What will be the effect of a monopoly sales tax imposed on a monopolist's output? O a. It will lead to an increase in price but will have no effect on output. O b. It will lead to a reduction in output but will have no effect on price. O c. It will lead to an increase in the price and a reduction in output. O d. It will have no impact on price or on output.

What will be the effect of a monopoly sales tax imposed on a monopolist's output? O a. It will lead to an increase in price but will have no effect on output. O b. It will lead to a reduction in output but will have no effect on price. O c. It will lead to an increase in the price and a reduction in output. O d. It will have no impact on price or on output.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Why must a monopolist always price in the elastic part of the demand curve if she sets an optimal price?Hint: Marginal Revenue equals Marginal Cost at the What is the relationship between elasticityand Marginal Revenue = 0 at unit elasticity?
One of these four answers best represents the condition that generates a natural monopoly. Which one? OA single firm controls an industry because there are very few customers in the industry. The government prohibits entry into an industry. O The firm takes anti-competitive actions to keep other firms out. O Economies of scale are large relative to quantity demanded in a market
One way a monopoly can convert additional consumer surplus into economic profit is to O price discriminate raise prices O lower prices
Monopolists can practice price discrimination in all monopoly markets. O a. True b. False
PRICE (Cents per Kilowatt-hour) 5 MR 2 QUANTITY (Thousands of kilowatt-hours) ATC MC 10 O True Which of the following statements are true about this natural monopoly? Check all that apply. O False D The electricity company must own a scarce resource. It is more efficient on the cost side for one producer to exist in this market rather than a large number of producers. Monopoly Outcome In order for a monopoly to exist in this case, the government must have intervened and created it. The electricity company is experiencing economies of scale. ? True or False: Without government regulation, natural monopolies can earn positive profit in the long run.
Suppose the table below describes the relationship between price and quantity demanded for a monopolist. Quantity 1 2 3 4 5 6 7 8 O If the marginal cost of producing each unit of output is $5, then this monopolist maximizes its profit by charging __________ per unit. O $8 $5 $3 Price $10 $9 $8 $7 $6 $5 $4 $3 $6
When consumers are maximizing their utility, they have to consider choosing the optimal combination of goods to buy. All of these O Their indifference curves The prices of each good Their income when
The government may regulate natural monopolies because O A. the government needs to ensure reasonable prices O B. Monopolies are illegal O C. natural monopolies experience economies of scale O D. market share for one firm must be limited to 40% Answers (in progress)
What is a defining characteristic of a natural monopoly? O horizontal total cost curve economies of scale over a very large range of output O strong patents that prevent any competition O marginal costs above the average cost
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Question 9 Because a monopolist has market power, which of the following is NOT a characteristic of a monopolist? O It faces a horizontal demand curve O It faces a downward-sloping demand curve O When it produces an extra unit of output, it must lower its price for on all units sold O Its marginal revenue curve is below its demand curve
Assuming that the price is greater than the average variable cost, a monopolist maximizes profits at the output for which (picture a graph): O price is equal to marginal revenue in the downward part of the marginal cost curve O marginal cost is equal to marginal revenue in the upward sloping part of the marginal cost curve O average variable cost and average total cost are in the downward part of their curves and price is equal to marginal cost O average total cost is at the lowest point