Rest of Markets ‘True or False: ce « Barriers to entry are essential to a monopoly. fo Mi 2. Fora single-price monopoly, marginal revenue, MR, equals price, 3. To maximize their profits, both monopolies and perfectly competlive firms produce the level of output that sets MR'= MC. ¥ 4. When a single-price monopoly is maximizing its profit, P > MC. / 5. A monopoly can earn an economic profit indefinitely. <==" 6. Ifa monopoly can successfully price discriminate, it can increase its profit.V Multiple Choice Questions: 1.1m order to sell more output, a single-price monopoly must __its price. raise. blower. 2. Ifa monopoly is producing a level of output such that marginal cost exceeds marginal revenue, to increase its, fas the firm M , should lower its price and increase its output. Cc ge ft C. should lower its price and decrease tts output. d. none of the above because the firm is incurring an economic loss and it cannot alter this fact, 3. Which of the following is true for a single-price monopoly? a, Price always equals marginal cost, that is, P = MCat all levels of output. bb, Forall levels of output, price equals marginal revenue, that is, P = MR. c dd. None of the above because all the statements are false, 4. Asingle-price monopolist will maximize its profits if it produces the amount of output such that a. price equals marginal cost, that is, P= MC. b. price equals marginal revenue, that is, P= MR 7 eae aaa d. price equals average total cost, that is, P= ATC. Wiauwe vac Muito Cheer Quests 11 and 12 j ; ac 1 mae oe 5. In Figure 12.4, a profit-maximizing single-price monopoly will produce aQlbQe 03 4. None of the above. 6. In Figure 12.4, a profit-maximizing single-price monopoly will set a price of aPL b. P2. Pa. 7. In the short run a monopoly can a. eam only an economic profit. b. earn only an economic profit or a normal profit ear only a normal profit. 60 Quontity (units per day) ‘8.The figure above shows the demand and cost curves for a single-price monopolist. ‘What level of output maximizes the firm's economie profit? L Ounits —B)Sunits G)20UAis) D) 30 units 9. What price will the firm charge? a) $50 per unit B) $10 per unit C} $20 per unit 0) $30 per unit an 10. What economic profit does this firm earn? { ? ae He IM. > LeTR-ie pa te SD } es ca Zoe = pe x2: ) =.