Question

Price and cost (dollars) 1,000 900 MC A 800 700 B D 600 C 500 D 400 300 200 100 MR 0 1,000 2,000 3,000 4,000 5,000 Quantity If the market in the figure above is a monopoly that maximizes its profit and charges every consumer the same price for each unit of output the consumer buys, the consumer surplus is equal to 8) A) area A. B) area B. C) area C. D) area D. 9) A firm that faces a high-demand period followed by a low-demand period must determine all of the following for peak-load pricing except which one? 9) A) short-term peak price C) short-term off-peak price B) long-term peak quantity D) long-run capacity 10) If Angelo's Pizza Restaurant has a constant marginal cost of $50 for each additional table in the restaurant and a constant marginal cost of $12 for operating each additional table, what is Angelo's long-run marginal cost per table? 10) A) $62 B) $50 C) $38 D) $12 11) In peak-load pricing, the capacity decision is determined by setting marginal revenue equal to long-run cost. 11) A) peak; marginal B) off-peak; marginal C) peak; average fixed D) off-peak; average fixed 

          Price and cost (dollars)
1,000
900
MC
A
800
700
B
D
600
C
500
D
400
300
200
100
MR
0
1,000 2,000 3,000 4,000 5,000
Quantity
If the market in the figure above is a monopoly that maximizes its profit and charges every consumer the same price for
each unit of output the consumer buys, the consumer surplus is equal to
8)
A) area A. B) area B.
C) area C. D) area D.
9) A firm that faces a high-demand period followed by a low-demand period must determine all of the following for
peak-load pricing except which one?
9)
A) short-term peak price
C) short-term off-peak price
B) long-term peak quantity
D) long-run capacity
10) If Angelo's Pizza Restaurant has a constant marginal cost of $50 for each additional table in the restaurant and a
constant marginal cost of $12 for operating each additional table, what is Angelo's long-run marginal cost per table?
10)
A) $62 B) $50 C) $38 D) $12
11) In peak-load pricing, the capacity decision is determined by setting
marginal revenue equal to long-run
cost. 11)
A) peak; marginal
B) off-peak; marginal
C) peak; average fixed
D) off-peak; average fixed
Show more…
Price and cost (dollars) 1,000 900 MC A 800 700 B D 600 C 500 D 400 300 200 100 MR 0 1,000 2,000 3,000 4,000 5,000 Quantity If the market in the figure above is a monopoly that maximizes its profit and charges every consumer the same price for each unit of output the consumer buys, the consumer surplus is equal to 8) A) area A. B) area B. C) area C. D) area D. 9) A firm that faces a high-demand period followed by a low-demand period must determine all of the following for peak-load pricing except which one? 9) A) short-term peak price C) short-term off-peak price B) long-term peak quantity D) long-run capacity 10) If Angelo's Pizza Restaurant has a constant marginal cost of 50 for each additional table in the restaurant and a constant marginal cost of12 for operating each additional table, what is Angelo's long-run marginal cost per table? 10) A) 62 B)50 C) 38 D)12 11) In peak-load pricing, the capacity decision is determined by setting marginal revenue equal to long-run cost. 11) A) peak; marginal B) off-peak; marginal C) peak; average fixed D) off-peak; average fixed

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Principles of Economics
Principles of Economics
Gregory Mankiw 8th Edition
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Text: Price and cost (dollars) 1,000 900 800 700 600 A B 500 C 400 300 200 100 MR . 0 1,000 2,000 3,000 4,000 5,000 Quantity If the market in the figure above is a monopoly that maximizes its profit and charges every consumer the same price for each unit of output the consumer buys, the consumer surplus is equal to 8) A) area A. B) area B. C) area C. D) area D. 9) A firm that faces a high-demand period followed by a low-demand period must determine all of the following for peak-load pricing except which one? (6 A) short-term peak price B) long-term peak quantity C) short-term off-peak price D) long-run capacity 10) If Angelo's Pizza Restaurant has a constant marginal cost of $50 for each additional table in the restaurant and a constant marginal cost of $12 for operating each additional table, what is Angelo's long-run marginal cost per table? 10) A) $62 B) $50 C) $38 D) $12 11) In peak-load pricing, the capacity decision is determined by setting marginal revenue equal to long-run cost. 11) A) peak; marginal B) off-peak; marginal C) peak; average fixed D) off-peak; average fixed
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Transcript

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00:01 So here we have a lot of questions about monopoly and monopolistic competition.
00:05 We're talking about how a monopoly makes decisions.
00:09 So a is wrong because it says takes price, right? a monopolist doesn't take the price.
00:18 The monopolist controls the market so they can set their own price, right? the correct answer here is set mr equals mc and then price from demand.
00:28 This is exactly what a monopolist does.
00:31 They figure out the optimal quantity and the demand curve determines the price, right? c is wrong because it says it's got this takes quantity bit.
00:42 Again, the monopolist can choose the quantity it wants.
00:45 It doesn't have to take the quantity.
00:47 And in d, we have price equals to marginal revenue and that's absolutely not true in monopoly, right? so 13, we have monopolistic competition here.
01:01 And the idea here is economic profit is attractive.
01:07 People like economic profit.
01:10 Economic profit induces entry.
01:14 People see the economic profit and so they come desiring the economic profit and that induces extra firms to enter the industry, right? so c.
01:25 And when you have extra firms, that means that the price falls and that gets you back down to zero profit in the long run.
01:36 Finally, then we have this first short answer question here where we have a whole bunch of stuff.
01:48 So for part a, the consumer surplus is the triangle below the price.
01:54 The price is 30...
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