Question 1

Consider a single-price monopolist that is operating in the inelastic range of its linear demand curve.This firm

Accepted Answer

The answer of Consider a single-price monopolist that is operating...

Question 2

The diagram below shows the demand curve facing a single-price monopolist.  FIGURE 10-4
-Refer to Figure 10-4.What is the firm's marginal revenue per unit as it moves from point A to point B on the demand curve?

Accepted Answer

The marginal revenue per unit is the change in total revenue divided by the change in quantity. If moving from point A to point B results in a $40 increase in total revenue for each additional unit sold, then the marginal revenue per unit is $40.

Question 3

Consider the following AR and MR curves for a single-price monopolist. FIGURE 10-2 -Refer to Figure 10-2.The price elasticity of demand at Q₁ is

Accepted Answer

At the output level Q₁, the MR curve intersects the demand curve at a point where the price elasticity of demand is greater than 1. This is because the MR curve lies below the demand curve, indicating that the monopolist is facing a downward-sloping demand curve. When the MR and demand curves intersect, the price elasticity of demand is equal to -1 times the ratio of the price to the quantity demanded, which is greater than 1 in this case. Therefore, the correct answer is D) greater than 1.

Question 4

The diagram below shows total revenue for a single-price monopolist. FIGURE 10-3 -Refer to Figure 10-3.The price elasticity of demand at Q₃ is

Accepted Answer

The answer of The diagram below shows total revenue for...

Question 5

The diagram below shows the demand curve facing a single-price monopolist.  FIGURE 10-4
-Refer to Figure 10-4.Suppose the firm is currently producing at point A on the demand curve,selling 100 units of output at a price of $60 per unit.If the firm moves to point B,the revenue the firm gives up on the units it was already selling is ________,and the revenue it gains on the additional units sold is ________.

Accepted Answer

Moving from point A to point B on the demand curve means the firm is increasing its output from 100 units to 120 units. At point A, the price of each unit is $60. At point B, the price of each unit is $50. 
Therefore, the revenue the firm gives up on the units it was already selling is:
$60 x 100 units - $50 x 100 units = $1000
The revenue the firm gains on the additional units sold is:
$50 x 20 units = $1000
So, the net gain in revenue from moving from point A to point B is:
$1000 (additional revenue) - $1000 (revenue given up on existing units) = $0. Therefore, the firm has no financial incentive to move from point A to point B.

Question 6

A monopolist faces a straight-line demand curve and is currently producing an output level of 2000 units receiving $10 000 in total revenue.At an output of 1000 units the marginal revenue for this firm would be

Accepted Answer

The answer of A monopolist faces a straight-line demand curve...

Question 7

For a monopolist,the profit-maximizing level of output occurs where

Accepted Answer

A monopolist maximizes profit where marginal revenue (MR) equals marginal cost (MC), as long as the MR is greater than the average variable cost (AVC), which ensures that the monopolist is covering all of its variable costs. MC = price is not applicable as monopoly firms have the power to set prices. MC=0 is not necessarily true as the monopolist can still make a profit even with positive marginal costs. MR = AC is not the profit-maximizing point as average cost (AC) includes fixed costs, which should not be taken into account when deciding the profit-maximizing quantity.

Question 8

Consider a profit-maximizing single-price monopolist that faces a linear demand curve.The firm would not set a price at which demand is inelastic because

Accepted Answer

When demand becomes inelastic, an increase in price leads to a decrease in total revenue. As a result, marginal revenue becomes negative in that range of output for a profit-maximizing single-price monopolist. Therefore, the monopolist would avoid setting a price at which demand becomes inelastic as it would result in a loss of profit.

Question 9

Consider the following AR and MR curves for a single-price monopolist. FIGURE 10-2 -Refer to Figure 10-2.The price elasticity of demand at Q₂ is

Accepted Answer

The answer of Consider the following AR and MR curves...

Question 10

Consider the following AR and MR curves for a single-price monopolist.  FIGURE 10-2
-Refer to Figure 10-2.For this single-price monopolist,the profit-maximizing level of output is

Accepted Answer

The answer of Consider the following AR and MR curves...

Question 11

At the profit-maximizing level of output for a single-price monopolist,price

Accepted Answer

A single-price monopolist maximizes profits where MC=MR. However, since the monopolist can control the price of the good, it will choose a price that is higher than its marginal cost in order to maximize profits. Therefore, the correct answer is (C) exceeds marginal cost.

Question 12

Which of the following statements about single-price monopolists is correct?

Accepted Answer

In a single-price monopoly, the average revenue (AR) is equal to the price, which is always greater than marginal revenue (MR) because the monopolist must lower the price to sell additional units.

Question 13

A monopolist will be earning positive economic profits

Accepted Answer

A monopolist will earn positive economic profits when its price exceeds average total cost. This is because the monopolist has the ability to charge a price above the cost of production and reduce output to maximize profits. As long as the price exceeds average total costs, the monopolist is able to earn a profit.

Question 14

If a single-price monopoly is presently producing an output at which marginal revenue is less than marginal cost,it can increase its profits by

Accepted Answer

If marginal revenue is less than marginal cost, it means that the monopoly is producing too much output and not maximizing its profits. By reducing output and raising prices, the monopoly can increase its profits as it will sell fewer units at a higher price, which will bring marginal revenue closer to marginal cost.

Question 15

The diagram below shows total revenue for a single-price monopolist. FIGURE 10-3 -Refer to Figure 10-3.The firm's marginal revenue at Q₁ is

Accepted Answer

Marginal revenue (MR) is the change in total revenue resulting from a one-unit increase in output. At point Q₁, the slope of the total revenue curve is downward sloping, which means that the MR is positive but falling. Therefore, the correct answer is C.

Question 16

The diagram below shows the demand curve facing a single-price monopolist.  FIGURE 10-4
-Refer to Figure 10-4.At what level of quantity does the marginal revenue curve for this firm intersect the horizontal axis?

Accepted Answer

The answer of The diagram below shows the demand curve...

Question 17

Consider the following AR and MR curves for a single-price monopolist.  FIGURE 10-2
-Refer to Figure 10-2.If marginal costs were positive and constant but less than A,the profit-maximizing output for this single-price monopolist would be

Accepted Answer

The profit-maximizing output for the single-price monopolist occurs where MR=MC. In this case, that point is Q₂, where the MR curve intersects the MC curve. At this output level, the monopolist will charge a price of P1U1B, and obtain a positive economic profit shown by the gap between the price and the average cost curve. At any output level less or greater than Q₂, the monopolist would earn less profit or suffer losses.

Question 18

The diagram below shows the demand curve facing a single-price monopolist.  FIGURE 10-4
-Refer to Figure 10-4.What is the firm's marginal revenue per unit as it moves from point C to point D on the demand curve?

Accepted Answer

Marginal revenue is the change in total revenue divided by the change in quantity sold. As the firm moves from point C to point D on the demand curve, the change in quantity sold is 10 units. The change in total revenue is $100 (10 units x $10 per unit). Therefore, the marginal revenue is $10.

Question 19

Consider the following AR and MR curves for a single-price monopolist.  FIGURE 10-2
-Refer to Figure 10-2.If marginal costs were zero,the profit-maximizing output for this single-price monopolist would be

Accepted Answer

The answer of Consider the following AR and MR curves...

Question 20

The diagram below shows the demand curve facing a single-price monopolist.  FIGURE 10-4
-Refer to Figure 10-4.Suppose the firm is currently at point C on the demand curve,selling 300 units at $40 per unit.If the firm moves to point D,the revenue the firm gives up on the units it was already selling is ________ and the revenue it gains on the additional units sold is ________.

Accepted Answer

The firm gives up $3000 in revenue on the units it was already selling (300 units x $10 price decrease) and gains $3000 in revenue on the additional units sold (100 units x $30 price increase).

Quiz 10: Monopoly, cartels, and Price Discrimination

Consider a single-price monopolist that is operating in the inelastic range of its linear demand curve.This firm

The diagram below shows the demand curve facing a single-price monopolist. FIGURE 10-4 -Refer to Figure 10-4.What is the firm's marginal revenue per unit as it moves from point A to point B on the demand curve?

Consider the following AR and MR curves for a single-price monopolist. FIGURE 10-2 -Refer to Figure 10-2.The price elasticity of demand at Q1 is

The diagram below shows total revenue for a single-price monopolist. FIGURE 10-3 -Refer to Figure 10-3.The price elasticity of demand at Q3 is

A monopolist faces a straight-line demand curve and is currently producing an output level of 2000 units receiving $10 000 in total revenue.At an output of 1000 units the marginal revenue for this firm would be

For a monopolist,the profit-maximizing level of output occurs where

Consider a profit-maximizing single-price monopolist that faces a linear demand curve.The firm would not set a price at which demand is inelastic because

Consider the following AR and MR curves for a single-price monopolist. FIGURE 10-2 -Refer to Figure 10-2.The price elasticity of demand at Q2 is

Consider the following AR and MR curves for a single-price monopolist. FIGURE 10-2 -Refer to Figure 10-2.For this single-price monopolist,the profit-maximizing level of output is

At the profit-maximizing level of output for a single-price monopolist,price

Which of the following statements about single-price monopolists is correct?

A monopolist will be earning positive economic profits

If a single-price monopoly is presently producing an output at which marginal revenue is less than marginal cost,it can increase its profits by

The diagram below shows total revenue for a single-price monopolist. FIGURE 10-3 -Refer to Figure 10-3.The firm's marginal revenue at Q1 is

The diagram below shows the demand curve facing a single-price monopolist. FIGURE 10-4 -Refer to Figure 10-4.At what level of quantity does the marginal revenue curve for this firm intersect the horizontal axis?

Consider the following AR and MR curves for a single-price monopolist. FIGURE 10-2 -Refer to Figure 10-2.If marginal costs were positive and constant but less than A,the profit-maximizing output for this single-price monopolist would be

The diagram below shows the demand curve facing a single-price monopolist. FIGURE 10-4 -Refer to Figure 10-4.What is the firm's marginal revenue per unit as it moves from point C to point D on the demand curve?

Consider the following AR and MR curves for a single-price monopolist. FIGURE 10-2 -Refer to Figure 10-2.If marginal costs were zero,the profit-maximizing output for this single-price monopolist would be

Consider the following AR and MR curves for a single-price monopolist. FIGURE 10-2 -Refer to Figure 10-2.The price elasticity of demand at Q₁ is

The diagram below shows total revenue for a single-price monopolist. FIGURE 10-3 -Refer to Figure 10-3.The price elasticity of demand at Q₃ is

Consider the following AR and MR curves for a single-price monopolist. FIGURE 10-2 -Refer to Figure 10-2.The price elasticity of demand at Q₂ is

The diagram below shows total revenue for a single-price monopolist. FIGURE 10-3 -Refer to Figure 10-3.The firm's marginal revenue at Q₁ is