Monopoly Questions and Answers

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Monopoly Questions and Answers

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Which of the following are necessary characteristics of a monopoly? (i) The firm is the sole seller of its product. (ii) The firm's product does not have close substitutes. (iii) The firm genera...
Compare and contrast perfect competition with monopoly. In particular, focus on how a firm determines the quantity to produce, what determines the price that is set, and what the firm's profit will...
How does a natural monopoly become regulated? What is the way that the pricing should take place for the monopoly? How much profit should be allowed to be made?
A local cable monopolist has demand and cost curves given by: QD = 1000 - 2P TC = 5,000 + 50Q a. Find the cable monopolist's profit-maximizing quantity and price. b. Find the cable monopolist's res...
Ameritech has a monopoly over local telephone service. If Ameritech is producing where marginal revenue is less than marginal cost, the firm: a. could increase profits by reducing output. b. could...
OneSource is a producer in a monopoly industry. The demand curve, total revenue curve, marginal revenue curve and total cost curve for OneSource are given as follows: Q = 160 - 4P TR = 40Q - 0.25Q^...
What are three examples of monopolies and consider how contestable their markets are.
What is a monopoly? What barriers to entry typically create the conditions favourable to monopolies? Give an example of a monopoly firm and the barriers to entry protecting its monopoly.
Evaluate the view that monopoly is an undesirable type of market structure: In which market structure would you place a physical copy of the book Economics, by N. Gregory Mankiw and Mark P. Taylor:...
Which market structure best describes farms that grow tomatoes? And explain why.
A market structure with a single producer, with no close substitutes, is called a _. |A. Oligopoly|B. Monopoly|C. Trusts|D. Perfect competition|E. Commodity |F. Public goods|G. Negative externality...
Adopting a "meet the competition" clause makes it more difficult to sustain cooperation since the incentive for a firm to secretly cut its price (below an agreed-upon price) increases. a. True. b....
In the case of pure monopoly: a) one firm is the sole producer of a good or service which has no close substitutes. b) the firm's profit is maximized at the price and output combination where margi...
Suppose a monopoly is producing its profit-maximizing output level. Now suppose the government imposes a lump sum tax on the monopoly, independent of its output. As a result, the monopoly's profit...
Fill in the blanks: (Schools of Economics) Classical economists want the government to promote competition, stop monopolies and cheating, and stop actions that limit _ prices and wages.
Suppose that a monopoly is producing at an output where its average total cost of production is minimized and equals $50 per unit. If marginal revenue equals $60, is the monopoly producing at the p...
Which one of the following statements is correct? a. Patents are one way of preventing a monopoly. b. If pharmaceutical patents are enforced, the number of new drugs will decrease. c. Monopoly pr...
Why is price greater than marginal revenue for a single-price monopolist, and how does this differ from perfect competition?
Which of the following is not a barrier to entry into a monopoly market? a. A patent. b. Economic profits. c. Exclusive licensing. d. A government franchise.
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 powe...
Which of the following statements is true? a. The demand curve faced by a monopolist is more elastic than the one faced by a competitive firm. b. A monopolist's demand curve is the market demand cu...
A monopoly will maximize profits at the level of output at which: A. MC = P. B. MR = AFC. C. MC = ATC. D. MR = MC.
Which of the following is most likely to be a monopoly? A. A public water utility. B. The Washington Post. C. AOL (America On-Line), an internet service provider D. WABC, a television station.
Which of the following statements is false? A. For a profit-maximizing monopolist, marginal revenue equals marginal cost. B. The marginal revenue earned by a monopolist will always be less than t...
Why is government justified in regulating a natural monopoly?
Explain why monopoly is not a preferred market system.
A monopolist produces a single good from the utilization of two plants, plant 1 and plant 2. It faces an inverse demand curve of P = 1100 - 20. where Q is the total quantity produced, thus Q = q_1...
Suppose you are an attorney representing two large corporations that filed for legislative approval to merge two companies that produce very similar products or services. The court authority tries...
What is the effect of the following market structure on the equilibrium wage and on the level of employment: Bilateral Monopoly.
The market for grade A large eggs in California is best considered to be an example of: A. monopoly B. oligopoly. C. perfect competition. D. monopolistic competition.
A monopolist sells in two different markets and charges the same price of $10 in both markets. In Market A, the demand curve is described by Q_d = 50 - 2 P. In Market B, the demand curve is describ...
When marginal revenue intersects marginal cost on a graph: A. a monopolist must go up to the demand curve to find the price. B. profits are maximized for a monopoly but not for a competitive firm....
The market demand curve for corn is Q = 300 - P, where P is the price. The supply of corn is provided by a monopoly whose MC at quantity Q is given by the formula 1/2 Q. Draw a diagram of the mono...
A single firm that can supply a good or service to an entire market at a smaller cost than two or more firms could is called a: a. Natural monopoly. b. Competitive monopoly. c. Cartel. d. Artific...
State and briefly explain the characteristics of a monopoly market.
List and explain some of the benefits of monopoly.
For a monopoly, the industry demand curve is the firm's marginal revenue curve. a. True b. False
Why does a monopoly never produce in the inelastic part of its demand curve?
The demand curve for a monopolist: a. is steeper than the marginal revenue curve b. lies below the marginal revenue curve at every point but the first c. is the same as the marginal revenue curve d...
What are similarities between a competitive industry and a monopoly?
Draw a graph that shows a monopoly firm as it incurs losses.
Give two sources of monopoly.
A monopolist produces a single good from the utilization of two plants, plant 1 and plant 2. It faces an inverse demand curve of: P = 1100-2Q. Q is total quantity produced, meaning Q = q1+ q2 (q1=...
A pharmaceutical firm has a monopoly on a new class of vasodilators. The market demand is given by P=240-0.01*Q, and thus MR=240-0.02*Q. The monopolist's marginal cost is constant and equal to 20....
Define a market structure with one producer dominating the industry, leaving no room for significant competitors, and the barriers to entry tend to be virtually insurmountable.
Compared to a perfectly competitive industry, a perfect price discriminator will: a) produce less and charge a higher price b) produce more and create more deadweight loss c) produce less and cre...
In which industries do firms set the prices?
Compared to perfect competition, monopolies charge \\ A. lower price B. higher price C. the same price D. whether higher or lower depends on the monopoly
Over the long run, a monopolist _____. a. cannot continue to make profits and will earn a loss b. can continue to make economic profits if it can maintain a monopoly and keep competitors from ente...
Suppose that at the current level of production, the price of a monopolist s product is equal to $15 per unit. Marginal revenue is equal to $10 per unit, and marginal cost is equal to $15 per unit....
What is the practice of colluding with other firms to control prices known as?
Assume that at the current output level, a monopolist is breaking even (profit equals zero), has a marginal revenue of $7, and a marginal cost of $4. Which of the following statements is correct? a...
In economics, what are the weaknesses of monopolies?
If a monopolist lowers the price and total revenues rise, then: a. average revenue must be less than marginal revenue. b. there must be no close substitutes for the monopolist's product. c. the mon...
Monopolies have ____ substitutes. a. many b. few c. no d. several but less than 10
Monopolies exist due to: a. patents. b. government franchises. c. cost factors. d. All of these choices contribute to the power of a monopoly.
In a monopoly, consumer surplus is: a. larger than under perfect competition. b. equal to that under perfect competition. c. smaller than under perfect competition. d. None of these choices.
A nondiscriminating pure monopolist's demand curve: A) coincides with its marginal revenue curve. B) is perfectly inelastic. C) lies below its marginal revenue curve. D) lies above its marginal re...
Firms operating with a formal agreement to fix prices and output is a cartel. a. True b. False
Monopoly firms are price makers as opposed to price takers. a. True b. False
In a certain market, demand curve is given by P = 68 - 2Q, while the supply curve is given by P = 20 + 2Q. Assuming a monopoly market with Q = 8, what is the total wealth?
A difference between a perfectly competitive market equilibrium and a perfect price discrimination equilibrium is that in a competitive market _____, whereas in perfect price discrimination _______...
Explain why marginal revenue is less than price for monopoly firms price?
The main reason(s) that monopolies may be able to earn positive economic profits for a relatively long period of time is that: a. assets cannot quickly move in and out of the industry when demand f...
When the cost of production is zero, monopoly equilibrium will be established at a level where the elasticity of demand curve is: 1) Greater than one. 2) Equal to one. 3) Less than one. 4) Infinity.
What is a monopoly?
Assume that a monopolist faces a demand curve given by Q = 10 p^-3. His cost function is c (y) = 2 y. a. What is the optimal level of output and price? b. What would be the optimal level and price...
Suppose that a monopolist calculates that at present output and sales levels, marginal revenue is $1.00 and marginal cost is $2.00. He or she could maximize profits or minimize losses by: A. Decrea...
Gaining or enhancing monopoly power in the product market allows _____. A) society to achieve productive and allocative efficiency. B) the firms' owners to keep a greater portion of their income. C...
Which of the following is true about a monopoly? A. Its demand curve is generally less elastic than in more competitive markets. B. It will always earn an economic profit. C. It will charge the hig...
Henry Potter owns the only well in town that produces clean drinking water. He faces the following demand, marginal revenue, and marginal cost curves: c. George's Uncle Billy says that a price ce...
Moldavia is a small country that initially does not trade with the rest of the world. Nut N' Honey Farms has a monopoly on the production of peanut brittle in Moldavia. The following information de...
Which of the following would induce a monopoly to produce the efficient level of output? a. Eliminate tariffs and quotas on competing imports. b. Impose a tariff on competing imports. c. Use quotas...
Monopolies produce too much output from society's perspective. True False
Compared to the situation in a competitive market, in a monopolistic market, firms generally do not produce less output, while charging higher prices. True False
In a monopoly where the marginal revenue and price are, respectively, given by $3 and $6, what is the price elasticity of demand?
The monopolist has a pricing policy; the competitive producer does not.
The more profitable a firm, the greater its monopoly power.
To maximize profits, a monopolist chooses the quantity where: a. costs are minimized. b. marginal cost equals zero. c. marginal revenue equals zero. d. marginal revenue equals marginal cost. e...
A big difference between a competitive firm and a monopolist is that a monopolist: a. can always make positive economic profits. b. does not charge a price equal to marginal revenue. c. cannot s...
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 maximi...
Suppose a monopolist faces inverse demand given by P = 140-3Q, and marginal cost given by MC= Q. Assume the monopolist charges each customer at the same price The monopolist maximizes his profits w...
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...
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 mo...
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 is the monopolist's profit maximizi...
Calculate the monopolist's profit under the following conditions. The intersection of the marginal revenue and marginal cost curves occurs where the output is 20 units. At an output of 20 units, th...
The advantage of public ownership of a monopoly is that prices can be based on efficiency rather than profit maximization. A. True B. False
What are the four public policies used by the government to control monopoly?
In which of these markets would the firms be facing the least elastic demand curve? A. monopolistic competition B. oligopoly C. pure monopoly D. perfect competition
What's the difference between an Oligarchy and a Monopoly?
Explain equilibrium in the perfect competition and monopoly market?
A monopoly will usually produce: a) only when its demand curve is perfectly inelastic. b) where its demand curve is elastic. c) where its demand curve is inelastic. d) where its demand curve is...
Explain the methods of obtaining a monopoly and the advantages-disadvantages of each.
Where a single firm has control of the market, it is called: a. a monopoly. b. an oligopoly. c. an oligarchy. d. a monarchy.
The monopolist, unlike the perfectly competitive firm, continues to earn an economic profit in the long-run because _____. a. it can change a higher price than its competitors and not lose market s...
The demand curve that a monopolist firm faces is _____. a. the same as the demand curve facing a perfectly competitive firm except the monopolist is a price maker and the competitive firm is a pric...
If a monopoly finds that at the present level of production, marginal revenue exceeds marginal cost, the firm should _____. a. shut down b. increase production c. maintain the production level bec...
The price searcher's marginal revenue curve lies below the demand curve because _____. a. the monopoly is not an efficient producer b. as the monopolist increases output, the price falls c. there...
A firm with market power that is currently making a negative economic profit in the short run should: A. exit in the long run if there is no plant size that will result in an economic profit that i...
A monopolist: A. can raise its price without losing any sales because it is the only supplier of a good for which there are no close substitutes for consumers B. can earn positive economic profit i...
A monopolist sells to two consumer groups, Boys and Girls. Demand for Boys: Q = 50 - P Demand for Girls: Q = 30 - P MC = 5 Find the profit-maximizing price/quantity combination in each market if th...
A firm is said to be a pure monopoly if it satisfies which three terms?
Name the type of market structure that has one seller and practices price discrimination.
What are characteristics that make up the monopoly and monopolisitc competition. Give an example of each characteristic.
In a monopoly market, the AR curve is always ____ the MR Curve. (a) Equal (b) Below (c) Above (d) Dividing
Monopolies lead to: A. rent-seeking B. deadweight loss C. an efficient outcome D. Both A and B are true.
Over the long run, a monopolist: a. cannot continue to make profits and will earn a loss b. can continue to make economic profits if it can maintain a monopoly and keep competitors from entering th...
Monopolies choose their profit-maximizing ______. a. output level b. price c. output level and price d. neither output level nor price
Monopoly power measures the ability to set the ________ for a good. a. price b. output level c. quality d. demand
Why do pure monopolists operate within the elastic portion of demand? Why would they not operate within the inelastic portion of demand?
A monopoly firm faces a demand curve given by the following equation: P = $500 - 10Q, where Q is the quantity sold per day. Its marginal cost curve is MC = $100 per day. Assume that the firm faces...
Which of the following statements is correct? A. The pure monopolist will maximize profit by producing at that point on the demand curve where elasticity is zero. B. In order to maximize profits,...
The problem with a monopoly is that a monopoly: a. produces a smaller output than that produced by a perfectly competitive firm. b. charges a higher price than the price a perfectly competitive fi...
What is the benefit for consumers if the government regulate monopolies firm?
When the monopoly is maximizing profit, A. its resources are not being used efficiently. B. its price is equal to that charged by the perfectly competitive firm. C. it is actually incurring a l...
Can a government create monopolistic conditions? Give an example.
Should monopolistic practices be condemned and outlawed? Briefly discuss.
Consider a monopolist facing linear demand P(Q) = 16 - Q. Find the monopolist's profit-maximizing choice of price and quantity if C(Q) = 8Q so that marginal cost is constant at 8.
Define the following term: Monopolistic market.
Which of the following is the best example of a monopoly? a. A local public utility. b. A fast-food restaurant. c. A department store. d. A wheat farmer.
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.
True or False: Price to consumers is typically lower in a monopoly market than in a perfectly competitive market if costs of production are the same for monopolist and perfectly competitive firms.
Under monopolistic competition, firms produce a) identical products. b) products that are somewhat differentiated. c) a unique product without close substitutes. d) It depends on the individual...
At the quantity where a single-price monopolist maximizes profit, price will be.. a. equal to marginal cost. b. equal to marginal revenue. c. less than marginal cost. d. greater than marginal c...
A single-price monopolist maximizes profits by producing at a price that is ______. a. less than marginal cost. b. greater than marginal cost. c. less than marginal revenue.
A cartel is a) a group of oligopolists who try to behave like a single monopolist and split the benefits among firms. b) a government-approved organization for the exchange of technical information...
Show diagrammatically a monopoly firm making economic profit in the short run. Is profit likely to be eroded to zero in the long run (like in perfect competition)? Explain.
Suppose that Boeing and Rolls-Royce Holdings are the sole producers of a particular jet engine. The two firms currently charge the same price for their products. If neither firm reduces the price o...
Advertising is more closely associated with the monopoly model than the monopolistic competition model. True or false?
If two monopolists agree to collude, this will increase the allocative inefficiency in the market. True or false?
If two monopolists agree to collude, this will increase the allocative inefficiency in the market. a. True. b. False.
At the profit maximizing level of output for a monopolist: (a) P = AR and AR = AC, (b) P = MC and MR is greater than MC, (c) P is greater than MC and MR = MC, (d) P = MR and AC = MC
Apple enjoys an extensive monopoly power in the market for MP3 players since Apple's iPhone _____. a. has many competitors b. is more expensive c. is hard to duplicate d. is produced overseas
Under bilateral monopoly, the wage rate is: (a) Indeterminate, (b) Equal to the competitive wage rate, (c) Higher than the competitive wage rate, (d) Lower than the competitive wage rate
Suppose the demand for Botox, a drug to treat some eye conditions, is p = 775 - 375Q (Q in million vials) and the monopolistic drug seller's marginal cost is constant at $25 (MC = 25). What are the...
If a profit-maximizing monopoly has reached its equilibrium position, then price: a. must be less than marginal cost. b. must be equal to marginal cost. c. must be greater than marginal cost. d. ma...
Monopoly power results in: a. a lower quantity than if the industry was perfectly competitive. b. a higher price than if the industry was perfectly competitive. c. a lower price than if the industr...
Monopoly exists whenever a. there is only one seller of a particular product. b. a seller has some degree of control over the price he or she can charge. c. the profit earned by the seller exceeds...
Consider a monopolist where the business sector request bend for the produce is given by P = 520 - 2Q. This monopolist has minimal costs that can be communicated as MC = 100 + 2Q and aggregate cost...
The XYZ Company is a profit-maximizing firm with a monopoly in the production of pennants. The firm sells its pennants for $10 each. We can conclude that the XYZ Company is producing a level of out...
A firm in the airline industry has a marginal cost of $200 and charges a price of $300. What are the Lerner index and markup factor?
The Blue Dragon Restaurant is a new Chinese Restaurant in town. As the only Chinese restaurant in the area, it faces the following daily demand curve: Q = 800 - 40 P where Q is the number of meals...
The theory of the kinked demand curve is that A. although the firm sells a differentiated product, too many competitors exist to make it worthwhile speculating on responses to the firm's behavior....
In the monopolist equilibrium, what is the relationship between price (P) and marginal cost (MC)?
Suppose a monopolist faces a demand equation given by P = 20 - Q, and MC = AVC = ATC = $6. What is the profit maximizing price for the monopolist?
If a monopolist claims his profit-maximizing markup factor is 3, what is the corresponding price elasticity of demand?
A monopolist's inverse demand function is P = 150 - 3Q. Your company produces output at two facilities; the marginal cost of producing at facility 1 is MC1(Q1) = 6(Q1). The marginal cost of produci...
When you compare a monopoly market to a perfectly competitive market, what does the monopoly market usually generate?
Evaluate: "Society does not need laws outlawing monopolization and monopoly. Inevitably, monopoly causes its own self-destruction, since its high profit is the lure for other firms or entrepreneurs...
A monopolist has demand and cost curves given by: Q = 200 - P, TC = 50 + 25Q + 0.1Q^2. Show work for all parts: a. Find the equation for the inverse demand curve (P as a function of Q). b. Show tot...
A local video rental monopolist faces the weekly demand function D(P) = 1000 - 50P. The marginal cost of a rental is $1. Suppose the town government places a $1 tax on all video rentals. a. What e...
True or False: A monopoly is able to continue to generate economic profits in the long run in any economic market? Why?
The monopolist, unlike the perfectly competitive firm, continues to earn an economic profit in the long run because ____. a. it can charge a higher price than its competitors and not lose market sh...
If a monopoly finds that at the present level of production, marginal revenue exceeds marginal cost, the firm should: a. shut down. b. increase production. c. maintain the production level because...
When a cartel member produces more output and lowers prices: A) it enjoys only a fraction of the benefits of selling more units. B) it receives all the benefits of the increased sales, and t...
A monopolist faces demand given by: P = 100 - 0.4QD, and has marginal costs given by: MC = 10 + 0.2Q. (A) Draw the demand, marginal revenue and marginal cost curves. Calculate and show how much thi...
Cartels are: a. unstable and tend to lose market power over time. b. extremely powerful and able to keep prices and profits high indefinitely. c. firms that face perfectly elastic demand curves and...
When a cartel member produces more output and lowers prices: a. It enjoys only a fraction of the benefits of selling more units. b. It receives all the benefits of the increased sales and the othe...
Given the following information: P = 20 - 2Q; MC = AC = 4. a) Determine the profit-maximizing output and price charged by a monopolist. b) Determine the competitive price and output. c) Graphically...
What are 3 ways to regulate a monopoly?
According to the political concept, does Microsoft have a monopoly? Why or why not?
The supply curve for a pure monopolist _____. a. is the portion of the marginal cost curve that lies above the average variable cost curve. b. is perfectly price elastic at the market price. c. is...
Explain why a monopolist can increase profits by practicing price discrimination compared with using a single price to maximize profits?
Many service industries such as restaurants, night clubs, movie theatres, and hairdressers experience much higher demand during weekends compared toweekdays. Explain a pricing strategy which would...
Monopoly powers given to domestic utility companies to create economies-of-scale might unintentionally: a. not be used for rent-seeking behaviors. b. be a positive externality for the world as a wh...
Monopolists earn excessive profits by increasing their quantity produced above the competitive market outcome. A) True B) False
A monopolist's marginal cost is less than the price it charges. A) True B) False
Peter Schott starts a new company that has a monopoly on a cool new app that gives answers to SOM Econ problem sets. His total cost function is TC = 80 + 3Q + 3Q^2, which means that MC = 3 + 6Q. Th...
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 valu...
A monopolist will always want to produce in the more elastic segment of its demand curve. a. True. b. False.
A monopoly can sell all that it desires at any given price. a. True b. False
Which of the following is always true of monopolists? a. They charge the highest possible price. b. They always earn high profits. c. They do not have to worry about demand. d. They charge a price...
In a monopoly: a. the industry has high barriers to entry. b. the industry has high barriers to exit. c. the industry has high barriers to entry and exit. d. the industry has no barriers to entry o...
A monopoly has an inverse demand function given by p = 120 - Q and a constant marginal cost of $10. (a) Graph the demand, marginal revenue, and marginal cost curves. (b) What is the profit-maximizi...
Which of the following statements is (are) true of a monopoly? (i) A monopoly has the ability to set the price of its product at whatever level it desires. (ii) A monopoly's total revenue will al...
A monopolist can never maximize welfare. a. True. b. False.
The main problem with imposing the socially optimal price (P = MC) on a monopoly is that the socially optimal price: a. May be so low that the regulated monopoly can't break even. b. May cause the...
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 wh...
True or False? Explain. Monopoly outcome is always inefficient, even if the monopolist cannot price discriminate.
Consider a single price monopolist that faces the following demand curve: p = 150 - Q. The total cost curve for this monopolist is given by the following: TC = 100 + 10Q + Q^2. Which of the followi...
Which of the following is the best example of a monopoly firm? a. The Bank of America b. The US Bank c. National City Bank d. The Federal Reserve e. Washington Mutual Funds Bank
Based on market research, a film production company in Ectenia obtains the following information about the demand and production costs of its new DVD: where Q indicates the number of copies sold an...
Suppose a cinema is a local monopoly whose demand curve for adult tickets on Saturday night P = 12 - 2 Q, where P is the price of a ticket in dollars and Q is the number of tickets sold in hundreds...
The demand curve facing a monopolist is _____. A. horizontal B. downward-sloping C. upward-sloping D. vertical
A monopoly has: a. a perfectly elastic supply curve. b. an upward sloping demand curve. c. a downward sloping demand curve. d. a perfectly elastic demand curve.
Consider a single firm facing an inverse demand function p = 100 - 10 q, where q is the quantity of the good produced and p is the price for the good. The firm has a linear cost function C (q) = 10...
The marginal cost of a monopolist is constant and is R10. The marginal revenue curve is given as follows: \\ MR = 100 - 2Q \\ The profit-maximizing price is.
Which of the following conditions is true for a monopolist? a. MR less than P. b. MR = P. c. MR = AFC. d. MR less than AVC.
Describe two different aspects in which a monopolistically competitive firm behaves like perfectly competitive firm.
Both antitrust policy and industrial regulation deal with monopoly. What distinguishes the two approaches? How does government decide to use one form of remedy rather than the other?
Which of the following models results in the highest level of output assuming a fixed number of firms with identical costs and a given demand curve? A. Cartel B. Monopoly C. Cournot D. Stackelb...
Last word Why have tech firms with near-monopolies in their own sectors sought to compete with tech firms that have extremely strong, near-monopoly positions in other sectors?
The reason economists consider monopoly to be socially undesirable is that monopolists: a) earn too much economic profit. b) can charge any price they want. c) exploit the inelastic nature of deman...
If the demand curve facing a monopolist shifts, then the monopolist's: a) marginal revenue curve and profit-maximizing level of output will change. b) marginal revenue curve will not change, but it...
Why is marginal revenue below average revenue for a monopoly?
How do you determine the highest price a monopolist can charge and still sell the product?
If a firm with monopoly pricing power in the market faces a demand curve of P = 4,000 - 2Q and marginal costs of MC = 1,000 + 2Q, then the firm will produce: A. 150 units. B. 500 units. C. 200 unit...
Most cartels do not last very long because: a. the firms merge into a monopoly. b. they are illegal in the United States. c. cartel members cheat on agreed upon production limits. d. OPEC discovers...
Which of the following is not a characteristic of a monopoly? A. There is only one seller. B. A monopolist is a price-taker. C. There are barriers to entry. D. A monopolist's sales revenue is const...
When a second firm enters a market, the original firm's profits decline because _____. A. the original firm's price decreases B. the original firm's ATC increases C. the original firm's quantity de...
When a second firm enters a monopolist's market: A. market price will rise B. the quantity produced by the first firm will decrease C. the first firm's profits increase D. All of the above will occ...
When a second firm enters a monopolist's market _____. A. market price will drop B. sales for the first firm will rise C. the first firm's profits will increase D. All of the above will occur
When a second firm enters a monopolist's market: A. the former monopolist's average cost decreases as its output level decreases B. the demand curve the former monopolist faces shifts to the left C...
Suppose company XYZ produces a different commodity. The company has substantial control over the price of the product. The company's cost function is estimated to be TC = 200 - 10Q + Q2, where Q is...
A monopolist that faces, at the optimal level of output, a price elasticity of demand of -3 and a marginal cost of 10 A. would necessarily be making profits if the average cost at that point was le...
A small town in Bolivia exists primarily because an open-pit copper mine produces a large amount of valuable metal ore. There is no other significant employer in the town, and the few other busines...
Monopolies like perfectly competitive firms maximize their profits where marginal revenue (MR) is equal to marginal cost (MC). The difference, however, is that the monopolist produces less goods fo...
Uber has now entered the transportation industry without requiring special licensing that used to apply to taxi drivers. How has the entry of Uber affected the market for transportation (think of c...
When an entrepreneur creates a new, highly demanded product, he/she often takes out a patent on the product. This makes it illegal for anyone else to manufacture the exact same product for 20 years...
In the graph above for a monopoly, which curves are most likely to represent marginal revenue, marginal cost, demand, and average total cost?
Unlike a perfectly competitive firm, a monopoly has a downward-sloping demand curve. Explain what this means in terms of the relationship between the various prices it could set and the varying qua...
Identify the two criteria necessary for a firm to be a monopoly.
A monopoly that must sell each unit of output at the same price to all its customers is called?
Blue Rose Inc. is the only flower grower to have cracked the secret of making a blue rose. The figure above shows the demand for blue roses, the marginal cost of producing a blue rose, and the marg...
A monopoly has costs described by TC(Q) = 4300+8Q. Demand is described by P = 50-0.1Q. What is the monopolist's profit-maximizing price (P)?
A monopoly has costs described by TC(Q) = 4300+8Q. Demand is described by P = 50-0.1Q. What is the monopolist's profit-maximizing quantity (Q)?
The demand for a good produced by a firm has been reliably measured by P = 100 - 5 Q, output Q is measured in thousands of units. If the total cost function is given by C = 10Q, what is the optimal...
A monopoly occurs when an industry has only one firm that produces a product and there are no close substitutes. Describe the conditions that lead to a monopoly.
Many retail stores offer to match or beat the price offered by the rival store. Explain why firms that belong to a cartel might make this offer.
For a monopolist, A. the elasticity of the demand is irrelevant because he has all the market power. B. the lower the elasticity of demand, the lower should he set his price. C. the higher the elas...
Assume that a single price monopolist has a marginal cost curve given by MC = 10 + 2Q. Further the demand curve that it faces is given by p = 250 - Q. Compared to a perfect industry, the deadweight...
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 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 value of the deadweight loss generated by this monopolist?...
The U.S. Postal Service is a monopoly. A. True B. False
Costco, the discount retailer, is a monopoly. A. True B. False
Amazon.com, the on-line bookstore is a monopoly. A. True B. False
If a monopolist's profits were taxed away and redistributed to its consumers, A. inefficiency would remain because output would be lower than under competitive conditions. B. inefficiency would rem...
A monopolist has equated marginal revenue to zero. The firm has: A. maximized profit. B. maximized total revenue. C. minimized cost. D. minimized profit. E. A. and B.
Choose the one alternative that best completes the statement or answers the question. _____ is comparable to a monopoly in the sense that an organization, in this case the government, has explicit...
What are some characteristics of a monopoly competition?
Which of the following firms will have the greatest freedom in setting the price of its product? a. one of three companies in an industry b. the only producer of a product with many substitutes c....
Recently, Bloomingfoods opened a store halfway between the two stores that it already owned and that are at the extreme points of Third Street. Assuming that Bloomingfoods holds the monopoly for or...
The large barriers to entry are a reason a monopoly: a. produces at the minimum average total cost in the long run. b. produces with no fixed costs in the long run. c. maximizes its profits by prod...
The demand curve that a monopolist faces is given by P = 75 - 0.5 Q, so their marginal revenue is MR = 75 - Q, and the marginal cost function is given by MC = 2 Q. Assume also that ATC at the profi...
The main reason a monopoly engages in price discrimination is that: a. doing so increases its profits. b. it wants to discriminate against a particular ethnic group. c. charging a lower price to so...
If the potential profits of a market are limited by location, what kind of monopoly tends to develop?
What is the most obvious failure of monopoly markets? A. The damage to the environment B. The high prices they allow the monopoly companies to charge C. The inequalities between employees and ex...
In a monopoly market, __________. A. the seller has the power to set quantity and price of its products B. no external parties regulate the price of its products C. all buyers and sellers can fr...
In a monopoly, how many sellers are there? A. There is a relatively small number of large firms controlling the market. B. There is only one seller, but other sellers can enter the market. C. Th...
In a monopoly market, A. the seller has the power to set quantity and price of its products. B. no external parties regulate the price of its products. C. all buyers and sellers can freely and imme...
Compare price and output decisions of a monopolistic competitive and monopoly market structure.
Which of the following choices is NOT true regarding a monopolist's marginal revenue? A. It is less than the price for all units produced B. It is horizontal C. It is downward sloping D. It is...
All of the following are characteristics of a monopoly market except which one? A. A single seller in the market B. No close substitutes to the good produced in the market C. The firm is a price-...
Regulatory commissions may focus on establishing a "fair-return" price to be charged by a monopolist. Under this policy, the monopolist would earn: a. positive economic profits b. zero economic pro...
True or false? The rule of reason doctrine declares that the existence of a monopoly alone is illegal.
For a monopsonist, the marginal factor cost is always: a. equal to the wage rate b. less than the wage rate c. greater than the wage rate d. the same as the labor supply e. the same as the labor de...
Monopoly can provide an example of market failure because firms with monopoly power A. may produce a larger output than would be supplied in a competitive market so that they achieve economies of s...
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.
What happens to a monopolist's price, profits, and output if its fixed costs decrease?
How is oligopoly different from monopoly and monopolistic competition?
True or false? A monopolist might keep its price below the profit-maximizing level to avoid attracting competitors.
True or false? Goods produced by a monopoly usually are more expensive than those produced by a perfectly competitive firm.
True or false? A lack of innovation may result from a successful monopoly.
True or false? The biggest problem with monopolies is they charge higher prices, so fewer consumers can afford the product.
True or false? Monopolies never go bankrupt.
Which of the following would be most likely to have monopoly power? a. A large department store. b. A long-distance telephone service provider. c. A local cable TV provider. d. A gas station.
A decreasing long-run average cost curve for a firm is most likely to be found in an industry that is a) monopolistic. b) perfectly competitive. c) monopolistically competitive. d) All of the above.
Assume that the demand for a product equals Q = 40 - P and the marginal cost of production equals a constant $10. Assume that there are no fixed costs so that average total costs are also a constan...
Let the demand for rides at an amusement park equals Q = 40 - P and the marginal cost of production equals a constant $10. Assume that there are no fixed costs so that average total costs are also...
Compared to the economically efficient quantity of output, amonopolistic competitor A. underproduces B. overproduces C. produces the economically efficient quantity
Compared to more competitive firms, monopoly producers tend to be A. more responsive to consumer demand B. more diligent to minimize costs of production C. Both of the above D. Neither of the above
1. For a monopoly A. the demand curve is downward sloping B. price is less than marginal revenue C. demand and marginal revenue are the same D. All of the above 2. In comparison to perfect competi...
A firm that is the lone seller of a product with no close substitutes is a(n) A. perfect competitor B. oligopoly C. monopoly D. monopolistic competitor
A monopoly is considering several units of a homogeneous product as a single package. A typical consumer's demand for the product is P = 50 - 2.5Q and your cost function is C = 20Q. a) Determine th...
Do firms in all market structures have monopoly power? Explain.
Serena sells her own patented perfume as a single-priced, profit-maximizing monopoly. The perfume has a demand function of P = 60 - 2.5Q and marginal cost function of MC = 2.5Q. where P is the pric...
''A monopoly is not efficient, and its pricing behavior leads to losses to society.'' What does this statement mean?
State whether this statement is True or False, giving reasons. In contrast to perfect competitors, monopolists are price makers and do not adjust quantity.
Using a well-illustrated diagram, show that a monopolist can make losses in the short-run even when MC = MR.
If the gains to producers from monopoly power could be redistributed to consumers, would the social cost of monopoly power be eliminated? Explain.
A cartel is a. A group firms which get together and make joint price and output decisions to maximize joint profits b. Form of tacit collusion c. Type of oligopoly in which the curve is kinked d. D...
A monopolist who faces a negatively sloped demand curve operates in the region where the elasticity of demand is a. Less than 1 b. Equal to 1 c. Greater than 1 d. between 0 and 1
The maximum profit condition for a monopoly firm is a. Total cost should be minimum b. Total revenue should be maximum c. Marginal revenue is equal to marginal cost d. Quantity should be maximum
The industry of fine art auction houses is a. a monopoly. b. monopolistically competitive. c. a duopoly. d. perfectly competitive.
Monopoly implies: a. low prices. b. high costs. c. low profits. d. no competition.
Which of the following is true of a perfectly competitive firm and a monopoly in the long run? a. P = ATC b. P = MC c. P = MR d. MR = MC
True or false? Monopolistically competitive markets are like monopoly markets in that firms in both markets have no control over price.
True or false? Monopolistically competitive markets are like monopoly markets in that firms in both markets face a large number of competitors.
A monopolist has a linear MC of MC = 2Q + 16. It faces a linear demand of P = 160 - Q. a) Find the equation of the MR. b) Find the profit-maximizing quantity and price for the monopolist. c) Draw...
Recall the economic distinction between the short run and the long run. If a competitive firm or a monopoly is operating in the short run then: A. it will not be able to cut its rate of output to z...
Compared to more competitive firms, monopoly producers tend to be a) more responsive to consumer demand. b) more diligent in minimizing costs of production. c) Both of the above. d) Neither of the...
Suppose a monopolist faces the following demand curve: P=420-4Q. Marginal cost of production is constant and equal to $36, and there are no fixed costs. How much profit will the monopolist make if...
Suppose a monopolist faces the following demand curve: P=420-4Q. Marginal cost of production is constant and equal to $36, and there are no fixed costs. What price will the profit maximizing monopo...
Suppose a monopolist faces the following demand curve: P=420-4Q. Marginal cost of production is constant and equal to $36, and there are no fixed costs. What is the monopolist's profit maximizing l...
True or false? Long-run equilibrium for a monopoly is where economic profit is equal to zero.
True or false? A profit-maximizing monopolist will always set price above marginal cost.
True or false? Because a monopoly is the only firm in an industry, it can charge any price.
To be able to engage in profit-maximizing price searching, a monopoly firm must be able to: A. induce the entry of other firms into the market for its product. B. avoid earning negative economic pr...
A price-discriminating monopolist will equate: A. price and marginal revenue in each market. B. marginal revenue and marginal cost in each market. C. average revenue and marginal revenue in each ma...
The price elasticity of demand for a good produced by a monopolist: A. does not equal zero because every good has at least one good substitute for it. B. does not equal zero because there will alwa...
In some situations, a monopoly might be considered more desirable than a perfectly competitive firm a) because a monopoly has more incentive to keep costs down. b) because a monopoly is the best w...
Which of the following characteristics is consistent with the monopoly industry? a) There are many firms. b) Barriers to entry keep potential competitors out of the market. c) There is pressure to...
From society's point of view, the efficient output level is ______ haircuts. a) 20 b) 23 c) 25 d) 30 e) whatever amount of haircuts that occur at the horizontal intercept of the demand function.
Which of the following statements is correct? a. Under perfect price discrimination, there is no deadweight loss. b. If a monopoly can separate its buyers into relatively few identifiable markets a...
Consider a monopoly that produces 1 good from 2 different factories, each with a different cost function, respectively C_1 (q) = 5 q and C_2 (q) = 6 q. The linear demand function is: p = 100 - (q_1...
Consider two market segments, X and Y, for product A. The price elasticity of demand for product A in market X is 1.5, while the same in market Y is 3. The monopolist is selling product A in both t...
A monopolist faces a market A demand curve given by Q_A = 70 - P and market B demand curve given by Q_B = 50 - 0.5 P. This monopolist pursues a separate monopoly pricing policy in each market. Assu...
If the government wishes to regulate the monopoly firm by restricting the price at OC in the market, the demand curve facing the monopolist will be equal to a) VD. b) CIJ. c) CFD. d) FD.
The unregulated monopolist will receive producer surplus equal to area a) ACF. b) BCFH. c) AVFH. d) AWEH.
If marginal costs are zero, a monopolist will maximize profit by producing at the point where a) average revenue is zero. b) price is maximum. c) total revenue is maximum. d) marginal revenue is ma...
Suppose your pharmaceutical company, which operates as a monopoly, has a patent on a drug with an estimated price elasticity of demand of 1.2. If the marginal cost of producing each pill is $3, at...
Acme Baseball Bats is a monopoly firm. If the marginal cost of producing a baseball bat is $30, and the absolute value of price elasticity of demand for Acme Baseball Bat Company is estimated to be...
Which of the following is not necessarily true at the profit-maximizing quantity of a monopolist? a) The marginal revenue is equal to the marginal cost of production. b) The slope of the marginal r...
A profit-maximizing monopoly firm will produce output equal to a) OC. b) OE. c) OJ. d) CJ.
The marginal revenue of a non-price-discriminating monopolist lies below the demand curve because a) the demand curve is unit elastic. b) the monopolist must lower the price on all units sold in or...
A market (or industry) demand curve is described by Q = 600 - 0.5P. The monopolist firm's cost function is TC = 8,550 + 20Q. A) Find the profit-maximizing quantity and price. B) If the monopoly is...
If firms A and B decide to collude and work as pure monopolists so that each firm produces half the quantity demanded by the market, what will be the economic profit for firm A?
True or false? Natural monopolies are only found in the markets for natural resources like oil and coal.
Consider a market for a homogenous good where the relationship between price and sales is indicated by p = 14 - q. There are no fixed costs of production, but there is a variable cost of 2 per unit...
The fundamental source of monopoly power is: A. barriers to entry B. profit C. decreasing average total cost D. a product without close substitutes
A monopoly faces the following TR and TC schedules: TR = 300q - 2q^2; TC = 12q^3 - 44q^2 + 60q + 30. What output should it sell to maximize profit?
True or false? The formation of a cartel ensures that each firm will earn greater profits than without a cartel.
True or false? Profits and losses in a private enterprise economic system lead to a monopolization of the industries in which they occur.
Monopolization is a process by which the government restricts the growth of monopoly firms. A) True B) False
State true or false. Since a monopolist is a price taker, it cannot have a supply curve.
Suppose that for a monopolist, MR = MC = $10 and P = $15 at the profit-maximizing level of output. At this level of output, the firm a. will shut down if ATC is greater than $15 b. is earning a pro...
True or False: A monopoly is a market characterized by several sellers of a good with no close substitutes and barriers to entry.
A monopolist firm serves 6 consumers. Each of the consumers only buy one unit of the good. Two consumers buy one unit if the price is lower or equal than $100 and the other four consumers buy one u...
The manager of a local monopoly estimates that the elasticity of demand for its product is constant and equal to -3. The firm's marginal cost is constant at $15 per unit. a. Express the firm's marg...
Complete this statement by filling in the blanks with the words ''increase'' or ''decrease'': \\ The entry of an additional firm in a mon. comp. market {Blank} the profit per unit of output becaus...
A firm that has monopoly power in the supply of a factor makes choices in the same manner as any other monopoly firm by selling where and selecting a price determined by the curve. a. MR = P; deman...
The government of your state wants Gigantic Software Corp., which is a natural monopoly, to stay in business yet still produce where price equals marginal cost. The government might choose to: a)...
You are a monopolist facing the following demand schedule. You produced a good at a constant marginal cost of $4 each. | Quantity | Price | 1 | 14 | 2 | 12 | 3 | 10 | 4 | 8 Assuming a fixed co...
In contrast to the demand curve that a perfectly competitive confronts, the demand curve that a monopolist confronts is ______. a. less elastic at all prices b. more elastic at all prices c. perf...
Determine under what market classification does the following most accurately fit: A large commercial bank. a, Oligopoly b. Monopolistic Competition c. Pure Competition d. Pure Monopoly
Determine under what market classification does the following most accurately fit: The steel industry. a, Oligopoly b. Monopolistic Competition c. Pure Competition d. Pure Monopoly
A firm can earn economic profits in the long run _______. (a) only when the market is a monopoly or monopolistically competitive (b) when the market is perfectly competitive, monopolistically compe...
Which of the following is true of the demand curve faced by a monopolist? a. A monopolist's demand curve is infinitely elastic. b. A monopolist's demand curve is more elastic than a competitive f...
A monopolist never drops their price to the point where: A) They can only earn normal profits. B) It is below minimum average total costs. C) They earn almost no excess profits. D) Demand is elasti...
Consider the following graph pertaining to a monopolist. If the monopolist set price equal to marginal cost, what would be its output rate?
Consider the following graph pertaining to a monopolist. In the graph, shade the area that shows the total profit earned by a monopolist.
Consider the following graph pertaining to a monopolist. Identify with a dash line the price and output set by this monopolist.
Consider the following graph. What does curve 2 represent?
Consider the following graph. What does curve 1 represent?
With only one seller in a posted offer market, prices will tend to move upward toward the monopoly price. a. True b. False
Answer the following. \\ A. Explain monopoly. B. Describe and analyze graphically a firm's profit-maximizing, break-even, and shutdown conditions. C. Describe the short and long run market condi...
a) Why are the monopolist's prices and quantity different from the competitive price and quantity? b) Is this good or bad from society's point of view?
A monopoly has the following demand and cost functions: P = 200 - 2Q; \: C(Q) = 2,000 + 3Q^2, respectively. Is the demand elastic, inelastic or unit elastic at the profit-maximizing price-quantity...
A monopoly has the following demand and cost functions: P = 200 - 2Q; \: C(Q) = 2,000 + 3Q^2, respectively. Calculate the maximum profit.
What is one difference between a firm in a perfectly competitive industry and a firm in a monopolistically competitive industry? (a) A monopolistically competitive firm does not face entry from oth...
Which of the following situations would most likely result in an oligopolistic market? a. locally regulated water market b. local market for internet services c. market for apples d. retail clothin...
In Grayton, there are two firms that produce pens, Red Pen, Inc. and Blue Pen, Inc. They would be considered: a. Nash equilibrium b. Cartel if they agree not to collude c. Duopoly d. none of the ab...
For a monopoly firm, the price: a. will be less than the marginal revenue b. will be more than the marginal revenue c. will be equal to marginal cost d. will be as high as monopolies want to charge
Determine whether the following statement is true or false: Although the logic of self-interest increases an oligopoly's level of output above the monopoly level, it does not push the oligopolists...
Two firms compete (cournot) with the demand function P = 260 - 2Q. Assume FC=0, \; MC=20. Find profit for both firms when firm 2 cheats and firm 1 continues to produce its half of the monopoly quan...
Two firms compete (cournot) with the demand function P = 260 - 2Q. Assume FC=0, \; MC=20. Find profit when both firms choose to collude.
A monopolist encountering a linear demand curve should always produce at the point where the demand is unit elastic in order to maximize profit. True False Uncertain (Justify selection.)
What is the marginal cost function? Suppose that a monopolist faces a demand curve of P = 100P- 2Q. Her firm has costs of C(Q) = 5Q^2.
Consider the following demand function: Q = 25 - 0.5P, where ''P'' is the price. Suppose that MC = AC = $20. Find the profit under monopoly.
Ann is a monopolist and less apples in the campus. The marginal cost of producing each apple is constant at $5 per apple. The inverse demand curve for apple is p(y) = 75 - \frac{y}{2}. The marginal...
Ann is a monopolist and less apples in the campus. The marginal cost of producing each apple is constant at $5 per apple. The inverse demand curve for apple is p(y) = 75 - \frac{y}{2}. The marginal...
Ann is a monopolist and sell apples on the campus. The marginal cost of producing each apple is constant at $5 per apple. The inverse demand curve for apple is p(y) = 100 - y. The marginal revenue...
Ann is a monopolist and less apples in the campus. The marginal cost of producing each apple is constant at $5 per apple. The inverse demand curve for apple is p(y) = 100 - y. The marginal revenue...
Tom has a monopoly in the retailing of coffee mugs. He is now selling 100 mugs per week at $8 each. If he wants to sell 150 coffee mugs, he can charge $5 each. The quantity effect is: Select one: a...
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 econo...
According to the political concept of a monopoly, do patents, copyrights, and trademarks create monopolies? Explain why or why not.
Describe the political and the economic concepts of a monopoly. What does each say constitutes a monopoly?
A single-price monopolist earns a total profit of ______ when it produces the profit-maximizing level of output. a) $120 b) $1000 c) $1800 d) 700 e) $500
A monopolist faces the following demand curve: P = 120 - 0.02Q, where Q is production, and P is price measured in cents per unit. The firm's cost function is given by C = 60Q + 25,000. If the gove...
A monopolist faces the following demand curve: P = 120 - 0.02Q, where Q is production, and P is price measured in cents per unit. The firm's cost function is given by C = 60Q + 25,000. What is the...
Yaster Gadgets manufactures and sells x smartphones per week. The weekly price-demand and cost equations are, respectively, p = 516 - 0.49x and C(x) = 20,655 + 17x. Suppose Yaster Gadgets wants to...
True or false? The government provides monopoly power to a firm when awarding a patent (often for 20 years) because research and development costs are typically very large, and substantial monopoly...
True or false? A government provides monopoly power to a firm when awarding a patent (often for 20 years) because without a patent, many useful products would not have been developed.
Assume that Matt and Wayne are beer producer duopolists. The market demand function is \\ Q = 10,000 - 100 P \\ P is the price in dollars and Q is kegs of beer. Marginal costs are $40 per keg. Ass...
Consumers are better off if a cartel serves a market as opposed to a monopoly. True False Explain.
Suppose that a monopoly faces inverse market demand function as P = 70 - 2 Q and its marginal cost function is MC = 40 - Q. Answer the following two questions. a. What should be the monopoly's prof...
How are the natural monopolies different from the regular monopolies? Should there really be this difference?
There is an ice cream monopoly in the town of Eureka. The monopoly firm is deciding how many ice cream carts to distribute in the town. Each cart has a cost of 1. The consumers have a utility for i...
The cost pass through is: A) The highest under perfect competition and the lowest under monopoly. B) The lowest under perfect competition and the highest under monopoly. C) Higher under Cournot duo...
Consider a monopolist facing two consumers with the following demand curves for its product: p_1 = 150 - 5 q_1 and p_2 = 100 - 6 q_2. Assume that the marginal cost is 10. A) If the monopolist pract...
Each firm in a cartel has an incentive to chisel because market price exceeds: a. marginal cost b. average cost c. average variable cost d. average fixed cost
True or false? A problem associated with maintaining a cartel is that profits are not maximized by a cartel, so it will evolve into a monopoly.
True or false? A problem associated with maintaining a cartel is that cartels are illegal.
Illustrate the monopolist's production choice graphically, and mark the area that corresponds to the monopolist's profit.
a) How many soccer balls does the monopolist produce? b) At what price are they sold? c) What is the monopolist's profit?
Firm A is the sole producer of a sport drink. A's marginal cost is MC = 30, and it faces market demand given by inverse demand function P = 100 - 0.5 Q. What is the monopoly quantity and monopoly p...
Monopolies and monopolistically competitive firms differ in that monopolies: a. participate in markets where barriers to entry are present. b. differentiate their products. c. face competition from...
The land Scott owns has the only known source of aloe needed to make anti-itch lotion. In this case, Scott's monopoly results from: a. government restrictions. b. location. c. sunk costs. d. ow...
Kalamazoo Competition-Free Concrete (KCC) is a local monopolist of ready-mix concrete. Its annual inverse demand function is P = 80 - 0.5Q, where P is the price, in dollars, of a cubic yard of conc...
A profit-maximizing monopolist may produce a socially inefficient level of output. In particular, the monopolist may choose not to produce some units of output that consumers would value at more th...
A) What are the characteristics of a monopoly? B) What are the characteristics of an oligopoly?
What is the profit maximizing rule for a monopolist?
When comparing a single-price monopoly to a perfectly competitive industry with the same costs: A. the monopoly's output is higher and the monopoly's price is lower than the perfectly competitive...
Monopoly power is best described as the ability to: 1) produce where MR intersects halfway between the original and the demand curve 2) charge the profit-maximizing price 3) produce the profit-m...
Choose the statement that is incorrect. \\ A. Internal cartels can operate legally. B. A cartel is a group of firms acting together to limit output, raise price, and increase economic profit. C....
Phillip Haynes is the controller of a company that has the sole authority to manufacture your product. The inverse market demand curve is P = 900 - 1.5 Q. Your total cost equation is C (Q) = 2 Q +...
a. DeBeers became a monopoly by doing what? b. How did they establish control of the market?
Why should it be harder to prove a predation-based monopolization case than an exclusion-based monopolization case?
What makes a pure monopoly an inefficient market?
Suppose the market demand curve is linear with P = 80 - 0.075Q. Because MR has twice the slope of the demand curve, the MR curve will be MR = 80 - 0.15Q. Instead of an upward sloping MC curve, supp...
How does the monopolist determine price? Explain.
True or false? A price-discriminating pure monopoly will follow a system where all buyers are charged the same price regardless of their elasticity of demand.
True or false? A price-discriminating pure monopoly will follow a system where buyers with relatively more inelastic demands are charged higher prices than buyers with relatively more elastic deman...
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...
Which of the following accurately describes the exact relationship between a monopoly's demand and MR curves, assuming the firm charges all customers the same price: A. MR lies below the D curve, a...
Explain how a monopolist chooses the quantity of output to produce and the price to charge. How does a monopolist's quantity of output compare to the quantity of output that maximizes total surplu...
According to the dynamic view of monopoly, what constitutes a credible barrier to entry? a. Large size of the incumbent. b. Insufficient capital. c. Government restrictions. d. Inability to adverti...
What is the main difference between a competitive firm and a monopoly firm? a) The number of customers served by the firm. b) Monopoly firms are more efficient and therefore have lower costs. c) Mo...
When a firm has a natural monopoly, the firm's: a. marginal cost curve must lie above the firm's average total cost curve. b. marginal cost always exceeds its average total cost. c. average total c...
My Big Banana (MBB) has a monopoly in Middletown on large banana splits. The demand for this delicacy is given by Q = 80 - P. MBB's total costs are given by TC = 40 + 2 Q + 2 Q^2. Its maximum monop...
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