Question 1

Exhibit 9.2
 
-Refer to Exhibit 9.2,which shows the cost and revenue curves faced by a monopolist.The demand curve faced by the monopolist at the profit-maximizing output is _____

Accepted Answer

At the profit-maximizing output, a monopolist operates where marginal revenue equals marginal cost. The demand curve at this point is typically price elastic because the monopolist can increase total revenue by lowering the price, indicating that the percentage change in quantity demanded is greater than the percentage change in price.

Question 2

Which of the following equations describes the relationship between market price (P),average revenue (AR),and marginal revenue (MR)for a non-discriminating monopolist?

Accepted Answer

For a non-discriminating monopolist, the price (P) equals the average revenue (AR), but the marginal revenue (MR) is less than both. This is because, to sell an additional unit, the monopolist must lower the price on all units sold, which decreases MR compared to AR and P.

Question 3

Table 9.5
 $$\begin{array} { c c c } 
\text { Quantity } & \text { Price } ( \$ ) & \text { Total Cost (\$) } \
0 & 10 & 10 \
1 & 9 & 12 \
2 & 8 & 19 \
3 & 7 & 23 \
4 & 6 & 31 \
5 & 5 & 46 \
6 & 4 & 69 \
7 & 3 & 99
\end{array}$$
-Refer to Table 9.5.The loss-minimizing output for a non-discriminating monopolist is _____

Accepted Answer

To determine the loss-minimizing output for a non-discriminating monopolist, we need to look for the quantity at which the total cost is the lowest (i.e., the loss is minimized).

From the table, we can see that the total cost is lowest at a quantity of 3, where it is $23. At this output level, the monopolist's total revenue (assuming they charge the same price for every unit sold) would be $21 (3 units sold x $7 price per unit), resulting in a loss of $2.

At any level of output lower than 3, the monopolist's total cost would be lower, but their total revenue would be even lower, resulting in an even greater loss. Therefore, C) 3 units is the best choice for a non-discriminating monopolist to minimize losses.

Question 4

Suppose a single firm supplies all the ceramic windlasses in the United States.The demand curve that the firm faces is _____

Accepted Answer

The answer of Suppose a single firm supplies all the...

Question 5

Exhibit 9.2
 
-Refer to Exhibit 9.2,which shows the cost and revenue curves faced by a monopolist.At the profit-maximizing output level for the monopolist,_____

Accepted Answer

At the profit-maximizing output level, the monopolist produces where marginal revenue (MR) equals marginal cost (MC), as long as price is greater than or equal to average variable cost (AVC). In this case, at the profit-maximizing output level, MR intersects MC at point A, which is where the monopolist produces. Therefore, choice B is correct.

Question 6

A non-price discriminating monopolist's demand curve _____

Accepted Answer

A non-price discriminating monopolist's demand curve lies to the right of its marginal revenue curve because the monopolist must lower the price on all units sold to sell additional units, causing marginal revenue to be less than the price.

Question 7

A monopolist must choose between two points on its demand curve.It can either sell 100 units for $3 each,or sell 150 units for $2 each.This implies that,for the given range of output,elasticity of demand for the monopolist's product is _____

Accepted Answer

The answer of A monopolist must choose between two points...

Question 8

Suppose the marginal revenue for a particular level of a monopolist's output is $40.This implies that _____

Accepted Answer

Marginal revenue measures the change in total revenue due to a one-unit change in output. Therefore, if the marginal revenue is positive ($40 in this case), then an increase in output will result in an increase in total revenue. This implies that total revenue is increasing for this output range.

Question 9

A profit-maximizing monopolist never produces along the _____

Accepted Answer

A profit-maximizing monopolist will avoid producing along the inelastic portion of the demand curve because, in this region, marginal revenue is negative. This means that selling an additional unit of the product would decrease total revenue, which is not desirable for maximizing profit.

Question 10

Exhibit 9.2
 
-Refer to Exhibit 9.2,which shows the cost and revenue curves faced by a monopolist.The profit-maximizing output and price for the monopolist are _____

Accepted Answer

The answer of Exhibit 9.2
 
-Refer to Exhibit 9.2,which shows...

Question 11

A firm facing a downward-sloping demand curve sells 50 units of output at $10 each.Which of the following can be concluded about the firm's marginal revenue for this output level?

Accepted Answer

For a firm facing a downward-sloping demand curve, the marginal revenue is less than the price because to sell additional units, the firm must lower the price on all units sold.

Question 12

Table 9.5
 $$\begin{array} { c c c } 
\text { Quantity } & \text { Price } ( \$ ) & \text { Total Cost (\$) } \
0 & 10 & 10 \
1 & 9 & 12 \
2 & 8 & 19 \
3 & 7 & 23 \
4 & 6 & 31 \
5 & 5 & 46 \
6 & 4 & 69 \
7 & 3 & 99
\end{array}$$
-Refer to Table 9.5.The revenue-maximizing output for a non-discriminating monopolist is _____

Accepted Answer

The answer of Table 9.5
 \[\begin{array} { c c c...

Question 13

Exhibit 9.2
 
-Refer to Exhibit 9.2,which shows the revenue of a non-discriminating monopolist.The total revenue earned by the monopolist at the profit-maximizing output is _____

Accepted Answer

At the profit-maximizing output, the monopolist produces where MR=MC, which is 6 units in this case. The corresponding price can be found by looking at the demand curve at this quantity, which is $468. Therefore, the total revenue earned by the monopolist at the profit-maximizing output is 6 x $468 = $2,808. Therefore, the correct answer is B.

Question 14

Exhibit 9.2
 
-Refer to Exhibit 9.2.A non-discriminating,profit-maximizing monopolist will earn a profit of _____ per unit of output.

Accepted Answer

To determine the profit per unit of output of a monopolist, we need to find the difference between the price and the average total cost (ATC). In this case, the monopolist produces where MR = MC, which is at an output of 6 units. The price corresponding to this output is $16. The ATC at this output is $12. Hence, the profit per unit of output is $4 ($16 - $12). So, the correct choice is C.

Question 15

For a monopolist producing a level of output at which market demand is inelastic,_____

Accepted Answer

When the market demand is inelastic, a decrease in price does not lead to a proportional increase in the quantity demanded, thus reducing the total revenue. Therefore, a decrease in price decreases total revenue. As a monopolist, producing at this level of output, short-run profit may still be positive, but not maximum. Increasing output may not increase short-run economic profit as the price may decrease and offset the gain from producing more.

Question 16

Which of the following is true for a monopolist?

Accepted Answer

Marginal revenue becomes negative when demand is inelastic because, in this region, lowering the price to sell one more unit leads to a decrease in total revenue. This is due to the price effect outweighing the quantity effect in the inelastic portion of the demand curve.

Question 17

Which of the following can be concluded about a monopolist whose marginal revenue is zero for a particular output level?

Accepted Answer

When marginal revenue is zero, the monopolist is producing at the output level where total revenue is at its maximum. This is because for a monopolist, marginal revenue is equal to its price and when marginal revenue is zero, the monopolist has reached the output level where the price is the highest it can be. Therefore, total revenue is at its maximum for that output level.

Question 18

A profit-maximizing monopolist supplies the quantity at which _____

Accepted Answer

A profit-maximizing monopolist determines the quantity to supply at the point where the difference between total revenue and total cost is maximized, which corresponds to the largest profit.

Question 19

Exhibit 9.2
 
-Refer to Exhibit 9.2,which shows the cost and revenue curves for a non-discriminating monopolist.The total cost incurred by the monopolist at the profit-maximizing output is _____

Accepted Answer

The answer of Exhibit 9.2
 
-Refer to Exhibit 9.2,which shows...

Question 20

A firm facing a downward-sloping demand curve sells 50 units of output at $10 each.The firm's average revenue is _____

Accepted Answer

The average revenue is calculated by dividing total revenue by the quantity sold. In this case, the firm sells 50 units at $10 each, so the total revenue is 50 x $10 = $500. Dividing by the quantity sold, the average revenue is $500/50 = $10. Therefore, the answer is C.

Quiz 9: Monopoly

Exhibit 9.2 -Refer to Exhibit 9.2,which shows the cost and revenue curves faced by a monopolist.The demand curve faced by the monopolist at the profit-maximizing output is _____

Which of the following equations describes the relationship between market price (P) ,average revenue (AR) ,and marginal revenue (MR) for a non-discriminating monopolist?

Suppose a single firm supplies all the ceramic windlasses in the United States.The demand curve that the firm faces is _____

Exhibit 9.2 -Refer to Exhibit 9.2,which shows the cost and revenue curves faced by a monopolist.At the profit-maximizing output level for the monopolist,_____