Question 1

Exhibit 9-6   What is the maximum profit the monopolist in Exhibit 9-6 can earn?

Accepted Answer

A) -$5 
B) $40.80 
C) $43.60 
D) $44.20 
E) $42.60 
A) -$5 
B) $40.80 
C) $43.60 
D) $44.20 
E) $42.60

Question 2

The demand curve facing a monopolist is perfectly elastic.

Accepted Answer

A) True 
 B)False

Question 3

If a perfectly competitive industry is monopolized, consumer surplus

Accepted Answer

A) can be expected to decrease 
B) will usually remain constant 
C) can be expected to increase 
D) drops from a high value to zero 
E) increases from zero to a high value 
A) can be expected to decrease 
B) will usually remain constant 
C) can be expected to increase 
D) drops from a high value to zero 
E) increases from zero to a high value

Question 4

De Beers Consolidated Mines has monopoly power

Accepted Answer

A) because of economies of scale 
B) through its control over key patents 
C) through its control of an essential resource 
D) through government-imposed barriers to entry 
E) because of its reputation for supplying high-quality diamonds 
A) because of economies of scale 
B) through its control over key patents 
C) through its control of an essential resource 
D) through government-imposed barriers to entry 
E) because of its reputation for supplying high-quality diamonds

Question 5

Exhibit 9-3   The firm in Exhibit 9-3, a monopolist that maximizes profit by charging all customers the same price, is making a profit of

Accepted Answer

A) $0 
B) $234 
C) $482 
D) $960 
E) $468 
A) $0 
B) $234 
C) $482 
D) $960 
E) $468

Question 6

Exhibit 9-17   What area in Exhibit 9-17 represents consumer surplus under monopoly without price discrimination?

Accepted Answer

A) area a 
B) area b 
C) area c 
D) area a + b + e 
E) area e 
A) area a 
B) area b 
C) area c 
D) area a + b + e 
E) area e

Question 7

Which of the following is not a condition required for a monopolist to price discriminate?

Accepted Answer

A) the demand curve facing the firm must be downward-sloping 
B) the firm must exhibit strong economies of scale 
C) there must be different groups of buyers with different price elasticities of demand 
D) the firm must be able to prevent reselling of the product 
E) the firm must have some market power 
A) the demand curve facing the firm must be downward-sloping 
B) the firm must exhibit strong economies of scale 
C) there must be different groups of buyers with different price elasticities of demand 
D) the firm must be able to prevent reselling of the product 
E) the firm must have some market power

Question 8

Exhibit 9-1   In Exhibit 9-1, the marginal revenue of the sixth unit is

Accepted Answer

A) $10 
B) $60 
C) $100 
D) $40 
E) -$40 
A) $10 
B) $60 
C) $100 
D) $40 
E) -$40

Question 9

The demand curve a monopolist faces

Accepted Answer

A) is more elastic than a perfectly competitive firm's demand curve 
B) is the market demand curve 
C) is as elastic as a perfectly competitive firm's demand curve 
D) is not affected by the prices of complements 
E) will not shift in response to a change in consumer tastes 
A) is more elastic than a perfectly competitive firm's demand curve 
B) is the market demand curve 
C) is as elastic as a perfectly competitive firm's demand curve 
D) is not affected by the prices of complements 
E) will not shift in response to a change in consumer tastes

Question 10

Which of the following is not true of monopolists?

Accepted Answer

A) The entry of new firms is not a major concern. 
B) Monopolists seek to maximize profits. 
C) Monopolists can charge any price they want and make a profit. 
D) Monopolists can choose any point on the market demand curve. 
E) Monopolists can raise price more than 10 percent. 
A) The entry of new firms is not a major concern. 
B) Monopolists seek to maximize profits. 
C) Monopolists can charge any price they want and make a profit. 
D) Monopolists can choose any point on the market demand curve. 
E) Monopolists can raise price more than 10 percent.

Question 11

An important difference between a perfectly competitive firm and a monopolist is that

Accepted Answer

A) the perfectly competitive firm tends to be larger 
B) only the monopolist attempts to maximize profit 
C) only the perfectly competitive firm maximizes profit 
D) the perfectly competitive firm faces a horizontal demand curve and the monopolist faces a downward-sloping demand curve 
E) only the monopolist maximizes profit at the quantity where marginal cost equals marginal revenue 
A) the perfectly competitive firm tends to be larger 
B) only the monopolist attempts to maximize profit 
C) only the perfectly competitive firm maximizes profit 
D) the perfectly competitive firm faces a horizontal demand curve and the monopolist faces a downward-sloping demand curve 
E) only the monopolist maximizes profit at the quantity where marginal cost equals marginal revenue

Question 12

DeBeers is a natural monopoly in the world's diamond trade.

Accepted Answer

A) True 
 B)False

Question 13

A monopolist that engages in perfect price discrimination

Accepted Answer

A) divides all buyers into two mutually exclusive groups 
B) refuses to sell to consumers of certain races, sexes, or creeds 
C) charges the same price for every unit sold 
D) charges a different price for every unit sold 
E) charges buyers who want a little of the good a low price and charges buyers who want a lot of the good a high price 
A) divides all buyers into two mutually exclusive groups 
B) refuses to sell to consumers of certain races, sexes, or creeds 
C) charges the same price for every unit sold 
D) charges a different price for every unit sold 
E) charges buyers who want a little of the good a low price and charges buyers who want a lot of the good a high price

Question 14

When a monopolist practices perfect price discrimination,

Accepted Answer

A) consumers receive no consumer surplus 
B) there is allocative inefficiency 
C) there is a deadweight loss 
D) profit is lower than for the nondiscriminating monopolist 
E) total revenue is less than for the nondiscriminating monopolist 
A) consumers receive no consumer surplus 
B) there is allocative inefficiency 
C) there is a deadweight loss 
D) profit is lower than for the nondiscriminating monopolist 
E) total revenue is less than for the nondiscriminating monopolist

Question 15

Exhibit 9-8   At the profit-maximizing quantity in Exhibit 9-8, what is the level of profit?

Accepted Answer

A) $20 
B) $30 
C) $0 
D) $70 
E) $40 
A) $20 
B) $30 
C) $0 
D) $70 
E) $40

Question 16

If the government breaks up a constant-cost, nondiscriminating monopoly into a perfectly competitive industry, what would we expect with regard to output and price?

Accepted Answer

A) Output and price will decrease. 
B) Output will increase and price will decrease. 
C) Output and price will increase. 
D) Output will decrease and price will increase. 
E) No change. 
A) Output and price will decrease. 
B) Output will increase and price will decrease. 
C) Output and price will increase. 
D) Output will decrease and price will increase. 
E) No change.

Question 17

For a nondiscriminating monopolist, which of the following is false?

Accepted Answer

A) The monopolist produces where MR = MC. 
B) The monopolist's marginal revenue curve is the same as its demand curve. 
C) The monopolist will never produce in the inelastic range of its demand curve. 
D) A monopolist is more allocatively inefficient than a perfectly competitive firm. 
E) The monopolist produces where P > MC. 
A) The monopolist produces where MR = MC. 
B) The monopolist's marginal revenue curve is the same as its demand curve. 
C) The monopolist will never produce in the inelastic range of its demand curve. 
D) A monopolist is more allocatively inefficient than a perfectly competitive firm. 
E) The monopolist produces where P > MC.

Question 18

Exhibit 9-16   Exhibit 9-16 depicts the cost and demand conditions facing a profit-maximizing monopolist that does not price discriminate.What is the deadweight loss in this situation?

Accepted Answer

A) $5 
B) $250 
C) $125 
D) $500 
E) $10 
A) $5 
B) $250 
C) $125 
D) $500 
E) $10

Question 19

In the short run, a monopolist will always shut down when

Accepted Answer

A) total cost is greater than total revenue at all output levels 
B) total variable cost is greater than fixed cost 
C) total revenue is greater than total variable cost at all output levels 
D) fixed cost is greater than total revenue at all output levels 
E) total variable cost is greater than total revenue at all output levels 
A) total cost is greater than total revenue at all output levels 
B) total variable cost is greater than fixed cost 
C) total revenue is greater than total variable cost at all output levels 
D) fixed cost is greater than total revenue at all output levels 
E) total variable cost is greater than total revenue at all output levels

Question 20

Why would we be likely to observe dentists engaging in price discrimination?

Accepted Answer

A) Dental care is expensive. 
B) All dentists are basically alike. 
C) It is very important to exercise care in choosing a dentist. 
D) It is nearly impossible to resell the services of a dentist. 
E) The demand for dentists is very inelastic. 
A) Dental care is expensive. 
B) All dentists are basically alike. 
C) It is very important to exercise care in choosing a dentist. 
D) It is nearly impossible to resell the services of a dentist. 
E) The demand for dentists is very inelastic.

Exam 9: A--Monopoly

Exhibit 9-6 What is the maximum profit the monopolist in Exhibit 9-6 can earn?

The demand curve facing a monopolist is perfectly elastic.

If a perfectly competitive industry is monopolized, consumer surplus

De Beers Consolidated Mines has monopoly power

Exhibit 9-3 The firm in Exhibit 9-3, a monopolist that maximizes profit by charging all customers the same price, is making a profit of

Exhibit 9-17 What area in Exhibit 9-17 represents consumer surplus under monopoly without price discrimination?

Which of the following is not a condition required for a monopolist to price discriminate?

Exhibit 9-1 In Exhibit 9-1, the marginal revenue of the sixth unit is

The demand curve a monopolist faces

Which of the following is not true of monopolists?

An important difference between a perfectly competitive firm and a monopolist is that

DeBeers is a natural monopoly in the world's diamond trade.

A monopolist that engages in perfect price discrimination

When a monopolist practices perfect price discrimination,

Exhibit 9-8 At the profit-maximizing quantity in Exhibit 9-8, what is the level of profit?

If the government breaks up a constant-cost, nondiscriminating monopoly into a perfectly competitive industry, what would we expect with regard to output and price?

For a nondiscriminating monopolist, which of the following is false?

Exhibit 9-16 Exhibit 9-16 depicts the cost and demand conditions facing a profit-maximizing monopolist that does not price discriminate.What is the deadweight loss in this situation?

In the short run, a monopolist will always shut down when

Why would we be likely to observe dentists engaging in price discrimination?

The Art and Science of Economic Analysis

Appendix--Understanding Graphs

Economic Tools and Economics Systems

Economic Decision Makers

Demand, Supply, and Markets

Elasticity of Demand and Supply

Appendix--Price Elasticity and Tax Incidence

Consumer Choice and Demand

Appendix--Indifference Curves and Utility Maximization

Production and Cost in the Firm

A--Perfect Competition

B--Perfect Competition

B--Monopoly

Monopolistic Competition and Oligopoly

Resource Markets

Labor Markets and Labor Unions

Capital, Interest, and Corporate Finance

Transaction Costs, Imperfect Information, and Behavioral Economics

Economic Regulation and Antitrust Policy

Public Goods and Public Choice

Externalities and the Environment

Income Distribution and Poverty

International Trade

International Finance

Economic Development

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