Question 1

A monopoly's short-run supply curve is its marginal cost curve above the minimum average variable cost.

Accepted Answer

A) True 
 B)False

Question 2

A monopolistically competitive industry is made up of:

Accepted Answer

A) a few firms,each producing a very differentiated good. 
B) one firm that produces a standardized good. 
C) market participants who are all price takers. 
D) many firms producing a slightly differentiated product. 
A) a few firms,each producing a very differentiated good. 
B) one firm that produces a standardized good. 
C) market participants who are all price takers. 
D) many firms producing a slightly differentiated product.

Question 3

If a monopolist is producing a quantity that generates MC < MR,then profit:

Accepted Answer

A) is maximized. 
B) is maximized only if MC = P. 
C) can be increased by increasing production. 
D) can be increased by decreasing production. 
A) is maximized. 
B) is maximized only if MC = P. 
C) can be increased by increasing production. 
D) can be increased by decreasing production.

Question 4

Market structures are categorized by:

Accepted Answer

A) the number and size of the firms. 
B) whether products are differentiated and the extent of advertising. 
C) the number of firms and whether products are differentiated. 
D) the size of the firms and the extent of advertising. 
A) the number and size of the firms. 
B) whether products are differentiated and the extent of advertising. 
C) the number of firms and whether products are differentiated. 
D) the size of the firms and the extent of advertising.

Question 5

If your farm had the only known source of a rare cocoa bean needed to make chocolate-covered peanuts,your monopoly would result from:

Accepted Answer

A) control of a scarce resource or input. 
B) technological superiority. 
C) increasing returns to scale. 
D) government-set barriers. 
A) control of a scarce resource or input. 
B) technological superiority. 
C) increasing returns to scale. 
D) government-set barriers.

Question 6

Use the following to answer question:
Figure: PPV  
-(Figure: PPV)Use Figure: PPV.The figure shows the demand and marginal revenue for a pay-per-view football game on cable TV.Assume that the marginal cost and average cost are a constant $20.If the cable company is a monopoly,how much consumer surplus is there when the monopolist maximizes profit?

Accepted Answer

A) $20 
B) $40 
C) $80 
D) $160 
A) $20 
B) $40 
C) $80 
D) $160

Question 7

Compared with perfect competition,monopoly produces a net welfare gain for society.

Accepted Answer

A) True 
 B)False

Question 8

Use the following to answer question:
Figure: Short-Run Monopoly  
-(Figure: Short-Run Monopoly)Use Figure: Short-Run Monopoly.The profit-maximizing quantity of output is quantity:

Accepted Answer

A) Q. 
B) R. 
C) S. 
D) T. 
A) Q. 
B) R. 
C) S. 
D) T.

Question 9

Use the following to answer question:
Figure: Computing Monopoly Profit  
-(Figure: Computing Monopoly Profit)Use Figure: Computing Monopoly Profit.To obtain maximum profits,the monopoly should produce the output determined by point:

Accepted Answer

A) G. 
B) N. 
C) H. 
D) K. 
A) G. 
B) N. 
C) H. 
D) K.

Question 10

If a firm wants to charge different customers different prices,it must be:

Accepted Answer

A) a price taker. 
B) in perfect competition. 
C) a price setter. 
D) operating in the long run only. 
A) a price taker. 
B) in perfect competition. 
C) a price setter. 
D) operating in the long run only.

Question 11

Suppose a perfectly competitive industry is suddenly transformed into a monopoly industry.We can assume that monopoly output will be _____ than will the competitive output and that _____.

Accepted Answer

A) higher;deadweight loss will emerge 
B) lower;consumer surplus will increase 
C) lower;deadweight loss will emerge 
D) higher;consumer surplus will decrease 
A) higher;deadweight loss will emerge 
B) lower;consumer surplus will increase 
C) lower;deadweight loss will emerge 
D) higher;consumer surplus will decrease

Question 12

Natural monopolies are NOT likely to include:

Accepted Answer

A) a diamond-mining company. 
B) a gas company. 
C) an electricity company. 
D) railways. 
A) a diamond-mining company. 
B) a gas company. 
C) an electricity company. 
D) railways.

Question 13

The city bus system charges lower fares to senior citizens than to other passengers.Assuming that this pricing strategy increases the profits of the bus system,we can conclude that senior citizens must have a _____ demand for bus service than do other passengers.

Accepted Answer

A) greater 
B) lower 
C) more elastic 
D) less elastic 
A) greater 
B) lower 
C) more elastic 
D) less elastic

Question 14

Use the following to answer question:
Figure: A Profit-Maximizing Monopoly Firm  
-(Figure: A Profit-Maximizing Monopoly Firm)Use Figure: A Profit-Maximizing Monopoly Firm.This firm's profit per unit is:

Accepted Answer

A) $5. 
B) $12. 
C) $15. 
D) $20. 
A) $5. 
B) $12. 
C) $15. 
D) $20.

Question 15

When a monopolist practices price discrimination,compared with a single-price monopolist,consumer surplus will:

Accepted Answer

A) remain the same. 
B) increase. 
C) decrease. 
D) increase initially and then return to its original level. 
A) remain the same. 
B) increase. 
C) decrease. 
D) increase initially and then return to its original level.

Question 16

Usually when a monopoly that isn't a natural monopoly is broken up,the losses to the producer outweigh the gains to consumers.

Accepted Answer

A) True 
 B)False

Question 17

Use the following to answer question:
Figure: PPV  
-(Figure: PPV)Use Figure: PPV.The figure shows the demand and marginal revenue for a pay-per-view football game on cable TV.Assume that the marginal cost and average cost are a constant $40.If the cable company is a single-price monopoly and maximizes profit,producer surplus will be:

Accepted Answer

A) $0. 
B) $45. 
C) $70. 
D) $90. 
A) $0. 
B) $45. 
C) $70. 
D) $90.

Question 18

Which strategy is NOT an example of price discrimination?

Accepted Answer

A) a Fourth of July sale 
B) a coupon in the newspaper offering a 10% discount on a product 
C) a higher price for front row seats at a concert than for seats at the back 
D) a lower price charged to the grandfather who bought his airline ticket to Chicago three weeks in advance and will stay over a Saturday night than to the businesswoman who bought her ticket the day of the flight and will not stay over Saturday night 
A) a Fourth of July sale 
B) a coupon in the newspaper offering a 10% discount on a product 
C) a higher price for front row seats at a concert than for seats at the back 
D) a lower price charged to the grandfather who bought his airline ticket to Chicago three weeks in advance and will stay over a Saturday night than to the businesswoman who bought her ticket the day of the flight and will not stay over Saturday night

Question 19

If a monopolist is producing a quantity where MC = P,then profit:

Accepted Answer

A) is maximized. 
B) is maximized only if MR = P. 
C) can be increased by increasing production. 
D) can be increased by decreasing production. 
A) is maximized. 
B) is maximized only if MR = P. 
C) can be increased by increasing production. 
D) can be increased by decreasing production.

Question 20

If a monopolist knows its price elasticity of demand is greater than one,then a(n)_____ in price will _____ total revenue.

Accepted Answer

A) increase;increase 
B) decrease;increase 
C) decrease;decrease 
D) increase;not change 
A) increase;increase 
B) decrease;increase 
C) decrease;decrease 
D) increase;not change

A monopoly's short-run supply curve is its marginal cost curve above the minimum average variable cost.

A monopolistically competitive industry is made up of:

If a monopolist is producing a quantity that generates MC < MR,then profit:

Market structures are categorized by:

If your farm had the only known source of a rare cocoa bean needed to make chocolate-covered peanuts,your monopoly would result from:

Compared with perfect competition,monopoly produces a net welfare gain for society.

Use the following to answer question: Figure: Short-Run Monopoly -(Figure: Short-Run Monopoly)Use Figure: Short-Run Monopoly.The profit-maximizing quantity of output is quantity:

Use the following to answer question: Figure: Computing Monopoly Profit -(Figure: Computing Monopoly Profit)Use Figure: Computing Monopoly Profit.To obtain maximum profits,the monopoly should produce the output determined by point:

If a firm wants to charge different customers different prices,it must be:

Suppose a perfectly competitive industry is suddenly transformed into a monopoly industry.We can assume that monopoly output will be _ than will the competitive output and that _.

Natural monopolies are NOT likely to include:

The city bus system charges lower fares to senior citizens than to other passengers.Assuming that this pricing strategy increases the profits of the bus system,we can conclude that senior citizens must have a _____ demand for bus service than do other passengers.

Use the following to answer question: Figure: A Profit-Maximizing Monopoly Firm -(Figure: A Profit-Maximizing Monopoly Firm)Use Figure: A Profit-Maximizing Monopoly Firm.This firm's profit per unit is:

When a monopolist practices price discrimination,compared with a single-price monopolist,consumer surplus will:

Usually when a monopoly that isn't a natural monopoly is broken up,the losses to the producer outweigh the gains to consumers.

Which strategy is NOT an example of price discrimination?

If a monopolist is producing a quantity where MC = P,then profit:

If a monopolist knows its price elasticity of demand is greater than one,then a(n)_ in price will _ total revenue.

First Principles

Economic Models: Trade-Offs and Trade

Consumer and Producer Surplus

Supply and Demand

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals and Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods and Common Resources

The Economics of the Welfare State

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Graphs in Economics

Consumer Preferences and Consumer Choice

Filters

Exam 13: Monopoly

A monopoly's short-run supply curve is its marginal cost curve above the minimum average variable cost.

A monopolistically competitive industry is made up of:

If a monopolist is producing a quantity that generates MC < MR,then profit:

Market structures are categorized by:

If your farm had the only known source of a rare cocoa bean needed to make chocolate-covered peanuts,your monopoly would result from:

Compared with perfect competition,monopoly produces a net welfare gain for society.

Use the following to answer question: Figure: Short-Run Monopoly -(Figure: Short-Run Monopoly)Use Figure: Short-Run Monopoly.The profit-maximizing quantity of output is quantity:

Use the following to answer question: Figure: Computing Monopoly Profit -(Figure: Computing Monopoly Profit)Use Figure: Computing Monopoly Profit.To obtain maximum profits,the monopoly should produce the output determined by point:

If a firm wants to charge different customers different prices,it must be:

Suppose a perfectly competitive industry is suddenly transformed into a monopoly industry.We can assume that monopoly output will be _____ than will the competitive output and that _____.

Natural monopolies are NOT likely to include:

The city bus system charges lower fares to senior citizens than to other passengers.Assuming that this pricing strategy increases the profits of the bus system,we can conclude that senior citizens must have a _____ demand for bus service than do other passengers.

Use the following to answer question: Figure: A Profit-Maximizing Monopoly Firm -(Figure: A Profit-Maximizing Monopoly Firm)Use Figure: A Profit-Maximizing Monopoly Firm.This firm's profit per unit is:

When a monopolist practices price discrimination,compared with a single-price monopolist,consumer surplus will:

Usually when a monopoly that isn't a natural monopoly is broken up,the losses to the producer outweigh the gains to consumers.

Which strategy is NOT an example of price discrimination?

If a monopolist is producing a quantity where MC = P,then profit:

If a monopolist knows its price elasticity of demand is greater than one,then a(n)_____ in price will _____ total revenue.

First Principles

Economic Models: Trade-Offs and Trade

Consumer and Producer Surplus

Supply and Demand

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals and Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods and Common Resources

The Economics of the Welfare State

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Graphs in Economics

Consumer Preferences and Consumer Choice

Filters

Suppose a perfectly competitive industry is suddenly transformed into a monopoly industry.We can assume that monopoly output will be _ than will the competitive output and that _.

If a monopolist knows its price elasticity of demand is greater than one,then a(n)_ in price will _ total revenue.