Question 1

Exhibit 9-12   The nondiscriminating monopolist in Exhibit 9-12 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 2

Which of the following describes the market structure of monopoly?

Accepted Answer

A) many firms with some control over price, and considerable product differentiation 
B) many firms with no control over price, producing identical products with no differentiation 
C) a few firms with some control over price, producing similar products which are close substitutes 
D) a few firms with no control over price, producing highly differentiated products 
E) a single firm producing all of the output for the industry 
A) many firms with some control over price, and considerable product differentiation 
B) many firms with no control over price, producing identical products with no differentiation 
C) a few firms with some control over price, producing similar products which are close substitutes 
D) a few firms with no control over price, producing highly differentiated products 
E) a single firm producing all of the output for the industry

Question 3

If a nondiscriminating monopolist is operating at an output level where price equals average total cost, we can conclude that

Accepted Answer

A) economic profit is $0 
B) the firm is not maximizing profit 
C) the firm should go out of business in the long run 
D) the firm is not earning its normal profit 
E) the firm should shut down in the short run 
A) economic profit is $0 
B) the firm is not maximizing profit 
C) the firm should go out of business in the long run 
D) the firm is not earning its normal profit 
E) the firm should shut down in the short run

Question 4

Average revenue equals the change in total revenue divided by the change in the quantity of output produced.

Accepted Answer

A) True 
 B)False

Question 5

Suppose Arf n' Barf restaurant has a monopoly on restaurant food in a certain small town.Their rent, which is one of several fixed costs they pay whether they sell food or not, has gone up.In the short run, the Arf n' Barf should

Accepted Answer

A) pay the higher rent and increase menu prices 
B) pay the higher rent and leave menu prices unchanged 
C) pay the higher rent and lower prices 
D) go out of business 
E) shut down 
A) pay the higher rent and increase menu prices 
B) pay the higher rent and leave menu prices unchanged 
C) pay the higher rent and lower prices 
D) go out of business 
E) shut down

Question 6

If the marginal cost curve shifts upward, a profit-maximizing, nondiscriminating monopolist is likely to respond in the short run by

Accepted Answer

A) raising price and increasing output 
B) raising price and decreasing output 
C) keeping price constant and increasing output 
D) reducing price and increasing output 
E) shutting down 
A) raising price and increasing output 
B) raising price and decreasing output 
C) keeping price constant and increasing output 
D) reducing price and increasing output 
E) shutting down

Question 7

For a monopolist, marginal revenue is

Accepted Answer

A) equal to price 
B) greater than price 
C) less than price 
D) represented by a horizontal curve 
E) equal to average revenue 
A) equal to price 
B) greater than price 
C) less than price 
D) represented by a horizontal curve 
E) equal to average revenue

Question 8

Which of the following prevents potential competitors from entering a monopolist's market?

Accepted Answer

A) legal restrictions 
B) diseconomies of scale 
C) product differentiation 
D) stable market demand 
E) rising marginal cost 
A) legal restrictions 
B) diseconomies of scale 
C) product differentiation 
D) stable market demand 
E) rising marginal cost

Question 9

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

Accepted Answer

A) $25 
B) $50 
C) $75 
D) $100 
E) $125 
A) $25 
B) $50 
C) $75 
D) $100 
E) $125

Question 10

Exhibit 9-3   At the profit-maximizing quantity, the demand curve facing the firm in Exhibit 9-3 is

Accepted Answer

A) perfectly elastic 
B) price elastic 
C) price inelastic 
D) unit elastic 
E) perfectly inelastic 
A) perfectly elastic 
B) price elastic 
C) price inelastic 
D) unit elastic 
E) perfectly inelastic

Question 11

For a monopolist that produces in the short run and does not price discriminate, price always has to be

Accepted Answer

A) equal to marginal cost at the profit-maximizing quantity 
B) equal to marginal revenue at the profit-maximizing quantity 
C) greater than marginal cost at the profit-maximizing quantity 
D) less than marginal cost at the profit-maximizing quantity 
E) less than marginal revenue at the profit-maximizing quantity 
A) equal to marginal cost at the profit-maximizing quantity 
B) equal to marginal revenue at the profit-maximizing quantity 
C) greater than marginal cost at the profit-maximizing quantity 
D) less than marginal cost at the profit-maximizing quantity 
E) less than marginal revenue at the profit-maximizing quantity

Question 12

Compared to a perfectly competitive market, a monopoly tends to produce

Accepted Answer

A) more output and charge a higher price 
B) the same amount of output, but charge a higher price 
C) less output and charge a higher price 
D) less output and charge the same price 
E) less output and charge a lower price 
A) more output and charge a higher price 
B) the same amount of output, but charge a higher price 
C) less output and charge a higher price 
D) less output and charge the same price 
E) less output and charge a lower price

Question 13

You are hired as a production analyst at Monopoly-R-Us and you estimate that, at current output, demand is inelastic and marginal cost is positive.You advise your superiors that they can increase profit by

Accepted Answer

A) raising price until demand becomes unit elastic 
B) raising price into the elastic range 
C) lowering price until demand becomes unit elastic 
D) lowering price into the elastic range 
E) reduce output without changing price 
A) raising price until demand becomes unit elastic 
B) raising price into the elastic range 
C) lowering price until demand becomes unit elastic 
D) lowering price into the elastic range 
E) reduce output without changing price

Question 14

Barriers to entry

Accepted Answer

A) prevent monopolies from earning profit in the long run 
B) prevent monopolies from earning profit in the short run 
C) may allow monopolies to earn profit in the long run 
D) prevent government from regulating a monopoly 
E) prevent a natural monopoly from raising its price 
A) prevent monopolies from earning profit in the long run 
B) prevent monopolies from earning profit in the short run 
C) may allow monopolies to earn profit in the long run 
D) prevent government from regulating a monopoly 
E) prevent a natural monopoly from raising its price

Question 15

Exhibit 9-5   The nondiscriminating monopolist at its profit-maximizing quantity in Exhibit 9-5 is making a profit of

Accepted Answer

A) $6, 200 
B) $13, 320 
C) $11, 000 
D) $15, 200 
E) $0 
A) $6, 200 
B) $13, 320 
C) $11, 000 
D) $15, 200 
E) $0

Question 16

Which of the following would not be considered price discrimination?

Accepted Answer

A) charging higher rates on long distance calls during normal business hours 
B) giving lower air fares to those who buy tickets a month before departure 
C) charging lower prices for senior citizens at museums 
D) getting separate prices for residential and commercial users of natural gas 
E) charging more for BMWs than for Chevrolets 
A) charging higher rates on long distance calls during normal business hours 
B) giving lower air fares to those who buy tickets a month before departure 
C) charging lower prices for senior citizens at museums 
D) getting separate prices for residential and commercial users of natural gas 
E) charging more for BMWs than for Chevrolets

Question 17

Exhibit 9-11   If the monopolist in Exhibit 9-11 engages in perfect price discrimination, price would be

Accepted Answer

A) $120 for the 884th unit 
B) $212 on all units 
C) $120 on all units 
D) $136 on all units 
E) $104 on all units 
A) $120 for the 884th unit 
B) $212 on all units 
C) $120 on all units 
D) $136 on all units 
E) $104 on all units

Question 18

For a monopolist,

Accepted Answer

A) marginal revenue and price are constant as quantity increases 
B) marginal revenue falls but price is constant as quantity increases 
C) marginal revenue is constant but price falls as quantity increases 
D) both marginal revenue and price fall as quantity increases, but price falls faster 
E) both marginal revenue and price fall as quantity increases, but marginal revenue falls faster 
A) marginal revenue and price are constant as quantity increases 
B) marginal revenue falls but price is constant as quantity increases 
C) marginal revenue is constant but price falls as quantity increases 
D) both marginal revenue and price fall as quantity increases, but price falls faster 
E) both marginal revenue and price fall as quantity increases, but marginal revenue falls faster

Question 19

Exhibit 9-11   If the monopolist in Exhibit 9-11 engages in perfect price discrimination, price would

Accepted Answer

A) vary between $212 and $120 
B) vary between $212 and $104 
C) be $136 on all units 
D) be $110 on all units 
E) be $104 on all units 
A) vary between $212 and $120 
B) vary between $212 and $104 
C) be $136 on all units 
D) be $110 on all units 
E) be $104 on all units

Question 20

Suppose that a price-discriminating monopolist divides its market into two segments.In each market segment, price is determined by finding the level of output where that market's

Accepted Answer

A) average revenue equals average total cost 
B) average revenue equals average variable cost 
C) marginal revenue equals average total cost 
D) marginal revenue equals marginal cost 
E) marginal cost equals average total cost 
A) average revenue equals average total cost 
B) average revenue equals average variable cost 
C) marginal revenue equals average total cost 
D) marginal revenue equals marginal cost 
E) marginal cost equals average total cost

Exam 9: A--Monopoly

Exhibit 9-12 The nondiscriminating monopolist in Exhibit 9-12 will produce where

Which of the following describes the market structure of monopoly?

If a nondiscriminating monopolist is operating at an output level where price equals average total cost, we can conclude that

Average revenue equals the change in total revenue divided by the change in the quantity of output produced.

Suppose Arf n' Barf restaurant has a monopoly on restaurant food in a certain small town.Their rent, which is one of several fixed costs they pay whether they sell food or not, has gone up.In the short run, the Arf n' Barf should

If the marginal cost curve shifts upward, a profit-maximizing, nondiscriminating monopolist is likely to respond in the short run by

For a monopolist, marginal revenue is

Which of the following prevents potential competitors from entering a monopolist's market?

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

Exhibit 9-3 At the profit-maximizing quantity, the demand curve facing the firm in Exhibit 9-3 is

For a monopolist that produces in the short run and does not price discriminate, price always has to be

Compared to a perfectly competitive market, a monopoly tends to produce

You are hired as a production analyst at Monopoly-R-Us and you estimate that, at current output, demand is inelastic and marginal cost is positive.You advise your superiors that they can increase profit by

Barriers to entry

Exhibit 9-5 The nondiscriminating monopolist at its profit-maximizing quantity in Exhibit 9-5 is making a profit of

Which of the following would not be considered price discrimination?

Exhibit 9-11 If the monopolist in Exhibit 9-11 engages in perfect price discrimination, price would be

For a monopolist,

Exhibit 9-11 If the monopolist in Exhibit 9-11 engages in perfect price discrimination, price would

Suppose that a price-discriminating monopolist divides its market into two segments.In each market segment, price is determined by finding the level of output where that market's

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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