ECON 102 Quiz 8 Study Guide with Answers

ECON 102 Quiz 8 Study Guide with Answers 1 ECON 102_Quiz 8_Study Guide with Answers A monopolist faces a demand curve given by: P = 210 – 5Q, where P is the price of the good and Q is the quantity demanded. The marginal cost of production is constant and is equal to $60. There are no fixed costs of production. How much output should the monopolist produce in order to maximize profit? None of these. The monopolist should produce the quantity where Marginal Revenue equals Marginal Cost. In this case, that quantity is 15 units. A monopolist faces a demand curve given by: P = 70 – 2Q, where P is the price of the good and Q is the quantity demanded. The marginal cost of production is constant and is equal to $6. There are no fixed costs of production. What price should the monopolist charge in order to maximize profit? None of these. The monopolist should produce the quantity where Marginal Revenue equals Marginal Cost, and charge the highest price allowed by the demand curve at that quantity. In this case, the monopoly price is $38. A monopolist faces a demand curve given by: P = 40 –Q, where P is the price of the good and Q is the quantity demanded. The marginal cost of production is constant and is equal to $2. There are no fixed costs of production. What is the deadweight loss associated with this monopoly? $180.50. Deadweight loss is equal to (PM -PC)*(QC -QM )/2. A monopolist faces a demand curve given by: P = 70 – 2Q, where P is the price of the good and Q is the quantity demanded. The marginal cost of production is constant and is equal to $6. There are no fixed costs of production. How much profit will the monopolist make? $512. Profit equals Q*(P-ATC). Since there are no fixed costs and marginal cost is constant, ATC = MC. The supply curve of a monopolist is non-existent. The profit maximizing quantity depends on both the demand curve and the marginal cost curve.