Question : 10.3   How Does a Monopoly Choose Price and Output? 1) The : 1244605

 

10.3   How Does a Monopoly Choose Price and Output?

 

1) The demand curve for the monopoly’s product is

A) the market demand for the product.

B) more elastic than the market demand for the product.

C) more inelastic than the market demand for the product.

D) undefined.

 

2) A monopolist’s profit maximizing price and output correspond to the point on a graph

A) where average total cost is minimized.

B) where total costs are the smallest relative to price.

C) where marginal revenue equals marginal cost and charging the price on the market demand curve for that output.

D) where price is as high as possible.

 

3) Microsoft hires marketing and sales specialists to decide what prices it should set for its products, whereas a wealthy corn farmer in Iowa, who sells his output in the world commodity market, does not. Why is this so?

A) because Microsoft is large enough to hire the best people in the field

B) because Microsoft could potentially lose sales if it sets prices indiscriminately

C) because the wealthy corn farmer is a price taker who chooses his optimal output independently of market price but Microsoft’s optimal output depends on the price it selects

D) because unlike Microsoft, the wealthy corn farmer is probably a monopolist

 

4) Because a monopoly’s demand curve is the same as the market demand curve for its product

A) the monopoly’s marginal revenue equals its price.

B) the monopoly is a price taker.

C) the monopoly must lower its price to sell more of its product.

D) the monopoly’s average total cost always falls as it increases its output.

 

5) If a theatre company expects $250,000 in ticket revenue from five performances and $288,000 in ticket revenue if it adds a sixth performance, the

A) marginal revenue of the sixth performance is $48,000.

B) marginal revenue of the sixth performance is $38,000.

C) cost of staging the sixth performance is probably higher than the cost of staging the previous five.

D) company will be making a loss on the sixth performance because its ticket sales will be less than the average received from the previous five.

 

6) If a monopolist’s price is $50 per unit and its marginal cost is $25, then

A) to maximize profit the firm should increase output.

B) to maximize profit the firm should decrease output.

C) to maximize profit the firm should continue to produce the output it is producing.

D) Not enough information is given to say what the firm should do to maximize profit.

 

7) If a monopolist’s marginal revenue is $25 a unit and its marginal cost is $25, then

A) to maximize profit the firm should increase output.

B) to maximize profit the firm should decrease output.

C) to maximize profit the firm should continue to produce the output it is producing.

D) Not enough information is given to say what the firm should do to maximize profit.

Figure 10-2

Figure 10-2 above shows the demand and cost curves facing a monopolist.

 

8) Refer to Figure 10-2. To maximize profit, the firm will produce

A) Q1.

B) Q2.

C) Q3.

D) Q4.

 

9) Refer to Figure 10-2. The firm’s profit-maximizing price is

A) P1.

B) P2.

C) P3.

D) P4.

10) Refer to Figure 10-2. If the firm’s average total cost curve is ATC1, the firm will

A) suffer a loss.

B) break even.

C) make a profit.

D) face competition.

 

 

Place your order
(550 words)

Approximate price: $22

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
$26
The price is based on these factors:
Academic level
Number of pages
Urgency
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more