If the monopolist charges price P* for output Q* in order to maximize profit or minimize loss in...
Question:
 |
If the monopolist charges price P* for output Q* in order to maximize profit or minimize loss in the short run, it should
A. continue to produce because a monopolist always earns a profit.
B. continue to produce because the price is greater than the average variable cost.
C. shut down because the price is greater than marginal cost.
D. shut down because the price is less than the average total cost.
Monopoly:
A monopoly is a market structure characterized by a single seller and a large number of buyers in the market, such that the single seller caters to the entire market demand. This is also the reason why monopolists do not have a supply curve. There is a high market restriction in monopoly, which results in the availability of no close substitutes in the market.
Answer and Explanation: 1
B. Continue to produce because the price is greater than the average variable cost.
Reason: The shut down point in a monopoly occurs at the point when the monopolist is not even able to earn a revenue equivalent to its average variable cost. Until the point the monopolist cannot cover its average variable cost, it will continue its production. In this case, we see that even when the monopolist is minimizing its level of loss by producing Q* level of output and at price P*, it is still incurring a loss equivalent to the difference between the AR (demand curve) and AC curves. Even then, the firm is able to generate revenue higher than its AVC, as AR is greater than AVC at the level of output. Hence, the firm will continue to produce.
Ask a question
Our experts can answer your tough homework and study questions.
Ask a question Ask a questionSearch Answers
Learn more about this topic:
Get access to this video and our entire Q&A library
What is a Monopoly in Economics? - Definition & Impact on Consumers
from
Chapter 7 / Lesson 2
35K
Understand the meaning of a monopoly in economics and what it does. Also, know the characteristics of a monopoly and the different types of monopolies.
Related to this Question
- A monopolist faces a demand curve given by P = 10 - Q and has constant marginal (and average cost) of 2. What is the output and the price that maximizes profit for this monopolist? (a) Q = 0, P = 10. (b) Q = 2, P = 8. (c) Q = 4, P = 6. (d) Q = 8, P = 2. (
- A monopolist faces a demand curve given by P = 10 - Q and has constant marginal (and average cost) of 2. What is the output and the price that maximizes profit for the monopolist? A) Q = 0, P = 10 B) Q = 2, P = 8 C) Q = 4, P = 6 D) Q = 8, P = 2 E) None of
- If a monopolist is producing a quantity where marginal revenue is equal to $16 and the marginal cost is equal to $17, the monopolist should: a. continue producing at the current output and price to maximize profits. b. decrease production and decrease the
- A monopolist has a cost function C(Q) = 100 + 10Q + 2Q^2 and the inverse demand curve it faces is P = 90 - 2Q. This monopoly will maximize profit when it produces _____ units of output, by charging price _____ per unit. The maximum profit earned by this m
- A monopolist is selling in a market with the following demand curve: P = 300 - 0.5 Q The marginal revenue is MR = 300 - Q. The firm has constant marginal costs of $50 per unit. What is the monopolist's profit-maximizing quantity and profit-maximizing pric
- A monopolist faces market demand given by P = 80 - Q. For this market, MR = 80 - 2Q and MC = 20. What price will the monopolist charge in order to maximize profits?
- A monopolist faces a demand curve P = 50 - 5Q where P is the product price and Q is the output. The monopolists cost function is C(Q) = 10Q. What are the monopolist's profit maximizing price, output, and profit? What are the consumer surplus and dead-weig
- A monopolist faces a demand curve of Q = 400 - 2P and MR = 200 - Q. The monopolist has a constant MC and ATC of $30. a. Find the monopolist's profit-maximizing output and price. b. Calculate the monopolist's profit. c. What is the Lerner Index for this in
- A monopolist faces a demand curve given by P=10-Q and has constant marginal (and average cost) of 2. What is the output and the price that maximizes profit for this monopolist? a. Q = 0, P = 10 b. Q = 2, P = 8 c. Q = 4, P = 6 d. Q = 8, P = 2 e. None of th
- A monopolist faces a demand curve given by P = 10 - Q and has constant marginal and average cost of 2. What is the economic profit made by this profit-maximizing monopolist? A) 0 B) 12 C) 14 D) 16
- A monopolist faces a demand curve given by P = 10 - Q and has a constant marginal (and average) cost of $2. What is the economic profit made by this profit-maximizing monopolist? a. $0 b. $12 c. $14 d. $16 e. none of the above
- A monopolist faces inverse market demand of P = 140 -Q/2, and has a total cost given by TC(Q)= 2Q^2 + 10Q + 200. a. Find this monopolist's profit maximizing output level, b. Find this monopolist's profit maximizing price, c. How much profit is this mon
- A monopolist faces market demand given by P = 200 - Q. For this market, MR = 200 - 2Q and MC = 3Q. What price will the monopolist charge in order to maximize profits.
- If a monopolist produces to a point at which marginal revenue is greater than marginal cost then: (a) profits will always be negative. (b) the incremental cost of producing the last unit is less than the incremental revenue. (c) profits are being maximize
- A monopolist faces a demand curve given by P=10-Q and has constant marginal (and average cost) of 2. What is the economic profit made by this profit-maximizing monopolist? a. 0 b. 12 c. 14 d. 16 e. None of the above
- A monopolist faces a demand curve: P = 100 - Q for its product. The monopolist has fixed costs of 1000 and a constant marginal cost of 4 on all units. Find the profit maximizing price, quantity, and p
- A monopolist can produce quantity Q of product at total cost of C(Q) = (10,020)Q + Q^2. The demand schedule for the product is Q = 1/3(140P) where P is the price charged for the product. Find the profit maximizing output (Q) and the maximum profit.
- A monopolist has demand and cost curves given by: Q_D = 1000 - 2P \\ TC = 5,000 + 50Q a. The monopolist's profit-maximizing quantity is [{Blank}] units and the price is $[{Blank}], b. The monopolist's profit is $ [{Blank}].
- The demand for a monopolist's output is q = 6,000/((p+7)^2) , where p is its price. It has constant marginal costs equal to $5 per unit. What price will it charge to maximize its profits? The answer i
- A monopolist faces the following demand curve and the total cost curve are given as follows: __P = 100 - 0.5Q TC = 5Q__ a) What is the profit-maximizing level of output? b) What is the profit-maximizing price? c) How much profit does the monopolist earn?
- A single price monopolist faces a demand curve given by Q = 200 - 2p and has constant marginal (and average total cost) of 20. What is the economic profit made by this profit-maximizing monopolist? A. 0 B. 800 C. 3200 D. 6400 E. None of the above
- If a monopolist produces to a point at which marginal revenue is less than marginal cost then: a. Profits are being maximized, b. Profits will always be negative, c. The incremental cost of producing the last unit exceeds the incremental revenue, d. The i
- A monopolist is able to maximize its profits by: A. setting the price at the level that will maximize its per-unit profit. B. producing output where MR = MC and charging a price along the demand curve. C. setting output at MR = MC and setting price at
- A monopolist is able to maximize its profits by A. setting the price at the level that will maximize its per-unit profit. B. producing output where MR = MC and charging a price along the demand curve. C. setting output at MR = MC and setting the price at
- A monopolist faces a market demand curve given by Q = 53 - P. Its cost function is given by C = 5Q + 50, i.e. its MC = $5. a. Calculate the profit-maximizing price and quantity for this monopolist. Also, calculate its optimal profit. b. Suppose a second
- At a price of $20, the marginal revenue of a monopolist is $6. If the marginal cost of production is $4, what should the monopolist do in order to maximize profits? a. increase its price b. decrease its price c. keep its price at the same level
- If the variable costs of a profit-maximizing pure monopolist decline, the firm should: a. raise both output and price. b. produce more output and charge a lower price. c. produce more output and charge a higher price. d. reduce both output and price.
- A monopolist faces inverse demand P = 300 - 2Q. It has total cost TC = 60Q + 2Q2 and marginal cost MC = 60 + 4Q. What is the maximum profit the monopolist can earn in this market?
- A monopolist has set her level of output to maximize profit. The firm's marginal revenue is $20 and the price elasticity of demand is -3.0. Which of the following prices or price ranges describe the firm's profit-maximizing price? A. $0-9 B. $10-19 C. $20
- Q P TC 0 1000 800 50 600 1500 100 480 6000 150 360 12000 200 280 19000 250 225 27850 a) What are this monopolist's profit-maximizing price and quantity? b) Calculate the monopolist's profits at the profit-maximizing point. c) In the statement of this
- If a monopolist produces to a point at which marginal revenue is less than marginal cost then: a. profits are being maximized. b. profits will always be negative. c. the incremental cost of produci
- A monopolist sells a product with the following total cost function: TC = 1200 + 0.5Q^2 And the market demand curve is given by: P = 300 - Q (a) Find the profit-maximizing output and price for this monopolist. (b) Calculate the price elasticity of demand
- A monopolist can produce at a constant average (and marginal) cost of AC= MC= $5. It faces a market demand curve given by Q=53-P. a. Calculate the profit-maximizing price and quantity for this monopolist. Also, calculate its profits. b. Suppose a second
- A monopolist faces the following demand curve P = 222 - 2Q. The monopolist's cost is given by C = 2Q. Calculate the profit-maximizing quantity and the corresponding price. What is the resulting profit/loss? Calculate the monopolist's markup.
- If a monopolist is producing at the profit-maximizing level of output, what price will it charge? a. The price given by the marginal-cost curve at that level of output. b. The price given by the tot
- If a monopolist is producing the profit maximizing output level and at this output level, the marginal cost is $4 and the profit maximizing price is $9, what is the markup? A. 2 B. 5 C. 2.25 D. 0.22
- Suppose a monopolist faces the demand curve P = 250 - 2Q. The marginal cost of production is constant and equal to $10, and there are no fixed costs. A. What is the monopolist's profit-maximizing level of output? B. What price will the profit-maximizing m
- Suppose a monopolist faces the demand curve P = 100 - 3Q. The marginal cost of production is constant and equal to $10, and there are no fixed costs. a. What is the monopolist's profit-maximizing level of output? b. What price will the profit-maximizing m
- The demand for a monopolist s output is 6,000/(p + 3)^2, where p is its price. It has constant marginal costs equal to $6 per unit. What price will it charge to maximize its profits? a. $9 b. $18 c. $21 d. $15 e. $6
- Suppose a monopolist faces the following demand curve: P = 314 - 7Q. The long-run marginal cost of production is constant and equal to $20. a. What is the monopolist's profit-maximizing level of output? b. What price will the profit-maximizing monopolist
- A monopolist: a. maximizes profit at the output where price equals marginal cost. b. charges a higher price than a competitive firm, ceteris paribus. c. is a price taker since it has market power. d. cannot earn an economic profit in the long run.
- If a profit-maximizing monopolist is currently operating on the inelastic region of its demand curve, it should A. decrease price while keeping output constant. B. decrease both price and output. C. increase both price and output. D. decrease price and in
- Which of the following is true for the monopolist? a. Economic profit is possible in the long run. b. Marginal revenue is less than the price charged. c. Profit maximizing or loss minimizing occurs when marginal revenue equals marginal cost. d. All of the
- Which of the following is true for monopolist? a. Economic profit is possible in the long run. b. Marginal revenue is less than the price charged. c. Profit maximizing or loss minimizing occurs when marginal revenue equals marginal cost. d. All of the
- Which of the following is true for the monopolist? a. Marginal revenue is less than the price charged. b. Economic profit is possible in the long run. c. Profit maximizing or loss minimizing occurs when marginal revenue equals marginal cost. d. All of the
- Which of the following is true for the monopolist? a. Marginal revenue is less than the price charged. b. Economic profit is possible in the long run. c. Profit maximizing or loss minimizing occurs when marginal revenue equals marginal cost. d. All of
- In maximizing profits, a single-price monopolist will charge a price that is: a. Less than marginal cost, b. Equal to marginal cost, c. Greater than marginal cost, d. There is not enough information to answer the question.
- If a monopolist produces to a point at which marginal revenue is less than marginal cost then: a. the firm should increase output. b. the firm should reduce output. c. the firm is maximizing profits. d. we do not know if the firm should increase or reduce
- A monopolist faces the demand curve P = 100 - 2Q, where P is the price and Q is the quantity demanded. If the monopolist has a total cost of C = 50 + 20Q, determine its profit-maximizing price and output.
- A monopolist faces market demand given by P = 100 - 3Q. For this market, MR = 100 - 6Q and MC = 25. What quantity of output will the monopolist produce in order to maximize profits?
- If a monopoly's inverse demand curve is P = 13 - Q and its total cost function is TC = 25 + Q + 0.5Q^2, A. what Q* maximizes the monopoly's profit (or minimizes its loss)? At Q^*, what are the price and the profit? Should the monopolist operate or shut do
- A monopolist faces an inverse demand P = 300 - 2Q and has total cost TC = 60Q + 2Q2 and marginal cost MC = 60 + 4Q. What is the maximum profit the monopolist can earn in this market? A) 60 B) 240
- If a monopolist is producing a quantity where marginal revenue is equal to $125 and the marginal cost is equal to $125, the monopolist should [{Blank}] to maximize profits. a. Increase production and lower the price, b. Decrease production and increase
- Suppose a monopolist faces the following demand curve: P = 596-6Q. Marginal cost of production is constant and equal to $20, and there are no fixed costs. a) What is the monopolists profit maximizing level of output? b) What price will the profit maximi
- 2. A monopolist has inverse demand P = 12 ? Q and cost of production C(Q) = Q2. Find its profit maximizing output, resulting pric2. A monopolist has inverse demand P = 12 - Q and cost of production C(
- A profit maximizing monopolist faces the demand curve P = 90 - Q and has total cost of 30Q. If the monopolist charges only one price, what is Q, P, producer surplus, consumer surplus, and total revenue?
- A monopolist has total cost TC = 200 + .5 Q2. Marginal cost is Q and the market demand is Q = 100 - P/2. 1) What is marginal revenue? 2) What quantity maximizes profits? 3) What is the price in th
- A monopolist is producing a level of output at which price is $8, marginal revenue is $5, average variable cost is $6, and marginal cost is $10. In order to maximize profit, the firm should: a. decrease price b. increase price c. keep price the same d. in
- A monopolist has cost c(q) = q^2 and the inverse demand for its product is P = 15 - Q. What is its marginal revenue curve? Derive its marginal cost. Derive the firm's profit maximizing output, total
- A monopolist faces a demand curve given by P = 10 - Q and has constant marginal and average cost of 2. What is the economic profit made by this profit-maximizing monopolist if they engage in perfect price discrimination? A) 32 B) 64 C) 100 D) 121 E) None
- A monopolist faces a demand curve given by P = 10 - Q and has constant marginal (and average) cost of 2. What is the economic profit made by this profit-maximizing monopolist if they engage in perfect price discrimination? a. 432 b. 64 c. 100 d. 121 e. No
- 1. A monopolist has total cost TC = .1Q(squared) - 2Q + 100. Market demand is Q = 86 - P, implying that the firm's marginal revenue is MR = 86 - 2Q. Its profit-maximizing output is: a. 92 b. 46 c.
- A monopolist faces a market demand curve given by: Q = 70 - P. This monopolist charges a single price for its output. If the monopolist can produce at constant average and marginal costs of AC = MC =
- Suppose a monopolist faces the following demand curve: P = 200 - 6Q The marginal cost of production is constant and equal to $20, and there are no fixed costs. (a) How much profit will the monopolist make if she maximizes her profit? (b) What would be t
- a. What is the profit-maximizing output of the monopolist shown below? b. What price do they set? c. What is the monopolist's markup over the competitive price? d. Why will this price not fall?
- A monopolist faces demand P = 10 - Q. It has costs C(Q) = 2Q. It can perfectly price discriminate. a. What is its marginal revenue curve? Graph the demand curve. b. Derive the profit maximizing outpu
- A monopolist faces a demand curve given by P=10-Q and has constant marginal (and average cost) of 2. What is the economic profit made by this profit-maximizing monopolist if they engage in perfect price discrimination? a. 32 b. 64 c. 100 d. 121 e. None of
- A monopolist faces market demand given by P 200 Q. For this market, MR 200 2Q and MC 3Q. What quantity of output will the monopolist produce in order to maximize profits?
- A monopolist faces a market demand curve given by Q=53-P. Its cost function is given by Q=53-P, i.e. its MC=$5. a) Calculate the profit-maximizing price and quantity for this monopolist. Also calculate its optimal profit.
- For a single-price monopolist, marginal revenue falls faster than price (as output rises) because: a) in order to sell additional units, the price must be lowered on all units. b) profits are maximized when marginal cost equals marginal revenue. c) the fi
- If a monopolist faces a constant-elasticity demand curve, given by Q=202, 500P-3, and has total costs given by TC=10Q, its profit-maximizing level of output is: a. 50. b. 60. c. 75. d. 100 e. 120.
- The demand and cost curves for a monopoly firm are as follows: Q = 750 - 5P; TC = 2000 + 70Q (a) At what output and price will the firm maximize total revenue? (b) At what output and price will the firm maximize total profit? (c) Compare the maximum profi
- At the profit-maximizing output in a monopoly-controlled market, the price a monopolist charges is: -below marginal cost -above marginal cost -above average total cost -below average total cost -e
- A monopolist faces the following demand curve: Price Quantity demanded $10 5 $9 10 $8 16 $7 23 $6 31 $5 49 $4 52 $3 60 The monopolist has total fixed costs of $40 and a constant marginal cost of $5. At the profit-maximizing level of output, the monopolist
- If MR = MC, a monopolist should, 1.) increase profit by decreasing output. 2.) keep production and pricing as is. 3.) increase profit by raising prices.
- Assume a monopolist faces a market demand curve of 50 = Q - frac{1}{2}P and has a short run total cost function C = 640 + 20Q. A. What is the profit-maximizing level of output? What are the profits? Graph the marginal revenue, marginal cost, and demand cu
- A monopolist faces the following inverse demand curve: p = 100 - Q This firm's cost function is given by C(Q) = 10 + 5Q Find this firm's profit maximizing choice of output.
- A monopolist can sell 20 operating systems at $110 each. In order to sell 21 operating systems, he must reduce the price to $100. If the monopolist reduces the price to $100, then marginal revenue is: a. -$10 b. -$100 c. $110 d. constant
- Consider a monopolist that produces a good at a constant marginal and average cost of 5$. The market demand is given by p = 53 - Q A) calculate the monopolists' profit at the profit-maximizing equilibrium
- Suppose a monopolist faces the following demand curve: P = 440 - 7Q. The long-run marginal cost of production is constant and equal to $20, and there are no fixed costs. a) What is the monopolist's profit-maximizing level of output? b) What price will
- Suppose a monopolist faces the following demand curve: P = 100 - 3Q. Marginal cost of production is constant and equal to $10, and there are no fixed costs. What price will the profit maximizing monopolist charge? a. $100 b. $55 c. $45 d. $15 e. $10 f. No
- 1. What is the profit maximizing quantity and price of this monopolist? b. If at the profit maximizing quantity, the average total cost is 100, what is the total cost? Is the monopolist making a profi
- A monopolist maximizes its profit when: A) the total revenue is maximized. B) the price is the highest. C) the total cost is minimized. D) the marginal revenue is equal to the marginal cost. E) the quantity sold is equal to the price.
- Let P denote price, MR denote marginal revenue, and MC denote marginal cost. A monopolist sets (blank) to maximise profit. For a monopolist, it is always the case that (blank). As a result, the monopolist maximises profit where (blank). (a) MR greater tha
- Suppose a monopolist faces the following demand curve: P = 100 - 3Q. Marginal cost of production is constant and equal to $10, and there are no fixed costs. How much profit will the monopolist make if she maximizes her profit? a. $300 b. $327.50 c. $825 d
- A monopolist faces a demand curve given by Q = 200 - 2p and has constant marginal (and average total cost) of 20. What is the economic profit made by this profit-maximizing monopolist if they engage in perfect price discrimination? A. 0 B. 800 C. 3200 D.
- A monopolist faces market demand given by Q_D = 65 - P and cost of production given by C = 0.5Q^2 + 5Q + 300. A. Calculate the monopolist's profit-maximizing output and price. B. Graph the monopolist's demand, marginal revenue, and marginal cost curves. S
- Suppose a monopolist faces the following demand curve: P = 200 - 6Q The marginal cost of production is constant and equal to $20, and there are no fixed costs. (a) What is the monopolist's profit-maximizing level of output? (b) What price will the profit-
- By following the profit-maximizing rule, a monopolist: a. will always have a normal profit. b. will always have an above-zero profit. c. could earn a larger profit by increasing output. d. maximizes its profit (or minimizes its losses).
- If a monopolist is producing a quantity where marginal revenue is equal to $32 and the marginal cost is equal to $30, the monopolist should: a. increase production and increase the price to maximize profits. b. decrease production and increase the price
- Which of the following is not generally true about a profit-maximizing monopolist? a) The monopolist faces a perfectly elastic demand curve. b) The monopolist can potentially continue to earn economic profits in the long run. c) The monopolist charges a p
- a monopolist faces the following demand and cost schedules: [TABLE] a) How much output should the monopolist produce? b) Explain what price should the firm charge. c) What is the maximum amount of profit that the firm can earn?
- A monopolist's profit-maximizing price and output correspond to the point on a graph: A) where total costs are the smallest relative to price B) where average total cost is minimized C) where price is
- 1. A monopolist faces an upward-sloping marginal cost curve. Its profit-maximizing quantity will be a. at the minimum point of the marginal cost curve. b. less than the (total) revenue-maximizing qua
- Suppose a profit-maximizing monopolist can engage in perfect price discrimination and faces a demand curve for its products given Q = 20 - 5P. This monopolist has a cost function of TC = 24 + 4Q. How much will monopolists profits be?
- A monopolist faces a demand curve given by Q = 200 - 2p and has constant marginal (and average total cost) of 20. What is the economic profit made by this profit-maximising monopolist if they engage in perfect price discrimination? A) 0 B) 800 C) 3200 D)
- 1. A Profit-maximizing monopolist faces a downward-sloping demand curve that has a constant elasticity of -3. The firm finds it optimal to charge a price of $12 for its output. What is its marginal co
- Suppose the demand curve for a monopolist is P = 200 - QD. The monopolist has a constant marginal and average total cost of $50 per unit. a. Find the monopolist's profit-maximizing output and price.
Explore our homework questions and answers library
Browse
by subject