Chapter 10

Question 1

Market power is

Answer 1

the ability to alter the market price of a good or service.

Question 2

If the entire output of a market is produced by a single seller, the firm

Answer 2

is a monopoly

Question 3

A monopolist will find that its marginal revenue curve

Answer 3

lies below its demand curve and is steeper than its demand curve.

Question 4

The marginal revenue of a monopolist falls below price because the firm

Answer 4

confronts a downward-sloping demand curve.

Question 5

In monopoly and perfect competition, a firm should expand production when

Answer 5

marginal revenue is above marginal cost.

Question 6

Monopolists set prices

Answer 6

at the output where marginal revenue equals marginal cost.

Question 7

Which of the following rules is satisfied when a monopoly maximizes profits?

Answer 7

MR = MC.

Question 8

If a monopolist is producing a level of output where MR exceeds MC, then it should

Answer 8

increase its output.

Question 9

Which of the following is true about the output level where marginal revenue equals marginal cost?

Answer 9

The firm is maximizing profit.

Question 10

(Table 24.1) Using the profit maximization rule, a monopolist will produce

Answer 10

3 units

Question 11

(Table 24.1) Using the profit maximization rule, a monopolist will charge a price of

Answer 11

$400

Question 12

(Table 24.1) According to the profit maximization rule, at the profit-maximizing level of output, marginal revenue is

Answer 12

$300

Question 13

(Table 24.1) According to the profit maximization rule, at the profit-maximizing level of output marginal, cost is

Answer 13

$300

Question 14

(Table 24.1) Using the profit maximization rule, a monopolist that is able to practice price discrimination will charge

Answer 14

different prices to different customers

Question 15

(Table 24.1) According to the profit maximization rule, at the profit-maximizing level of output, the average total cost is

Answer 15

$316.67

Question 16

(Table 24.1) According to the profit maximization rule, at the profit-maximizing level of output, total revenue is

Answer 16

$1,200

Question 17

(Table 24.1) According to the profit maximization rule, at the profit-maximizing level of output, total cost is

Answer 17

$950

Question 18

(Figure 24.1) The profit-maximizing rate of output is

Answer 18

F

Question 19

(Figure 24.1) The profit-maximizing monopolist will charge a price of

Answer 19

A

Question 20

(Figure 24.1) The total revenue is represented by the area

Answer 20

ABFE

Question 21

(Figure 24.1) The shaded area represents

Answer 21

total profit

Question 22

(Figure 24.1) The total cost is represented by the area

Answer 22

CDFE

Question 23

(Figure 24.2) The profit-maximizing level of output is

Answer 23

4 units

Question 24

(Figure 24.2) A profit-maximizing monopolist will charge a price of

Answer 24

$5.50

Question 25

(Figure 24.2) The profit-maximizing monopolist will earn a profit per unit of

Answer 25

$1.50

Question 26

(Figure 24.2) The total revenue at the profit-maximizing rate of output is

Answer 26

$22.00

Question 27

(Figure 24.2) The total profit at the profit-maximizing rate of output is

Answer 27

$6.00

Question 28

(Figure 24.2) The total cost at the profit-maximizing rate of output is

Answer 28

$16.00

Question 29

A barrier to entry is

Answer 29

an obstacle that makes it difficult for new firms to enter a market.