Question

1)In monopolistic​ competition, profit is maximized when the amount produced is such that

A.

marginal revenue is greater than marginal cost.

B.

marginal revenue equals marginal cost.

C.

total revenue is maximized.

D.

total revenue equals total cost.

2)Dole Co. operates in a monopolistically competitive market. To try to earn an economic​ profit, Dole Co. will

A.

increase output.

B.

prevent other firms from entering the market.

C.

continually seek to differentiate its product.

D.

increase its​ product's price.

3) How does a​ single-price monopoly determine the price it will charge its​ customers?

A​ single-price monopoly​ _______.

A.

produces the quantity at which marginal revenue equals marginal cost and sets the price equal to marginal revenue at that quantity

B.

charges the price from the demand curve that corresponds to the quantity where the price elasticity of demand equals 1

C.

produces the quantity at which average total cost is minimized and charges the highest price consumers will pay for that quantity from the demand curve

D.

produces the quantity at which marginal revenue equals marginal cost and charges the highest price consumers will pay for that quantity from the demand curve

4) What are some of the ways that​ real-world airlines price​ discriminate?

​Real-world airlines price discriminate by separating travelers according to​ _______.

A.

their price elasticity of​ demand, their form of​ identification, and whether they are traveling first class or economy

B.

how far in advance they purchase​ tickets, physical disabilities that make boarding​ difficult, and the length of time required to make a connection

C.

their price elasticity of​ demand, whether they will stay at their destination over a​ weekend, and how far in advance they purchase tickets

D.

their willingness to go through airport​ security, their proximity to an​ airport, and the number of children traveling in the family

5) AT&T Moves Away From​ Unlimited-Data Pricing

​AT&T said it will eliminate its​ $30 unlimited data plan as the crush of data use from the iPhone has hurt call quality.​ AT&T is introducing new plans costing​ $15 a month for 200 megabytes of data traffic or​ $25 a month for 2 gigabytes.​ AT&T says those who exceed 2 gigabytes of usage will pay​$10 a month for each additional gigabyte.​ AT&T hopes that these plans will attract more customers.

​Source:

The

Wall Street

Journal​,

June​ 2, 2010

Explain why​ AT&T's new plans might be price discrimination.

​AT&T's new plans might be price discrimination because​ ______.

A.

​AT&T is selling data plans at different prices but its marginal cost is the same regardless of how much data is downloaded

B.

​AT&T is a monopoly and only monopolies can price discriminate

C.

​AT&T changed their price structure because of an increase in demand for data traffic

D.

the cost of supplying different sizes of data plans increases as more data is downloaded

Answer 1

1 - Option. B

Marginal revenue equals marginal cost

This is the profit maximising condition for the monopolistic firm . The other options are not the profit maximising conditions.

2 - Option C

Continuously seek to differentiate its products.

By doing this , the monopolist earns the positive economic profits in long run. In the other options , economic profit is not earned.

3 - Option D

Produces the quantity at the level where the marginal revenue equals the marginal cost and charges the highest price the consumer can pay at the demand curve.

Other options do not show this strategy of the monopoly firm . Hence only option D is correct.

4 - Option C

Their price elasticity of demand , whether they will stay at their destination over a weekend or how far in advance they book their tickets.

5 - Option A

AT&T is selling the data plans at different prices but its marginal cost will remain the same.

Other options will not be under price discrimination that above entity is following.