Question 1

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?

Accepted Answer

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

Question 2

Scenario 15-3
A monopoly firm maximizes its profit by producing Q = 500 units of output. At that level of output, its marginal revenue is $30, its average revenue is $60, and its average total cost is $34.
-Refer to Scenario 15-3. The firm's profit-maximizing price is

Accepted Answer

The profit-maximizing price is equal to the marginal revenue, which is $30.

Question 3

A monopolist will choose to increase output when

Accepted Answer

A monopolist will choose to increase output as long as the marginal revenue they receive from selling an additional unit is greater than the marginal cost of producing that unit. In other words, the monopolist will continue to produce as long as they are making a profit on each additional unit. If marginal revenue exceeds marginal cost at the present level of output, the monopolist will choose to increase output to maximize their profit.

Question 4

Scenario 15-3
A monopoly firm maximizes its profit by producing Q = 500 units of output. At that level of output, its marginal revenue is $30, its average revenue is $60, and its average total cost is $34.
-Refer to Scenario 15-3. At Q = 500, the firm's marginal cost is

Accepted Answer

To maximize profit, a monopoly firm produces where marginal revenue (MR) equals marginal cost (MC). Here, the firm produces at Q = 500 units of output where MR = $30. Therefore, MC must also be $30. This makes option B the correct answer.

Question 5

For a profit-maximizing monopolist,

Accepted Answer

The answer of For a profit-maximizing monopolist,
...

Question 6

Which of the following statements is correct?

Accepted Answer

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.

Question 7

A monopolist maximizes profits by

Accepted Answer

A monopolist maximizes profits by producing an output level where marginal revenue equals marginal cost. This is the point where the additional revenue from selling one more unit equals the additional cost of producing that unit.

Question 8

Scenario 15-3
A monopoly firm maximizes its profit by producing Q = 500 units of output. At that level of output, its marginal revenue is $30, its average revenue is $60, and its average total cost is $34.
-Refer to Scenario 15-3. At Q = 500, the firm's total revenue is

Accepted Answer

The answer of Scenario 15-3
A monopoly firm maximizes its profit...

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?

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

Which of the following statements is not correct?

Accepted Answer

The monopolist produces where MR = MC, but not where P = MC because they have market power and can set their own price.

Question 11

Scenario 15-3
A monopoly firm maximizes its profit by producing Q = 500 units of output. At that level of output, its marginal revenue is $30, its average revenue is $60, and its average total cost is $34.
-Refer to Scenario 15-3. At Q = 500, the firm's profit is

Accepted Answer

The firm's profit is calculated as (Average Revenue - Average Total Cost) * Quantity = ($60 - $34) * 500 = $13,000.

Question 12

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?

Accepted Answer

The total revenue is $27 * 10 = $270. The total cost is (average fixed cost + average variable cost) * quantity = ($10 + $12) * 10 = $220. The total profit is total revenue - total cost = $270 - $220 = $50.

Question 13

A monopolist maximizes profits by

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 14

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

Accepted Answer

The correct formula for calculating a monopolist's profit is (price - average total cost) × quantity, because it takes into account both the revenue from selling the product at the monopolist's chosen price and the cost of producing that product. Option A only considers the marginal cost, which is not enough to accurately determine profit. Option B only considers the average total cost, which does not take into account the revenue from selling the product. Option C multiplies the price by the quantity but does not take into account the cost of production.

Question 15

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?

Accepted Answer

To maximize profits, a monopolist should produce at the point where marginal cost equals marginal revenue (MC=MR). In this case, the marginal cost of producing 75 units is $6 per unit, while the marginal revenue is $5 per unit. This means that the firm is producing more than it should at that level, and should reduce production. Additionally, the average revenue is less than the price, which means that the monopolist is practicing price discrimination. To increase its profits, the monopolist should produce fewer units and charge a higher price.

Question 16

A reduction in a monopolist's fixed costs would

Accepted Answer

A reduction in fixed costs does not affect the marginal cost or marginal revenue, which are the determinants of the profit-maximizing price and quantity for a monopolist. Therefore, the profit-maximizing price and quantity remain unchanged.

Question 17

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?

Accepted Answer

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

Question 18

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?

Accepted Answer

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

Question 19

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

Accepted Answer

A profit-maximizing monopolist will produce the level of output where marginal revenue is equal to marginal cost. This is because when marginal revenue is greater than marginal cost, the firm can increase profits by producing more output. On the other hand, when marginal revenue is less than marginal cost, the firm can increase profits by producing less output. Therefore, the monopolist will choose the level of output at which these two are equal.

Question 20

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

Accepted Answer

A monopolist will maximize profits where marginal cost (MC) equals marginal revenue (MR). This is because if MC is less than MR, the firm can increase profits by producing more, and if MC is greater than MR, the firm can increase profits by producing less. Therefore, the profit-maximizing quantity of output is determined by the intersection of the MC and MR curves.

Quiz 15: Monopoly

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?

Scenario 15-3 A monopoly firm maximizes its profit by producing Q = 500 units of output. At that level of output, its marginal revenue is $30, its average revenue is $60, and its average total cost is $34. -Refer to Scenario 15-3. The firm's profit-maximizing price is

A monopolist will choose to increase output when

Scenario 15-3 A monopoly firm maximizes its profit by producing Q = 500 units of output. At that level of output, its marginal revenue is $30, its average revenue is $60, and its average total cost is $34. -Refer to Scenario 15-3. At Q = 500, the firm's marginal cost is

For a profit-maximizing monopolist,

Which of the following statements is correct?

A monopolist maximizes profits by

Scenario 15-3 A monopoly firm maximizes its profit by producing Q = 500 units of output. At that level of output, its marginal revenue is $30, its average revenue is $60, and its average total cost is $34. -Refer to Scenario 15-3. At Q = 500, the firm's total revenue is

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?

Which of the following statements is not correct?

Scenario 15-3 A monopoly firm maximizes its profit by producing Q = 500 units of output. At that level of output, its marginal revenue is $30, its average revenue is $60, and its average total cost is $34. -Refer to Scenario 15-3. At Q = 500, the firm's profit is

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 monopolist maximizes profits by

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

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 reduction in a monopolist's fixed costs would

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

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