A monopolist\'s price is: Equal to their minimum average total cost in the long
ID: 1126548 • Letter: A
Question
A monopolist's price is:
Equal to their minimum average total cost in the long run.
Equal to their marginal cost.
Below their minimum average total cost in the long run.
Above their marginal cost.
Equal to their minimum average variable cost in the long run.
1 points
Question 2
A monopolist never drops their price to the point where:
They can only earn normal profits.
It is below minimum average total costs.
They earn almost no excess profits.
Demand is elastic and marginal revenue is above zero.
Demand is inelastic and marginal revenue becomes negative.
Question 5
A monopolist can earn excess profits if:
Their average total costs are low enough.
They are able to charge a price above their average total cost.
Their marginal costs are low enough.
They are able to set their price equal to their average total cost.
They are able to set their price above their average variable cost.
Question 7
A monopolist's marginal revenue curve is below their demand curve because:
They can afford to advertise.
If a monopolist lowers their price to attract new customers they must reduce their price to all their existing customers as well.
They have control over their market and keep their price artificially high.
They restrict their output to keep their price artificially high.
Barriers to entry prevent competitors from entering their market.
1 points
Question 8
A monopolist can increase their profits by bundling their products because bundling allows them:
To price discriminate and charge consumers higher prices based on their willingness to pay.
Create different varieties of their product at different price and quality levels.
Create different varieties of their product at the same price and quality level.
Create both different varieties of the product at different price and quality levels and at the same price and quality level.
To force consumers to pay for products they have little use for to obtain something that has great value to them.
1 points
Question 9
An example of versioning is when:
An airline charges different fares to leisure and business customers.
A printer company disables a feature on its printer so as to be able to sell it to different consumers for different prices.
A software company leases rather then sells its software so as to charge higher fees.
A software company creates both a full featured and a limited featured edition of their software program so as to be able to charge different prices to different buyers.
An airlines creates a frequent flier program to increase customer loyalty.
1 points
Question 10
In the above diagram the monopolist:
Produces 15 million copies of Windows and sells them for approximately $70 per copy.
Produces 20 million copies of Windows and earns approximately $20 in excess profits per copy.
Produces 15 million copies of Windows and earns approximately $30 in excess profits per copy.
Produces 10 million copies of Windows and earns approximately $60 in profits per copy.
Produces 20 million copies of Windows and sells them for approximately $100 per copy.
Equal to their minimum average total cost in the long run.
Equal to their marginal cost.
Below their minimum average total cost in the long run.
Above their marginal cost.
Equal to their minimum average variable cost in the long run.
Explanation / Answer
1 A monopolist's price is: Above their marginal cost
2. A monopolist never drops their price to the point where Demand is inelastic and marginal revenue becomes negative
5. A monopolist can earn excess profits if Their marginal costs are low enough.
7 A monopolist's marginal revenue curve is below their demand curve because If a monopolist lowers their price to attract new customers they must reduce their price to all their existing customers as well.
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