Question

1- Consider a monopolistic market where the government has decided to implement lump-sum tax. Which of the following are true? Select all that apply.

The monopolist loses profit.

The government gains revenue.

The monopolist is forced to reduce their prices.

The monopolist is forced to sell less products.

2-Consider a monopolistic market where the government has decided to implement lump-sum tax. Which of the following are true? Select all that apply.

The monopolist loses profit.

The government gains revenue.

The monopolist is forced to reduce their prices.

The monopolist is forced to sell less products.

3- A company has just entered the fertilizer market, which has a few other sellers. What are some ways this company can gain market power? Select all that apply.

Patent their fertilizer.

Claim that their fertilizer is "natural" and "organic."

Produce eye-catching, unique packaging.

Increase their prices.

4- True or false: If a monopolist wanted to maximize their total revenue, then they should produce where the marginal revenue is equal to zero.

True

False

5- Market equilibrium occurs when...

buyers and sellers exchange money for goods.

supply is greater than demand and price is set at MC

quantity supplied equals quantity demanded at the market price

demand is slightly greater than supply and price is set at MC

6-The Krusty Krab has recently had a decrease in their french fry supply after an unfortunate incident. The decrease in supply would lead to

more french fries sold at a higher price.

less french fries sold at a lower price.

more french fries sold at a lower price.

less french fries sold at a higher price.

7- True or false: A firm’s supply curve exists only in Stage II of production.

True

False

8- The market demand curve for Good X will usually be shifted out by all of the following except:

consumer expectations that the good will be needed (snow shovels before a storm)

the price of a substitute good increases

the price of complement good increases

increased population in the market

9-The amounts of a good that consumers are willing able to purchase at a specific price, at a specific time is referred to as:

Equilibrium quantity

Demand

Supply

Equilibrium price

Answer 1

1) lumpsum tax will increase the average total cost and reduce the profit earned by the monopolist. However there is no change in the price and quantity because marginal cost is unchanged. Select

The monopolist loses profit.

The government gains revenue.

2) Repeat 1)

3) patent is a good example of acquiring Monopoly power because it will then grant exclusive right of production. Similar arrangement can be made by branding and packaging. Select

Patent their fertilizer.

Produce eye-catching, unique packaging

4) the statement is true because when total revenue is maximum marginal revenue is zero

5) quantity supplied equals quantity demanded at the market price

6) less french fries sold at a higher price.

7) this statement is false

8) the price of complement good increases

9) demand.