25: Use the following to answer question Figure: Demand, Revenue, and Cost Curve

Question

25: Use the following to answer question Figure: Demand, Revenue, and Cost Curves Price of figglenuts 100 90 80 70 60 50 40 30 20 10 MC ATC 0 20 60 100 140 180 220 Quantity of figglenuts 25. (Figure: Demand, Revenue, and Cost Curves) Look at the figure Demand, Revenue, and Cost Curves. Figglenuts-R-Us is a monopolist in the figglenut market. Figglenuts-R-Us will sell figglenuts and set a price of to maximize profits. A) 70: S65 B) 100; $50 C) 120; $40 D) 150; $46 26. A monopolist or an imperfectly competitive firm practices price discrimination primarily to: A) increase profits. B) expand plant size. C) lower total costs. D) reduce marginal costs. 27. A profit-maximizing mortopoly will never set price in the inelastic region of the demand curve. A) True B) False 28. When a natural monopoly is regulated to charge a price equal to average total cost, consumer surplus increases, but total surplus decreases. A) True B) False

Explanation / Answer

Q25

Answer

Option A

The firm produces at MR=MC where Q=70 and the price is found by demand curve at the production level P=$65

Q26

Answer

Option A

The price discrimination gives firms power to earn more profit.

Q27

Answer

Option B

False

The monopolist produces in the region of elastic demand because the profit is maximum at MR=MC and the MC is positive and the demand is inelastic when the MR is negative.

Q28

Answer

Option b

false

the market welfare increases because the firm charges the price lower and produces more output.

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