Monopoly 3761
Table 15-13
The following table gives information on the price, quantity, and total cost of production for a
monopolist.
Price
Output
Total Costs
$5
0
$3
$4
5
$8
$3
10
$20
$2
15
$33
$1
20
$53
$0
25
$78
154. Refer to Table 15-13. If the monopolist maximizes profits, he will charge a price of
a. $4.
b. $3.
c. $2.
d. $1.
155. Refer to Table 15-13. How much profit will the firm earn at the profit-maximizing price?
a. $9
b. $12
c. $15
d. $18
3762 Monopoly
Table 15-14
The following table gives information on the price, quantity, and total cost of production for a
monopolist.
Price
Output
Total Costs
$5
0
$3
$4
5
$8
$3
10
$18
$2
15
$33
$1
20
$53
$0
25
$78
156. Refer to Table 15–14. At what price does marginal revenue equal marginal cost?
a. $5
b. $4
c. $3
d. $2
Monopoly 3763
Table 15-15
A monopolist faces the following demand curve:
Price
Quantity
$10
5
$9
10
$8
16
$7
23
$6
31
$5
45
$4
52
$3
60
157. Refer to Table 15-15. The monopolist has total fixed costs of $40 and a constant marginal cost
of $5. At the profit-maximizing level of output, the monopolist’s profit is
a. $88.
b. $8.
c. $6.
d. We do not have enough information to determine profit.
3764 Monopoly
Table 15-16
A monopolist faces the following demand curve:
Price
Quantity
$10
5
$9
10
$8
16
$7
23
$6
31
$5
45
$4
52
$3
60
158. Refer to Table 15-16. The monopolist has total fixed costs of $40 and a constant marginal cost
of $5. At the profit–maximizing level of output, the monopolist‘s average total cost is
a. $9.00.
b. $7.50.
c. $6.74.
d. $5.82.
Monopoly 3765
Table 15-17
A monopolist faces the following demand curve:
Quantity
10
20
30
40
50
60
70
80
90
100
159. Refer to Table 15–17. Which of the following statements best describes the relationship
between the price and the marginal revenue associated with values in the table?
a. The price and marginal revenue are the same.
b. The price is greater than or equal to the marginal revenue.
c. The price is less than or equal to the marginal revenue.
d. The relationship cannot be determined from the information given.
3766 Monopoly
160. Refer to Table 15-17. If the marginal cost of production is constant at $18 per unit, this profit–
maximizing monopolist will choose to produce
a. 20 units.
b. 30 units.
c. 40 units.
d. 50 units.
Table 15-18
A monopolist faces the following demand curve:
Quantity
Price
0
$20
1
$18
2
$16
3
$14
4
$12
5
$10
6
$8
Suppose marginal cost is constant at $8 per unit.
161. Refer to Table 15–18. The monopolist’s total revenue from selling 4 units of output is
a. $4.
b. $16.
c. $32.
d. $48.
Monopoly 3767
162. Refer to Table 15–18. The monopolist’s marginal revenue from selling the second unit of
output is
a. $8.
b. $14.
c. $16.
d. $24.
163. Refer to Table 15–18. The monopolist’s marginal revenue is
a. always more than the price of its good.
b. always equal to the price of its good.
c. always less than the price of its good.
d. sometimes more and sometimes less than the price of its good.
3768 Monopoly
164. Refer to Table 15–18. When the price effect on revenue is greater than the output effect,
marginal revenue is
a. positive. This occurs with the 3rd unit of output.
b. positive. This occurs with the 4th unit of output.
c. negative. This occurs with the 5th unit of output.
d. negative. This occurs with the 6th unit of output.
165. Refer to Table 15-18 The monopolist’s profit-maximizing level of output is
a. 3 units.
b. 4 units.
c. 5 units.
d. 6 units.
Monopoly 3769
166. Refer to Table 15-18. Suppose the firm depicted in the table is selling a prescription drug for
which it had a patent, but the patent has expired. As new firms enter the market and sell the
generic version of this drug competitively, what quantity will be sold?
a. 3 units
b. 4 units
c. 5 units
d. 6 units
3770 Monopoly
Table 15–19
A monopolist faces the following demand curve:
Quantity
Price
0
$20
1
$18
2
$16
3
$14
4
$12
5
$10
6
$8
7
$6
8
$4
9
$2
10
$0
167. Refer to Table 15-19. If a monopolist faces a constant marginal cost of $9, how much output
should the firm produce?
a. 2 units
b. 3 units
c. 4 units
d. 5 units
Monopoly 3771
168. Refer to Table 15–19. If a monopolist faces a constant marginal cost of $7, how much output
should the firm produce?
a. 3 units
b. 4 units
c. 5 units
d. 6 units
169. Refer to Table 15-19. If a monopolist faces a constant marginal cost of $5, how much output
should the firm produce in order to equate marginal revenue with marginal cost?
a. 3 units
b. 4 units
c. 5 units
d. 6 units
3772 Monopoly
170. Refer to Table 15–19. If a monopolist faces a constant marginal cost of $3, how much output
should the firm produce?
a. 3 units
b. 4 units
c. 5 units
d. 6 units
171. Refer to Table 15-19. If a monopolist faces a constant marginal cost of $1, how much output
should the firm produce in order to equate marginal revenue with marginal cost?
a. 3 units
b. 4 units
c. 5 units
d. 6 units
Monopoly 3773
Table 15-20
A monopolist faces the following demand curve:
Quantity
Price
0
$30
1
$27
2
$24
3
$21
4
$18
5
$15
6
$12
7
$9
8
$6
9
$3
10
$0
172. Refer to Table 15-20. If a monopolist faces a constant marginal cost of $20, how much output
should the firm produce in order to maximize profit?
a. 2 units
b. 3 units
c. 4 units
d. 5 units
3774 Monopoly
173. Refer to Table 15-20. If a monopolist faces a constant marginal cost of $10, how much output
should the firm produce in order to maximize profit?
a. 2 units
b. 3 units
c. 4 units
d. 5 units
174. Refer to Table 15–20. If a monopolist faces a constant marginal cost of $5, how much output
should the firm produce in order to maximize profit?
a. 2 units
b. 3 units
c. 4 units
d. 5 units
Monopoly 3775
175. Refer to Table 15-20. If a monopolist faces a constant marginal cost of $2, how much output
should the firm produce in order to maximize profit?
a. 2 units
b. 3 units
c. 4 units
d. 5 units
Scenario 15-3
A monopoly firm maximizes its profit by producing Q = 500 units of output. At that level of
output, its marginal revenue is $30, its average revenue is $60, and its average total cost is $34.
176. Refer to Scenario 15-3. The firm‘s profit–maximizing price is
a. $30.
b. between $30 and $34.
c. between $34 and $60.
d. $60.
3776 Monopoly
177. Refer to Scenario 15-3. At Q = 500, the firm’s total revenue is
a. $13,000.
b. $15,000.
c. $17,000.
d. $30,000.
178. Refer to Scenario 15-3. At Q = 500, the firm’s profit is
a. $13,000.
b. $15,000.
c. $17,000.
d. $30,000.
Monopoly 3777
179. Refer to Scenario 15-3. At Q = 500, the firm’s marginal cost is
a. less than $30.
b. $30.
c. $34.
d. greater than $34.
180. A monopolist maximizes profits by
a. producing an output level where marginal revenue equals marginal cost.
b. charging a price equal to marginal revenue and marginal cost.
c. charging a price where marginal cost equals average total cost.
d. Both a and b are correct.
181. A monopolist maximizes profits by
a. producing an output level where marginal revenue equals marginal cost.
b. charging a price that is greater than marginal revenue.
c. earning a profit of (P – MC) x Q.
d. Both a and b are correct.
3778 Monopoly
182. A profit–maximizing monopolist will produce the level of output at which
a. average revenue is equal to average total cost.
b. average revenue is equal to marginal cost.
c. marginal revenue is equal to marginal cost.
d. total revenue is equal to opportunity cost.
183. For a profit-maximizing monopolist,
a. P > MR = MC.
b. P = MR = MC.
c. P > MR > MC.
d. MR < MC < P.
Monopoly 3779
184. The monopolist’s profit-maximizing quantity of output is determined by the intersection of which
of the following two curves?
a. marginal cost and demand
b. marginal cost and marginal revenue
c. average total cost and marginal revenue
d. average variable cost and average revenue
185. A monopolist will choose to increase output when
a. market price increases.
b. at all levels of output, marginal cost increases.
c. at the present level of output, marginal revenue exceeds marginal cost.
d. the demand curve shifts to the left.
3780 Monopoly
186. Which of the following statements is not correct?
a. The competitive firm produces where P = MC.
b. The monopolist produces where P = MC.
c. The competitive firm produces where MR = MC.
d. The monopolist produces where MR = MC.
187. Which of the following statements is correct?
a. If the monopolist’s marginal revenue is greater than its marginal cost, the monopolist can
increase profit by selling more units at a lower price per unit.
b. If the monopolist‘s marginal revenue is greater than its marginal cost, the monopolist can
increase profit by selling fewer units at a higher price per unit.
c. When a monopolist produces where price equals the minimum of average total cost, it earns a
positive economic profit.
d. If the monopolist is earning a positive economic profit, it must be producing where MR = MC.