Question 1

-The firm depicted in Figure 10-14 will

Accepted Answer

The answer of 
-The firm depicted in Figure 10-14 will
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Question 2

-In Figure 10-14,the total cost to the non-discriminating monopoly at the profit-maximizing output is

Accepted Answer

The total cost to the non-discriminating monopoly at the profit-maximizing output is $1,137.50. This is because the profit-maximizing output is where marginal cost equals marginal revenue. At this output, the total cost is equal to the area under the marginal cost curve up to the profit-maximizing output. In this case, the area under the marginal cost curve up to the profit-maximizing output is $1,137.50.

Question 3

A single-price monopolist is producing 500 units of output.At that level,price is $200,and average total cost is $150.In addition,both marginal cost and marginal revenue equal $120.Which of the following statements is correct in the short run?

Accepted Answer

The profit per unit is calculated as the difference between price and average total cost, which is $200 - $150 = $50.

Question 4

Which of the following is true for a monopolist that does not price discriminate?

Accepted Answer

A monopolist that does not price discriminate faces a downward-sloping demand curve, so to sell more units, it must lower the price on all units sold, making price (P) greater than marginal revenue (MR).

Question 5

Which of the output levels shown in Figure 10-10 would a monopolist never produce?

Accepted Answer

A monopolist maximizes profits by producing the quantity where marginal revenue equals marginal cost. In Figure 10-10, the marginal cost curve intersects the marginal revenue curve at points A, B, D, and E. Therefore, a monopolist could potentially produce 1 unit, 3 units, 4 units, or 5 units. However, at a quantity of 7 units, the marginal cost curve is above the marginal revenue curve, indicating that producing the 7th unit would result in a loss for the monopolist. Therefore, a monopolist would never produce 7 units.

Question 6

For a monopoly,profit per unit of output is

Accepted Answer

In a monopoly, the profit-maximizing output level occurs where marginal revenue (MR) equals marginal cost (MC). However, the profit per unit of output is not equal to the difference between MR and MC. Instead, it is equal to the price (P) minus the average total cost (ATC), since the firm charges the highest price consumers are willing to pay given the level of output it produces, while incurring costs for each unit produced. Therefore, the best choice is B, price minus average total cost.

Question 7

-Assuming no price discrimination,the firm represented by Figure 10-16 will have a per unit profit of

Accepted Answer

The firm's per unit profit is equal to the difference between the price and the average total cost. At the profit-maximizing output level, the price is $250 and the average total cost is $200. Therefore, the per unit profit is $250 - $200 = $50.

Question 8

-Assuming no price discrimination,the firm represented by Figure 10-16 will have a(n)

Accepted Answer

The firm is making an economic profit because the price is above the average total cost.

Question 9

-Suppose a firm is considering entering a market where it would face the demand and cost conditions shown in Figure 10-13.Which of the following statements is correct?

Accepted Answer

The firm is a natural monopolist, meaning it has high fixed costs and decreasing average costs over the relevant range of output. If it charges a single price, it may not cover its average total costs, leading to a long-run economic loss.

Question 10

-For the monopolist in Figure 10-10,the marginal revenue from producing the 7th unit is

Accepted Answer

In a monopolist's marginal revenue curve, the marginal revenue is typically less than the price due to the downward-sloping demand curve. If the marginal revenue is negative, it indicates that producing an additional unit decreases total revenue.

Question 11

-The firm in Figure 10-15 has

Accepted Answer

The firm has an economic loss of $12,500, as indicated by the difference between total costs and total revenue in the figure.

Question 12

In the short run,the monopolist should continue to produce whenever

Accepted Answer

In the short run, a monopolist should continue to produce as long as the price is greater than the average variable cost, as this means the firm can cover its variable costs and contribute to fixed costs, minimizing losses.

Question 13

-Figure 10-11 shows a single-price monopolist.The maximum level of profit that could be achieved is

Accepted Answer

The maximum level of profit that could be achieved is $20. This is because the monopolist is able to set a price that is above the marginal cost of production, and the quantity demanded at that price is greater than the quantity supplied at the marginal cost of production.

Question 14

-What is the total profit (or loss)for the (single-price)monopolist shown in Figure 10-9?

Accepted Answer

The monopolist's profit is the area above the marginal cost curve and below the demand curve. This area is represented by the rectangle edcf.

Question 15

-The single-price monopoly in Figure 10-14 will have an economic profit of

Accepted Answer

The single-price monopoly in Figure 10-14 will have an economic profit of $612.50. This is because the monopoly is able to charge a price above its marginal cost, which is the profit-maximizing price.

Question 16

Brittany provides manicures at the only salon in town.Her marginal cost is constant at $5 per client,her fixed cost is $25 per day,and she is able to do 8 manicures per day.On a given day,half of her clients are willing to pay $15 for a manicure;half are willing to pay only $10.If she charges all of her clients $10,then her maximum daily profit equals

Accepted Answer

If Brittany charges $10 per client, she serves 8 clients, earning $80 in total revenue. Her total cost is $25 (fixed) + $5 * 8 (variable) = $65. Thus, her profit is $80 - $65 = $15.

Question 17

A monopolist earns a profit whenever

Accepted Answer

A monopolist will earn a profit whenever the price exceeds the average total cost, as this means that the revenue received per unit sold is greater than the average cost per unit, resulting in a positive profit. Option A is incorrect as a firm can earn zero profit, but still continue production. Option B is incorrect since a monopolist will maximize profits at the level where marginal revenue equals marginal cost, but this does not necessarily ensure a positive profit. Option C is incorrect as profits can occur even if price does not necessarily exceed average variable cost. Option D is incorrect since marginal revenue being positive does not necessarily ensure a positive profit.

Question 18

In the short run,a monopoly should shut down whenever

Accepted Answer

In the short run, a monopoly should shut down if the price is less than the average variable cost everywhere, as it cannot cover its variable costs and would minimize losses by ceasing production.

Question 19

-Assuming no price discrimination,the firm depicted in Figure 10-16 will

Accepted Answer

In the short run, if a firm is earning an economic profit, it means that its total revenue exceeds its total costs, including both fixed and variable costs. This typically occurs when the price is above the average total cost at the profit-maximizing output level.

Question 20

-Figure 10-12 shows the cost and demand curves facing a monopolist whose marginal cost is constant.The firm has no fixed costs.If the firm charges a single price,economic profit will equal the area

Accepted Answer

The answer of 
-Figure 10-12 shows the cost and demand...

Quiz 11: Monopoly