Why a monopolist would probably earn fewer profits

Assignment Help Microeconomics
Reference no: EM13204296

1. Suppose that a drug for treating cancer is cleared by the Food and Drug Administration and that the company is successful in obtaining a patent for its product. Which of the following is then true?
A) The method of producing the product would not be considered intellectual property.
B) The drug would have many close substitutes.
C) The patent holder has a monopoly.
D) The patent holder now faces barriers to entry.

2. When the number of substitutes increase, the demand curve for a monopolist will
A) become more inelastic.
B) not change.
C) become more elastic.
D) become steeper.

3. Which of the following is true of a perfectly competitive firm and a monopoly in the long run?
A) P = MR
B) MR = MC
C) P = MC
D) P = ATC

4. A barrier to entry is
A) a term used to explain why monopolies always make economic profits.
B) a restriction on starting a business.
C) the situation when the government produces a good instead of relying on private firms to produce the good.
D) a restriction on the profits that a monopoly can make.

5. Price differentiation is a situation in which
A) consumers' comparison-shop.
B) the demand curve is vertical.
C) there are different prices for the same product that are not due to differences in the marginal cost of providing the commodity to different groups of buyers.
D) there are different prices for similar products reflecting differences in the marginal cost of providing the commodities to different groups of buyers.

6. Which of the following is TRUE?
A) Charging all customers the same price when costs vary can actually be a case of price discrimination.
B) Price discrimination guarantees that the monopolist will make a profit.
C) Monopoly results in a higher quantity of output being sold compared with perfect competition.
D) Price discrimination occurs when there are differences in prices that reflect differences in marginal cost.

7. When consumers would have been willing to pay higher prices at various quantities consumed than the market clearing price, the differences are called
A) monopoly profits.
B) consumer surplus.
C) deadweight loss.
D) opportunity cost.

8. A monopolist would probably earn fewer profits if
A) the importance of specialized capital equipment in its production techniques increased.
B) tariffs on competing products were lowered.
C) the time length of patents increased.
D) environmental regulations increased that required the purchase of special capital equipment.

9. The monopolist determines the price and quantity combination that maximizes short-run profits by
A) finding the point at which marginal revenue and demand intersect. This gives the price and quantity that maximizes profits.
B) finding the quantity at which average revenue and average total cost are furthest apart.
C) determining the price by finding the highest price at which sales can be made and then using the demand curve to find the appropriate quantity.
D) finding the quantity at which marginal cost and marginal revenue are equal and then using the demand curve to find price.

10. A pure monopolist is selling 7 units at a price of $12. If the marginal revenue of the 8th unit is $4, then the price of the 8th unit is
A) $11.
B) greater than $12.
C) $4.
D) $10.

11. Which of the following is a TRUE statement about a monopoly?
A) As long as there are barriers to entry, a monopoly can always find some price-output combination that generates positive economic profits.
B) As long as the demand curve slopes down, a monopoly can always find some price-output combination that generates positive economic profits.
C) A monopoly must earn an above-normal profit to stay in business.
D) A monopoly does not necessarily earn positive economic profits.

12. Which of the following is NOT a condition for price discrimination to exist?
A) identification of buyers with differing elasticities
B) unpatented product or the service
C) downward sloping demand curve faced by the firm
D) ability to prevent the resale of the product or service

13. For a firm to become a monopoly in an industry,
A) the firm will engage in unfair practices to drive all competitors out of the market.
B) the firm must produce a faulty product.
C) barriers to entry must exist.
D) the firm must charge higher prices than its competitors.

Reference no: EM13204296

Questions Cloud

Define insurance companies track life expectancy information : Insurance companies track life expectancy information to assist in determining the cost of life insurance policies. The insurance company knows that, last year, the life expectancy of its
What describes the monopolistic competition : A monopolist is maximizing profit at an output rate of 1,000 units per month. At this output rate, the price that its customers are willing and able to pay is $8 per unit, average total cost is $5 per unit, and marginal cost is $6 per unit. It may..
Explain maximize the total number of people reached : In addition, Martinez has decided that there should be at least six ads on TV or radio or some combination of those two. The amount spent on billboards and newspaper together must not exceed the amount spent on TV ads.
How to find the tension in each rope : A 260 pound weight is supported by two ropes, one forming a 40 degree angle with the ceiling and the other a 50 degree angle
Why a monopolist would probably earn fewer profits : As long as there are barriers to entry, a monopoly can always find some price-output combination that generates positive economic profits. As long as the demand curve slopes down, a monopoly can always find some price-output combination that genera..
State the population of a certain community : a 5 year projection of population trends suggest that t years from now, the population of a certain community will be P(t)=-t3+9t2+48t+200.
Determine bounded sequence of positive real number : Let(bn)be a bounded sequence of positive real number such that for any bounded positive sequence of real number we have: limsup(an bn)= limsup(an)limsup(bn).
How much would another investor be willing to pay : Suppose that the two years have elapsed since you purchased the security, and you hve recieved the first two payments of $600 each. Now suppose the market interest rate suddenly jumps to 10%. How much would another investor be willing to pay for y..
What price should the manager charge for the calculators : The California Instruments Corporation, a producer of electronic Equipment, makes pocket calculators in a plant that is run autonomously. The plant has a capacity output of 200,000 calculators per year, and the plant's manager regards 75 percent o..

Reviews

Write a Review

Microeconomics Questions & Answers

  Explain necessary conditions for positive equilibrium prices

What are the necessary conditions for positive equilibrium prices and quantities? (b) What is the economic interpretation of the parameter "f"? (c) What will be effect (increase or decrease) of an increase in exogenous income on P*, the equilibrium p..

  What are the fixed and variable costs

a. Distinguish between explicit and implicit costs of your college education giving examples of each. b. What are your fixed costs  Variable Costs c. Use a real-world example to explain the law of diminishing marginal productivity in your co..

  The price of a british car in united states dollars

The currency in Great Britain is pound and the price of a particular British car is 12,000. suppose the exchange rate is 0.67 per dollar.

  Determine who benefits can be tough for negative events

Major events in our country and around the world tend to have economic advantages for some segments of society and disadvantages for others. Determining who benefits can be tough for negative events

  Are there sources of market failure other than those listed

alternative methods for dealing with market failures that include direct regulation, incentive programs such as tax incentive programs and market incentive programs, and voluntary reductions. At issue, is whether government can successfully addres..

  Information about market demand curve

Supposing the marginal cost curve is for a competitive industry as a whole, find out the profit-maximizing level of output and price.

  Why governments intervene in markets with price floor

This is a self-reflection paper developed based on the classroom discussion around minimum wage. Explain the effect minimum wage has on the economy. List and describe both the pros and cons of the more recent increases in the federal minimum wage...

  Define natural monopoly

Define a natural monopoly and what has happened to natural monopolies in recent years? Describe. Under which market structure does your type of business fall?

  Maximizes pro t at current price and quantity

Firm A is the sole supplier of a certain product. A's marginal cost equals average cost MC = AC = 30, and it faces market demand given by inverse demand function P = 120 0:5Q. Suppose at the moment A produces quantity q = 120 units at price p = ..

  Explain the relationship between the magpie and the eagle

Explain the relationship between the Magpie and the Eagle and explain what would be the effect of a 10% increase in the income of the target market have on the demand for the Magpie

  Style of an academic journal article

Write your paper in the style of an academic journal article. The in-class readings, as well as articles published in The Rand Journal,

  Demonstrate competence of economic principles

Frederic Bastiat (1801 - 1850) was a French political economist famous for exploding popular economic misconceptions

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd