12-180
to achieve efficiency.
312.
Output
Price
Total Cost
0
$500
$250
1
300
260
2
250
290
3
200
350
4
150
500
5
100
680
Refer to the demand and cost data for a pure monopolist given in the table. A
nondiscriminating monopolist would maximize profits at a price and
quantity of
313.
Output
Price
Total Cost
0
$500
$250
12-181
1
300
260
2
250
290
3
200
350
4
150
500
5
100
680
Refer to the demand and cost data for a pure monopolist given in the table. A
nondiscriminating monopolist would earn maximum profits of
314.
Output
Price
Total Cost
0
$500
$250
1
300
260
2
250
290
3
200
350
4
150
500
5
100
680
Refer to the demand and cost data for a pure monopolist given in the table. If the monopolist
perfectly price-discriminated and sold each unit of the
product at the maximum price the
buyer of that unit would be willing to pay, and if the monopolist sold 4 units, then total
revenue would be
12-182
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written consent of McGraw-Hill Education.
A. $600.
B.
$900.
C. $1,000.
D. $1,400.
315.
Output
Price
Total Cost
0
$500
$250
1
300
260
2
250
290
3
200
350
4
150
500
5
100
680
Refer to the demand and cost data for a pure monopolist given in the table. If the monopolist
perfectly price-discriminated and sold each unit of the
product at the maximum price the
buyer of that unit would be willing to pay, and if the monopolist sold 4 units, then total profits
would be
316.
Output
Price
Total Cost
0
$500
$250
1
300
260
2
250
290
3
200
350
4
150
500
5
100
680
Refer to the demand and cost data for a pure monopolist given in the table. If the monopolist
were forced to produce the socially optimal output
through the imposition of a ceiling price,
the ceiling price would have to be set at
317.
Refer to the graph for a pure monopoly. A profit-maximizing monopolist would set what
price and quantity levels in the short run?
318.
Refer to the graph for a pure monopoly. If the government regulated the monopoly and made
the firm set a fair-return price, what price and quantity
levels would we observe in the short
run?
319.
Refer to the graph for a pure monopoly. If the government regulated the monopoly and made
it produce the level of output that would achieve
allocative efficiency, what price and
quantity levels would we observe in the short run?
320.
Refer to the graph for a pure monopoly. If the government regulated the monopoly and made
it charge the socially optimal price, this price would
be
321.
Refer to the graph for a pure monopoly. Which of the following pricing models would allow
the monopolist to earn positive economic profits?
322.
The problem with socially optimal pricing regulation of a natural monopoly is that
12-189
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written consent of McGraw-Hill Education.
A c c e s s i b i l i t y : Keyboard Navigation
Blooms: Analyze
Difficu l t y : 03 Hard
Learning Objective: 12–07 Distinguish between the monopoly price, the socially optimal price,
and the fair-return price of a government-regulated monopoly.
Test Bank: II
Topic: Regulated Monopoly
323.
The problem with adopting a fair-return pricing policy for a natural monopoly is that
324.
An argument for making regulated monopolies adopt marginal-cost pricing is that this
would
325.
With a natural monopoly, the fair-return price
12-190
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written consent of McGraw-Hill Education.
B.
is allocatively inefficient; the socially optimal price is allocatively efficient.
C.
and the socially optimal price are both allocatively inefficient.
D.
and the socially optimal price are both allocatively efficient.
326.
What is the meaning of the phrase “dilemma of regulation”?
327.
“Big data” collection by online firms about buyers and their behaviors allows the firms
to practice
12-191
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written consent of McGraw-Hill Education.
Access i b i lity: Keyboard Navigation
Blooms: Understand
D i f f i c u l t y : 02 Medium
Learning Objective: 12–06 Describe why a monopolist might prefer to charge different prices
in different markets.
Test Bank: II
Topic: Barriers to Entry
True / False Questions
328.
“Price maker” means that a monopoly can decide whatever price it wants to, in order to
sell a specific given quantity of its product.
329.
The government may create barriers to entry that serve to foster monopoly power of
firms.
330.
A patent for a new product or a new business process is typically granted for a hundred
years.
12-192
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written consent of McGraw-Hill Education.
Blooms: Remember
D i f f i c u l t y : 01 Easy
Learning Objective: 12–02 List and explain the barriers to entry that shield pure monopolies
from competition.
Test Bank: II
Topic: Barriers to Entry
331.
A monopolist can use its pricing strategy as a barrier to entry by other firms.
332.
A firm sells 99 units of output when price equals $10, and 100 units of output when
price equals $9. Its marginal revenue for the 100th unit of
output is negative.
333.
The monopolist’s demand curve is more elastic than the industry demand curve.
12-193
334.
At the inelastic portion of a monopolist’s demand curve, the marginal revenue of each
extra unit of output is positive.
335.
As a monopolist lowers the price of its product from a high level, it finds that its total
revenue may at first increase and then, below a certain price,
its total revenue begins to
decrease.
336.
A monopolist will avoid setting a price in the elastic segment of the demand curve and
prefer to set the price in the inelastic segment.
337.
In order to maximize profits, the monopolist will produce the output level where MR =
MC and charge a price equal to MR and MC.
12-194
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written consent of McGraw-Hill Education.
FALSE
338.
A monopolist, being the sole seller in a market, is assured of positive economic profits.
339.
If a monopolist finds itself operating in the inelastic portion of its demand curve, then it
should never lower its price because doing so would
reduce its profits.
340.
The supply curve for a monopolist is the upward-sloping portion of the marginal cost
curve that lies above the average variable cost curve.
12-195
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written consent of McGraw-Hill Education.
Access i b i lity: Keyboard Navigation
Blooms: Understand
D i f f i c u l t y : 02 Medium
Learning Objective: 12–04 Explain how a pure monopoly sets its profit-maximizing output and
price.
Test Bank: II
Topic: Output and Price Determination
341.
For a monopolist, maximum profits will occur when the gap between average revenue
(or price) and average cost is biggest.
342.
In the long-run equilibrium, a monopolist will earn zero economic profits.
343.
In a monopoly at equilibrium, price is greater than marginal cost.
12-196
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written consent of McGraw-Hill Education.
Topic: Economic Effects of Monopoly
344.
A monopolist is free to charge whatever price it wishes, to sell a certain level of output.
345.
In an unregulated monopoly at equilibrium, the output level is higher than the
economically efficient level.
346.
One of the economic effects of monopoly is an income transfer from consumers to the
firm.
347.
Price discrimination is not viable if consumers can resell the products they purchase to
other consumers.
348.
In most cases, a monopolist practicing price discrimination will end up earning less
economic profits than a nondiscriminating monopolist.
349.
A price-discriminating monopolist will set a higher price where demand is more elastic
and a lower price where demand is less elastic.
350.
In a natural monopoly case, the socially optimal pricing policy rule will often yield a
higher price than the fair-return pricing rule.
12-198
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written consent of McGraw-Hill Education.
A c c e s s i b i l i t y : Keyboard Navigation
Blooms: Analyze
Difficu l t y : 03 Hard
Learning Objective: 12–07 Distinguish between the monopoly price, the socially optimal price,
and the fair-return price of a government-regulated monopoly.
Test Bank: II
Topic: Regulated Monopoly
351.
In a natural monopoly case, the socially optimal pricing policy rule will often result in
negative economic profits for the firm.