fit maximizing monopoly will produce that output for which marginal cost equals
ID: 1120290 • Letter: F
Question
fit maximizing monopoly will produce that output for which marginal cost equals marginal revenue. b. average cost is minimized. c. d. marginal cost is minimized. marginal revenue equals price. If a monopoly is maximizing profits a. b. 2 price will always be greater than average cost. price will always equal marginal cost. price will always be greater than marginal cost. d. price will always equal marginal revenue. 3 The "deadweight loss" from a monopoly refers to the portion of a monopolist's profits that are above the competitive profit level. the loss of consumer surplus and produce surplus due to the monopolization of a market that is not transferred to another economic actor. the increase in price due to the monopolization of a market. the inefficient use of factors of production by a monopoly c. d. 4 A price discriminating monopolist having identical costs in two separated markets should charge a lower price in that market a. which has a higher demand which has a more elastic demand. which has a less elastic demand. which has a higher marginal revenue. d. ect (first degree) price discrimination extracts all consumer surplus. is not illegal. c makes the monopolist produce a quantity such that P-MC. d all of the above. e. none of the above. A monopolist has found that at the current level of output the price elasticity of demand is -0.5. Which of the following statements is true? 6 a The firm should cut output. c. d. The output level should not be altered. The firm should increase output. All of the above. Which of the following is (are) a condition(s) for third degree price discrimination? a. b. c. 7 Monopoly power. Different price elasticities of demand Separate markets. All of the above.Explanation / Answer
Ans)
1.
a. Marginal revenue equals marginal cost
The profit maximization rule is that MC should equal MR and the MC curve should cut the MR from below.
2.
price will always be greater than marginal cost.
A monopolist always produces where MC=MR for profit maximization but charges a higher price than the marginal cost.
3.
b. the loss of consumer surplus and producer surplus due to the monopolization of a market that is not transferred to another economic actor.
Deadweight loss is the fall in total surplus due to the monopolization of a market
4.
b. which has a more elastic demand
The firm should charge a lower price to consumers having more elastic demand since a higher price will lead to large fall in revenues.
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