PC and Monopoly Graphs

1. PC and Monopoly Graphs *Reference Graphs*

2. 1. Refer to the above diagram. To maximize profit or minimize losses this firm will produce: • K units at price C. • D units at price J. • E units at price A. • E units at price B.

3. 2. Refer to the above diagram. At the profit-maximizing output, total revenue will be: • 0AHE. • 0BGE. • 0CFE. • ABGE.

4. 3. Refer to the above diagram. At the profit-maximizing output, total fixed cost is equal to: • 0AHE. • 0BGE. • 0CFE. • BCFG.

5. 4. Refer to the above diagram. At the profit-maximizing output, total variable cost is equal to: • 0AHE. • 0CFE. • 0BGE. • ABGH.

6. 5. Refer to the above diagram. At the profit-maximizing output, the firm will realize: • a loss equal to BCFG. • a loss equal to ACFH. • an economic profit of ACFH. • an economic profit of ABGH.

7. 6. Refer to the above diagram. To maximize profits or minimize losses this firm should produce: • E units and charge price C. • E units and charge price A. • M units and charge price N. • L units and charge price LK.

8. 7. Refer to the above diagram. In equilibrium total revenue will be: • NM times 0M. • 0AJE. • 0EGC. • 0EHB.

9. 8. Refer to the above diagram. In equilibrium total cost will be: • NM times 0M. • 0AJE. • 0CGC. • 0BHE.

10. 9. Refer to the above diagram. In equilibrium the firm will realize: • an economic profit of ABHJ. • an economic profit of ACGJ. • a loss of GH per unit. • a loss of JH per unit.

11. 10. In equilibrium which of the following conditions are common to both unregulated monopoly and to pure competition? • MC = P • MC = ATC • MR = MC • P = MR

12. 11. Refer to the above diagram for a pure monopolist. If the monopolist is unregulated, it will maximize profits by charging: • a price above P3 and selling a quantity less than Q3. • price P3 and producing output Q3. • price P2 and producing output Q2. • price P1 and producing output Q1.

13. 12. Refer to the above diagram for a pure monopolist. Suppose a regulatory commission is created to determine a legal price for the monopoly. If the commission seeks to provide the monopolist with a "fair return," it will set price at: • P1. • P3. • P2. • P4.

14. 13. Refer to the above diagram for a pure monopolist. If a regulatory commission seeks to achieve the most efficient allocation of resources to this line of production, it will set a price of: • P1. • P3. • P2. • P4.

15. 14. Refer to the above diagram for a pure monopolist. If a regulatory commission sets price to achieve the most efficient allocation of resources, it will have to: • tax the monopolist P3 P1 per unit to prevent the monopolist from realizing an economic profit. • subsidize the monopolist or the monopolist will go bankrupt in the long run. • subsidize the monopolist P1P4 per unit to allow the monopolist to break even. • tax the monopolist P1P2 per unit to prevent the monopolist from realizing an economic profit.

16. 15. If a purely competitive firm is producing at some level less than the profit-maximizing output, then: • price is necessarily greater than average total cost. • fixed costs are large relative to variable costs. • price exceeds marginal revenue. • marginal revenue exceeds marginal cost.