Question 1

Figure 15-3 
-Refer to Figure 15-3.What area measures the monopolist's profit?

Accepted Answer

The area that measures the monopolist's profit is the rectangle defined by the intersection of the demand curve and the marginal cost curve (i.e., the area between points B and G), multiplied by the quantity sold (K). Therefore, the correct choice is C, which corresponds to this area. A and D are incorrect because they do not represent the profit area, and B is incorrect because it includes the consumer surplus as part of the monopolist's profit.

Question 2

A monopolist will choose to increase output when

Accepted Answer

A monopolist will only increase output when the marginal revenue exceeds the marginal cost. This is because at the current level of output, the marginal revenue is greater than the marginal cost, which means that the additional units produced will bring in more revenue than the cost of producing those units. Therefore, the monopolist will benefit from increasing output. The other options are not necessarily true for a monopolist to increase output.

Question 3

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 4

Figure 15-4 
-Refer to Figure 15-4.The marginal revenue curve for a monopoly firm is depicted by curve

Accepted Answer

The best choice for the monopoly firm is where MR=MC, which is at the point where the marginal cost curve intersects with the marginal revenue curve. Thus, the profit-maximizing output level is Q2 and the corresponding price is P2. The areas representing producer surplus and deadweight loss are also shown in the diagram.

Question 5

Which of the following statements is correct?

Accepted Answer

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

Question 6

Figure 15-4 
-Refer to Figure 15-4.If the monopoly firm wants to maximize its profit,it should operate at a level of output equal to

Accepted Answer

The monopoly firm should operate at the level of output where marginal revenue (MR) equals marginal cost (MC), which is at point Q2. At a lower output level, the MR would be higher than MC, leading to an increase in profit if the output is increased. At a higher output level, the MC would be higher than MR, leading to a decrease in profit if the output is increased. Therefore, the best choice for the monopoly firm is to operate at point Q2.

Question 7

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

Accepted Answer

The profit-maximizing quantity of output for a monopolist is where marginal cost (MC) equals marginal revenue (MR), because at this point the additional cost of producing one more unit is equal to the additional revenue gained from selling one more unit. This point is the most efficient point for the monopolist to produce in order to maximize profit. Therefore, the answer is B, which describes the intersection of the MC and MR curves.

Question 8

Figure 15-4 
-Refer to Figure 15-4.If the monopoly firm is currently producing Q3 units of output,then a decrease in output will necessarily cause profit to

Accepted Answer

According to the diagram, at Q3 level of output, the marginal cost (MC) is greater than the marginal revenue (MR), resulting in a negative marginal profit. Therefore, any decrease in output will reduce the negative marginal profit, leading to an increase in profit. Thus, profit will decrease if output decreases.

Question 9

Figure 15-4 
-Refer to Figure 15-4.Profit can always be increased by increasing the level of output by one unit if the monopolist is currently operating at

Accepted Answer

If the monopolist is currently operating at output level Q1 (point i) or Q2 (point ii), they can increase profit by producing one more unit of output and selling it at the monopolist price P1 or P2 respectively. However, if the monopolist is currently operating at output level Q3 (point iii), increasing output by one unit would result in a decrease in profit since the marginal cost of producing that additional unit is greater than the marginal revenue earned from selling it. Thus, the correct choice is either (i) or (ii) where profit can be increased by producing one more unit of output.

Question 10

Which of the following statements is not correct?

Accepted Answer

The monopolist does not necessarily produce where P = MC. The monopolist maximizes profit by producing at the quantity where MR = MC, which is typically at a higher price level than under perfect competition due to its market power.

Question 11

Figure 15-4 
-Refer to Figure 15-4.The demand curve for a monopoly firm is depicted by curve

Accepted Answer

Curve A represents the demand curve for a monopoly firm, which means that the firm is the sole provider of the good and can set the price. The profit-maximizing output level for a monopoly firm is where marginal revenue (MR) equals marginal cost (MC). In the graph, the MR curve intersects with the MC curve at point E, which corresponds to a quantity of 6 units and a price of $8. At this output level, the firm earns a profit equal to the area of the rectangle formed by the price and the average total cost (ATC) curve, which is (8-4)*6 = $24. This is the best choice for the monopoly firm because it maximizes profit.

Question 12

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

Accepted Answer

A profit-maximizing monopolist will produce where marginal revenue is equal to marginal cost, as this is where the monopolist will be able to earn the greatest possible profit. This is because when marginal revenue is greater than marginal cost, producing an additional unit of output will increase profit, and when marginal revenue is less than marginal cost, the monopolist will be losing money on every additional unit produced. Therefore, the monopolist will produce the quantity at which marginal revenue is equal to marginal cost in order to maximize profit.

Question 13

Figure 15-3 
-Refer to Figure 15-3.What price will the monopolist charge?

Accepted Answer

The monopolist will charge the price at the point where the demand curve intersects the quantity produced, which is typically at the price level B in a standard monopoly diagram.

Question 14

Figure 15-4 
-Refer to Figure 15-4.Profit will be maximized by charging a price equal to

Accepted Answer

The answer of Figure 15-4 
-Refer to Figure 15-4.Profit will...

Question 15

A monopolist

Accepted Answer

A monopolist does not have a supply curve because it sets the price it wants to charge and then chooses the quantity to supply at that price. The decision of how much to produce is not determined by the price as in a competitive market, but rather by the monopolist's desire to maximize profit. Therefore, the statement in option A is incorrect as a monopolist's supply curve is downward sloping. Option C is also incorrect as competitive firms have a perfectly elastic supply curve due to the presence of many firms producing identical goods. Option D is incorrect as marginal revenue is always less than the price a monopolist charges, not more.

Question 16

For a profit-maximizing monopolist,

Accepted Answer

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

Question 17

Figure 15-3 
-Refer to Figure 15-3.How much output will the monopolist produce?

Accepted Answer

The monopolist will produce at point K, where marginal cost (MC) equals marginal revenue (MR).

Question 18

A reduction in a monopolist's fixed costs would

Accepted Answer

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

Question 19

Figure 15-4 
-Refer to Figure 15-4.The marginal cost curve for a monopoly firm is depicted by curve

Accepted Answer

The answer of Figure 15-4 
-Refer to Figure 15-4.The marginal...

Question 20

Figure 15-4 
-Refer to Figure 15-4.The average total cost curve for a monopoly firm is depicted by curve

Accepted Answer

The average total cost curve for a monopoly firm is depicted by curve C because it represents the point where the firm produces at the lowest possible average cost. At this point, the firm can maximize its profits. Curve A is the average total cost curve for a firm in perfect competition, curve B is the average total cost curve for a monopolistically competitive firm, and curve D is not a relevant cost curve.

Quiz 15: Monopoly

Figure 15-3 -Refer to Figure 15-3.What area measures the monopolist's profit?

A monopolist will choose to increase output when

A monopolist maximizes profits by

Figure 15-4 -Refer to Figure 15-4.The marginal revenue curve for a monopoly firm is depicted by curve

Which of the following statements is correct?

Figure 15-4 -Refer to Figure 15-4.If the monopoly firm wants to maximize its profit,it should operate at a level of output equal to

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

Figure 15-4 -Refer to Figure 15-4.If the monopoly firm is currently producing Q3 units of output,then a decrease in output will necessarily cause profit to

Figure 15-4 -Refer to Figure 15-4.Profit can always be increased by increasing the level of output by one unit if the monopolist is currently operating at

Which of the following statements is not correct?

Figure 15-4 -Refer to Figure 15-4.The demand curve for a monopoly firm is depicted by curve

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

Figure 15-3 -Refer to Figure 15-3.What price will the monopolist charge?

Figure 15-4 -Refer to Figure 15-4.Profit will be maximized by charging a price equal to

A monopolist

For a profit-maximizing monopolist,

Figure 15-3 -Refer to Figure 15-3.How much output will the monopolist produce?

A reduction in a monopolist's fixed costs would

Figure 15-4 -Refer to Figure 15-4.The marginal cost curve for a monopoly firm is depicted by curve

Figure 15-4 -Refer to Figure 15-4.The average total cost curve for a monopoly firm is depicted by curve