Chapter 10- monopoly

A single-price monopoly is characterized by a marginal revenue curve that is

• upward sloping.

• downward sloping.

• horizontal.

• vertical.

A barrier to entry is

• an economic term for economies of scale

• illegal in most markets

• anything that prevents new firms from entering the market

• a factor that increases competition

A type of monopoly that arises because a single firm can supply a good or service to an entire market at a lower cost than could two or more firms.

• Monopoly

• Natural Monopoly

• Price Discrimination

• Cartel

The profit-maximizing combination of output and price for a single-price monopoly is:

• Q1 & P1
• Q2 & P3
• Q1 & P4
• Q3 & P2

For this monopolist, what is the area of consumer surplus?

• A,B,H,J

• A,J,G,C

• A,R,J

• A,R,J,E

Answer explanation

The area between the demand curve and the price level, up to the quantity demanded.

Consumer surplus is the difference between what a customer is willing to pay for a product and the actual price they pay.

Dead weight loss for this monopoly are represented by area:

• BKL0
• J,H,N

• J,K,N

• J,G,N

What is the area above the supply curve, up to the price line, that represents the benefit gained by producers?

• Producer Surplus
• Monopoly Surplus
• Deadweight Loss
• Consumer Surplus

What is the reason that the government interferes with monopolies in order to protect society's overall well-being?

• Deadweight Loss
• Producer Surplus
• Consumer Surplus
• Monopoly Benefits

If a monopoly sales tax on each unit sold increases the price from $15 to $16, what is the new quantity demanded?

• 4
• 5
• 6
• 3

What happens to the marginal revenue of a monopoly when it increases output by one unit?

• It becomes equal to price

• It decreases

• It increases

• It remains constant