Question

In: Economics

Question 37 A monopolist maximizes profits by a. producing an output level where marginal revenue equals...

Question 37

A monopolist maximizes profits by

	a.	producing an output level where marginal revenue equals marginal cost.
	b.	charging a price equal to marginal revenue and marginal cost.
	c.	charging a price where marginal cost equals average total cost.
	d.	Both a and b are correct.

Question 38

A monopoly is an inefficient way to produce a product because

	a.	it faces a downward-sloping demand curve.
	b.	it can earn both short-run and long-run profits.
	c.	the cost to the monopolist of producing one more unit exceeds the value of that unit to potential buyers.
	d.	it produces a smaller level of output than would be produced in a competitive market.

Question 39

A movie theater can increase its profits through price discrimination by charging a higher price to adults and a lower price to children if it

	a.	can prevent children from buying the lower-priced tickets and selling them to adults.
	b.	has some degree of monopoly pricing power.
	c.	can easily distinguish between the two groups of customers.
	d.	All of the above are correct.

Expert Solution

Answer : 37) The answer is option a.

To maximize profit the monopolist produce that output level where marginal revenue is equal to marginal cost. Monopolist's charged price is equal to demand on produced output level. Therefore, option a is correct.

38) The answer is option d.

Monopolist produce that output level where marginal revenue is equal to marginal cost. But in competitive market the firm produce that output level where demand is equal to marginal cost. The marginal revenue curve lies below the demand curve. So, monopolist's produced output level is smaller than that firm's produced output level which the firm can produce in competitive market. Therefore, option d is correct.

39) The answer is option d.

Firm's price discrimination is possible when the firm has degree of monopoly power and when the firm distinguish it's customers in different groups. So, options b and c are correct.

If the movie theater sell the lower priced tickets to adults then adults become happy to see that the price of tickets for children is low. As a result, adults will buy more lower priced tickets which will increase the movie theater's profit. Therefore,option a is correct.

As options a, b and c are correct hence option d is the answer.

Rahul Sunny answered 2 years ago

A competitive firm maximizes profit at the point where marginal revenue equals marginal cost; a monopolist...

A competitive firm maximizes profit at the point where marginal revenue equals marginal cost; a monopolist maximizes profit at the point where marginal revenue exceeds marginal cost. true or false Price discrimination is a rational strategy for a profit-maximizing monopolist when there is no opportunity for customers to engage in arbitrage across market segmentations true or false When regulating a monopoly with average cost pricing, the monopoly is able to enjoy a zero economic profit and the deadweight loss of...

Explain why a firm maximizes its profits by producing the level of output at which marginal...

Explain why a firm maximizes its profits by producing the level of output at which marginal revenue equals marginal costs.

A monopolist: Maximizes profit at the output where price equals marginal cost. Charges a higher price...

A monopolist: Maximizes profit at the output where price equals marginal cost. Charges a higher price than a competitive firm, ceteris paribus. Is a price taker since it has market power. Cannot earn an economic profit in the long run.

1. A monopolist maximizes profits at the output at which A) total revenue is at its...

1. A monopolist maximizes profits at the output at which A) total revenue is at its greatest, assuming that the firm has both fixed and variable costs. B) price equals marginal cost. C) price exceeds marginal cost by the greatest amount. D) none of the above 2. Which of the following is true of marginal revenue earned by a monopolist that charges a single price to all its consumers? A) Marginal revenue earned by a monopolist is equal to the...

1..A pure monopolist will maximize profits by producing at that output where price and marginal cost...

1..A pure monopolist will maximize profits by producing at that output where price and marginal cost are equal. A)True B)False 2..In the long run a pure monopolist will maximize profits by producing that output at which marginal cost is equal to: A)average total cost. B)marginal revenue. C)average variable cost. D)average cost. 3..Which is not true for a monopolistically competitive industry? A).Firms tend to operate with excess capacity. B). Each firm faces a downward-sloping demand curve. C). These firms earn zero...

1.A monopolist maximizes profit at the output rate where its total revenue equals total cost. True...

1.A monopolist maximizes profit at the output rate where its total revenue equals total cost. True False 2. To maximize profit, the perfectly competitive firm charges a price equal to __________ while the monopolist charges a price __________. marginal revenue; equal to marginal cost marginal cost; greater than marginal cost marginal revenue; less than marginal revenue average total cost; greater than average total cost 3.Compared to the perfectly competitive firm, the monopolist faces a demand curve that is ___________________ elastic...

1. Which of the following is true about the output level where marginal revenue equals marginal...

1. Which of the following is true about the output level where marginal revenue equals marginal cost? Group of answer choices The firm is maximizing profit. Economic profits are equal to zero. The firm should reduce its output. The firm should increase its output. 2. The price charged by a profit-maximizing monopolist occurs Group of answer choices At the minimum of the long-run average total cost curve. Where P = MR = MC. At a price on the demand curve...

· Question 16 For a monopolist, at each output level, marginal revenue is less than the...

· Question 16 For a monopolist, at each output level, marginal revenue is less than the price because: of the law of diminishing returns monopolist produces a larger output than would purely competitive firms price should be lowered to increase sales quantity · Question 17 In the long-run, a pure monopolist will make: zero economic profit only normal profit decreasing economic profit zero or positive economic profit · Question 18 Which of the following is not necessarily true at the...

For a monopolist: Price is greater than marginal revenue. Marginal revenue equals zero. Marginal cost equals...

For a monopolist: Price is greater than marginal revenue. Marginal revenue equals zero. Marginal cost equals zero. Average total cost equals marginal cost.

Suppose a firm is producing a level of output such that marginal revenue is equal to...

Suppose a firm is producing a level of output such that marginal revenue is equal to marginal cost. The firm is selling its output at a price of $6 per unit and is incurring average variable costs of $7 per unit and average total costs of $8 per unit. Given this information, it may be concluded that the firm: Group of answer choices is operating at maximum total profit is operating at a loss that could be reduced by shutting...