1.Firms with market power engage in price discrimination because they want to
a.offer their products to low-income buyers at the lowest price without suffering a loss
b.offset losses in the lower-priced market by profits in the higher-priced market
c.increase profits
d.prevent potential competitors from entering the market
e.decrease producer surplus
2. For an unregulated monopolist, the profit- maximizing quantity will always be
a. In the elastic region of the demand curve
b.Where marginal revenue equals price
c.Where price equals average total cost
d.Where price equals marginal cost
e.Where the marginal cost curve intersects the demand curve
3.In order for a firm to engage in price discrimination, it must be
a.Able to separate consumers into different groups based on demand elasticities
b.Producing in the inelastic portion of its demand curve to raise its price and increase total revenue
c.A price taker
d.Experiencing economies of scale in the relevant range of production
e.Experiencing constant marginal cost
4.Which of the following is most likely to occur if the firm increases production beyond 10 units?
a.Consumers would be willing to purchase more than 10 units at the price of $20 per unit.
b.The firm would definitely experience a loss.
c.The firm would have to lower its price to sell more than 10 units.
d.The firm's average cost of pr6duction would initially increase.
e.The firm's profits would increase.
5.Assume that a profit-maximizing monopolist currently produces and sells 100 units of good X at a price of $10 per unit. If average total cost and marginal cost are constant at $5 per unit, which of the following government policies will most likely lead to the socially optimum level of output?
a.Establish a price floor of $5 per unit for good X.
b.Establish a price ceiling of $10 per unit for good X.
c.Impose a $5 per unit sales tax on good X.
d.Provide a per unit subsidy for the production of good X
e.Support the production and marketing of a substitute product by other firms