profit-maximizing monopoly in Exhibit 9-11 that does not price discriminate will be

A profit-maximizing monopolist that produces in the short run will

NARRBEGIN: Exhibit 9-11-1 Exhibit 9-11 -If the monopolist in Exhibit 9-11 engages in perfect price discrimination, price would