Question 10 The amount of output a monopolist produces is Al

Question 10: The amount of output a monopolist produces is: Always more than its cost minimizing output level Always less than its cost minimizing output level Always the same as its cost minimizing output level D. More than, less than, or as much as its cost minimizing output levelx Question 11: A water compan company faces an should charge residents: y serves the residents of a city by pumping underground water. The water ting water as the reservoir is being used. The company asing cost of extrac A. A higher price per cubic meter of water, once their consumption exceeds a specific amount. B. A lower price per cubic meter of water, once their consumption exceeds a specific amount. C. A highe D. A lower price per cubic meter of water, once their This pricing strategy is the result of price discrimination This pricing strategy is the result of price discrimination This pricing strategy is the result of differences in production costs This pricing strategy reflects consumers\' dimini r price per cubic meter of water, once the ir consumption exceeds a specific amount. consumption exceeds a specific amount. shing willingness to pay for additional units of water

Solution

10) Monopolist produce where MR=MC and charge price greater than MC. If it produces more and charges less, ATC will decrease. At min(ATC) price is equal to MC. So monopolist produces less than its cost minimizing output level. Option B is correct.

11) As the water company faces an increasing cost of extracting water the company should charge a high price. Consumers willing to pay this high price until they fulfill their basic needs. After certain consumption, their willingness to pay will be reduced, so the company should charge less to maximize their profit. Option D is correct.