Economics Quiz

25)
Which of the following is true of a natural monopoly?
25)
______ A)
Its long-run average cost curve slopes upward as it intersects the demand curve. B)
Economies of scale exist to only a very low level of output. C)
The firm is not protected by any barrier to entry. D)
The firm can supply the entire market at a lower cost than could two or more firms.

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26)
Prime Pharmaceuticals has developed a new asthma medicine, for it has a patent. An inhaler can be produced at a constant marginal cost of $2/inhaler. The demand curve, marginal revenue curve, and marginal cost curve for this new asthma inhaler are in the figure above. With its patent giving it a monopoly for its new inhaler,
C) barriers to enter the monopoly's market. D) the cost-savings gained by the monopoly.

|Price |Quantity demanded |Marginal revenue |Total cost (dollars)|
|(dollars) | |(dollars) | |
|30 |0 |0 |25 |
|27 |1 |27 |28 |
|24 |2 |21 |33 |
|21 |3 |15 |40 |
|18 |4 |9 |49 |
|15 |5 |3 |60 |
|12 |6 |-3 |73 |
|9 |7 |-9 |88 | 38)
If the single-price monopolist whose cost and demand data are in the above table were forced to produce 5 units of output, what would be the monopolist's economic profit?
38)
______ A)
$75
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42)
The figure above shows a monopoly's total revenue and total cost curves. The monopoly's economic profit is maximized when it produces
42)
______ A)
5 units of output.
B)
20 units of output. C)
15 units of output.
D)
0 units of output.

Demand Schedule Facing a Perfectly Price Discriminating Firm
|Price |Quantity Sold |
|(dollars) | |
|8 |0 |
|7 |1 |
|6 |2 |
|5 |3 |
|4 |4 |
|3 |5 |
|2 |6 |
|1 |7 | 43)
Using the demand schedule in the above table, if the firm's marginal cost is constant at $3.00, output for a perfectly price discriminating monopolist is
43)
______ A)
5 units.
B)
3 units.
C)
4 units.
D)
2 units.

44)
Which of the following is NOT a possible gain to society from a monopoly?
44)
______ A)
The monopoly might induce innovation. B)
The monopoly might lead to rent