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Exam 14: Monopoly

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Question 261

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The deadweight loss associated with a monopoly occurs because the monopolist

A) maximizes profits.
B) produces an output level less than the socially optimal level.
C) produces an output level greater than the socially optimal level.
D) equates marginal revenue with marginal cost.

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Question 262

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Give some examples of the benefits and costs of antitrust laws.

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Benefits include promoting com...

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Question 263

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Some companies merge in order to lower costs through efficient joint production.

Table 15-4 A monopolist faces the following demand curve: -Refer to Table 15-4. If the monopolist produces 5 units, what is its average revenue?

Price discrimination is a rational strategy for a profit-maximizing monopolist when

Scenario 15-5 An airline knows that there are two types of travelers: business travelers and vacationers. For a particular flight, there are 100 business travelers who will pay $600 for a ticket while there are 50 vacationers who will pay $300 for a ticket. There are 150 seats available on the plane. Suppose the cost to the airline of providing the flight is $20,000, which includes the cost of the pilots, flight attendants, fuel, etc. -Refer to Scenario 15-5. How much profit will the airline earn if it sets the price of each ticket at $300?

In reality, perfect price discrimination is

Reduced competition through merging of companies will raise social welfare

Competitive firms differ from monopolies in which of the following ways? i) Competitive firms do not have to worry about the price effect lowering their total revenue. Ii) Marginal revenue for a competitive firm equals price, while marginal revenue for a monopoly is less than the price it is able to charge. Iii) Monopolies must lower their price in order to sell more of their product, while competitive firms do not.

A monopolist produces where P = MC = MR.

Figure 15-4 -Refer to Figure 15-4. The marginal revenue curve for a monopoly firm is depicted by curve

Authors are allowed to be monopolists in the sale of their books in order to

Antitrust laws allow the government to

Scenario 15-6 The concert promoters of a heavy-metal band, WeR2Loud, know that there are two types of concert-goers: die- hard fans and casual fans. For a particular WeR2Loud concert, there are 1,000 die-hard fans who will pay $150 for a ticket and 500 casual fans who will pay $50 for a ticket. There are 1,500 seats available at the concert venue. Suppose the cost of putting on the concert is $50,000, which includes the cost of the band, lighting, security, etc. -Refer to Scenario 15-6. How much profit will the concert promoters earn if they engage in price discrimination?

Table 15-10 The monopolist faces the following demand curve: -Refer to Table 15-10. If the monopolist has total fixed costs of $40 and a constant marginal cost of $5, what is the profit-maximizing level of output?

Figure 15-4 -Refer to Figure 15-4. If the monopoly firm is currently producing Q3 units of output, then a decrease in output will necessarily cause profit to

Allowing an inventor to have the exclusive rights to market her new invention will lead to i) a product that is priced higher than it would be without the exclusive rights. Ii) desirable behavior in the sense that inventors are encouraged to invent. Iii) higher profits for the inventor.

If a monopolist is able to perfectly price discriminate,

Table 15-4 A monopolist faces the following demand curve: -Refer to Table 15-4. If the monopolist produces 10 units, what is its average revenue?

Figure 15-22 -Refer to Figure 15-22. How much consumer surplus results if this single-price monopolist profit-maximizes?