Question 1

A reduction in a monopolist's fixed costs would
A) decrease the profit-maximizing price and increase the profit-maximizing quantity produced.
B) increase the profit-maximizing price and decrease the profit-maximizing quantity produced.
C) not effect the profit-maximizing price or quantity.
D) possibly increase,decrease or not effect profit-maximizing price and quantity,depending on the elasticity of demand.

Accepted Answer

The answer of A reduction in a monopolist's fixed costs...

Question 2

The monopolist's profit-maximizing quantity of output is determined by the intersection of which of the following two curves?
A) marginal cost and demand
B) marginal cost and marginal revenue
C) average total cost and marginal revenue
D) average variable cost and average revenue

Accepted Answer

The monopolist's profit-maximizing quantity of output is determined by where marginal cost (MC) equals marginal revenue (MR). This is because a monopolist can only maximize profit by producing up to the point where the marginal revenue from selling an additional unit equals the marginal cost of producing that unit. The intersection of MC and MR is the point where the monopolist's profit is maximized.

Question 3

A monopolist maximizes profits by
A) producing an output level where marginal revenue equals marginal cost.
B) charging a price that is greater than marginal revenue.
C) earning a profit of (P - MC)x Q.
D) Both a and b are correct.

Accepted Answer

A monopolist maximizes profits by producing an output level where marginal revenue equals marginal cost. However, the monopolist will also charge a price that is greater than marginal revenue in order to maximize profits. The profit earned is calculated as (P - MC) x Q. Therefore, both options A and B are correct.

Question 4

Which of the following statements is correct?
A) If the monopolist's marginal revenue is greater than its marginal cost,the monopolist can increase profit by selling more units at a lower price per unit.
B) If the monopolist's marginal revenue is greater than its marginal cost,the monopolist can increase profit by selling fewer units at a higher price per unit.
C) When a monopolist produces where price equals the minimum of average total cost,it earns a positive economic profit.
D) If the monopolist is earning a positive economic profit,it must be producing where MR = MC.

Accepted Answer

The answer of Which of the following statements is correct?
A)...

Question 5

If a monopolist sells 100 units at $8 per unit and realizes an average total cost of $6 per unit,what is the monopolist's profit?
A) $200
B) $400
C) $600
D) $800

Accepted Answer

The answer of If a monopolist sells 100 units at...

Question 6

Suppose a monopolist charges a price of $27 for its product and sells 10 units at that price.At 10 units of production the firm has average fixed cost equal to $10 and average variable cost equal to $12.How much total profit is the firm earning at this price?
A) $5
B) $25
C) $50
D) $140

Accepted Answer

The answer of Suppose a monopolist charges a price of...

Question 7

A profit-maximizing monopolist will produce the level of output at which
A) average revenue is equal to average total cost.
B) average revenue is equal to marginal cost.
C) marginal revenue is equal to marginal cost.
D) total revenue is equal to opportunity cost.

Accepted Answer

A profit-maximizing monopolist will produce at the level of output at which marginal revenue (MR) is equal to marginal cost (MC) because this is where profits are maximized. At any output level where MR is greater than MC, producing one more unit will generate more revenue than cost, meaning increasing output will increase profits. Conversely, at any output level where MC is greater than MR, producing one more unit will generate more cost than revenue, meaning decreasing output will increase profits. Therefore, the monopolist will produce at the output level where these two are equal, which is at MR=MC.

Question 8

A profit-maximizing monopolist charges a price of $12.The intersection of the marginal revenue and marginal cost curves occurs where output is 10 units and marginal cost is $6.Average total cost for 10 units of output is $5.What is the monopolist's profit?
A) $60
B) $70
C) $100
D) $120

Accepted Answer

The answer of A profit-maximizing monopolist charges a price of...

Question 9

Suppose when a monopolist produces 50 units its average revenue is $8 per unit,its marginal revenue is $4 per unit,its marginal cost is $4 per unit,and its average total cost is $3 per unit.What can we conclude about this monopolist?
A) The monopolist is currently maximizing profits,and its total profits are $200.
B) The monopolist is currently maximizing profits,and its total profits are $250.
C) The monopolist is not currently maximizing its profits;it should produce more units and charge a lower price to maximize profit.
D) The monopolist is not currently maximizing its profits;it should produce fewer units and charger a higher price to maximize profit.

Accepted Answer

To find the monopolist's profit-maximizing quantity, we can set its marginal revenue equal to its marginal cost:

$4 = MC

Since its marginal cost is also equal to its marginal revenue, the monopolist’s price must be $8.

To find the monopolist's profit, we can use the formula:

Profit = (Price - Average Total Cost) x Quantity

In this case,

Profit = ($8 - $3) x 50 
Profit = $250

Therefore, the monopolist is currently maximizing profits, and its total profits are $250.

Question 10

Table 15-17
 
-Refer to Table 15-17.If a monopolist faces a constant marginal cost of $3,how much output should the firm produce in order to equate marginal revenue with marginal cost?
A) 3 units
B) 4 units
C) 5 units
D) 6 units

Accepted Answer

The answer of Table 15-17
 
-Refer to Table 15-17.If a...

Question 11

Which of the following statements is not correct?
A) The competitive firm produces where P = MC.
B) The monopolist produces where P = MC.
C) The competitive firm produces where MR = MC.
D) The monopolist produces where MR = MC.

Accepted Answer

The monopolist produces where MR = MC, not where P = MC. This is because in a monopoly, the firm has the power to set the price and will choose to produce where marginal revenue equals marginal cost in order to maximize profits.

Question 12

A monopolist will choose to increase output when
A) market price increases.
B) at all levels of output,marginal cost increases.
C) at the present level of output,marginal revenue exceeds marginal cost.
D) the demand curve shifts to the left.

Accepted Answer

A monopolist will increase output as long as marginal revenue (MR) exceeds marginal cost (MC). This is because producing one more unit of output will add more revenue (MR) than cost (MC). Therefore, when a monopolist reaches a point where MR=MC, producing any more output will not be profitable. Thus, the monopolist will continue to increase output as long as MR>MC.

Question 13

Table 15-17
 
-Refer to Table 15-17.If a monopolist faces a constant marginal cost of $4,how much output should the firm produce?
A) 3 units
B) 4 units
C) 5 units
D) 6 units

Accepted Answer

The answer of Table 15-17
 
-Refer to Table 15-17.If a...

Question 14

Suppose when a monopolist produces 75 units its average revenue is $10 per unit,its marginal revenue is $5 per unit,its marginal cost is $6 per unit,and its average total cost is $5 per unit.What can we conclude about this monopolist?
A) The monopolist is currently maximizing profits,and its total profits are $375.
B) The monopolist is currently maximizing profits,and its total profits are $300.
C) The monopolist is not currently maximizing profits;it should produce more units and charge a lower price to maximize profits.
D) The monopolist is not currently maximizing profits;it should produce fewer units and charge a higher price to maximize profits.

Accepted Answer

The monopolist is not currently maximizing profits because its marginal cost ($6) exceeds its marginal revenue ($5). To maximize profits, the monopolist should produce fewer units and charge a higher price. This would increase its marginal revenue and allow it to earn a higher profit per unit, while also reducing its total costs. Therefore, option D is the correct answer.

Question 15

For a profit-maximizing monopolist, A) P > MR = MC. B) P = MR = MC. C) P > MR > MC. D) MR < MC < P.

Accepted Answer

The answer of For a profit-maximizing monopolist,
A) P > MR...

Question 16

Which of the following formulas would correctly calculate a monopolist's profit?
A) profit = price - marginal cost
B) profit = price - average total cost
C) profit = (price - marginal cost)* quantity
D) profit = (price - average total cost)* quantity

Accepted Answer

The answer of Which of the following formulas would correctly...

Question 17

A monopolist maximizes profits by
A) producing an output level where marginal revenue equals marginal cost.
B) charging a price equal to marginal revenue and marginal cost.
C) charging a price where marginal cost equals average total cost.
D) Both a and b are correct.

Accepted Answer

The answer of A monopolist maximizes profits by
A) producing an...

Question 18

A profit-maximizing monopolist charges a price of $14.The intersection of the marginal revenue curve and the marginal cost curve occurs where output is 15 units and marginal cost is $7.What is the monopolist's profit?
A) $90
B) $105
C) $180
D) Not enough information is given to determine the answer.

Accepted Answer

The answer of A profit-maximizing monopolist charges a price of...

Question 19

Table 15-17
 
-Refer to Table 15-17.If a monopolist faces a constant marginal cost of $1,how much output should the firm produce in order to equate marginal revenue with marginal cost?
A) 3 units
B) 4 units
C) 5 units
D) 6 units

Accepted Answer

The answer of Table 15-17
 
-Refer to Table 15-17.If a...

Question 20

Table 15-17
 
-Refer to Table 15-17.If a monopolist faces a constant marginal cost of $2,how much output should the firm produce?
A) 3 units
B) 4 units
C) 5 units
D) 6 units

Accepted Answer

The answer of Table 15-17
 
-Refer to Table 15-17.If a...

Quiz 15: Monopoly

A reduction in a monopolist's fixed costs would

The monopolist's profit-maximizing quantity of output is determined by the intersection of which of the following two curves?

A monopolist maximizes profits by

Which of the following statements is correct?

If a monopolist sells 100 units at $8 per unit and realizes an average total cost of $6 per unit,what is the monopolist's profit?

Suppose a monopolist charges a price of $27 for its product and sells 10 units at that price.At 10 units of production the firm has average fixed cost equal to $10 and average variable cost equal to $12.How much total profit is the firm earning at this price?

A profit-maximizing monopolist will produce the level of output at which

A profit-maximizing monopolist charges a price of $12.The intersection of the marginal revenue and marginal cost curves occurs where output is 10 units and marginal cost is $6.Average total cost for 10 units of output is $5.What is the monopolist's profit?

Suppose when a monopolist produces 50 units its average revenue is $8 per unit,its marginal revenue is $4 per unit,its marginal cost is $4 per unit,and its average total cost is $3 per unit.What can we conclude about this monopolist?

Table 15-17 -Refer to Table 15-17.If a monopolist faces a constant marginal cost of $3,how much output should the firm produce in order to equate marginal revenue with marginal cost?

Which of the following statements is not correct?

A monopolist will choose to increase output when

Table 15-17 -Refer to Table 15-17.If a monopolist faces a constant marginal cost of $4,how much output should the firm produce?

Suppose when a monopolist produces 75 units its average revenue is $10 per unit,its marginal revenue is $5 per unit,its marginal cost is $6 per unit,and its average total cost is $5 per unit.What can we conclude about this monopolist?

For a profit-maximizing monopolist,

Which of the following formulas would correctly calculate a monopolist's profit?

A monopolist maximizes profits by

A profit-maximizing monopolist charges a price of $14.The intersection of the marginal revenue curve and the marginal cost curve occurs where output is 15 units and marginal cost is $7.What is the monopolist's profit?

Table 15-17 -Refer to Table 15-17.If a monopolist faces a constant marginal cost of $1,how much output should the firm produce in order to equate marginal revenue with marginal cost?

Table 15-17 -Refer to Table 15-17.If a monopolist faces a constant marginal cost of $2,how much output should the firm produce?