8. A fundamental source of monopoly market power arises from a. perfectly elastic demand. b. perfectly inelastic demand. c. barriers to entry. d. availability of "free" natural resources, such as water or air.

8. A fundamental source of monopoly market power arises from a. perfectly elastic demand. b. perfectly inelastic demand. c. barriers to entry. d. availability of "free" natural resources, such as water or air.

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter14: Monopoly

Section: Chapter Questions

Problem 5CQQ

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8. A fundamental source of monopoly market power arises from
a. perfectly elastic demand.
b. perfectly inelastic demand.
c. barriers to entry.
d. availability of "free" natural resources, such as water or air.

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Draw a monopolists demand curve, marginal revenue, and marginal cost curves. Identify the monopolists profit-maximizing output level. Now, think about a slightly higher level of output (sayQ0+1). According to the graph, is there any consumer willing to pay more than the marginal cost of that new level of output? If so, what does this mean?
How does the demand curve perceived by a monopolist compare with the market demand curve?
44. Which of the following statements about a monopoly is FALSE? a. A monopoly has many suppliers of the good. b. None of these c. Monopolies have barriers to entry or exit. d. The good produced by a monopoly has no close substitutes.
4. A monopoly’s supply curve isA. more elastic than is the supply curve of a PC industry.B. the same as the market supply curve since the monopoly is the industry.C. vertical in the short run.D. more elastic than is the supply curve of a PC industry.E. None of the above.
Quèstion 18 If a monopoly is producing at an output at which marginal cost exceeds marginal revenue, it should a. raise output and keep price unchanged. b. raise price and lower output. c. lower output and keep price unchanged. d. shut down production of the good. e. lower price and raise output.
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.
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6. A monopoly is currently producing an output level where P = $30, MR = $20, AVC = $16, AC = $24, and MC =$22. In order to maximize profit, this firm shouldA. decrease output.B. increase output.C. shut down.D. This monopoly is producing the profit maximizing output level.E. None of the above.
2 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?
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 intervention
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Mary has a monopoly selling her patented non-alcoholic icewine. Currently, her marginal revenue is $26 and her marginal cost is $29. The price of a bottle of icewine is $35. She should A. increase the price and decrease the level of output. B. decrease the price and increase the level of output. C. increase the price and the level of output. D. decrease the price and the level of output.