Deck 10: Monopoly

Question 1

Which of the following is an industry without significant barriers to entry?

A)Electricity generation
B)Natural gas distribution
C)Cable television provision
D)Corn farming
E)Postal services

Answer 1

D

Question 2

When Glaxo-Wellcome introduced AZT,an AIDS drug,it was able to enjoy high profits because:

A)it was highly recommended by the doctors.
B)the quick response of rivals in introducing substitute drugs.
C)barriers to entry provided by patents.
D)of its competitive price in the pharmaceutical industry.
E)it experienced constant returns to scale in the long run.

Answer 2

C

Question 3

Which of the following would least likely be a barrier to entry into a monopoly?

A)Economies of scale enjoyed by a large firm.
B)Tariffs on foreign goods are eliminated.
C)A company is the sole inventor of what it produces and no one else can make a good substitute.
D)Government restrictions such as license requirements are enacted.
E)A company is the only owner of an essential resource needed to produce its product.

Answer 3

B

Question 4

Firms that have downward-sloping demand curves:

A)earn positive economic profits even in the long run.
B)produce homogeneous products.
C)operate in a perfectly competitive market structure.
D)enjoy monopoly or market power.
E)be price takers.

Question 5

A firm such as a public utility,which is the sole producer in a market in which government determines prices and standards of service,is known as a(n):

A)local monopoly.
B)natural monopoly.
C)regulated monopoly.
D)oligopoly.
E)monopolistically competitive firm.

Question 6

A local monopoly is a firm that:

A)is the sole supplier of a good without substitutes in a specific geographic area.
B)is one of the suppliers of a good in a specific geographic area.
C)supplies to the consumers within only one country.
D)produces to meet the requirement of only one consumer.
E)supplies its product to customers only in one city.

Question 7

Which of the following statements is true?

A)A perfectly competitive firm's demand curve is the market-demand curve.
B)For a monopolist,the demand curve faced by a monopolist is more elastic than the one faced by a competitive firm.
C)For a monopolist,the law of demand generally does not apply because it is the only firm in a market.
D)A monopolist's demand curve is the market-demand curve.
E)The demand curve faced by a monopolist is flatter than the market demand curve.

Question 8

Which of the following is an assumption of the monopoly model?

A)There exists a large number of buyers and sellers.
B)There are no close substitutes of the good.
C)The firm faces a horizontal demand curve.
D)There is free entry and exit of firms.
E)The firm is a price taker.

Question 9

If a firm has a perfectly elastic demand curve,then:

A)it must be a monopoly firm.
B)it can charge any price it desires.
C)the firm has significant market power.
D)the firm has no market power.
E)the firm should shut down.

Question 10

The following table shows the units of the output sold at different price levels by Gizmo's Inc. Table 10.1
According to Table 10.1,what is the marginal revenue of the third unit?

A)$42
B)$32
C)$18
D)$14
E)$10

Question 11

A clothing store can sell two shirts for $20 each or three shirts for $18 each.At a quantity of three shirts sold,marginal revenue is _____.

A)$18
B)$14
C)$54
D)$20
E)$44

Question 12

In many cities the market for cab services is monopolized.This monopoly arises because:

A)of economies of scale.
B)of government restriction of entry.
C)there is a limited space on the streets for taxis.
D)it protects the consumers from unscrupulous drivers.
E)of high fixed costs of entering the business.

Question 13

Barriers to entry do not occur when:

A)economies of scale in production exist in an industry.
B)the government requires a professional license or franchise agreement.
C)the firm that introduces a product is granted a patent.
D)a firm controls a scarce resource.
E)diseconomies of scale in production exist in an industry.

Question 14

Which of the following is true of the demand curve faced by a monopolist?

A)A monopolist's demand curve is infinitely elastic.
B)A monopolist's demand curve is more elastic than a competitive firm's demand curve.
C)A monopolist faces a relatively inelastic demand curve.
D)A monoplist's demand curve coincides with its marginal revenue curve.
E)A monopolist faces a positively sloped demand curve.

Question 15

Which of the following will be the best example of a monopoly firm?

A)The US Bank
B)The Bank of America
C)National City Bank
D)The Federal Reserve
E)Washington Mutual Funds Bank

Question 16

Which of the following refers to a natural monopoly?

A)A monopoly resulting from government control.
B)A monopoly resulting from economies of scale.
C)A monopoly resulting from output leadership.
D)A monopoly resulting from a large advertising budget.
E)A monopoly resulting from trade restrictions.

Question 17

When long-run average costs are declining for the entire range of demand,the firm is known as a(n):

A)local monopoly.
B)regulated monopoly.
C)monopolistically competitive firm.
D)natural monopoly.
E)oligopoly.

Question 18

Before World War II,Alcoa controlled the supply of bauxite in the United States.Because bauxite is a scarce resource that is vital to the production of aluminum:

A)Alcoa was bound to charge a nominal price in the U.S.aluminum market.
B)Alcoa had a monopoly in the U.S.aluminum market.
C)the U.S.aluminum market was highly competitive.
D)Alcoa can be said to have operated a monopolistically competitive market.
E)Alcoa was altruistic and willing to share its bauxite with other aluminum firms.

Question 19

Which of the following is true under monopoly?

A)Price is equal to marginal revenue
B)Price is equal to marginal cost
C)Price is less than marginal revenue
D)Price is less than marginal cost
E)Price is greater than marginal revenue

Question 20

Perfect competition provides one model in which there are many firms with no barriers to entry.If perfect competition as a model lies on one extreme,the model that lies on the opposite extreme is:

A)monopolistic competition.
B)oligopoly.
C)monopoly.
D)imperfect competition.
E)oligopolistic competition.

Question 21

The table given below shows the price charged by a firm and the marginal cost incurred by it for the different levels of the output. Table 10.2
The firm described in Table 10.2:

A)must be a monopoly firm.
B)must be a perfectly competitive firm.
C)cannot be a perfectly competitive firm.
D)has no market power.
E)cannot be a monopoly.

Question 22

The figure given below shows the demand curve faced by a firm. Figure 10.1 Refer to Figure 10.1 and calculate the revenue gained by the firm when it reduces the price of its product from $8 to $4.

A)$4
B)$8
C)$32
D)$16
E)$10

Question 23

For a monopolist with a linear demand curve,total revenue is maximum when:

A)marginal revenue is positive.
B)marginal revenue is at its maximum.
C)the price elasticity of demand is greater than unity.
D)the price elasticity of demand is equal to unity.
E)the marginal revenue is at its minimum.

Question 24

The table given below shows the prices charged and marginal cost incurred by a monopolist for different units of the output. Table 10.3
Assume that the firm described in Table 10.2 is incurring a total cost of $7,000 at the profit-maximizing output level.The firm will

A)lose $10,000 in the short run.
B)break even.
C)earn a profit of $3,800.
D)earn a profit of $3,500.
E)earn a profit of $5,500.

Question 25

The figures given below represent the revenue curves of a monopolist. Figure 10.2 TR: Total revenue curve
AR: Average revenue curve
MR: Marginal revenue curve
According to Figure 10.2,at point C:

A)price elasticity of demand is equal to infinity.
B)price elasticity of supply is equal to 1.
C)price elasticity of supply is equal to 1.
D)price elasticity of demand is equal to 0.
E)price elasticity of demand is equal to 1.

Question 26

If at an output of 10 units a monopolist is earning a positive profit,marginal revenue is $6,and marginal cost is $4,then the monopolist:

A)is in equilibrium.
B)should increase output.
C)should reduce output.
D)should lower the price at the current output level.
E)should raise the price at the current output level.

Question 27

The table given below shows the prices charged and marginal cost incurred by a monopolist for different units of the output. Table 10.3
What price will the profit-maximizing firm described in Table 10.3 charge,if the firm is earning a positive economic profit?

A)$1,500
B)$1,400
C)$1,350
D)$1,300
E)$1,550

Question 28

The figures given below represent the revenue curves of a monopolist. Figure 10.2 TR: Total revenue curve
AR: Average revenue curve
MR: Marginal revenue curve
Refer to Figure 10.2.If the monopolist is selling a quantity between B and E,then to maximize total revenue,the monopolist should:

A)increase price because it is operating on the elastic portion of the demand curve.
B)decrease price because it is operating on the elastic portion of the demand curve.
C)increase price because it is operating on the inelastic portion of the demand curve.
D)decrease price because it is operating on the inelastic portion of the demand curve.
E)increase price because it is operating at the point at which price elasticity of demand is greater than 1.

Question 29

The figures given below represent the revenue curves of a monopolist. Figure 10.2 TR: Total revenue curve
AR: Average revenue curve
MR: Marginal revenue curve
Refer to Figure 10.2.If the output at E is 600 units,then the output at B is _____ units.(We know that the slope of the marginal revenue curve is twice the slope of the average revenue curve.)

A)900 units.
B)200 units.
C)300 units.
D)1200 units.
E)800 units.

Question 30

The figures given below represent the revenue curves of a monopolist. Figure 10.2 TR: Total revenue curve
AR: Average revenue curve
MR: Marginal revenue curve
Refer to Figure 10.2.In order to maximize profits,what quantity should the monopolist produce?

A)B
B)E
C)Between B and E
D)Impossible to determine because we are not given the cost curves.
E)Impossible to determine because we are not given the demand curve.

Question 31

The figure given below shows the demand curve faced by a firm. Figure 10.1 Refer to Figure 10.1 and calculate the revenue lost when the firm lowers the price of its product from $8 to $4.

A)$20
B)$18
C)$24
D)$16
E)$28

Question 32

If a monopolist is producing at the profit-maximizing level of output what price will it charge?

A)The price given by the marginal-revenue curve at that level of output.
B)The price given by the marginal-cost curve at that level of output.
C)The price given by the average-cost curve at that level of output.
D)The price given by the average-revenue curve at that level of output.
E)The price given by the total revenue curve at that level of output.

Question 33

The table given below shows the prices charged and marginal cost incurred by a monopolist for different units of the output. Table 10.3
What is the profit-maximizing output level for the monopoly firm described in Table 10.3,if the firm is earning a positive economic profit?

A)1 unit
B)3 units
C)5 units
D)8 units
E)9 units

Question 34

If a monopolist is producing at a point at which marginal revenue is greater than marginal cost,it should:

A)continue producing at the current level.
B)raise its prices.
C)lower its prices.
D)increase the level of production.
E)decrease the level of production.

Question 35

The table given below shows the price charged by a firm and the marginal cost incurred by it for the different levels of the output. Table 10.2
Assume that the firm described in Table 10.2 is incurring a total cost of $25 at the profit-maximizing output level.The firm will:

A)lose $10 in the short run.
B)break even.
C)earn a profit of $50.
D)earn a profit of $30.
E)earn a profit of $55.

Question 36

The following table shows the units of the output sold at different price levels by Gizmo's Inc. Table 10.1
Refer to Table 10.1.At what level of output is total revenue maximized?

A)3
B)4
C)5
D)6
E)7

Question 37

The table given below shows the price charged by a firm and the marginal cost incurred by it for the different levels of the output. Table 10.2
What is the profit-maximizing output level for the monopoly firm described in Table 10.2 if the firm is earning a positive economic profit?

A)1 unit
B)2 units
C)3 units
D)5 units
E)6 units

Question 38

A monopolist maximizes profit:

A)by charging the highest possible price on the demand curve.
B)by charging a price that equals its marginal cost.
C)by producing a level of output where the average-cost curve intersects the demand curve.
D)by producing a level of output where marginal revenue equals marginal cost.
E)by charging a price equal to its average total cost.

Question 39

The following table shows the units of the output sold at different price levels by Gizmo's Inc. Table 10.1
According to Table 10.1,Gizmo's cannot be:

A)a monopsonist.
B)a monopoly.
C)an oligopolistic firm.
D)a perfectly competitive firm.
E)a monopolistically competitive firm.

Question 40

The following table shows the units of the output sold at different price levels by Gizmo's Inc. Table 10.1
According to Table 10.1,at what level of output is marginal revenue equal to $14?

A)1
B)2
C)3
D)4
E)5

Question 41

Price discrimination is best described as a monopolist:

A)selling a product at the fixed market determined price.
B)charging buyers an excessive price for the product.
C)charging different customers different prices when the costs are equal.
D)selling a product for different prices during two different periods of time.
E)charging same prices to different customers when the costs are different.

Question 42

The following figure shows the revenue and cost curves of a monopolist. Figure 10.3 D: Average Revenue
MR: Marginal Revenue
ATC: Average Total Cost
MC: marginal Cost
Consider the monopolist described in the Figure 10.3.If the firm engages in profit-maximizing behavior,economic profit per unit of output will be:

A)0
B)P₂
C)P₄ minus P₂
D)P₅ minus P₄
E)P₅ minus P₁

Question 43

The table given below shows the price,marginal revenue and marginal cost of a monopolist at different levels of the output.The firm does not incur a fixed cost of production. Table 10.4
Refer to Table 10.4 and calculate the total revenue earned by the monopolist at the profit maximizing level of output.

A)$60.
B)$16.
C)$52.
D)$42.
E)$30.

Question 44

The table given below shows the price,marginal revenue and marginal cost of a monopolist at different levels of the output.The firm does not incur a fixed cost of production. Table 10.4
In Table 10.4,assume that total fixed costs are $20.What is the maximum profit the firm can earn at equilibrium?

A)$0
B)$4
C)$16
D)$30
E)$52

Question 45

Why is there a supply point and not a supply curve for a monopolist?

A)A monopolist cannot affect the market price by changing its supply.
B)A monopolist produces a homogeneous product having similar substitutes
C)A monopolist equates the price which it charges with its marginal cost
D)There is only one quantity and price at which a monopolist operates
E)A monopolist supplies to a large number of consumers

Question 46

If at the profit-maximizing level of output,a monopolist's average-total-cost curve lies above its demand curve,then:

A)the firm should shut down in the short run.
B)the firm is earning economic losses.
C)the firm is earning economic profits.
D)the firm should increase its output.
E)the firm should decrease its output.

Question 47

To practice price discrimination,a firm:

A)must be facing a relatively elastic demand curve.
B)must have customers with different elasticities of demand.
C)must not be able to distinguish between customers based on elasticities of demand.
D)must not be able to prevent resale of the product.
E)must be a price taker.

Question 48

Suppose you inherit the only spring of mineral water in an area and want to maximize profits from this costless product.You would ask your customers to bring their containers with them and:

A)charge them the highest price possible to sell some output.
B)charge them the lowest price possible to sell as much as you can.
C)ask them how much they would like to pay and accept it.
D)charge the price at which MR is zero.
E)charge the price at which MR is maximum.

Question 49

Grocery store coupons,mail-in rebates,senior discounts,and in-state versus out-of-state tuition fees are all examples of:

A)government intervention.
B)price neutrality.
C)arbitrage pricing.
D)price discrimination.
E)illegal business practice.

Question 50

The ability of a firm to charge different customers different prices is called _____:

A)price ceiling.
B)price discrimination.
C)predatory pricing.
D)price flooring.
E)basing point pricing.

Question 51

Identify the correct statement.

A)A monopolist's pricing decision is limited by the demand for its product.
B)A monopolist is able to choose any price and quantity combination that it desires.
C)A monopolist can increase its profits by increasing price if the demand for its good is relatively elastic.
D)A monopolist does not suffer losses even in the short run.
E)A monopolist is not able to reap positive profits in the long run.

Question 52

The following figure shows the revenue and cost curves of a monopolist. Figure 10.3 D: Average Revenue
MR: Marginal Revenue
ATC: Average Total Cost
MC: marginal Cost
Consider the monopolist described in Figure 10.3.If the firm engages in profit-maximizing behavior,what price will it charge?

A)P₁
B)P₂
C)P₃
D)P₄
E)P₅

Question 53

Which of the following is not a necessary condition for price discrimination?

A)The firm must be a price maker.
B)The firm must be able to distinguish between customers.
C)The firm must be able to prevent resale between customers.
D)The firm must be able to product homogenous products.
E)The firm must be facing a downward-sloping demand curve.

Question 54

Which of the following is true of a firm that can successfully practice price discrimination?

A)Its total revenue is often reduced.
B)It appropriates a part of the consumer surplus.
C)It has no way of distinguishing between types of customers.
D)It has no market power in the industry.
E)It must be a perfectly competitive firm.

Question 55

The following figure shows the revenue and cost curves of a monopolist. Figure 10.3 D: Average Revenue
MR: Marginal Revenue
ATC: Average Total Cost
MC: marginal Cost
Consider the monopolist described in Figure 10.3.The firm can maximize profit by producing:

A)zero units.
B)Q₁ units.
C)Q₂ units.
D)Q₃ units.
E)Q₄ units.

Question 56

One of the popular myths about monopoly is that:

A)a monopolist is the single seller of a particular commodity.
B)a monopolist can charge any price for his/her good.
C)a monopolist is a price maker.
D)a monopolist may earn positive profits even in the long run.
E)a monopolist faces the market demand curve.

Question 57

The table given below shows the price,marginal revenue and marginal cost of a monopolist at different levels of the output.The firm does not incur a fixed cost of production. Table 10.4
Refer to Table 10.4.Assuming that the monopolist is maximizing profits,the price the monopolist will charge is _____.

A)$13.
B)$14.
C)$12.
D)$16.
E)$15.

Question 58

The following table shows the marginal revenues earned by a price discriminating monopolist from two different markets. Table 10.5
Refer to Table 10.5.How would a price-discriminating monopolist allocate his or her product between market X and market Y if marginal cost is $40 in both markets?

A)4 units in market X; 1 unit in market Y
B)3 units in market X; 2 units in market Y
C)2 units in market X; 3 units in market Y
D)Nothing in market X; 5 units in market Y
E)5 units in market X; nothing in market Y

Question 59

A monopolist can charge a high price if:

A)the quantity demanded is positively related to price.
B)the demand is relatively price-elastic.
C)the demand curve is negatively sloped.
D)the demand is relatively price-inelastic.
E)there exist a large number of substitutes.

Question 60

If the monopolist's price happens to be greater than the average-variable cost but less than the average total cost,in the short run the monopolist will:

A)be forced to shut down to minimize the cost.
B)operate at a loss.
C)operate at an economic profit.
D)operate at a normal profit.
E)go out of business.

Question 61

The figure given below shows the demand curves of two classes of buyers for tickets to a football match. Figure 10.4 D₁: Demand curve of group 1
D₂: Demand curve of group 2
MR₁: Marginal revenue of group 1
MR₂: Marginal revenue of group 2
MC: Marginal cost
In Figure 10.4,the demand curve D₂:

A)has a price elasticity of demand greater than 1.
B)is relatively less price elastic than D₁.
C)is the inverse of the demand curve D₁.
D)has a price elasticity of demand less than 1.
E)represents the demand of the group that is more responsive to price changes.

Question 62

The following figures show the demand and cost curves of a perfectly competitive and a monopoly firm respectively. Figure 10.7 D: Average Revenue
AC: Average cost
MC: Marginal cost
MR: Marginal cost
Refer to Figure 10.7.If the perfectly competitive industry and the monopoly produces the same quantity,then:

A)there are 10 firms in the perfectly competitive industry.
B)there are 800 firms in the perfectly competitive industry.
C)there are 1,000 firms in the perfectly competitive industry.
D)there are 2,000 firms in the perfectly competitive industry.
E)there are 100 firms in the perfectly competitive industry.

Question 63

The figure below shows the market equilibrium (point B) at the intersection of demand and supply curves under perfect competition. Figure 10.5 D: Market demand curve
S: Market supply curve
Refer to Figure 10.5.Which of the following regions on the graph represents consumer surplus in a perfectly competitive market?

A)The area P_PCBA
B)The area 0BP_PC
C)The area 0BA
D)Half of area P_PCBA
E)The area ABS

Question 64

Movie theaters are able to offer discounts to senior citizens because:

A)the elderly deserve lower prices because of their contributions to society.
B)senior citizens have the most inelastic demand.
C)theaters can separate senior citizens from other customers,and it is easier to prevent resale.
D)senior citizens cannot see the movie very well anyway because of poor eyesight.
E)senior citizens should be given special privileges owing to their age.

Question 65

Perfect price discrimination occurs when:

A)each customer is charged the maximum price that each is willing and able to pay.
B)two classes of customers are charged different prices as they have different elasticities of demand.
C)senior citizens are offered restaurant discounts.
D)the firm sets MR < MC for each class of customers.
E)the firm charges same price to different customers so that it is equal to the equilibrium price.

Question 66

The long-run equilibrium price-output combination for a monopolist is economically inefficient because:

A)it does not operate on the minimum point of its marginal-cost curve.
B)it does not produce the level of output at which price equals marginal cost.
C)consumer surplus is maximized but not producer surplus.
D)producer surplus is maximized but not consumer surplus.
E)it operates on the downward sloping portion of the average-total-cost curve.

Question 67

The following figures show the demand and cost curves of a perfectly competitive and a monopoly firm respectively. Figure 10.7 D: Average Revenue
AC: Average cost
MC: Marginal cost
MR: Marginal cost
Calculate the deadweight loss in Figure 10.6,if the perfectly competitive industry is monopolized after it had been producing an output of 10,000 units?

A)The area P₂ACP₁
B)The area ABC
C)The area P₂ABP₁
D)The distance AB
E)There is no deadweight loss

Question 68

The following figure shows the revenue curves of a monopolist: Figure 10.6 D: Average revenue
MR: Marginal revenue
In Figure 10.6,assume that marginal costs are constant at $2,500 and fixed costs are zero.What price and output level would result from perfect competition?

A)P = $2,500,Q = 400
B)P = $2,500,Q = 200
C)P = $5,000,Q = 0
D)P = $4,000,Q = 400
E)P = $4,000,Q = 200

Question 69

The figure below shows the market equilibrium (point B) at the intersection of demand and supply curves under perfect competition. Figure 10.5 D: Market demand curve
S: Market supply curve
Assume that in Figure 10.5,the market is originally perfectly competitive but then becomes a monopoly.Compared with perfect competition,a monopoly would have:

A)a price lower than P_PC.
B)a quantity more than Q_PC.
C)a greater consumer surplus.
D)a deadweight loss.
E)a lower producer surplus.

Question 70

The efficiency loss that occurs when a market is monopolized is known as:

A)a deadweight loss.
B)a monopoly loss.
C)an economic loss.
D)an X-loss.
E)a capital loss.

Question 71

When practicing price discrimination,a firm can increase its revenue by:

A)charging a higher price to the customers with a more inelastic demand.
B)charging a higher price to the customers with a perfectly elastic demand.
C)supplying more in a market with a more inelastic demand.
D)supplying less in a market with lower elasticity of demand.
E)charging a lower price in a market dominated by wealthy consumers.

Question 72

The following figure shows the revenue curves of a monopolist: Figure 10.6 D: Average revenue
MR: Marginal revenue
In Figure 10.6,assume that marginal costs are constant at $2,500 and fixed costs are 0.What would be the amount of consumer surplus if the market was perfectly competitive?

A)$1,000,000
B)$500,000
C)$300,000
D)$250,000
E)$250,000

Question 73

Compared with a perfectly competitive market with similar cost conditions,a monopolist will have:

A)a higher output and lower price.
B)a lower output and lower price.
C)a higher output and a lower price.
D)a lower output and a higher price.
E)equal output and a higher price.

Question 74

The figure given below shows the demand curves of two classes of buyers for tickets to a football match. Figure 10.4 D₁: Demand curve of group 1
D₂: Demand curve of group 2
MR₁: Marginal revenue of group 1
MR₂: Marginal revenue of group 2
MC: Marginal cost
Refer to Figure 10.4.What price must be charged to both the groups to maximize profits?

A)P₁
B)P₂
C)Group 1 must be charged P₁ and group 2 must be charged P₂.
D)Group 1 must be charged P₂ and group 2 must be charged P₁.
E)Both the groups must be charged a price that is equal to the marginal cost.

Question 75

The following figures show the demand and cost curves of a perfectly competitive and a monopoly firm respectively. Figure 10.7 D: Average Revenue
AC: Average cost
MC: Marginal cost
MR: Marginal cost
According to Figure 10.7,which of the following statements is incorrect about the price P₁?

A)The monopolist is maximizing profit at P_1.
B)In the long run,firms will leave the perfectly competitive industry and force the price upward.
C)The monopolist is earning normal profit at P_1.
D)Both the firms maximize their profits at P_{1 .}
E)The perfectly competitive firm would produce 10 units of output at P_1.

Question 76

The following figures show the demand and cost curves of a perfectly competitive and a monopoly firm respectively. Figure 10.7 D: Average Revenue
AC: Average cost
MC: Marginal cost
MR: Marginal cost
According to Figure 10.7,when the monopolist is maximizing profit:

A)its resources are not being used efficiently.
B)its price is higher than that charged by the perfectly competitive firm.
C)its price is equal to the price charged by the perfectly competitive firm.
D)it is earning above-normal profit.
E)it is actually incurring a loss.

Question 77

The following figure shows the revenue curves of a monopolist: Figure 10.6 D: Average revenue
MR: Marginal revenue
Refer to Figure 10.6.Assume that marginal costs are constant at $2,500 and fixed costs are zero.Under a monopoly,consumer surplus would be:

A)$100,000.
B)$500,000.
C)$300,000.
D)$250,000.
E)$200,000.

Question 78

The figure below shows the market equilibrium (point B) at the intersection of demand and supply curves under perfect competition. Figure 10.5 D: Market demand curve
S: Market supply curve
Refer to Figure 10.5.Assume that the curve labeled S represents the monopolist's marginal-cost curve and the curve labeled D represents the monopolist's demand curve.Which of the following will represent the consumer surplus?

A)The area P_PCBA
B)The area 0BP_PC
C)The area 0BA
D)An area that is less than P_PCBA
E)The area ABS

Question 79

The following table shows the marginal revenues earned by a price discriminating monopolist from two different markets. Table 10.5
Refer to Table 10.5.If marginal cost is $30 in both markets,what quantities will be supplied in each of the markets?

A)4 units in market X; 1 unit in market Y
B)4 units in market X; 2 units in market Y
C)2 units in market X; 3 units in market Y
D)3 units in market X; 3 units in market Y
E)3 units in market X; nothing in market Y

Question 80

The perfectly competitive market structure results in economic efficiency because:

A)price is equal to marginal revenue in the short run.
B)firms are producing at the minimum point of the average-total-cost curve in the short run.
C)a normal profit is being earned in the long run.
D)a normal profit is being earned in the short run.
E)in the long run,price is equal to marginal cost and minimum average-total-cost.