Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Chapter 16, Problem 4MCQ
To determine
Among the given options, identify the correct one on the basis of below statement:
The price set by
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A monopoly is considered a _____ and a competitive firm is considered a _________.
a. price taker; price taker
b. price maker; price maker
c. price taker; price maker
d. price maker; price taker
One difference between a competitive firm and a monopoly is that __________________.
a. monopoly makes economic profits, but a competitive firm never makes economic profits
b. a monopoly faces a downward sloping marginal revenue curve, whereas a competitive firm faces a horizontal marginal revenue curve
c. the cost curves of a monopoly are always below those of a competitive firm
d. a monopoly always has economies of scale, but a competitive firm always has diseconomies of scale
When will a monopoly set its price equal to marginal cost?
A monopoly will set its price equal to marginal cost when
A. consumer demand is infinitely elastic.
B. new firms cannot threaten to enter.
C. consumers are not sensitive to price.
D. its marginal revenue curve is downward-sloping.
E. it has no fixed costs.
Chapter 16 Solutions
Foundations of Economics (8th Edition)
Ch. 16 - Prob. 1SPPACh. 16 - Prob. 2SPPACh. 16 - Prob. 3SPPACh. 16 - Prob. 4SPPACh. 16 - Prob. 5SPPACh. 16 - Prob. 6SPPACh. 16 - Prob. 7SPPACh. 16 - Prob. 8SPPACh. 16 - Prob. 9SPPACh. 16 - Prob. 10SPPA
Ch. 16 - Prob. 11SPPACh. 16 - Prob. 1IAPACh. 16 - Prob. 2IAPACh. 16 - Prob. 3IAPACh. 16 - Prob. 4IAPACh. 16 - Prob. 5IAPACh. 16 - Prob. 6IAPACh. 16 - Prob. 7IAPACh. 16 - Prob. 8IAPACh. 16 - Prob. 9IAPACh. 16 - Prob. 10IAPACh. 16 - Prob. 1MCQCh. 16 - Prob. 2MCQCh. 16 - Prob. 3MCQCh. 16 - Prob. 4MCQCh. 16 - Prob. 5MCQCh. 16 - Prob. 6MCQCh. 16 - Prob. 7MCQ
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- What is a legal monopoly?arrow_forwardWhat is a natural monopoly?arrow_forwarda. What is the main constraint of a monopoly? b. Consider the company Luxottica which is responsible for almost all of the production of eyeglasses in the world. to compete with this company, a newcomer would need a huge amount of money, for example, just to start an assembly line. these high costs can be considered an example of what concept?arrow_forward
- What is the deadweight loss associated with monopoly? A. The loss in consumer surplus due to high prices and reduced output B. The loss in producer surplus due to low prices and excess supply C. The loss in government revenue due to taxation D. The loss in economic efficiency due to government interventionarrow_forwardPlz do the both questions. Which of the following statements is true about a monopoly?O.A. there are no barriers to entryO.B. they earn positive economic profits in the short run onlyO.C. they produce a good that has close substitutesO.D. none of the abovearrow_forwardWhat is the dead weight loss? a.The loss in welfare due to the monopoly producing a LARGER amount than a competitive market would b. None of the other answers is correct c.A new weight loss system d.The loss in welfare due to the monopoly producing a SMALLER amount than a competitive market wouldarrow_forward
- A natural monopoly refers to a monopoly that is defended from direct competition by a. Control over a vital input b. A government franchise c. A patent or copyright d. Economies of scale over a broad range of outputarrow_forward2 A monopoly sells its goods in the United States, where the elasticity of demand is -2, and in Japan, where the elasticity of demand is -5. Its marginal cost is $10. At what price does the monopoly sell its goods in each country if resale is impossible?arrow_forwardDraw the graph. If the monopoly is a doing perfect price discrimination, then: 1. the monopoly produces a quantity Q = ______ where ________________ (which curves intersect?)2. the monopoly charges a price of ________ (trick question!!!!)3. the consumer surplus is CS = ______. 4. the producer surplus is PS = _________(identify the area on the graph and calculate it).5. this monopoly ________ (is / is not) efficient because ______________________.arrow_forward
- 13. A monopoly’s price is $20. At this price the absolute value of the elasticity of demand is 2. What is the monopoly’s MC?arrow_forwardA natural monopoly is a monopoly that arises because one firm can meet the entire market demand at a lower average _____ cost than two or more firms could. A legal monopoly is a market in which _____ by the granting of a public franchise, government licence, patent, or copyright. A. fixed; competition and entry are restricted B. total; competition and entry are restricted C. variable; profts are maximized D. variable; costs are minimizedarrow_forward1. Given that a monopoly’s marginal cost is not zero, EXPLAIN why the demand must be elastic at the profitmaximizing quantity. Explain with a graph.arrow_forward
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