Question

Q1) A monopolist will choose to increase output when

Group of answer choices

at the present level of output, marginal revenue exceeds marginal cost.

market price increases.

the demand curve shifts to the left.

at all levels of output, marginal cost increases.

Q2) The deadweight loss that arises from a monopoly is a consequence of the fact that the monopoly

Group of answer choices

earns positive profits.

price is the same as average revenue.

price equals marginal revenue.

quantity is lower than the socially-optimal quantity.

Q3) The concert promoters of a heavy-metal band, WeR2Loud, know that there are two types of concert-goers: die-hard fans and casual fans. For a particular WeR2Loud concert, there are 1,000 die-hard fans who will pay $150 for a ticket and 500 casual fans who will pay $50 for a ticket. There are 1,500 seats available at the concert venue. Suppose the cost of putting on the concert is $50,000, which includes the cost of the band, lighting, security, etc.

Refer to Scenario 15-6. How much additional profit can the concert promoters earn by charging each customer their willingness to pay relative to charging a flat price of $150 per ticket?

Group of answer choices

$100,000

$50,000

$25,000

$75,000

Answer 1

1. A monopolist will choose to increase output when " at the present level of output, marginal revenue exceeds marginal cost "

The monopolist will continue to produce output if MC<MR,but when MR=MC, the firm stops as producing output after this point will result in more cost and less marginal revenue.

2. The deadweight loss that arises from a monopoly is a consequence of the fact that the monopoly " quantity is lower than the socially-optimal quantity "

Monopolist produce at Point where MC = MR, to maximize profits and restricting output. Thus monopolist dosent produce socially optimal quantity as does perfect competitive firm produce when MR = MC = AR

3. The answer is "75000"

Total cost = 50000

Total revenue when ticket is sold at 150Fixed price = 150 * 1000 = 150000

total revenue when ticket is sold at 50 $ = 50 * 500

= 25000

Lost revenue (Loss) of 100 $, when ticket is sold at 50 $= 100 $ * 500 = -50000

Profit = Total revenue - total cost

= 150000 + 25000 - 50000 - 50000

= 75000 $