# FINANCE

In a monopolistic market structure, if price is above average total cost, the monopolist is

a. earning an economic profit.
b. taking an economic loss.
c. minimizing total fixed costs.
d. minimizing total variable costs.

Exhibit 24-4

 Price Quantity Demanded Fixed Cost Variable Cost Total Revenue Total Cost Marginal Revenue Marginal Cost \$100 0 \$10 \$0 (D) (I) 90 1 10 25 (E) (J) (N) (S) 80 2 (B) 65 (F) (K) (O) (T) (A) 3 10 130 225 (L) (P) (U) 60 4 10 (C) (G) 220 (Q) (V) 50 5 10 310 (H) (M) (R) (W)

____  15.   Refer to Exhibit 24-4. The profit-maximizing single-price monopolist’s maximum profit is

 a. \$70. b. \$85. c. \$110. d. \$130. e. \$140.

____  16.   Refer to Exhibit 24-4.  What dollar amounts go in blanks (A), (B), (C), (D), and (E), respectively?

 a. \$70; \$10; \$90; \$10; and \$130 b. \$90; \$70; \$50; \$30; and \$10 c. \$25; \$10; \$10; \$30; and \$50 d. \$75; \$10; \$210; \$0; and \$90

____  17.   Refer to Exhibit 24-4.  What dollar amounts go in blanks (O), (P), (Q), and (R), respectively?

 a. \$90; \$80; \$53.33; and \$60 b. \$90; \$70; \$50; and \$30 c. \$70; \$65; \$15; and \$10 d. \$0; \$90; \$160; and \$210

Exhibit 24-8

 Quantity Total Revenue Total Cost 2 \$200 \$150 3 \$270 \$175 4 \$328 \$205 5 \$375 \$252 6 \$390 \$312

____  18.   Refer to Exhibit 24-8. A profit-maximizing single-price monopolist will set the price at

 a. \$90 per unit. b. \$82 per unit. c. \$65 per unit. d. \$75 per unit. e. There is not enough information provided to answer this question.

____  19.   When the monopoly firm sells two units of its product, it earns total revenue of \$260 and it incurs a total cost of \$210. If its marginal revenue for the second unit was \$110, what was the marginal revenue of the first unit?

 a. \$100 b. \$150 c. \$133 d. \$220 e. There is not enough information to answer the question.

Exhibit 24-9

 Quantity Sold Price (units) Total Cost \$10 10 \$80 9 20 100 8 30 130 7 40 170 6 50 230 5 60 300 4 70 380

____  20.   Refer to Exhibit 24-9. A single-price monopolist that seeks to maximize profits will sell __________ units and charge a per-unit price of __________ dollars.

 a. 20; 9 b. 40; 7 c. 50; 6 d. 10; 10 e. 7; 40

____  21.   Refer to Exhibit 24-9. A single-price monopolist earns a total profit of __________ when it produces and sells 20 units of its good.

 a. \$80. b. \$100. c. \$30. d. \$61. e. \$49.

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