ECON 203 - The total cost of production

Question # 00543482 Posted By: dr.tony Updated on: 06/10/2017 12:43 AM Due on: 06/10/2017
Subject Economics Topic Microeconomics Tutorials:
Question
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Refer to the figure below. The total cost of production is:

You were correct.

$400

$510

$160

$330

Covers this concept:

Revenue, Costs, Profit and Losses in Monopolies

Calculate and graph a monopoly's fixed, variable, average, marginal and total costs

________________________________________

If a monopolist produces one more unit of output, but sells the increased output at a slightly lower price:

You were correct.

marginal revenue is affected by adding one additional unit sold at the new price.

all the previous units, which used to sell at a higher price, now sell for more.

because of higher output the marginal revenue curve is above the demand curve.

Covers this concept:

Revenues Under Monopoly

Calculate and graph the firm's average, marginal and total revenues

________________________________________

The marginal revenue curve for a monopolist ________ the market demand curve.

You were correct.

always is the same

always runs parallel

always lies beneath

always rises above

Covers this concept:

Revenues Under Monopoly

Calculate and graph the firm's average, marginal and total revenues

________________________________________

Refer to the figure below. Total revenue is:

You were incorrect.

$160

$420

$560

$480

Review this concept:

Measuring a Monopoly’s Revenues

Measure total revenues as the area under the average revenue curves

________________________________________

The total revenue curve for a monopolist will ________.

You were incorrect.

start high, decline, and then rise

start low, rise, and then decline

start high, rise, and then decline.

Review this concept:

Measuring a Monopoly’s Revenues

Measure total revenues as the area under the average revenue curves

________________________________________

If a firm holds a pure monopoly in the market and is able to sell 5 units of output at $4.00 per unit and 6 units of output at $3,90 per unit, it will produce and sell the sixth unit if its marginal cost is:

You were incorrect.

$4.00 or less.

$3.40 or less.

$3.90 or less.

$3.50 or less.

Review this concept:

A Monopoly’s Profit-Maximizing Output Level

Determine the profit maximizing output level and price; calculate and graphically illustrate where marginal revenue equals marginal costs

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The following table shows a monopolist’s demand curve and cost information for the production of its good. What quantity will it produce?

Quantity Price per Unit Total Cost

10 $10 $20

20 $8 $50

30 $6 $65

40 $4 $90

50 $2 $120

You were correct.

30

10

20

40

Covers this concept:

A Monopoly’s Profit-Maximizing Output Level

Determine the profit maximizing output level and price; calculate and graphically illustrate where marginal revenue equals marginal costs

________________________________________

Refer to the figure below. Total profit is:

You were incorrect.

$60

$-120

$80

$240

Review this concept:

A Monopoly’s Profit and Losses

Calculate and graphically illustrate profit and losses for a monopolist

________________________________________

Refer to the table below. This information reflects the demand curve and the average cost curve for a firm that is a natural monopoly. What will this firm’s profits equal?

Price Quantity Demanded LRAC

$13 1 $10.50

$11 2 $9.75

$9 3 $9.50

$7 4 $9.625

$5 5 $10.30

You were incorrect.

$1.25

$1.50

$2.50

$0.50

Review this concept:

A Monopoly’s Profit and Losses

Calculate and graphically illustrate profit and losses for a monopolist

________________________________________

If monopolists are able to produce fewer goods and sell them at a higher price than they could under perfect competition, the result will be:

You were correct.

elimination of barriers to entry.

government deregulation.

irregularly high unsustainable profits.

abnormally high sustained profits.

Covers this concept:

Inefficiencies in Monopolies

Explain why a monopoly is inefficient using deadweight loss

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Following the assumption that firms maximize profits, how will the price and output policy of an unregulated monopolist compare with ideal market efficiency?

You were correct.

Output will be too small and its price too high.

Output will be too large and its price too low.

Output will be too small and its price too low.

Output will be too large and its price too high.

Covers this concept:

Inefficiencies in Monopolies

Explain why a monopoly is inefficient using deadweight loss

________________________________________

In the United States, price discrimination is ________.

You were incorrect.

illegal

permitted

encouraged

Review this concept:

Single Price vs. Price Discriminating Monopolist

Differentiate between a single price monopolist and a price discriminating monopolist

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Why can a price discriminating monopolist be both more profitable and more efficient (i.e., produce greater net benefits for society)?

You were incorrect.

Because it supplies a higher quantity of output than a single price monopolist.

Because it charges a lower price than a single price monopolist.

Because it is more socially conscious than a single price monopolist.

Review this concept:

Single Price vs. Price Discriminating Monopolist

Differentiate between a single price monopolist and a price discriminating monopolist

________________________________________

City Gas is a natural monopoly that supplies natural gas to a particular city. Its cost and demand information are given below. If the government decides to regulate this natural monopoly by forcing them to produce at the point where the demand curve intersects average cost, then compared to the unregulated natural monopoly, the price will ________ and the quantity will ________.

Quantity (Millions of therms) Price ($ per therm) Total Cost (million $)

1 48 35

2 44 64

3 38 90

4 30 113

5 20 133

6 8 150

You were correct.

rise : rise

rise : fall

fall : rise

Covers this concept:

Controlling Monopolies

Analyze different strategies to control monopolies, including natural monopolies

________________________________________

What role does the U.S. government play with respect to market competition?

You were correct.

It preserves competition by maintaining abundant government-owned firms to ensure consumer friendly pricing.

It policies anticompetitive behavior and prohibits contracts that restrict competition.

It preserves competition by regulating prices and intervening in the price and output decisions of businesses.

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