Chapter 10- monopoly

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

• upward sloping.

• downward sloping.

• horizontal.

• vertical.

A barrier to entry is

• an economic term for economies of scale

• illegal in most markets

• anything that prevents new firms from entering the market

• a factor that increases competition

A type of monopoly that arises because a single firm can supply a good or service to an entire market at a lower cost than could two or more firms.

• Monopoly

• Natural Monopoly

• Price Discrimination

• Cartel

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

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

For this monopolist, what is the area of consumer surplus?

• A,B,H,J

• A,J,G,C

• A,R,J

• A,R,J,E

Answer explanation

The area between the demand curve and the price level, up to the quantity demanded.

Consumer surplus is the difference between what a customer is willing to pay for a product and the actual price they pay.

Profit maximization level of output is at

• MC = MR

• MC = AR

• MR = 0

• MC = AC

Answer explanation

where MR crosses MC is where producing one more unit would not increase profit because the cost of producing that unit equals the revenue it generates.

Dead weight loss for this monopoly are represented by area:

• BKL0
• J,H,N

• J,K,N

• J,G,N

What is the area above the supply curve, up to the price line, that represents the benefit gained by producers?

• Producer Surplus
• Monopoly Surplus
• Deadweight Loss
• Consumer Surplus

What is the reason that the government interferes with monopolies in order to protect society's overall well-being?

• Deadweight Loss
• Producer Surplus
• Consumer Surplus
• Monopoly Benefits

If a monopoly sales tax on each unit sold increases the price from $15 to $16, what is the new quantity demanded?

• 4
• 5
• 6
• 3