Question

QUESTION 8

For a monopolist:

		price equals average total cost.
		price is above marginal revenue.
		marginal revenue equals zero.
		marginal cost equals zero.

QUESTION 9

An example of price discrimination is the price charged for:

		an economics textbook sold at a campus bookstore.
		gasoline.
		theater tickets that offer lower prices for seniors.
		a postage stamp.

QUESTION 10

There is only one gas station within hundreds of miles. The owner finds that if she charges $3 a gallon, she sells 199 gallons a day, and if she charges $2.99 a gallon, she sells 200 gallons a day. The marginal revenue of the 200th gallon of gas is:

		$0.01
		$1
		$2.99.
		$600.

QUESTION 11

At the long-run equilibrium level of output, the monopolist's marginal cost will:

		exceed price.
		be equal to price.
		be less than price.
		be less than marginal revenue.

QUESTION 12

A monopolist will earn economic profits as long as his price exceeds:

		MR.
		AFC.
		AVC.
		ATC

QUESTION 13

A monopolist will maximize its profit by:

		Setting its price as high as possible.
		Producing a quantity where MR = MC.
		Producing a quantity where P = MC.

QUESTION 14

Both a perfectly competitive firm and a monopolist:

		Always earn an economic profit.
		maximize profit by setting MR = MC.
		maximize profit by setting P = MC.
		are price takers.

QUESTION 15

Without government regulation, the market outcome of monopoly:

		Is inefficient and results in deadweight loss.
		Can be either efficent or inefficient.
		All consumers who value the good higher than its marginal cost will be able to get the product.
		None of the above.

Answer 1

Ans 8: Price is more than Marginal Revenue.  

Ans 9: theater tickets that offer lower prices for seniors. (Same service but different price for different age group.(break even point)

Ans 10: Total Revenue = P*Q

TR1: $3*199 = $597

TR2: $2.99*200 = $598

Therefore, the marginal revenue from 200th gallons of gas is = $598 - $597 = $1

Ans 11: Exceed price

Ans 12: ATC

Ans 13: Producing a quantity where MR = MC. (profit maximization condition)

Ans 14: maximize profit by setting MR = MC. (but in perfectly competitive case, Price is always equal to MR)

Ans 15: Is inefficient and results in deadweight loss.