CH14 - Name: _ Date: _ Use the following to answer question...

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Name: __________________________ Date: _____________ Use the following to answer question 1: Figure: Monopolist 1. (Figure: Monopolist) The deadweight loss associated with this monopoly can be measured as the area: A) 1/2( P 1 P 2 )( Q 2 Q 1 ). B) 1/2( P 2 P 4 )( Q 4 Q 2 ). C) 1/2( P 1 P 3 ) Q 3 . D) 1/2( P 1 P 3 ) Q 2 . 2. Suppose a perfectly competitive market is suddenly transformed into one that operates as a monopoly market. We would expect: A) price to rise, output to fall, consumer surplus to rise, producer surplus to rise, and deadweight loss to fall. B) price to rise, output to fall, consumer surplus to fall, producer surplus to fall, and deadweight loss to rise. C) price to rise, output to fall, consumer surplus to fall, producer surplus to rise, and deadweight loss to rise. D) price to fall, output to rise, consumer surplus to rise, producer surplus to fall, and deadweight loss to fall. Page 1
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3. Suppose that a monopolist increases production from 10 units to 11 units. If the market price declines from $30 per unit to $29 per unit, marginal revenue for the eleventh unit is: A) $1. B) $9. C) $19. D) $29. 4. Bob owns a trout farm with monopoly power in North Carolina. For Bob, his optimal output occurs where marginal revenue ________. Also, because of monopoly power, Bob's supply curve ________. A) equals marginal cost; does not exist B) exceeds marginal cost; does not exist C) equals marginal cost; is upward-sloping D) exceeds marginal cost; is perfectly inelastic 5. In order to engage in price discrimination a firm must be: A) a price-taker. B) a price-setter. C) able to identify consumers whose elasticities differ. D) a price-setter and it must be able to identify consumers whose elasticities differ. Page 2
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Use the following to answer questions 6-7: Figure: Profit-Maximizing Output and Price 6. (Figure: Profit-Maximizing Output and Price) In the figure, a perfect competitor would produce at a price of ________ and output of ________. A) $600; 8 units B) $200; 8 units C) $200; 16 units D) $600; 16 units 7. (Figure: Profit-Maximizing Output and Price) Assume there are no fixed costs and AC = MC. In the figure, at the profit-maximizing quantity of production for the monopolist, total revenue is ________, total cost is ________, and profit is ________. A) $600; $200; $400 B) $1,600; $3,200; $1,600 C) $4,800; $3,200; $1,600 D) $4,800; $1,600; $3,200 8. Situations in which the more users of a product there are, the more useful the product becomes are called: A) network effects. B) monopolies. Page 3
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C) conglomerates. D) exclusive franchises. Use the following to answer question 9: Figure: Short-Run Monopoly 9. (Figure: Short-Run Monopoly) The profit-maximizing price is price: A) N. B)
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This note was uploaded on 02/18/2012 for the course ECON 102 taught by Professor Kim during the Fall '08 term at University of Illinois, Urbana Champaign.

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CH14 - Name: _ Date: _ Use the following to answer question...

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