Question

8. Which ot the following statements is corroct a. The benefits that accrue to a monopoly's owners are equal to the costs that are incurred by consumers of that firm's product b. The deadweight loss that arises in monopoly stems from the fact that the profit-maximizing monopoly firm produces a quantity of output that exceeds the socially-efficient quantity c. The deadweight loss caused by monopoly is similar to the deadweight loss caused by a tax on a d. The primary social problem caused by monopoly is monopoly profit Figure 158 9. Refer to Figure 15-8. What is the socially efficient price and quantity? a. price- A; quantity X b. price B; quantity Y c. price B, quantity x d. price C; quantity x 10. Refer to Figure 15-8. What is the monopoly price and quantity? a. price A: quantity-X b. price B: quantity Y c. price B quantity X d. price C: quantity X 11. Refer to Figure 15-8. What is the area of deadweight loss? the rectangle (A-C)"X b. th triangle 1/2[(A-C(Y-X)) c. the triangle 1/2[(A-B)(Y-x) d. therectangle (A-C)*X plus the triangle 1/2(A-C Y-X) 2. For a firm to price discriminate a. t must be a natural monopoly. b, ít must be egulated by the government c.t must have some market power d.consumers must tell the firm what they are willing to pay for the product 13. Which of the following is the preferred strategy for the government to follow to remedy the inefficient allocation of resources associated with monopolies? a. preventing mergers through antitrust laws b. regulating the prices that monopolies can charge c. doing nothing d.None of the above strategies is preferred. Each is a viable strategy 14. Antitrust laws have economie benefits that outweigh the costs if they and lower the costs of production and raise the costs of production raise the costs of production prevent mergers that would decrease competition prevent mergers that would decrease competition allow a. b. mergers that would decrease competition and c. None of the above is correct because antitrust laws never have economic benefits that outweigh the costs. d. 1S. Reduced competition through merging of companies will raise social welfare if the social cost from the synergies exceeds thc a.

Answer 1

8.

C

In both the cases, price increases and quantity demanded decreases. It creates dead weight loss.

12.

A

A natural monopoly can sell the product at different prices to different groups of people. Here, no alternatives are available to the people. So, they have to buy goods even if it is made available with price discrimination.

13.

B

It will make monopolies to produce more to cover the losses due to regulated price. It will increase the efficiency of allocation.

14.

B

In this case, economic benefits will be more than its costs.

15.

B

16.

D

Utility providers are generally monopolies, so it should be regulated.

Q. 9, 10, 11 demand figure 15-8 that is not given in the question. So, repost these questions with the figure 15-8.