A firm is a natural monopoly if it exhibits the following as its output increases:
decreasing marginal revenue.
increasing marginal cost.
decreasing average revenue.
decreasing average total cost.
answer
decreasing average total cost.
question
For a profit-maximizing monopoly that charges the same price to all consumers, what is the relationship between price , marginal revenue , and marginal cost ?
answer
p is less than MR, MR = MC
question
If a monopoly's fixed costs increase, its price will _____, and its profit will _____.
increase, decrease
decrease, increase
increase, stay the same
stay the same, decrease
answer
stay the same, decrease
question
Compared to the social optimum, a monopoly firm chooses
a quantity that is too low and a price that is too high.
a quantity that is too high and a price that is too low.
a quantity and a price that are both too high.
a quantity and a price that are both too low.
answer
a quantity that is too low and a price that is too high.
question
The deadweight loss from monopoly arises because
the monopoly firm makes higher profits than a competitive firm would.
some potential consumers who forgo buying the good value it more than its marginal cost.
consumers who buy the good have to pay more than marginal cost, reducing their consumer surplus.
the monopoly firm chooses a quantity that fails to equate price and average revenue.
answer
some potential consumers who forgo buying the good value it more than its marginal cost.
question
When a monopolist switches from charging a single price to perfect price discrimination, it reduces
the quantity produced.
the firm's profit.
consumer surplus.
total surplus.
answer
consumer surplus.
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