final1 - 1 A natural monopoly is based on a diseconomies of...

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1. A natural monopoly is based on a. diseconomies of scale b. diseconomies of scope c. external diseconomies d. economic freedom e. economies of scale ANS: E 2. Economies of scale act as a barrier to entry because a. one large firm can supply the market at a higher average cost than many small firms could b. firms are not allowed by law to sell output below average cost c. large firms can hire inputs at a higher price than smaller firms could d. firms will not compete with a larger firm when there are differences in marginal cost e. one large firm can produce the market output at a lower average cost than many small firms ANS: E Figure 9-3 Total Price Quantity Cost $ 100 1 $150 $ 90 2 $180 $ 80 3 $220 $ 70 4 $300 $ 60 5 $400 $ 50 6 $550 3. What is the profit-maximizing level of output for the non-discriminating monopolist in Figure 9-3? a. 1 unit b. 2 units c. 3 units d. 4 units e. 5 units ANS: C 4. Figure 9-4 depicts a monopoly that does not price discriminate . What are the equilibrium price and output? a. there is no equilibrium under monopoly b. P' and Q' c. P and Q d. P' and Q e. P and Q' ANS: B 5. The firm depicted in Figure 9-4 is a perfect price discriminator . What is its equilibrium price and output? a. P' and Q' b. P and Q
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c. P' and Q d. each consumer is charged the maximum price he or she is willing to pay, and the equilibrium output is Q' e. each consumer is charged the maximum price he or she is willing to pay, and the equilibrium output is Q ANS: E Figure 9-10 Price Quantity $100 1 $ 90 2 $ 80 3 $ 70 4 $ 60 5 $ 50 6 $ 40 7 6. For the monopolist in Figure 9-10, the marginal revenue from producing the last unit is a. $20 b. -$20 c. $40 d. $280 e. $50 ANS: B 7. For the monopolist in Figure 9-10, total revenue from selling 4 units of output would be a. $20 b. $300 c. $80 d. $70 e. $280 ANS: E 8. A firm that engages in perfect price discrimination produces more output to maximize its profits than it would if it charged only one price. a. True b. False ANS: A 9. Each of the following, except one, is a characteristic of a monopolistically competitive market. Which is the exception? a. differentiated products b. no significant barriers to entry c. many buyers d. a standardized product e. many sellers ANS: D 10. All of the following, except one, are sources of product differentiation. Which is the exception? a. product quality b. location c. price d. consumer tastes e. buyers' perceptions ANS: C
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11. The profit-maximizing, or loss-minimizing, output for the firm in Figure 10-3 is a. zero units b. 50 units c. 70 units d. 75 units e. 83 units ANS: C 12. The profit-maximizing price for the firm in Figure 10-3 is a. $165 b. $150 c. less than $150, but more than $100 d. irrelevant because the firm should shut down immediately e. less than $100 ANS: B 13. At the profit-maximizing, or loss-minimizing, level of output for the firm in Figure 10-3, total revenue is approximately a. $10,500
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final1 - 1 A natural monopoly is based on a diseconomies of...

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