1. Of the following, which is NOT a characteristic of a pure monopoly? (A) Barri
ID: 1108229 • Letter: 1
Question
1. Of the following, which is NOT a characteristic of a pure monopoly? (A) Barriers to enter the industry are high.* (B) The sales price in a monopoly is set independently of demand.* (C) There are no close substitutes for the product.- (D) The industry consists of a single firm.* 2. Natural monopolies result from (A) Patents and copyrights*' (B) Pricing strategies (C) Extensive economies of scale in production-' (D) Control over an essential natural resource* Use the following table on a monopolist's revenue and cost information to answer the next two questions. All prices and costs are in dollars Price Demande TRP AR MRe ATCP MCP 160 15P 140 13- 54e 102 146 40 12e 3. Which of the following combinations of sales price and quantity maximizes profits?* Price ($)- 12+ 13e Quantity., 80 80 12 12+ (D)o 13/ 4. What is the maximum level of profits for this monopoly (A) S6+ (B) S8 (C) S10 (D) S12- 5. Which of the following statements is true?* (A) First-degree price discrimination leads to positive deadweight loss.* (B) Deadweight loss due to third-degree price discrimination only represents lost consumer surplus.* (C) Third-degree price discrimination causes a greater consumer-surplus loss in more elastic markets. (D) Through first-degree price discrimination, all consumer surplus is transferred to the firmExplanation / Answer
1. Ans: The sales price in a monopoly is set independently of demand
2. Ans: Extensive economies of scale in production
3. Ans: Price = $13 and Quantity = 12 (i.e., option D)
Explanation:
Because at this combnition of price and quantity, the profit maximization condition MR = MC is satisfied.
4. Ans: $10
Explanation:
Profit = TR - TC = $156 - $146 = $10
5. Ans: Through first degree price discrimination, all consumer surplus is transfered to the firm.
P($ Demand(Q) TR ($) = P*Q AR($) = TR/Q MR($) TC($) ATC ($) = TC/Q MC($) 16 0 0 2 15 4 60 15 15 54 13.50 13 14 8 112 14 13 102 12.75 12 13 12 156 13 11 146 12.17 11Related Questions
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