Question 1

Exhibit 9-18   The firm in Exhibit 9-18, who charges the same price to all customers, will incur how much cost?

Accepted Answer

A) somewhere between $0 and $30 
B) somewhere between $30 and $45 
C) somewhere between $45 and $60 
D) somewhere between $60 and $75 
E) cannot tell from the information available 
A) somewhere between $0 and $30 
B) somewhere between $30 and $45 
C) somewhere between $45 and $60 
D) somewhere between $60 and $75 
E) cannot tell from the information available

Question 2

Exhibit 9-8   Consider Exhibit 9-8.What is the profit-maximizing price?

Accepted Answer

A) $70 
B) $80 
C) $23.33 
D) $20 
E) it is impossible to determine price because only information on total revenue is given 
A) $70 
B) $80 
C) $23.33 
D) $20 
E) it is impossible to determine price because only information on total revenue is given

Question 3

U.S.patent laws establish property rights for inventors of new products

Accepted Answer

A) forever 
B) until a superior invention comes along 
C) for 3 years 
D) for 10 years 
E) for 20 years 
A) forever 
B) until a superior invention comes along 
C) for 3 years 
D) for 10 years 
E) for 20 years

Question 4

In the short run, how will a profit-maximizing monopolist react if its marginal cost suddenly increases? It will

Accepted Answer

A) lower price to expand revenue possibilities 
B) restrict output to extract a higher price from customers 
C) maintain the current price if profit is still positive 
D) increase plant size to lower marginal cost 
E) decrease plant size to lower marginal cost 
A) lower price to expand revenue possibilities 
B) restrict output to extract a higher price from customers 
C) maintain the current price if profit is still positive 
D) increase plant size to lower marginal cost 
E) decrease plant size to lower marginal cost

Question 5

Nondiscriminating monopoly is similar to perfect competition in that

Accepted Answer

A) they have the same level of barriers to entry 
B) they have a similar number of firms in the industry 
C) the demand curve facing the firm is perfectly elastic for both 
D) price equals marginal revenue for both 
E) price equals average revenue for both 
A) they have the same level of barriers to entry 
B) they have a similar number of firms in the industry 
C) the demand curve facing the firm is perfectly elastic for both 
D) price equals marginal revenue for both 
E) price equals average revenue for both

Question 6

Negative marginal revenue means that

Accepted Answer

A) the firm is maximizing its economic profit 
B) the firm is maximizing its total revenue 
C) total revenue is increasing at an increasing rate as output increases 
D) total revenue is increasing at a decreasing rate as output increases 
E) total revenue is decreasing as output increases 
A) the firm is maximizing its economic profit 
B) the firm is maximizing its total revenue 
C) total revenue is increasing at an increasing rate as output increases 
D) total revenue is increasing at a decreasing rate as output increases 
E) total revenue is decreasing as output increases

Question 7

Exhibit 9-11   In Exhibit 9-11, the level of output that would achieve allocative efficiency is

Accepted Answer

A) 700 units 
B) 810 units 
C) 884 units 
D) 976 units 
E) 1, 000 units 
A) 700 units 
B) 810 units 
C) 884 units 
D) 976 units 
E) 1, 000 units

Question 8

Exhibit 9-7   In Exhibit 9-7, what is the profit-maximizing price for a monopolist that does not price discriminate?

Accepted Answer

A) $36 
B) $32 
C) $28 
D) $24 
E) $20 
A) $36 
B) $32 
C) $28 
D) $24 
E) $20

Question 9

A monopolist's supply curve is the portion of its marginal cost curve above average variable cost.

Accepted Answer

A) True 
 B)False

Question 10

Exhibit 9-2   Between which quantities in Exhibit 9-2 is demand unit elastic?

Accepted Answer

A) 1 and 2 
B) 2 and 3 
C) 3 and 4 
D) 4 and 5 
E) 5 and 6 
A) 1 and 2 
B) 2 and 3 
C) 3 and 4 
D) 4 and 5 
E) 5 and 6

Question 11

Irving R.Associates is granted a patent for a new product for which there are no close substitutes.Which of the following must be true at the profit-maximizing quantity?

Accepted Answer

A) Price is equal to marginal cost. 
B) Average revenue is equal to marginal cost. 
C) Marginal revenue is positive. 
D) Marginal revenue is less than marginal cost. 
E) Price is greater than average revenue. 
A) Price is equal to marginal cost. 
B) Average revenue is equal to marginal cost. 
C) Marginal revenue is positive. 
D) Marginal revenue is less than marginal cost. 
E) Price is greater than average revenue.

Question 12

Suppose that a price-discriminating monopolist divides its market into two segments.The firm will charge the lower price in the market segment where consumers

Accepted Answer

A) have relatively less elastic demand 
B) have relatively more elastic demand 
C) attach a higher marginal value to each unit of the good 
D) have perfectly inelastic demand 
E) attach higher average value to units of the good 
A) have relatively less elastic demand 
B) have relatively more elastic demand 
C) attach a higher marginal value to each unit of the good 
D) have perfectly inelastic demand 
E) attach higher average value to units of the good

Question 13

For a nondiscriminating monopolist, which of the following statements is true?

Accepted Answer

A) Unlike a firm in perfect competition, a monopolist produces where MR > MC. B) The monopolist's marginal revenue curve is the same as its demand curve. C) The monopolist will always produce in the inelastic range of its demand curve. D) The monopolist does not have a supply curve. E) The monopolist produces where MR < MC. A) Unlike a firm in perfect competition, a monopolist produces where MR > MC. B) The monopolist's marginal revenue curve is the same as its demand curve. C) The monopolist will always produce in the inelastic range of its demand curve. D) The monopolist does not have a supply curve. E) The monopolist produces where MR < MC.

Question 14

Unlike perfectly competitive firms, monopolists can

Accepted Answer

A) earn positive short-run economic profit even if price is less than average variable cost at all rates of output 
B) sell any quantity of output at any price they choose 
C) earn long-run economic profits 
D) reduce the sales of other firms in the industry through advertising 
E) face a perfectly elastic demand curve 
A) earn positive short-run economic profit even if price is less than average variable cost at all rates of output 
B) sell any quantity of output at any price they choose 
C) earn long-run economic profits 
D) reduce the sales of other firms in the industry through advertising 
E) face a perfectly elastic demand curve

Question 15

Exhibit 9-11   Total cost for the profit-maximizing (nondiscriminating)monopoly in Exhibit 9-11 will be

Accepted Answer

A) $95, 200 
B) $84, 000 
C) $77, 000 
D) $53, 200 
E) $42, 000 
A) $95, 200 
B) $84, 000 
C) $77, 000 
D) $53, 200 
E) $42, 000

Question 16

Which of the following falsely describes a nondiscriminating monopolist at profit maximization?

Accepted Answer

A) Price is greater than marginal cost. 
B) Economic profit is always positive. 
C) Marginal revenue is equal to marginal cost. 
D) Marginal revenue will typically be less than price. 
E) Average total cost will not be at a minimum. 
A) Price is greater than marginal cost. 
B) Economic profit is always positive. 
C) Marginal revenue is equal to marginal cost. 
D) Marginal revenue will typically be less than price. 
E) Average total cost will not be at a minimum.

Question 17

Exhibit 9-7   In Exhibit 9-7, how much profit is the monopoly earning at the profit-maximizing quantity?

Accepted Answer

A) $16 
B) -$20 
C) $32 
D) $34 
E) -$16 
A) $16 
B) -$20 
C) $32 
D) $34 
E) -$16

Question 18

Which of the following statements is true of a monopolist?

Accepted Answer

A) The firm charges the highest possible price. 
B) The firm always earns a profit. 
C) The firm might earn a profit in the long run. 
D) The firm generates a larger consumer surplus than a perfectly competitive firm. 
E) The firm is more production efficient than a perfectly competitive firm. 
A) The firm charges the highest possible price. 
B) The firm always earns a profit. 
C) The firm might earn a profit in the long run. 
D) The firm generates a larger consumer surplus than a perfectly competitive firm. 
E) The firm is more production efficient than a perfectly competitive firm.

Question 19

Exhibit 9-5   Optimal output and price for the nondiscriminating monopolist in Exhibit 9-5 are

Accepted Answer

A) 90 and $18 
B) 1, 500 and $24 
C) 1, 700 and $22 
D) 1, 100 and $28 
E) 1, 500 and $22 
A) 90 and $18 
B) 1, 500 and $24 
C) 1, 700 and $22 
D) 1, 100 and $28 
E) 1, 500 and $22

Question 20

What is the relationship between price elasticity of demand and the monopolist's revenue?

Accepted Answer

A) marginal revenue is maximized where demand is unit elastic. 
B) average revenue is maximized where demand is unit elastic. 
C) marginal revenue is negative where demand is inelastic. 
D) average revenue is negative where demand is inelastic. 
E) marginal revenue is lowest where demand is unit elastic. 
A) marginal revenue is maximized where demand is unit elastic. 
B) average revenue is maximized where demand is unit elastic. 
C) marginal revenue is negative where demand is inelastic. 
D) average revenue is negative where demand is inelastic. 
E) marginal revenue is lowest where demand is unit elastic.

Exam 9: A--Monopoly

Exhibit 9-18 The firm in Exhibit 9-18, who charges the same price to all customers, will incur how much cost?

Exhibit 9-8 Consider Exhibit 9-8.What is the profit-maximizing price?

U.S.patent laws establish property rights for inventors of new products

In the short run, how will a profit-maximizing monopolist react if its marginal cost suddenly increases? It will

Nondiscriminating monopoly is similar to perfect competition in that

Negative marginal revenue means that

Exhibit 9-11 In Exhibit 9-11, the level of output that would achieve allocative efficiency is

Exhibit 9-7 In Exhibit 9-7, what is the profit-maximizing price for a monopolist that does not price discriminate?

A monopolist's supply curve is the portion of its marginal cost curve above average variable cost.

Exhibit 9-2 Between which quantities in Exhibit 9-2 is demand unit elastic?

Irving R.Associates is granted a patent for a new product for which there are no close substitutes.Which of the following must be true at the profit-maximizing quantity?

Suppose that a price-discriminating monopolist divides its market into two segments.The firm will charge the lower price in the market segment where consumers

For a nondiscriminating monopolist, which of the following statements is true?

Unlike perfectly competitive firms, monopolists can

Exhibit 9-11 Total cost for the profit-maximizing (nondiscriminating)monopoly in Exhibit 9-11 will be

Which of the following falsely describes a nondiscriminating monopolist at profit maximization?

Exhibit 9-7 In Exhibit 9-7, how much profit is the monopoly earning at the profit-maximizing quantity?

Which of the following statements is true of a monopolist?

Exhibit 9-5 Optimal output and price for the nondiscriminating monopolist in Exhibit 9-5 are

What is the relationship between price elasticity of demand and the monopolist's revenue?

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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