State True or False and justify your answer: If a rational monopolist is confronted with a...
Question:
State True or False and justify your answer:
If a rational monopolist is confronted with a dramatic increase in its fixed costs, then this monopolist, ceteris paribus, would have a strong incentive to pass at least some of this fixed cost along to consumers in the form of higher prices for its products.
Monopoly:
Monopoly is a type of market structure where there is only one seller in the market who is dealing with differentiated and unique goods and services. There are huge barriers in the entry of new firms in the market.
Answer and Explanation: 1
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View this answerThe statement is True
Explanation: Monopolist is the price maker, so it is very easy for him to pass on the cost of fixed assets to the consumers by...
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What is a Monopoly in Economics? - Definition & Impact on Consumers
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Chapter 7 / Lesson 2
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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
- State True or False and justify your answer: In the case of a natural monopoly (i.e. a firm whose average cost decreases as output increases due to large fixed and low marginal costs), the government should generally regulate the monopolist to charge a pr
- State True or False and justify your answer: A monopolist can earn positive profits in the long run because it has market power, allowing it to charge a price that is higher than the marginal cost.
- State true or false and justify your answer: A monopolist always earns an economic profit.
- A monopolist maximizes profit by producing an output level where marginal cost equals price. a. True b. False
- A monopolist's marginal cost is less than the price it charges. A) True B) False
- State true or false and justify your answer: The monopolist can choose the price or the quantity, but not both simultaneously.
- True or false? A monopolist is constrained by marginal cost in setting its price.
- State true or false and justify your answer: Like a perfectly competitive firm, a monopolist maximizes profit by producing the level of output for which P = MC.
- True or False: Consider a monopolist that produces two interrelated goods A and B with Q_A(P_A, P_B) and Q_B (P_A, P_B) where Q is the demand and P is the price. If \frac{dQ_A]{dQ_B}= 0, the firm could charge the same price as a monopolist in market A whi
- The ratio of price to marginal cost for a monopolist increases as the demand curve becomes more elastic. True or False? Explain
- State true or false and justify your answer: If the demand for a good shifts out (increases), then the labor demand of a monopolist in that industry will increase.
- State true or false and justify your answer: If the price is greater than the marginal cost, a firm should produce less.
- If a monopolist is able to price discriminate, it will also be the case that marginal cost is different in each market. Is this statement true or false? Explain.
- State true or false. Since a monopolist is a price taker, it cannot have a supply curve.
- A monopolist picks the quantity of output at which price equals marginal cost. A) True B) False
- The ratio of a monopolist's optimal price to its marginal cost is larger when the market elasticity of demand is greater in absolute value (i.e., more elastic). a. True. b. False.
- True or False: A monopolist sells to two markets: Market 1: there is a constant elasticity of demand e1<-1 Market 2: there is a constant elasticity of demand e2>-1. The monopolist charges a higher pr
- State True or False and justify your answer: A monopoly with a more elastic demand curve will have more market power.
- In monopolistic competition, firms equate price and marginal cost. Is this statement true or false? Explain.
- Evaluate the following statements and discuss whether they are true, false or uncertain. Justify your answer. A monopolist who encounters a linear demand curve should always produce at the point where the demand is unit elastic in order to maximize profit
- True or false: A monopolist produces an efficient quantity of output but it is still inefficient because it charges a price that exceeds marginal cost and the resulting profit is a social cost. True
- State whether the following is true or false and explain why. If a natural monopolist engages in marginal cost pricing, it typically will earn abnormal profits.
- True or false? Equilibrium in a monopolized market is efficient because the monopolist always produces where marginal cost equals marginal revenue.
- State True or False and justify your answer: Price discrimination by a monopolist is almost always socially harmful and typically is unlawful.
- A monopolist maximizes profit at the output rate where its total revenue equals total cost. a. True b. False
- State true or false and justify your answer: A rational decisionmaker takes an action if and only if the marginal cost exceeds the marginal benefit.
- Answer true or false: A monopolist's marginal revenue is 0 whenever the price elasticity of demand is -1.
- A monopolist produces an output level where marginal revenue equals marginal cost and charges a price where marginal cost equals average total cost. a. True b. False
- If a price ceiling is imposed in a natural monopoly market and the price ceiling is below marginal cost of the monopolist, then the monopolist will not produce any units for sale in the long run. a. True. b. False.
- For a monopolist that engages in price discrimination, when the price elasticity in market 1 is less (in absolute value) than in market 2, the optimal price in market 1 will exceed the optimal price in market 2. a. True. b. False.
- True or False: In the long run, a monopolist can't be hurt by an increase in fixed costs, because he will raise the price of his product by enough to maintain his profit.
- Consider the following statement: "A monopolist always sets price equal to the unitary elastic point on its demand curve." Is the statement true or false?
- State True or False and justify your answer: A monopolist can sell 10 units at a unit price of $12 and 9 units at a unit price of $13. This means that the marginal revenue of the 10th unit is $12.
- The marginal revenue curve for a monopolist is always less than the price because of the price effect. a. True b. False
- State whether the following is true or false and explain why. The kinked demand model of oligopoly allows for the possibility that cost functions, including marginal cost, can shift without changing the quantity and price of profit maximizing output.
- An increase in demand would enable a monopolist to raise its price while reducing its output. A) True B) False
- A monopolist will never produce where the demand function is inelastic. Explain your answer. (i) True (ii) False
- A monopolist will always charge a higher price than a purely competitive industry. (a) True (b) False.
- A profit-maximizing monopolist will set its price and output where demand is inelastic. Is this statement true or false? Use a diagram, and provide a short explanation in your answer.
- A monopolist's marginal revenue curve is flatter than its demand curve. a. True b. False
- In monopolistic competition, firms equate marginal revenue and marginal cost. Is this statement true or false? Explain.
- In the case of a monopoly, the firm maximizes profits at a point where the marginal revenue significantly exceeds the marginal cost. A. true B. false
- In monopoly, firms equate price and marginal cost. Is this statement true or false? Explain.
- State true or false and justify your answer: A firm would increase profits from dumping if it charges a lower price at home, where demand is inelastic, and a higher price abroad where demand is elastic.
- A monopolist always sets price equal to the unitary elastic point on its demand curve.? a. True b. False, Use a graph.
- True or false? A monopolist produces on the inelastic portion of its demand curve.
- Are the following statements true or false? Explain your answer. - If demand shifts out (or right), short-run profits increase, but long-run profits are unaffected in a perfectly-competitive environment. - If demand is downward-sloping and a monopolist
- True or false? In a market in which there is a perfectly price discriminating monopolist, there is no consumer surplus.
- Evaluate whether the following statements are true, false. or uncertain. Make sure to explain your reasoning: a. The equilibrium outcome in a monopolized market is efficient because the monopolist always produces where marginal cost equals marginal revenu
- True or false? A monopolist is constrained by demand in setting its price.
- True or False: (Explain) A profit-maximizing monopolist can never be allocatively efficient.
- In a natural monopoly, if the government requires marginal cost pricing, it must pay the monopolist a subsidy. a. True b. False
- Determine whether the following statement is true or false: The ratio of a monopolist's optimal price to its marginal cost is larger when the market elasticity of demand is greater in absolute value (i.e., more elastic).
- True or false? Monopolies charge a mark-up over marginal cost because they face a perfectly elastic supply curve.
- Price-discriminating, profit-maximizing monopolists charge higher prices to buyers who have more elastic demand curves. a. True b. False
- True or False: When a monopolist practices price discrimination, the monopolist's profits will be lower than in a single-price monopoly.
- True or false? A profit-maximizing monopolist takes the price as given and chooses the output level that maximizes profits at that price.
- True or false: If a price ceiling is imposed in a natural monopoly market and the price ceiling is above marginal cost and average cost of the monopolist, and below the price the monopolist would choo
- In monopoly, firms equate marginal revenue and marginal cost. Is this statement true or false? Explain.
- State true or false and justify your answer: If the average variable cost is rising, the marginal cost must be rising.
- A monopoly's marginal cost curve is the monopoly's supply curve. True or false? Explain your answer.
- 1. In some situations, such as when negative externalities exist, the monopolist's price and output decisions may be preferable to that of the competitive solution. a. True b. False 2. Which of the
- Tell whether each of the following statements is TRUE or FALSE. If the statement is false, explain why. 1. Because a monopolist faces a downward-sloping demand curve for its product, the phenomenon of
- In perfect competition, firms equate price and marginal cost. Is this statement true or false? Explain.
- State true or false and justify your answer: An increase in input prices causes a downward shift in each isoquant.
- True or False: In competitive markets, price exceeds marginal cost; in monopolized markets, price equals marginal cost.
- State true or false and justify your answer: If the price elasticity of demand for a good is 3, then total revenue will increase.
- A monopolist that can perfectly price discriminate will find it profitable to sell more than a monopolist that can not price discriminate a. True. b. False.
- State True or False and justify your answer: A monopoly is most likely to emerge and be sustained when firms have U-shaped long-run average total cost curves.
- In a monopolistically competitive market equilibrium, the price is equal to the marginal cost. a. True b. False
- State True or False and justify your answer: In the long-run, both allocative inefficiency and X-inefficiency might be found in monopoly but not under conditions of pure competition.
- Answer true or false and explain: A rational monopolist would never choose to operate at a point where P = 20 and MR = -4.
- If the government regulates the price a natural monopolist can charge to be equal to the firm's marginal cost, the government will likely need to subsidize the firm. a. True b. False
- State true or false and justify your answer: An increase in demand will not cause the price to rise if the industry is a constant cost industry.
- State True or False: Total profit for all firms in an oligopolistic market is greater than that of a monopolist.
- A monopolist never produces on the elastic portion of his demand curve. a. True b. False
- True or false? From the point of view of economic efficiency, a monopolist produces too little of a good and charges too high a price.
- True or false? If a monopoly is maximizing profits, the price will always be greater than the marginal cost.
- Is the following scenario true or false? Explain the reason for your answer. As a price-taker, assuming there are no externalities, the market equilibrium is also the efficient outcome.
- State true or false and justify your answer: Increases in product prices will shift the consumer's indifference curve to the right.
- The price a monopolist charges may or may not be above its average cost, but it is always above its MR. A) True B) False
- When a monopolist increases the quantity that it sells all else equal total revenue increases which is called the output effect. a. True b. False
- A monopolist selling an elastic good will set a lower price than a monopolist selling an inelastic good. True or false?
- A monopolist does not have a supply curve because the firm's decision about how much to supply is impossible to separate from the demand curve it faces. a. True b. False
- Assume the price elasticity of demand for a good is -3. In this case, a decrease in price would result in marginal revenue of (2/3)P. a. True b. False
- True or False (Explain): At the equilibrium price, price will be equal marginal cost (for all firms that choose to produce) under perfect competition.
- True or false? A profit-maximizing monopolist has a lot of market power.
- Answer true or false: The monopolistic competitive firm faces a perfectly elastic demand curve.
- Determine whether the following statement is true or false: A monopolist will always want to produce in the more elastic segment of its demand curve.
- True or false? Marginal revenue is less than price for monopolies and monopolistically competitive firms.
- State true or false and justify your answer: When we say "fixed costs don't matter," we mean that increasing fixed costs has no effect on profit.
- Determine if the following statement is true or false: A monopolist sells to two markets: In Market 1, there is a constant elasticity of demand e1 is less than -1. In Market 2, there is a constant el
- A discriminating monopolist will produce a larger output than a non-discriminating monopolist. a. True b. False
- State true or false and justify your answer: If demand is inelastic, then an increase in the price of a good will lead to a decrease in total revenue for producers of the good.
- A monopolist will always pick a price in the elastic region of the demand curve. a. True b. False
- True or False: If a price ceiling is imposed in a natural monopoly market and the price ceiling is below average total cost of the monopolist and below the price the monopolist would choose to charge if unregulated, then the monopolist will not produce an
- If a monopolistic competitor is earning profits, then economists predict its costs will rise to reduce profits to zero. a. True. b. False.
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