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201-tutorial-10

# 201-tutorial-10 - Econ 201 Tutorial#10 Date Week of Nov 22...

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Econ 201 Tutorial #10 Date: Week of Nov. 22- 28, 2010 Coverage: Chapter 10 Monopoly I. Multiple Choice Questions: 1. In the short run, a monopolist with a loss of \$50, along with marginal revenue of \$15, and marginal cost of \$10, should a. Shut down. b. Expand output and raise price. c. Expand output and cut price. d. Cut output and raise price. 2. Inefficiency results from monopoly because a. There is no competition to force down costs. b. High monopoly prices are not equitable. c. A monopoly underproduces relative to the ideal at which society’s marginal cost=marginal benefit. d. All of the above. 3. If a monopoly is maximizing profit, then the marginal cost of producing one more unit is a. More than its marginal benefit to society. b. Less than its marginal benefit to society. c. Less than its marginal benefit to the monopoly firm. d. None of the above. 4. Monopoly results because of a. Barriers to entry into the industry. b. Greed by the seller. c. Lack of interest by potential competitors. d. Inadequate regulation by government. Table 1 Type of User Elasticity of Demand Commercial 1.1 Industrial 3.0 Household 2.0 Government 1.2 5. Refer to Table 1. A price-discriminating monopoly would charge the highest price to a. Commercial users. b. Industrial users. c. Household users. d. Government. 6. Refer to Table 1. A price-discriminating monopoly would charge the lowest price to a. Commercial users. b. Industrial users. c. Household users. d. Government. Part II: Short Questions 1. Let the demand curves for a monopolist who sells its product in two separated markets to be given by: Q 1 =50-P 1 , so marginal revenue for this market is given by

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201-tutorial-10 - Econ 201 Tutorial#10 Date Week of Nov 22...

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