Deck 10: Monopolistic Competition, Product Differentiation, Monopoly and Antitrust

Question 1

Exhibit
The following diagram depicts monopolistically competitive firms.?


-Refer to Exhibit. The firm illustrated in Graph A above maximizes profits (minimizes losses) by producing at level of output ____ and charging price ____.

A)q1; P₁
B)q2; P₁
C)q1; P₂
D)q2; P₂

Answer 1

q1; P₁

Question 2

Exhibit
The following diagram depicts monopolistically competitive firms.?


-Refer to Exhibit. In Graph B above, the firm will maximize profits (minimize losses) by producing at level of output ____ and charging price ____.

A)q1; P₁
B)q2; P₁
C)q1; P₂
D)q2; P₂

Answer 2

q1; P₁

Question 3

Exhibit
The following diagram depicts monopolistically competitive firms.?


-Refer to Exhibit. In Graph B, a profit-maximizing (loss-minimizing) firm will experience a ____ at output quantity ____.

A)loss; q₁
B)loss; q₂
C)profit; q₁
D)profit; q₂

Answer 3

loss; q₁

Question 4

Exhibit
The following diagram depicts monopolistically competitive firms.?


-Refer to Exhibit. In Graph B, the profit-maximizing (loss-minimizing) firm is making a ____ shown by the area ____.

A)profit; P₁ V R S
B)loss; P₂ P₁ S T
C)profit; P₂ P₁ S T
D)loss; P₁ V R S

Question 5

Exhibit
The following diagrams depict firms in monopolistically competitive markets.
?


-Refer to Exhibit. Graph ____ demonstrates firms entering the market, and a resulting ____ of the firm's share of the market.

A)A; increase
B)B; increase
C)A; decrease
D)B; decrease

Question 6

Exhibit
The following diagrams depict firms in monopolistically competitive markets.
?


-Refer to Exhibit. Graph ____ demonstrates firms exiting the market, and a resulting ____ of the firm's share of the market.

A)A; increase
B)B; increase
C)A; decrease
D)B; decrease

Question 7

?Exhibit
The graph depicts a monopolistically competitive firm's demand, marginal revenue, and cost curves.


-Refer to Exhibit. If the firm produces the profit-maximizing (or loss-minimizing) level of output, it will produce:

A)100 sweaters each week.
B)85 sweaters each week.
C)70 sweaters each week.
D)60 sweaters each week.

Question 8

?Exhibit
The graph depicts a monopolistically competitive firm's demand, marginal revenue, and cost curves.


-Refer to Exhibit. Based on the diagram, it follows that:

A)new firms will enter the industry.
B)existing firms will exit the industry.
C)the firm is operating in long-run equilibrium.
D)the firm could minimize average cost by producing 85 sweaters each week.

Question 9

?Exhibit
The graph depicts a monopolistically competitive firm's demand, marginal revenue, and cost curves.


-Refer to Exhibit. To maximize profit (or minimize losses), the firm will charge:

A)$38 per sweater.
B)$44 per sweater.
C)$50 per sweater.
D)$56 per sweater.

Question 10

A natural monopolist will voluntarily choose to produce at the point where P = MC.

Question 11

Perfectly competitive firms and monopolists are different because

A)in perfect competition MC = P, while a monopolist produces where P > MC.
B)in perfect competition MC = P, while a monopolist produces where MC > P.
C)in perfect competition P > MC, while a monopolist produces where MC = P.
D)in perfect competition MC > P, while a monopolist produces where MC = P.

Question 12

Based on the table below what is the marginal revenue of the 14^th unit of output??QuantityPrice13$50.0014$49.7515$49.50

A)$0.25
B)$46.00
C)$46.50
D)$49.75

Question 13

Based on the table below what is the marginal revenue of the 28^th unit of output??QuantityPrice27$28.5028$27.0029$25.50?

A)-$16.50
B)-$13.50
C)$13.50
D)$16.50

Question 14

?Exhibit


-Refer to Exhibit. The profit-maximizing firm will produce at what level of output?

A)Q1
B)Q2
C)Q3
D)None of the above.

Question 15

?Exhibit


-Refer to Exhibit. If the firm is profit maximizing, the region bounded by CADE represents:

A)total costs.
B)total losses.
C)total profits.
D)total consumer surplus.

Question 16

?Exhibit


-Refer to Exhibit. The socially efficient level of output equals:

A)Q1
B)Q2
C)Q3
D)none of the above.

Question 17

?Exhibit


-Refer to Exhibit. The profit-maximizing firm's total revenue is indicated in the diagram as area:

A)0CEQ₁.
B)0BFQ₂.
C)0ADQ₁.
D)CADE.

Question 18

?Exhibit


-Refer to Exhibit. Total cost when the monopolist is maximizing profits is indicated by area:

A)0CEQ₁.
B)0BFQ₂.
C)0ADQ₁.
D)CADE.

Question 19

?Exhibit


-Refer to Exhibit. The welfare loss due to monopoly is indicated in the diagram as area:

A)DGE.
B)DFH.
C)DFQ₂Q₁.
D)EGQ₃Q₁.

Question 20

?Exhibit


-Refer to Exhibit. The profit-maximizing firm will produce at what level of output?

A)Q1
B)Q2
C)Q3
D)zero units

Question 21

?Exhibit


-Refer to Exhibit. The region bounded by P*ABC represents:

A)total costs.
B)total losses.
C)total profits.
D)total consumer surplus.

Question 22

What is the maximum amount of economic profit that the firm below could generate??

A)$222
B)$300
C)$330
D)$370

Question 23

Exhibit
Consider the following demand and cost information for a monopoly.


-Refer to Exhibit. What is the marginal revenue of the 2nd unit?

A)$2
B)$4
C)$10
D)$14

Question 24

Exhibit
Consider the following demand and cost information for a monopoly.


-Refer to Exhibit. What is the marginal cost of the 3rd unit?

A)$2
B)$7
C)$16
D)$31

Question 25

Exhibit
Consider the following demand and cost information for a monopoly.


-Refer to Exhibit. What price should the monopoly charge to maximize profit?

A)$8
B)$10
C)$12
D)$14

Question 26

Exhibit
Consider the following demand and cost information for a monopoly.


-Refer to Exhibit. At the profit-maximizing price, how much profit will the monopoly earn?

A)$4
B)$5
C)$6
D)$7

Question 27

Exhibit
Consider the following demand and cost information for a monopoly.


-Refer to Exhibit. What is the monopolist's average total cost of production at the profit-maximizing price?

A)$6
B)$7
C)$8
D)$8.5

Question 28

Exhibit


-Refer to Exhibit. What price will the monopolist charge?

A)A
B)D
C)B
D)C

Question 29

Exhibit


-Refer to Exhibit. How much output will the monopolist produce?

A) Q₁
B) Q₂
C) Q₃
D) zero

Question 30

Exhibit


-Refer to Exhibit. What area measures the monopolist's profit?

A) BFGA
B) DEFB
C) DEGA
D) BFQ₁0

Question 31

Exhibit


-Refer to Exhibit. What area measures the monopolist's total costs?

A) AGQ₁0
B) DEQ₁0
C) BFQ₁0
D) CHQ₃0

Question 32

Exhibit


-Refer to Exhibit. What area measures the monopolist's total revenue?

A) AGQ₁0
B) DEQ₁0
C) BFQ₁0
D) CHQ₃0

Question 33

?Exhibit


-Refer to Exhibit. What price will the monopolist charge?

A)A
B)D
C)B
D)C

Question 34

?Exhibit


-Refer to Exhibit. How much output will the monopolist produce?

A) Q₁
B) Q₂
C) Q₃
D) zero

Question 35

?Exhibit


-Refer to Exhibit. What area measures the monopolist's loss?

A) EFHA
B) CIJB
C) EFGD
D) AHQ₁0

Question 36

?Exhibit


-Refer to Exhibit. What area measures the monopolist's total costs?

A) AGQ₁0
B) DGQ₁0
C) AHQ₁0
D) BJQ₂0

Question 37

?Exhibit


-Refer to Exhibit. What area measures the monopolist's total revenue?

A) EFQ₁0
B) DGQ₁0
C) AHQ₁0
D) CIQ₃0

Question 38

Which of the following is (are) true of a monopoly?
(i)A monopoly has the ability to set its price.
(ii)A monopolists marginal revenue will always increase when it lowers the price of its product.
(iii)A monopoly can never experience an economic loss.

A)(i) only
B)(ii) only
C)(i) and (ii) only
D)(ii) and (iii) only

Question 39

Exhibit
The following diagram contains information on cost and revenue curves facing a regulated monopoly.


-Refer to Exhibit. If the government is able to regulate the monopolist using marginal-cost pricing, what price and output combinations are expected to result?

A)P5 and Q₂
B)P2 and Q₂
C)P4 and Q₃
D)P6 and Q₄

Question 40

Exhibit
The following diagram contains information on cost and revenue curves facing a regulated monopoly.


-Refer to Exhibit. If the government is able to regulate the monopolist using average-cost pricing, what price and output combinations are expected to result?

A)P5 and Q₂
B)P2 and Q₂
C)P4 and Q₃
D)P6 and Q₄

Question 41

Exhibit
The following diagram contains information on cost and revenue curves facing a regulated monopoly.


-Refer to Exhibit. If regulators set a price according to marginal-cost pricing, the firm will:

A)earn positive economic profits.
B)make zero economic profits.
C)suffer an economic loss.
D)earn the same level of profits as it would absent regulation.

Question 42

Exhibit


-Refer to Exhibit. What quantity of output would a profit-maximizing monopolist produce?

A)Q₄
B)Q1
C)Q2
D)Q3

Question 43

Exhibit


-Refer to Exhibit. Identify the area that represents total revenue for a profit-maximizing monopolist

A) P₄DQ₁0
B) P₃BQ₃0.
C) P₄DQ₁0 .
D) DAP₁P₄.

Question 44

Exhibit


-Refer to Exhibit. Identify the area of the welfare loss due to monopoly pricing and output practices.

A) ADB
B) DCB
C)ACB
D) DAP₁P₄

Question 45

?Exhibit


-Refer to Exhibit. In perfect competition, producer surplus is area:

A)b + c
B)b + d
C)d + e
D) e

Question 46

?Exhibit


-Refer to Exhibit. In perfect price discrimination, producer surplus is area:

A) a
B)a + b + c
C)a + b + c + d + e
D) zero

Question 47

?Exhibit


-Refer to Exhibit. In perfect competition total welfare is area:

A) a + b + c
B)d + e
C)a + b + c + d + e
D) zero

Question 48

?Exhibit


-Refer to Exhibit. In single price monopoly, total welfare is area:

A) zero
B)a
C)b + d
D) a + b + d

Question 49

?Exhibit


-Refer to Exhibit. In perfect competition, deadweight loss is area:

A) a
B) a + b + c
C)a + b + c + d + e
D) zero

Question 50

?Exhibit


-Refer to Exhibit. If customers are charged 4 cents during the non-peak period, it is:

A)not efficient because the marginal benefit is greater than the marginal cost
B)efficient because marginal benefit is equal to the marginal cost
C)cannot determine
D)none of the above