**ANSWER ALL THE QUESTIONS** 1. Reference: Ref 13-6 Figure: PPV (Figure: PPV) Us
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Question
**ANSWER ALL THE QUESTIONS**
1.
Reference: Ref 13-6 Figure: PPV
(Figure: PPV) Use Figure: PPV. The figure shows the demand and marginal revenue for a pay-per-view football game on cable TV. Assume that the marginal cost and average cost are a constant $20. If the cable company is a monopoly, how much will it produce?
Select one:
a. 2
b. 8
c. 6
d. 4
2.
If a firm wants to charge different customers different prices, it must be:
Select one:
a. a price setter.
b. operating in the long run only.
c. a price taker.
d. in perfect competition.
3.
Market structures are categorized by:
Select one:
a. whether products are differentiated and the extent of advertising.
b. the number of firms and whether products are differentiated.
c. the number and size of the firms.
d. the size of the firms and the extent of advertising.
4.
Table: Demand and Total Cost
Quantity
(Megawatts)
Reference: Ref 13-3 Table: Demand and Total Cost
(Table: Demand and Total Cost) Use Table: Demand and Total Cost. Lenoia runs a natural monopoly firm producing electricity for a small mountain village. The table shows Lenoia's demand and total cost of producing electricity. The price effect of increasing production from 3 megawatts to 4 megawatts is:
Select one:
a. $500.
b. $450.
c. –$150.
d. –$50.
5.
In contrast with perfect competition, a monopolist:
Select one:
a. earns zero economic profits in the long run.
b. produces where MR > MC, and a perfectly competitively firm produces where P = MC.
c. may have economic profits in the long run.
d. produces more at a lower price.
6.
Marginal revenue for a monopolist is:
Select one:
a. less than price.
b. equal to price.
c. equal to average revenue.
d. greater than price.
7.
The demand curve for a monopoly is:
Select one:
a. above the MR curve.
b. the MR curve above the AVC curve.
c. the MR curve above the horizontal axis.
d. the entire MR curve.
8.
Reference: Ref 13-6 Figure: PPV
(Figure: PPV) Use Figure: PPV. The figure shows the demand and marginal revenue for a pay-per-view football game on cable TV. Assume that the marginal cost and average cost are a constant $20. If the cable company is a monopoly, what price will it charge?
Select one:
a. $100
b. $20
c. $40
d. $60
9.
When price discrimination occurs, the producer's profit is _____ if the producer charges each customer the same profit-maximizing price where marginal revenue equals _____ cost.
Select one:
a. less than; marginal
b. the same as; average total
c. greater than; marginal
d. the same as; marginal
10.
Table: Lunch
Reference: Ref 13-7 Table: Lunch
(Table: Lunch) Use Table: figure Lunch. This table shows market demand for picnic lunches for people taking all-day rafting trips on the river. Suppose that the marginal cost and average cost of each lunch are a constant $4 for all firms in the market. What is deadweight loss in this market in the long run?
Select one:
a. $360
b. $180
c. $0
d. $4
Quantity
(Megawatts)
Megawatt Total Cost 1 $550 $1,000 2 $500 $1075 3 $450 $1200 4 $400 $1375 5 $350 $1600 6 $300 $1875 7 $250 $2200 8 $200 $2575
Explanation / Answer
1. Image is missing
2. a. a price setter.
Price discrimination is the practise of charging different prices from different customers for same product. It is done by maily monopoly firm who have full control over the price of commodity.
3. b. the number of firms and whether products are differentiated.
Market structure includes Perfectly competitive market, Monopoly, Oligopoly and Monopolistic competition which varies in the number of firms in the market and also because of product differentiation.
5. c. may have economic profits in the long run.
Due to complete control over the price of commodity, no competitior in the market, monopolist is able to earn profit even in long run.
6. a. less than price.
Equilibrium price under monopolist is where intersection of MR and MC meets the demand curve. Since demand curve lies above MR curve, price also lies above MR curve.
7. a. above the MR curve.
Demand curve is above MR curve under monopolistic competitive market or monopoly market.
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