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Exam 12: Monopoly

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Question 111

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Price discrimination may occur in monopoly.

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Question 112

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Most electric, gas, and water companies are examples of:

A) unregulated monopolies.
B) natural monopolies.
C) restricted-input monopolies.
D) sunk-cost monopolies.

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Question 113

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Use the following to answer questions Figure: Short-Run Monopoly -(Figure: Short-Run Monopoly) Look at the figure Short-Run Monopoly. The marginal cost of producing the profit-maximizing quantity is cost:

When a monopolist practices price discrimination as opposed to setting a single price, the monopolist increases its profits by capturing consumer surplus.

Use the following to answer questions: Figure: The Profit-Maximizing Output and Price -(Figure: The Profit-Maximizing Output and Price) Look at the figure The Profit-Maximizing Output and Price. Assume that there are no fixed costs and AC = MC = $200. At the profit-maximizing output and price for a perfectly competitive industry, deadweight loss is:

Use the following to answer questions: Figure: PPV -(Figure: PPV) Look at the figure PPV, which shows the demand and marginal revenue for a pay-per-view football game on cable TV. Assume that the marginal cost and average cost are a constant $40. If the cable company practices perfect price discrimination, consumer surplus will be:

Mr. Porter sells 10 bottles of champagne per week at $50 per bottle. He can sell 11 bottles per week if he lowers the price to $45 per bottle. The quantity and the price effects on total revenue would be, respectively, an increase of _____ and a decrease of _____.

Monopoly is inefficient because some consumer surplus is transferred to producer surplus.

Use the following to answer questions: Figure: The Profit-Maximizing Output and Price -(Figure: The Profit-Maximizing Output and Price) Look at the figure The Profit-Maximizing Output and Price. Assume that there are no fixed costs and AC = MC = $200. At the profit-maximizing output and price for competitor perfectly competitive industry, consumer surplus is:

The demand curve facing a monopolist is:

You own a lemonade stand in a competitive market, and as such, you are a price-taking firm. Which of the following events would most likely increase your market power?

In monopoly:

Airlines that engage in price discrimination charge higher prices to business travelers because their _____ is more _____ than that of other travelers.

Use the following to answer questions: -(Table: Prices and Demand) The New Orleans Saints have a monopoly on Saints logo hats. The marginal cost of producing a hat is $18. If the Saints increase the number of hats they sell from four to five, the price effect is a(n) _____ in total revenue of _____.

When a monopolist practices price discrimination, compared to a single-price monopolist, deadweight loss will:

An oligopoly is characterized as an industry in which:

Use the following to answer questions: -(Table: Prices and Demand) Look at the table Prices and Demand. The New Orleans Saints have a monopoly on Saints logo baseball hats. The Saints sell at most one hat to each customer, and the table shows each customer's willingness to pay. The marginal cost of producing a hat is $18, and there are no fixed costs. How much is the Saints' profit at the profit-maximizing output?

In contrast with perfect competition, a monopolist:

A monopolist that charges each customer a different price based on the customer's individual willingness to pay is called a single-price monopolist.

Use the following to answer questions: Figure: PPV -(Figure: PPV) Look at the figure PPV, which shows the demand and marginal revenue for a pay-per-view football game on cable TV. Assume that the marginal cost and average cost are a constant $40. If the cable company practices perfect price discrimination, deadweight loss will be: