12. MICRO-CH-15

Which of the following is not a barrier to entry in a monopolized market?

• The government gives a single firm the exclusive right to produce some good.

• The costs of production make a single producer more efficient than a large number of producers.

• A key resource is owned by a single firm.

• A single firm is very large.

A firm whose average total cost continually declines at least to the quantity that could supply the entire market is known as a

• perfect competitor.

• natural monopoly.

• government monopoly.

• regulated monopoly.

When a monopolist produces an additional unit, the marginal revenue generated by that unit must be

• above the price because the marginal revenue is the difference between that price and the previous price multiplied by the previously sold number of units.

• above the price because the marginal revenue is the price plus the difference between that price and the previous price multiplied by the previously sold number of units.

• below the price because the marginal revenue is the price minus the previous price.

• below the price because the marginal revenue is the price minus the difference between that price and the previous price multiplied by the previously sold number of units.

A monopolist maximizes profit by producing the quantity at which

• marginal revenue equals marginal cost.

• marginal revenue equals price.

• marginal cost equals price.

• marginal cost equals demand.

• None of the answers is correct.

Which of the following statements about price and marginal cost in competitive and monopolized markets is true?

• In competitive markets, price equals marginal cost; in monopolized markets, price equals marginal cost.

• In competitive markets, price exceeds marginal cost; in monopolized markets, price exceeds marginal cost.

• In competitive markets, price equals marginal cost; in monopolized markets, price exceeds marginal cost.

• In competitive markets, price exceeds marginal cost; in monopolized markets, price equals marginal cost.

Cengage Learning is a monopolist in the production of your textbook because

• Cengage Learning owns a key resource in the production of textbooks.

• Cengage Learning is a natural monopoly.

• the government has granted Cengage Learning exclusive rights to produce the textbook.

• Cengage Learning is a very large company.

The profit-maximizing monopolist will choose the price and quantity represented by point

• A.

• B.

• C.

• D.

• None of the answers is correct.

The profit earned by the profit-maximizing monopolist is represented by the area

• P4 A B P2

• P4 A C P1

• P4 A Q1 0

• P3 D Q2 0

• None of the answers is correct.

The deadweight loss associated with monopoly pricing is represented by the area

• P4 A B P2

• P4 A C P1

• A B D

• P2 B C P1

• None of the answers is correct.

The efficient price and quantity are represented by point

• A.

• B.

• C.

• D.

• None of the answers is correct.