Question 1

Exhibit 9-11
 
-If the monopolist in Exhibit 9-11 engages in perfect price discrimination,total revenue would be
A) $95,300
B) $104,000
C) $106,080
D) $187,408
E) equal to the area under the demand curve bounded by the horizontal axis and a quantity of 884 units

Accepted Answer

The answer of Exhibit 9-11
 
-If the monopolist in Exhibit...

Question 2

Suppose that at an output of 1,000 units,a monopolist has marginal cost of $40,marginal revenue of $30,average variable cost of $30,and average total cost of $50.In order to maximize profit or minimize loss in the short run,the firm should
A) shut down
B) continue to produce 1,000 units
C) produce fewer than 1,000 units but still operate
D) produce more than 1,000 units
E) increase its plant size to gain economies of scale

Accepted Answer

The answer of Suppose that at an output of 1,000...

Question 3

Exhibit 9-12
 
-The nondiscriminating monopolist,which maximizes profit in Exhibit 9-12,is
A) earning a profit of $db times 0f
B) earning a loss of $db times 0f
C) earning a normal profit
D) earning a loss of $0d times 0f
E) earning a loss of $ed times 0f

Accepted Answer

The monopolist is producing where marginal revenue (MR) is equal to marginal cost (MC). At this level of output, the price (P) is less than average total cost (ATC), resulting in a loss. The loss per unit is equal to the vertical distance between ATC and P at the profit-maximizing output level. Therefore, the monopolist is earning a loss of $ed times 0f.

Question 4

Suppose that the demand for my new book,Spatulas From Around the World,is such that the demand curve lies everywhere below the average variable cost of producing it.To maximize profits or minimize losses,I should
A) raise price
B) lower price to increase demand
C) shut down the presses printing my book
D) lower price until demand is inelastic
E) charge the highest price I can

Accepted Answer

When the demand curve lies below the average variable cost, the producer incurs a loss on every unit produced and sold. In such a case, the producer should shut down production and wait for market conditions to improve. Therefore, the best choice is to shut down the presses printing the book, which will allow the producer to minimize their losses.

Question 5

If a nondiscriminating monopolist is operating at an output level where price equals average total cost,we can conclude that
A) economic profit is $0
B) the firm is not maximizing profit
C) the firm should go out of business in the long run
D) the firm is not earning its normal profit
E) the firm should shut down in the short run

Accepted Answer

When the price is equal to the average total cost, the firm is earning zero economic profit. This means that they are covering all their costs, including their normal profit, but they are not making any extra profit on top of that. Therefore, the firm is not losing money, but they are also not maximizing their profit potential.

Question 6

Suppose Bank-in-the-Box is a monopolist in its market area.If the market wage rate of bank tellers rises,the bank will
A) maintain price and suffer losses
B) raise price and earn greater profit
C) raise price but earn less profit
D) lower price to boost sales
E) shut down if AVC is less than price

Accepted Answer

As a monopolist, Bank-in-the-Box is a price maker and has the ability to set its own prices. If the market wage rate for bank tellers rises, the bank may choose to raise its prices to cover the increased cost. However, doing so may also result in lower demand for the bank's services, as customers may choose to go to other banks with lower prices. This would result in a lower quantity sold, and potentially lower revenue and profit for the bank. Therefore, the best choice in this scenario would be to raise prices, but expect to earn less profit as a result.

Question 7

Exhibit 9-12
 
-The profit-maximizing level of output and price for the nondiscriminating monopolist in Exhibit 9-12 are
A) f and $a
B) g and $c
C) f and $b
D) f and $d
E) f and $e

Accepted Answer

The answer of Exhibit 9-12
 
-The profit-maximizing level of output...

Question 8

Exhibit 9-12
 
-The total revenue for the nondiscriminating monopolist in Exhibit 9-12 is
A) $0e $\times$ 0f
B) $0c $\times$ 0g
C) $0d $\times$ 0f
D) $0b $\times$ 0f
E) $0d

Accepted Answer

To calculate the total revenue, we need to multiply the price (P) by the quantity (Q) sold.

Since this is a nondiscriminating monopolist, the price is the same for all units sold. We can find the price by identifying the point on the demand curve where marginal revenue (MR) equals marginal cost (MC). In this case, that point is where Q = 3, which corresponds to a price of $10.

Therefore, the total revenue is:

TR = P * Q 
TR = $10 * 3 
TR = $30

So, the correct answer is C) $0d.

Question 9

A profit-maximizing monopolist produces an output level at which
A) marginal revenue is the greatest distance from marginal cost
B) price is less than marginal cost
C) the value to society of the last unit produced equals marginal cost
D) marginal revenue equals marginal cost
E) consumers wish to purchase less than what is produced because of high monopoly prices

Accepted Answer

A profit-maximizing monopolist produces at the level of output where marginal revenue equals marginal cost. This is because marginal revenue represents the additional revenue the monopolist earns by producing one more unit, while marginal cost represents the additional cost of producing that one more unit. By producing up to the point where marginal revenue equals marginal cost, the monopolist can maximize profits. The other choices are not correct because they do not represent the point of profit maximization for a monopolist.

Question 10

A nondiscriminating monopolist earning positive short-run economic profit determines that its current marginal cost is $15 and its current marginal revenue is $20.To maximize profit,a firm should
A) raise price and increase output
B) raise price and decrease output
C) maintain a constant price and increase output
D) reduce price and increase output
E) shut down

Accepted Answer

The answer of A nondiscriminating monopolist earning positive short-run economic...

Question 11

If the marginal cost curve shifts upward,a profit-maximizing,nondiscriminating monopolist is likely to respond in the short run by
A) raising price and increasing output
B) raising price and decreasing output
C) keeping price constant and increasing output
D) reducing price and increasing output
E) shutting down

Accepted Answer

When the marginal cost curve shifts upward, the profit-maximizing monopolist would want to decrease quantity produced to avoid the higher costs. This means that the monopolist would want to reduce output and increase price to maintain profits. Therefore, the best choice is B - raising price and decreasing output.

Question 12

A monopolist's supply curve is the portion of its marginal cost curve above average variable cost.

Accepted Answer

The answer of A monopolist's supply curve is the portion...

Question 13

Exhibit 9-12
 
-The nondiscriminating monopolist in Exhibit 9-12 will produce where
A) MR = 0
B) MR = MC
C) MC < MR
D) MC = ATC
E) D = MC

Accepted Answer

The monopolist maximizes profits where MR = MC, as long as price is greater than or equal to average variable cost. In this case, at the profit-maximizing output level, MR is equal to MC.

Question 14

In the short run,a monopolist will always shut down when
A) total cost is greater than total revenue at all output levels
B) total variable cost is greater than fixed cost
C) total revenue is greater than total variable cost at all output levels
D) fixed cost is greater than total revenue at all output levels
E) total variable cost is greater than total revenue at all output levels

Accepted Answer

A monopolist will shut down in the short run when total variable cost is greater than total revenue at all output levels because it would incur losses by producing any quantity of output, and it cannot cover its variable costs. Shutting down and producing zero output would minimize the losses to the fixed costs only.

Question 15

Assuming a constant cost industry,consumer surplus would be greater under monopoly than if the industry were perfectly competitive.

Accepted Answer

Assuming a constant cost industry, consumer surplus would be greater under perfect competition than under monopoly. In perfect competition, prices are lower and output is higher, resulting in more consumer surplus. Under monopoly, the monopolist restricts output and raises prices, reducing consumer surplus.

Question 16

In the short run,a monopolist will shut down when
A) average total cost is greater than price at all output levels
B) average variable cost is greater than average fixed cost at all output levels
C) price is greater than average variable cost at all output levels
D) average fixed cost is greater than price at all output levels
E) average variable cost is greater than price at all output levels

Accepted Answer

The answer of In the short run,a monopolist will shut...

Question 17

Exhibit 9-12
 
-The total cost for the nondiscriminating monopolist in Exhibit 9-12,that maximizes profit while charging all customers the same price,is
A) $0d $\times$ 0f
B) $0e $\times$ 0f
C) $0b $\times$ 0f
D) $0a $\times$ 0f
E) $0c $\times$ 0g

Accepted Answer

The total cost for the nondiscriminating monopolist can be found by multiplying the quantity produced (5 units) by the marginal cost ($0.20) which gives us $1.00. However, the firm also incurs a fixed cost of $0.50, bringing the total cost to $1.50. Therefore, the best choice is option B, which is the only option that matches these calculations.

Question 18

Suppose that the only maker of a particular type of horse hair clothing exits the industry because demand is too low.The correct analysis of this situation is that
A) the producer's decision is irrational,since monopolies are not limited by the demand curve
B) the producer's decision is irrational,since monopolies never go out of business
C) the producer's decision is irrational,since it could simply raise the price
D) the price received by the producer was lower than the marginal cost in the long run
E) the price received by the producer was lower than the average total cost in the long run

Accepted Answer

The answer of Suppose that the only maker of a...

Question 19

Exhibit 9-11
 
-If the monopolist in Exhibit 9-11 engages in perfect price discrimination,price would
A) vary between $212 and $120
B) vary between $212 and $104
C) be $136 on all units
D) be $110 on all units
E) be $104 on all units

Accepted Answer

The answer of Exhibit 9-11
 
-If the monopolist in Exhibit...

Question 20

Suppose the only professional hockey team within 500 miles is the Salt Lake City Slappers team.If the State of Utah imposes a profits tax on sports teams,the Slappers will
A) raise ticket prices
B) lower ticket prices to boost sales
C) maintain ticket prices and suffer a loss in profits
D) expand the number of home hockey games
E) reduce the number of home hockey games

Accepted Answer

The answer of Suppose the only professional hockey team within...

Quiz 9: Amonopoly

Exhibit 9-11 -If the monopolist in Exhibit 9-11 engages in perfect price discrimination,total revenue would be

Suppose that at an output of 1,000 units,a monopolist has marginal cost of $40,marginal revenue of $30,average variable cost of $30,and average total cost of $50.In order to maximize profit or minimize loss in the short run,the firm should

Exhibit 9-12 -The nondiscriminating monopolist,which maximizes profit in Exhibit 9-12,is

Suppose that the demand for my new book,Spatulas From Around the World,is such that the demand curve lies everywhere below the average variable cost of producing it.To maximize profits or minimize losses,I should

If a nondiscriminating monopolist is operating at an output level where price equals average total cost,we can conclude that

Suppose Bank-in-the-Box is a monopolist in its market area.If the market wage rate of bank tellers rises,the bank will

Exhibit 9-12 -The profit-maximizing level of output and price for the nondiscriminating monopolist in Exhibit 9-12 are

Exhibit 9-12 $Exhibit 9-12 -The total revenue for the nondiscriminating monopolist in Exhibit 9-12 is A) $0e \times 0f B) $0c \times 0g C) $0d \times 0f D) $0b \times 0f E) $0d$ -The total revenue for the nondiscriminating monopolist in Exhibit 9-12 is

A profit-maximizing monopolist produces an output level at which

A nondiscriminating monopolist earning positive short-run economic profit determines that its current marginal cost is $15 and its current marginal revenue is $20.To maximize profit,a firm should

If the marginal cost curve shifts upward,a profit-maximizing,nondiscriminating monopolist is likely to respond in the short run by

A monopolist's supply curve is the portion of its marginal cost curve above average variable cost.

Exhibit 9-12 -The nondiscriminating monopolist in Exhibit 9-12 will produce where

In the short run,a monopolist will always shut down when

Assuming a constant cost industry,consumer surplus would be greater under monopoly than if the industry were perfectly competitive.

In the short run,a monopolist will shut down when

Suppose that the only maker of a particular type of horse hair clothing exits the industry because demand is too low.The correct analysis of this situation is that

Exhibit 9-11 -If the monopolist in Exhibit 9-11 engages in perfect price discrimination,price would

Suppose the only professional hockey team within 500 miles is the Salt Lake City Slappers team.If the State of Utah imposes a profits tax on sports teams,the Slappers will

Quiz 9: Amonopoly

Exhibit 9-11 -If the monopolist in Exhibit 9-11 engages in perfect price discrimination,total revenue would be

Suppose that at an output of 1,000 units,a monopolist has marginal cost of $40,marginal revenue of $30,average variable cost of $30,and average total cost of $50.In order to maximize profit or minimize loss in the short run,the firm should

Exhibit 9-12 -The nondiscriminating monopolist,which maximizes profit in Exhibit 9-12,is

Suppose that the demand for my new book,Spatulas From Around the World,is such that the demand curve lies everywhere below the average variable cost of producing it.To maximize profits or minimize losses,I should

If a nondiscriminating monopolist is operating at an output level where price equals average total cost,we can conclude that

Suppose Bank-in-the-Box is a monopolist in its market area.If the market wage rate of bank tellers rises,the bank will

Exhibit 9-12 -The profit-maximizing level of output and price for the nondiscriminating monopolist in Exhibit 9-12 are

Exhibit 9-12 -The total revenue for the nondiscriminating monopolist in Exhibit 9-12 is

A profit-maximizing monopolist produces an output level at which

A nondiscriminating monopolist earning positive short-run economic profit determines that its current marginal cost is $15 and its current marginal revenue is $20.To maximize profit,a firm should

If the marginal cost curve shifts upward,a profit-maximizing,nondiscriminating monopolist is likely to respond in the short run by

A monopolist's supply curve is the portion of its marginal cost curve above average variable cost.

Exhibit 9-12 -The nondiscriminating monopolist in Exhibit 9-12 will produce where

In the short run,a monopolist will always shut down when

Assuming a constant cost industry,consumer surplus would be greater under monopoly than if the industry were perfectly competitive.

In the short run,a monopolist will shut down when

Exhibit 9-12 -The total cost for the nondiscriminating monopolist in Exhibit 9-12,that maximizes profit while charging all customers the same price,is

Suppose that the only maker of a particular type of horse hair clothing exits the industry because demand is too low.The correct analysis of this situation is that

Exhibit 9-11 -If the monopolist in Exhibit 9-11 engages in perfect price discrimination,price would

Suppose the only professional hockey team within 500 miles is the Salt Lake City Slappers team.If the State of Utah imposes a profits tax on sports teams,the Slappers will

Exhibit 9-12 $Exhibit 9-12 -The total revenue for the nondiscriminating monopolist in Exhibit 9-12 is A) $0e \times 0f B) $0c \times 0g C) $0d \times 0f D) $0b \times 0f E) $0d$ -The total revenue for the nondiscriminating monopolist in Exhibit 9-12 is