Monopoly

The profit-maximizing combination of output and price for a single-price monopoly is:

• Q1 & P1
• Q2 & P3
• Q1 & P4
• Q3 & P2

A firm with market power engages in price discrimination to:

• earn a higher profit
  
• increase consumer surplus
  
• decrease deadweight loss
  
• make its demand more elastic 

For the firm shown in the graph above, the short- run, profit-maximizing strategy would be to set output at:

• Q1, price at P3, and earn an economic profit 
• Q1, price at P1, and suffer a loss 
• Q2, price at P2, and earn an economic profit 
• Q2, price at P2, and earn only a normal profit 

In order for a firm to engage in price discrimination, it must be: 

• producing in the inelastic portion of its demand curve to raise its price and increase total revenue 
• a price taker
  
• able to separate consumers into different groups based on demand elasticities 
• experiencing economies of scale in the relevant range of production
  

Revenue maximization level of output is at

• MC = MR

• MC = AR

• MR = 0

• MC = AC

What is not an advantage of a monopoly?

• achieving economies of scale

• high level of research and development

• Producing a greater quantity at profit-maximizing level of output

• higher prices and lower output

Which is not a type of a legal barrier?

• patent

• excise tax

• trademark

• copyrights

Which of the following is NOT a major barrier to entry for a monopolist?

• control over a key input

• patent protection

• economies of scale

• product differentiation

A single-price monopoly is characterized by a marginal revenue curve that is

• upward sloping.

• downward sloping.

• horizontal.

• vertical.

Monopolist can control

• price

• output

• both

• nothing