Question 1

Price-discriminating, profit-maximizing monopolists charge higher prices to buyers who have more elastic demand curves.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A) $95, 200 
B) $84, 000 
C) $53, 200 
D) $42, 000 
E) $18, 200 
A) $95, 200 
B) $84, 000 
C) $53, 200 
D) $42, 000 
E) $18, 200

Question 3

A natural monopoly results when a firm has

Accepted Answer

A) a license 
B) a patent 
C) official approval to produce a product 
D) decreasing average costs over the range of market demand 
E) exclusive use of a natural resource 
A) a license 
B) a patent 
C) official approval to produce a product 
D) decreasing average costs over the range of market demand 
E) exclusive use of a natural resource

Question 4

Which of the following is true?

Accepted Answer

A) Patents reduce a firm's incentive to develop new products. 
B) Patents are given for new works of art or literature. 
C) Patents give a permanent exclusive right to produce a new good. 
D) Patents give a temporary exclusive right to produce a new good. 
E) Patents guarantee economic profits. 
A) Patents reduce a firm's incentive to develop new products. 
B) Patents are given for new works of art or literature. 
C) Patents give a permanent exclusive right to produce a new good. 
D) Patents give a temporary exclusive right to produce a new good. 
E) Patents guarantee economic profits.

Question 5

Suppose that a monopolist must choose between two points on its demand curve: it can sell 100 units for $3 each, or it can sell 150 units for $2 each.Which of the following is true?

Accepted Answer

A) The monopolist is facing elastic demand. 
B) The monopolist is facing unit elastic demand. 
C) The monopolist is facing inelastic demand. 
D) The monopolist is facing perfectly elastic demand. 
E) The elasticity of demand cannot be determined with the information given. 
A) The monopolist is facing elastic demand. 
B) The monopolist is facing unit elastic demand. 
C) The monopolist is facing inelastic demand. 
D) The monopolist is facing perfectly elastic demand. 
E) The elasticity of demand cannot be determined with the information given.

Question 6

Exhibit 9-5   The nondiscriminating monopolist in Exhibit 9-5 will produce where

Accepted Answer

A) MR = 0 
B) MR = MC 
C) MC < MR 
D) MC = ATC 
E) D = MC 
A) MR = 0 
B) MR = MC 
C) MC < MR 
D) MC = ATC 
E) D = MC

Question 7

What is true at the profit-maximizing quantity for a nondiscriminating monopolist but not true of a perfectly competitive firm?

Accepted Answer

A) Price equals marginal cost. 
B) Price is greater than marginal cost. 
C) Marginal revenue equals marginal cost. 
D) Marginal revenue is less than marginal cost. 
E) Marginal revenue is greater than average revenue. 
A) Price equals marginal cost. 
B) Price is greater than marginal cost. 
C) Marginal revenue equals marginal cost. 
D) Marginal revenue is less than marginal cost. 
E) Marginal revenue is greater than average revenue.

Question 8

Which of the following is true in both perfect competition and monopoly?

Accepted Answer

A) Firms produce a differentiated product. 
B) Firms cannot earn economic profit in the long run. 
C) Individual firms have no ability to control the price of their output but must accept the market price. 
D) Firms go out of business in the long run if total revenue cannot cover total cost. 
E) Firms can earn economic profit in the long run. 
A) Firms produce a differentiated product. 
B) Firms cannot earn economic profit in the long run. 
C) Individual firms have no ability to control the price of their output but must accept the market price. 
D) Firms go out of business in the long run if total revenue cannot cover total cost. 
E) Firms can earn economic profit in the long run.

Question 9

Exhibit 9-13   In the short run, the monopolist depicted in Exhibit 9-13 should

Accepted Answer

A) shut down because P  AVC at some output levels 
D) continue producing because P > ATC at all output levels 
E) continue producing because monopolists never shut down 
A) shut down because P  AVC at some output levels 
D) continue producing because P > ATC at all output levels 
E) continue producing because monopolists never shut down

Question 10

Exhibit 9-1   In Exhibit 9-1, total revenue from selling 5 units is

Accepted Answer

A) $20 
B) $140 
C) $100 
D) $10 
E) $5 
A) $20 
B) $140 
C) $100 
D) $10 
E) $5

Question 11

Suppose Bank-in-the-Box is a monopolist in its market area.If the market wage rate of bank tellers rises, the bank will

Accepted Answer

A) maintain price and suffer losses 
B) raise price and earn greater profit 
C) raise price but earn less profit 
D) lower price to boost sales 
E) shut down if AVC is less than price 
A) maintain price and suffer losses 
B) raise price and earn greater profit 
C) raise price but earn less profit 
D) lower price to boost sales 
E) shut down if AVC is less than price

Question 12

A major fruit juice manufacturer failed in its attempt to engage in price discrimination between students and all other consumers.What is a possible explanation for this failure?

Accepted Answer

A) There was nothing to prevent the students from reselling the fruit juice to other consumers. 
B) The fruit juice manufacturer produced in a perfectly competitive market. 
C) The two groups of consumers probably have the same demand elasticity for fruit juice. 
D) The cost of producing the product is relatively high. 
E) Demand for fruit juice is probably inelastic. 
A) There was nothing to prevent the students from reselling the fruit juice to other consumers. 
B) The fruit juice manufacturer produced in a perfectly competitive market. 
C) The two groups of consumers probably have the same demand elasticity for fruit juice. 
D) The cost of producing the product is relatively high. 
E) Demand for fruit juice is probably inelastic.

Question 13

Patent laws

Accepted Answer

A) reduce incentive to innovate by restricting market entry 
B) reduce incentive to innovate by making it difficult to use the patented innovation 
C) increase incentive to innovate by restricting entry into a market 
D) increase incentive to innovate by giving a firm permanent and exclusive production rights 
E) give a firm the right to provide a wide variety of goods or services 
A) reduce incentive to innovate by restricting market entry 
B) reduce incentive to innovate by making it difficult to use the patented innovation 
C) increase incentive to innovate by restricting entry into a market 
D) increase incentive to innovate by giving a firm permanent and exclusive production rights 
E) give a firm the right to provide a wide variety of goods or services

Question 14

For a monopolist,

Accepted Answer

A) P = MR = AR 
B) P = MR > AR 
C) P > MR = AR 
D) P = MR  MR 
A) P = MR = AR 
B) P = MR > AR 
C) P > MR = AR 
D) P = MR  MR

Question 15

Exhibit 9-11   What price will be charged by the profit-maximizing monopolist in Exhibit 9-11 that does not price discriminate?

Accepted Answer

A) $60 
B) $76 
C) $110 
D) $120 
E) $136 
A) $60 
B) $76 
C) $110 
D) $120 
E) $136

Question 16

Compared to the productive efficiency of a perfectly competitive firm, a monopolist tends to be

Accepted Answer

A) very efficient because it charges a higher price 
B) more efficient because it produces greater output 
C) inefficient 
D) equally efficient, as it also produces where MR = MC 
E) very efficient because it conserves resources by producing less output 
A) very efficient because it charges a higher price 
B) more efficient because it produces greater output 
C) inefficient 
D) equally efficient, as it also produces where MR = MC 
E) very efficient because it conserves resources by producing less output

Question 17

Exhibit 9-15   Exhibit 9-15 depicts a non-discriminating monopoly market.Consumer surplus is represented by area

Accepted Answer

A) eda 
B) ecf 
C) dacb 
D) dafc 
E) abf 
A) eda 
B) ecf 
C) dacb 
D) dafc 
E) abf

Question 18

Which of the following is true at the profit-maximizing quantity for both a perfectly competitive firm and a monopoly?

Accepted Answer

A) Price equals marginal cost. 
B) Price is greater than marginal cost. 
C) Marginal revenue equals marginal cost. 
D) Marginal revenue is less than marginal cost. 
E) Marginal revenue is greater than average revenue. 
A) Price equals marginal cost. 
B) Price is greater than marginal cost. 
C) Marginal revenue equals marginal cost. 
D) Marginal revenue is less than marginal cost. 
E) Marginal revenue is greater than average revenue.

Question 19

Exhibit 9-9   Maximum profit for the nondiscriminating monopolist in Exhibit 9-9 is

Accepted Answer

A) $4 
B) $14 
C) $3.50 
D) $21 
E) not measurable with the information given 
A) $4 
B) $14 
C) $3.50 
D) $21 
E) not measurable with the information given

Question 20

Price discrimination occurs when a monopolist charges

Accepted Answer

A) both c and d 
B) different prices to different buyers for different products 
C) different prices to different groups of buyers, based on differences in the cost of providing the commodity to the buyer 
D) different prices to different groups of buyers for reasons unrelated to the cost of providing the commodity to the buyer 
E) all buyers the same price for the same product 
A) both c and d 
B) different prices to different buyers for different products 
C) different prices to different groups of buyers, based on differences in the cost of providing the commodity to the buyer 
D) different prices to different groups of buyers for reasons unrelated to the cost of providing the commodity to the buyer 
E) all buyers the same price for the same product

Exam 9: A--Monopoly

Price-discriminating, profit-maximizing monopolists charge higher prices to buyers who have more elastic demand curves.

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

A natural monopoly results when a firm has

Which of the following is true?

Suppose that a monopolist must choose between two points on its demand curve: it can sell 100 units for $3 each, or it can sell 150 units for $2 each.Which of the following is true?

Exhibit 9-5 The nondiscriminating monopolist in Exhibit 9-5 will produce where

What is true at the profit-maximizing quantity for a nondiscriminating monopolist but not true of a perfectly competitive firm?

Which of the following is true in both perfect competition and monopoly?

Exhibit 9-13 In the short run, the monopolist depicted in Exhibit 9-13 should

Exhibit 9-1 In Exhibit 9-1, total revenue from selling 5 units is

Suppose Bank-in-the-Box is a monopolist in its market area.If the market wage rate of bank tellers rises, the bank will

A major fruit juice manufacturer failed in its attempt to engage in price discrimination between students and all other consumers.What is a possible explanation for this failure?

Patent laws

For a monopolist,

Exhibit 9-11 What price will be charged by the profit-maximizing monopolist in Exhibit 9-11 that does not price discriminate?

Compared to the productive efficiency of a perfectly competitive firm, a monopolist tends to be

Exhibit 9-15 Exhibit 9-15 depicts a non-discriminating monopoly market.Consumer surplus is represented by area

Which of the following is true at the profit-maximizing quantity for both a perfectly competitive firm and a monopoly?

Exhibit 9-9 Maximum profit for the nondiscriminating monopolist in Exhibit 9-9 is

Price discrimination occurs when a monopolist charges

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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