Answered: 3. A monopolist is forced to lower its…

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter16: Government Regulation

Section: Chapter Questions

Problem 10E

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Question

3. A monopolist is forced to lower its price in order to sell another unit of its product. This describes the problem of

A-persistent economic profits

B-market power

C-diseconomies of scale

D-economies of scale

E-market discrimination

(04.02 MC)

The allocatively efficient quantity of product Z for the whole market is 2 million units. At that quantity, the demand for Z is at $5 and the average total cost for its single supplier is $7. The average total cost does not fall to $5 until 3.5 million units. Based on this data, the market for product Z is (2 points)

A-perfectly competitive

B-a natural monopoly

C-a legal monopoly

D-monopolistically competitive

E-productively efficient

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