ECON-1010-D1/D2-Introduction to Microeconomics

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Use the figure below to answer the following questions.

Figure 12.3.3

Consider Figure 12.3.3. Which area indicates the deadweight loss from a single-price monopoly?

ACD

0%

EADCF

0%

EACF

0%

ABD

0%

BCD

100%

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Use the information below to answer the following questions.

Fact 12.5.1

Cascade Springs Inc. is a natural monopoly that bottles water from a spring high in the Rocky Mountains. The total fixed cost it incurs is $80,000, and its marginal cost is 10 cents a bottle. The demand curve for Cascade Springs bottled water is shown in the following figure:

Figure 12.5.1

Refer to Figure 12.5.1. Suppose the government regulates the firm with average cost pricing. The price of a bottle of water is

$0.20.

✅

$0.

❌

$0.30.

❌

$0.10.

❌

$0.50.

❌

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Use the figure below to answer the following questions.

Figure 12.3.3

Consider Figure 12.3.3. In a single-price monopoly, which area indicates producer surplus?

KHD

0%

IHD

0%

IFC

0%

KEA

0%

IEAC

0%

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Use the figure below to answer the following questions.

Figure 12.4.2

Refer to Figure 12.4.2. Assume this monopoly practises perfect price discrimination. How many tickets are sold?

100 tickets

100%

20 tickets

0%

60 tickets

0%

40 tickets

0%

80 tickets

0%

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Use the figure below to answer the following questions.

Figure 12.2.3

Refer to Figure 12.2.3. Assume this firm is a single-price monopoly. How many tickets does this monopolist sell to maximize economic profit?

100 tickets

❌

20 tickets

❌

30 tickets

✅

60 tickets

❌

50 tickets

❌

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Use the figure below to answer the following questions.

Figure 12.5.2

Consider the natural monopoly depicted in Figure 12.5.2. If a regulatory agency sets a price just sufficient for the firm to make zero economic profit, what output will it produce?

Q₁

0%

Q₀

0%

Q₄

0%

Q₂

0%

Q₃

0%

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Use the figure below to answer the following questions.

Figure 12.3.3

Consider Figure 12.3.3. If the market is perfectly competitive, which area indicates the deadweight loss?

ADC

❌

A perfectly competitive market does not have a deadweight loss.

50%

ABD

0%

KDI

0%

BCD

0%

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Use the figure below to answer the following questions.

Figure 12.3.3

Consider Figure 12.3.3. Which area indicates the difference in producer surplus between a single-price monopoly and a perfectly competitive market?

ACD

❌

ABD

❌

EABH

❌

EADH

❌

EABH - BCD

✅

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Use the figure below to answer the following questions.

Figure 12.2.3

Refer to Figure 12.2.3. Assume this firm is a single-price monopoly. What is the profit-maximizing price to charge for the tickets?

$3.00

❌

$2.50

0%

$3.50

0%

$5.00

0%

$4.00

❌

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