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Exercises for Chapter 11

# Exercises for Chapter 11 - th unit for \$6 d The monopolist...

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500 1,000 1,500 2,000 10.00 2.00 4.00 6.00 8.00 Q MR D MC ATC 12.00 14.00 Price and Cost (\$) Exercises for Chapter 11: 1. The graph below represents the cost, demand and marginal revenue curves for a monopolist. What is the price and quantity that a single-price monopolist will choose, and what profit will the monopolist earn? a. Price = \$6.00; Q = 1,500 units; Profit is \$9,000 b. Price = \$6.00; Q = 1,500 units; Profit is \$8,250 c. Price = \$8.00; Q = 1,000 units; Profit is \$8,250 d. Price = \$8.00; Q = 1,000 units; Profit is \$4,000 2. Refer to the previous monopoly graph. Now suppose that the monopolist practices perfect price discrimination. What is the quantity that he chooses now, and what price does he charge?

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Unformatted text preview: th unit for \$6. d. The monopolist now produces 1,000 units and sells the 1,000 th unit for \$4. 3. If the (non-price-discriminating) monopolist in the graph above produces 20 units of output, which of the following would be true? a. profit is maximized b. the market price will be less than \$25 c. demand is elastic d. marginal revenue is negative 4. If a monopoly is currently producing 25 units of output where the price is \$10 and the marginal cost is \$10, what should the monopoly do to maximize profit? a. raise the price b. lower the price c. increase production d. shut down 5. If a natural monopoly is producing where P = MC, a. allocative efficiency is satisfied b. the monopoly will earn economic losses c. profit for the monopoly will be equal to zero d. Both a and b are true. MC D MR Q 30 15 28 25 30 35...
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Exercises for Chapter 11 - th unit for \$6 d The monopolist...

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