QUE STION 1 2.5 points Save Answer Refer to the accompanying figure to answer th

Question

QUE STION 1 2.5 points Save Answer Refer to the accompanying figure to answer the questions that follow Price MC ATC $70 $50 $40 $25 MR 1000 1500 Quantity The total revenue when a firm is profit-maximizing is a. $70,000 O b. $67,500 c. $60,000 d. $25,000 e. $50,000 QUESTION 2 2.5 points Save Answer Deadweight loss results in a monopoly because O a. the monopolist charges a price equal to marginal cost, which is higher than the price charged in a competitive market o b. the monopolist charges a price below marginal cost. c. the monopolist makes a positive economic profit in the short run. d. some consumers who would benefit from a competitive market lose out e, the monopolist produces a quantity that is higher than the quantity produced in a competitive market QUE STION 3 2.5 points Saved It is unrealistic to regulate a natural monopoly at marginal cost pricing because a. firms do not need to follow regulations from the government. o b. the government is not allowed to regulate markets. c, marginal cost pricing ends up having the natural monopoly firm earn zero economic profits d, with this type of regulation, the firm will want to shut down, and that outcome is not desirable for society e. regulating a market causes more deadweight los:s

Explanation / Answer

1) Using the MR=MC rule, note that the quantity produced is 1000 units and the price charged is $70 per unit. Hence the total revenue is 1000*70 - $70,000. The correct option is A

2) The answer is C since the monopolist produces a quantity lower than competitive market, and charges P>ATC. It is only this fact that it makes positive economic profit.

3) It should be D since P = MC for a natural monopoly, simply has a higher ATC at this level so there are economic losses.

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