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31.A monopolist maximizes profit: a.by charging the highest possible price the
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# Question : 31.A monopolist maximizes profit: a.by charging the highest possible price the : 1413821

31.A monopolist maximizes profit:

a.by charging the highest possible price on the demand curve.

b.by charging a price that equals its marginal cost.

c.by producing a level of output where the average-cost curve intersects the demand curve.

d.by producing a level of output where marginal revenue equals marginal cost.

e.by charging a price equal to its average total cost.

32.If a monopolist is producing at a point at which marginal revenue is greater than marginal cost, it should:

a.continue producing at the current level.

b.raise its prices.

c.lower its prices.

d.increase the level of production.

e.decrease the level of production.

33.If at an output of 10 units a monopolist is earning a positive profit, marginal revenue is \$6, and marginal cost is \$4, then the monopolist:

a.is in equilibrium.

b.should increase output.

c.should reduce output.

d.should lower the price at the current output level.

e.should raise the price at the current output level.

NARRBEGIN: Table 10.2

The table given below shows the price charged by a firm and the marginal cost incurred by it for the different levels of the output.

Table 10.2

PriceQuantityMarginal Cost

\$151\$3

\$142\$4

\$133\$5

\$124\$6

\$115\$7

\$106\$8

NARREND

34.The firm described in Table 10.2:

a.must be a monopoly firm.

b.must be a perfectly competitive firm.

c.cannot be a perfectly competitive firm.

d.has no market power.

e.cannot be a monopoly.

35.What is the profit-maximizing output level for the monopoly firm described in Table 10.2 if the firm is earning a positive economic profit?

a.1 unit

b.2 units

c.3 units

d.5 units

e.6 units

36.Assume that the firm described in Table 10.2 is incurring a total cost of \$25 at the profit-maximizing output level. The firm will:

a.lose \$10 in the short run.

b.break even.

c.earn a profit of \$50.

d.earn a profit of \$30.

e.earn a profit of \$55.

NARRBEGIN: Table 10.3

The table given below shows the prices charged and marginal cost incurred by a monopolist for different units of the output.

Table 10.3

PriceOutputMarginal Cost

\$1,7500

\$1,7001\$1,000

\$1,6502  \$800

\$1,6003  \$700

\$1,5504  \$500

\$1,5005  \$500

\$1,4506  \$700

\$1,4007  \$800

\$1,3508\$1,000

\$1,3009\$2,000

NARREND

37.What is the profit-maximizing output level for the monopoly firm described in Table 10.3, if the firm is earning a positive economic profit?

a.1 unit

b.3 units

c.5 units

d.8 units

e.9 units

38.What price will the profit-maximizing firm described in Table 10.3 charge, if the firm is earning a positive economic profit?

a.\$1,500

b.\$1,400

c.\$1,350

d.\$1,300

e.\$1,550

39.Assume that the firm described in Table 10.2 is incurring a total cost of \$7,000 at the profit-maximizing output level. The firm will

a.lose \$10,000 in the short run.

b.break even.

c.earn a profit of \$3,800.

d.earn a profit of \$3,500.

e.earn a profit of \$5,500.

40.If a monopolist is producing at the profit-maximizing level of output what price will it charge?

a.The price given by the marginal-revenue curve at that level of output.

b.The price given by the marginal-cost curve at that level of output.

c.The price given by the average-cost curve at that level of output.

d.The price given by the average-revenue curve at that level of output.

e.The price given by the total revenue curve at that level of output.

## Solution 5 (1 Ratings )

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