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143.
Output
Total Cost
Product Price
0
$250
$500
1
260
300
2
290
150
3
350
200
4
480
150
5
700
100
If the profit-maximizing pure monopolist whose information is in the accompanying table is
able to price discriminate, charging each customer the
price associated with each given
level of output, how many units will the firm produce?
12-82
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
To p i c : Price Discrimination
Type: Table
144.
Output
Total Cost
Product Price
0
$250
$500
1
260
300
2
290
150
3
350
200
4
480
150
5
700
100
If the profit-maximizing pure monopolist whose information is in the accompanying table is
able to price discriminate, charging each customer the
price associated with each given
level of output, how much profit will the firm earn?
145.
The graphs represent the demand for use of a local golf course for which there is no
significant competition. (It has a local monopoly.) P denotes
the price of a round of golf, and
Q is the quantity of rounds "sold" each day. If the left graph represents the demand during
weekdays and the right
graph the weekend demand, this profit-maximizing golf course
should
146.
The graphs represent the demand for use of a local golf course for which there is no
significant competition. (It has a local monopoly.) P denotes
the price of a round of golf, and
Q is the quantity of rounds "sold" each day. If the left graph represents the demand during
weekdays and the right
graph the weekend demand, then over the course of a full seven-day
week, this price-discriminating, profit-maximizing golf course should sell a
total of
147.
The graphs represent the demand for use of a local golf course for which there is no
significant competition. (It has a local monopoly.) P denotes
the price of a round of golf, and
Q is the quantity of rounds "sold" each day. If the left graph represents the demand during
weekdays and the right
graph the weekend demand, this profit-maximizing golf course will
earn how much economic profit over the course of a full seven-day week?
148.
Assume the figure applies to a pure monopolist and that MC is the same for both graphs. If
this firm is able to price discriminate between children
and adults, it should charge prices
of
149.
Assume the figure applies to a pure monopolist and that MC is the same for both graphs. If
this firm is able to price discriminate between children
and adults, its profit-maximizing
level of output will be
150.
Assume the figure applies to a pure monopolist and that MC is the same for both graphs. If
this firm is able to price discriminate between children
and adults, its economic profit will
be
151. Other things equal, a price-discriminating monopolist will
12-89
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Acc es si bi lit y: Keyboard Navigation
Blooms: Understand
D iffi c ul t y : 02 Medium
Learning Objective: 12-06 Describe why a monopolist might prefer to charge different prices
in different markets.
Test Bank: I
To p i c : Price Discrimination
152.
Refer to the diagram for a pure monopolist. If the monopolist is unregulated, it will maximize
profits by charging
12-90
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Type: Graph
153.
Refer to the diagram for a pure monopolist. Suppose a regulatory commission is created to
determine a legal price for the monopoly. If the
commission seeks to provide the monopolist
with a "fair return," it will set price at
154.
Refer to the diagram for a pure monopolist. If a regulatory commission seeks to achieve the
socially optimal allocation of resources to this line of
production, it will set a price of
155.
Refer to the diagram for a pure monopolist. If a regulatory commission sets the price to
achieve the socially optimal allocation of resources, it will
have to
156.
A dilemma of regulation is that
12-93
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
B.
the regulated price that results in a "fair return" restricts output by more than would
unregulated monopoly.
C.
regulated pricing always conflicts with the "due process" provision of the Constitution.
D.
the regulated price that achieves allocative efficiency is also likely to result in losses.
157.
If a regulatory commission wants to provide a natural monopoly with a fair return, it
should establish a price that is equal to
158.
If a regulatory commission wants to establish a socially optimal price for a natural
monopoly, it should select a price
12-94
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
and the fair-return price of a government-regulated monopoly.
Test Bank: I
To p i c : Regulated Monopoly
159.
If a regulatory commission imposes upon a nondiscriminating natural monopoly a price
that is equal to marginal cost and below average total cost
at the resulting output, then
160.
Refer to the diagram for a natural monopolist. If a regulatory commission were to set a
maximum price of P3, the monopolist would
12-95
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
A.
maximize profits.
B.
increase output beyond the profit-maximizing level.
C.
reduce output below the profit-maximizing level.
D.
be unable to make a normal profit.
161.
Refer to the diagram for a natural monopolist. If a regulatory commission set a maximum
price of P2, the monopolist would
12-96
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Blooms: Analyze
Dif ficu lty: 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: I
To p i c : Regulated Monopoly
Type: Graph
162.
Refer to the diagram for a natural monopolist. If a regulatory commission set a maximum
price of P1, the monopolist would produce output
12-97
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Type: Graph
163.
(Consider This) Children are charged less than adults for admission to professional
baseball games but are charged the same prices as adults at the
concession stands. This
pricing system occurs because
164.
(Consider This) Children are charged less than adults for admission to professional
baseball games but are charged the same prices as adults at the
concession stands. Which of
the following conditions of price discrimination explains why this occurs?
165.
(Last Word) "Big Data"
166.
(Last Word): Alex owns a luxury automobile and regularly purchases high-end fashion
items online. Kara drives an old sedan and does most online
shopping on eBay and Amazon.
Suppose both Alex and Kara search the same online retailer for a nice watch to give on
Father’s Day. Based on
Big Data and personalized pricing, we would expect
167.
(Last Word): The ability of personalized pricing by online retailers to price discriminate
12-99
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
AACSB: Knowledge Application
Acc es si bi lit y: Keyboard Navigation
Blooms: Understand
D iffi c ul t y : 02 Medium
Learning Objective: 12-06 Describe why a monopolist might prefer to charge different prices
in different markets.
Test Bank: I
To p i c : Price Discrimination
True / False Questions
168.
A pure monopolist will maximize profits by producing at that output where price and
marginal cost are equal.
169.
In the short run a pure monopolist will maximize profits by producing at that level of
output where the difference between price and average total
cost is at a maximum.
170.
In the short run a pure monopolist will charge the highest price the market will bear for
its product.
12-100
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
AACSB: Knowledge Application
Acc es si bi lit y: Keyboard Navigation
Blooms: Understand
D iffi c ul t y : 02 Medium
Learning Objective: 12-04 Explain how a pure monopoly sets its profit-maximizing output and
price.
Test Bank: I
To p i c : Output and Price Determination
171.
Pure monopolists always earn economic profits.
172.
If the XYZ Company can sell 4 units per week at $10 per unit and 5 units per week at
$9 per unit, the marginal revenue of the fifth unit is $5.
173.
Because of their large-scale level of production, pure monopolists overallocate
resources to their industry by producing beyond the P = MC output.
