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- 1. Multiple ChoiceA single-price monopolist is currently producing in the inelastic portion of its market demand curve. In order to maximize profits, the monopolist should change the price and quantity in which of the following ways?P=Increase; Q=IncreaseP=Increase; Q=DecreaseP=Decrease; Q=DecreaseP=No Change; Q=Increase
- 2. Multiple ChoiceIf the goal of government regulators of a natural monopoly is to reduce deadweight loss without subsidizing the monopolist, government regulators would set a price equal to:Average variable costAverage total costAverage fixed costMarginal cost
- 3. Multiple Choice
The profit-maximizing combination of output and price for a single-price monopoly is:Q1 & P1Q2 & P3Q1 & P4Q3 & P2 - 4. Multiple ChoiceIf the monopolist could engage in perfect price discrimination, the monopolist’s total output and the price charged for the last unit of output sold would be:Q1 & P1Q2 & P3Q1 & P2Q3 & P2
- 5. Multiple ChoiceA firm with market power engages in price discrimination to:earn a higher profit
increase consumer surplus
decrease deadweight loss
make its demand more elastic - 6. Multiple ChoiceCompared to a perfectly competitive industry with the same demand and cost curves, a monopoly’s price and quantity will be which of the following?P=Higher; Q=SameP=Lower; Q=SameP=Lower; Q=HigherP=Higher; Q=Lower
- 7. Multiple ChoiceFor the firm shown in the graph above, the short- run, profit-maximizing strategy would be to set output at:Q1, price at P3, and earn an economic profitQ1, price at P1, and suffer a lossQ2, price at P2, and earn an economic profitQ2, price at P2, and earn only a normal profit
- 8. Multiple ChoiceFor an unregulated monopolist, the profit-maximizing quantity will always be:in the elastic region of the demand curvewhere marginal revenue equals pricewhere price equals average total costwhere the marginal cost curve intersects the demand curve
- 9. Multiple ChoiceIn order for a firm to engage in price discrimination, it must be:producing in the inelastic portion of its demand curve to raise its price and increase total revenuea price taker
able to separate consumers into different groups based on demand elasticitiesexperiencing economies of scale in the relevant range of production
- 10. Multiple ChoiceA monopolist introduces a technological innovation that lowers the marginal cost and average cost of production. The price of the good and the quantity are most likely to change in which of the following ways?P=Decrease; Q=IncreaseP=Decrease; Q=DecreaseP=Increase; Q=IncreaseP=Increase; Q=Decrease
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