Question 1

Which statement BEST reflects an evaluation of monopoly firms?

Accepted Answer

A) They are economically inefficient. 
B) They have little or no market power. 
C) Consumers are given more choices,lower costs,and higher quality. 
D) Competition should replace all monopolies. 
A) They are economically inefficient. 
B) They have little or no market power. 
C) Consumers are given more choices,lower costs,and higher quality. 
D) Competition should replace all monopolies.

Question 2

Use the following to answer question:
Figure: The Profit-Maximizing Output and Price  
-(Figure: The Profit-Maximizing Output and Price)Use Figure: The Profit-Maximizing Output and Price.Assume that there are no fixed costs and AC = MC = $200.The profit-maximizing price for a monopolist is:

Accepted Answer

A) $800. 
B) $200. 
C) $600. 
D) $1,000. 
A) $800. 
B) $200. 
C) $600. 
D) $1,000.

Question 3

Suppose the elasticity of demand for tickets to Broadway shows is 2.0 for men and 0.3 for women.To use price discrimination to increase profits,the producers should charge higher prices to _____ because their demand is more _____.

Accepted Answer

A) men;elastic than that of women 
B) men;inelastic than that of women 
C) women;elastic than that of men 
D) women;inelastic than that ofmen 
A) men;elastic than that of women 
B) men;inelastic than that of women 
C) women;elastic than that of men 
D) women;inelastic than that ofmen

Question 4

Consumer surplus is higher under a single-price monopoly than it is under a perfectly price-discriminating monopoly.

Accepted Answer

A) True 
 B)False

Question 5

Suppose that a profit-maximizing monopoly firm undergoes a substantial technological change that reduces its marginal and average total costs by $40.If in response to its reduction in cost the firm changes its price in a profit-maximizing way,then we can predict that its total output will:

Accepted Answer

A) rise. 
B) fall. 
C) remain unchanged. 
D) It is not possible to make a determination from the information given. 
A) rise. 
B) fall. 
C) remain unchanged. 
D) It is not possible to make a determination from the information given.

Question 6

A monopoly is a market characterized by a:

Accepted Answer

A) single seller. 
B) product with many close substitutes. 
C) large number of small firms. 
D) small number of large firms. 
A) single seller. 
B) product with many close substitutes. 
C) large number of small firms. 
D) small number of large firms.

Question 7

When a monopolist practices price discrimination,producer surplus will be higher than it is in a single-price monopoly.

Accepted Answer

A) True 
 B)False

Question 8

When a natural monopoly is regulated to charge a price equal to average total cost,consumer surplus increases,but total surplus decreases.

Accepted Answer

A) True 
 B)False

Question 9

One government policy for dealing with natural monopoly is to:

Accepted Answer

A) impose a price floor to eliminate the deadweight loss. 
B) impose a price ceiling to reduce economic profit. 
C) break it up into smaller firms. 
D) impose fines on the monopolist. 
A) impose a price floor to eliminate the deadweight loss. 
B) impose a price ceiling to reduce economic profit. 
C) break it up into smaller firms. 
D) impose fines on the monopolist.

Question 10

Which statement is TRUE?

Accepted Answer

A) A monopoly firm is a price maker. 
B) MR = P if the demand curve is downward sloping. 
C) MR = MC is a profit-maximizing rule for firms in perfect competition only. 
D) Monopolies tend to charge lower prices than do perfectly competitive firms. 
A) A monopoly firm is a price maker. 
B) MR = P if the demand curve is downward sloping. 
C) MR = MC is a profit-maximizing rule for firms in perfect competition only. 
D) Monopolies tend to charge lower prices than do perfectly competitive firms.

Question 11

Use the following to answer question:  
-(Table: Demand for Lenny's Coffee)Use Table: Demand for Lenny's Coffee.Lenny's Café is the only source of coffee for hundreds of miles in any direction.Lenny is selling 2 cups of coffee.If he lowers the price and sells 3 cups of coffee,the _____ effect will dominate the _____ effect,and total revenue will _____.

Accepted Answer

A) quantity;price;decrease 
B) price;quantity;increase 
C) price;quantity;decrease 
D) quantity;price;increase 
A) quantity;price;decrease 
B) price;quantity;increase 
C) price;quantity;decrease 
D) quantity;price;increase

Question 12

The monopoly firm's profit-maximizing price is:

Accepted Answer

A) given by the point on the ATC curve for the profit-maximizing quantity. 
B) given by the point on the demand curve for the profit-maximizing quantity. 
C) determined for the quantity of output at which MR > MC by the greatest amount. 
D) found where MR > MC at the monopolist's profit-maximizing quantity of output. 
A) given by the point on the ATC curve for the profit-maximizing quantity. 
B) given by the point on the demand curve for the profit-maximizing quantity. 
C) determined for the quantity of output at which MR > MC by the greatest amount. 
D) found where MR > MC at the monopolist's profit-maximizing quantity of output.

Question 13

A monopolist's marginal cost curve shifts up,but the firm's demand curve remains the same and the firm does not shut down.Compared with the condition before the increase in marginal costs,the monopolist will _____ its price and _____ its level of production.

Accepted Answer

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

Question 14

The GoSports Company is a profit-maximizing firm with a monopoly in the production of school team pennants.The firm sells its pennants for $10 each.We can conclude that GoSports is producing a level of output at which:

Accepted Answer

A) average total cost equals $10. 
B) average total cost is greater than $10. 
C) marginal revenue equals $10. 
D) marginal cost equals marginal revenue. 
A) average total cost equals $10. 
B) average total cost is greater than $10. 
C) marginal revenue equals $10. 
D) marginal cost equals marginal revenue.

Question 15

Use the following to answer question:
Figure: The Monopolist  
-(Figure: The Monopolist)Use Figure: The Monopolist.At the profit-maximizing level,this monopolist will:

Accepted Answer

A) incur a loss equal to the area (P1 - P4)Q1. 
B) earn a profit equal to the area (P2 - P4)Q2. 
C) earn a profit equal to the area (P2 - P3)Q2. 
D) break even. 
A) incur a loss equal to the area (P1 - P4)Q1. 
B) earn a profit equal to the area (P2 - P4)Q2. 
C) earn a profit equal to the area (P2 - P3)Q2. 
D) break even.

Question 16

Use the following to answer question:
Figure: Monopoly Model  
-(Figure: Monopoly Model)Use Figure: Monopoly Model.When the firm is in equilibrium (that is,maximizing its economic profit),its total cost is the area of rectangle:

Accepted Answer

A) 0PDJ. 
B) 0IHJ. 
C) IPDH. 
D) 0SBJ. 
A) 0PDJ. 
B) 0IHJ. 
C) IPDH. 
D) 0SBJ.

Question 17

Use the following to answer question:  
-(Table: Lunch)Use Table: Lunch.This table shows market demand for picnic lunches for people taking all-day rafting trips on the river.Joe has a firm providing this service,and his marginal cost and average cost for each lunch are a constant $4.If Joe is a monopolist,what is deadweight loss in the long run?

Accepted Answer

A) $45 
B) $90 
C) $180 
D) $360 
A) $45 
B) $90 
C) $180 
D) $360

Question 18

Price discrimination is the practice of:

Accepted Answer

A) charging different prices to buyers of the same good. 
B) paying different prices to suppliers of the same good. 
C) equating price to marginal cost. 
D) equating price to marginal revenue. 
A) charging different prices to buyers of the same good. 
B) paying different prices to suppliers of the same good. 
C) equating price to marginal cost. 
D) equating price to marginal revenue.

Question 19

Because of monopoly,consumers experience _____ than they do with perfect competition.

Accepted Answer

A) more choices 
B) larger quantities 
C) higher quality 
D) higher prices 
A) more choices 
B) larger quantities 
C) higher quality 
D) higher prices

Question 20

Consumer surplus in monopoly is smaller than it is in the same industry operating under perfect competition.

Accepted Answer

A) True 
 B)False

Which statement BEST reflects an evaluation of monopoly firms?

Use the following to answer question: Figure: The Profit-Maximizing Output and Price -(Figure: The Profit-Maximizing Output and Price)Use Figure: The Profit-Maximizing Output and Price.Assume that there are no fixed costs and AC = MC = $200.The profit-maximizing price for a monopolist is:

Suppose the elasticity of demand for tickets to Broadway shows is 2.0 for men and 0.3 for women.To use price discrimination to increase profits,the producers should charge higher prices to _ because their demand is more _.

Consumer surplus is higher under a single-price monopoly than it is under a perfectly price-discriminating monopoly.

Suppose that a profit-maximizing monopoly firm undergoes a substantial technological change that reduces its marginal and average total costs by $40.If in response to its reduction in cost the firm changes its price in a profit-maximizing way,then we can predict that its total output will:

A monopoly is a market characterized by a:

When a monopolist practices price discrimination,producer surplus will be higher than it is in a single-price monopoly.

When a natural monopoly is regulated to charge a price equal to average total cost,consumer surplus increases,but total surplus decreases.

One government policy for dealing with natural monopoly is to:

Which statement is TRUE?

The monopoly firm's profit-maximizing price is:

A monopolist's marginal cost curve shifts up,but the firm's demand curve remains the same and the firm does not shut down.Compared with the condition before the increase in marginal costs,the monopolist will _ its price and _ its level of production.

The GoSports Company is a profit-maximizing firm with a monopoly in the production of school team pennants.The firm sells its pennants for $10 each.We can conclude that GoSports is producing a level of output at which:

Use the following to answer question: Figure: The Monopolist -(Figure: The Monopolist)Use Figure: The Monopolist.At the profit-maximizing level,this monopolist will:

Use the following to answer question: Figure: Monopoly Model -(Figure: Monopoly Model)Use Figure: Monopoly Model.When the firm is in equilibrium (that is,maximizing its economic profit),its total cost is the area of rectangle:

Price discrimination is the practice of:

Because of monopoly,consumers experience _____ than they do with perfect competition.

Consumer surplus in monopoly is smaller than it is in the same industry operating under perfect competition.

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

Which statement BEST reflects an evaluation of monopoly firms?

Use the following to answer question: Figure: The Profit-Maximizing Output and Price -(Figure: The Profit-Maximizing Output and Price)Use Figure: The Profit-Maximizing Output and Price.Assume that there are no fixed costs and AC = MC = $200.The profit-maximizing price for a monopolist is:

Suppose the elasticity of demand for tickets to Broadway shows is 2.0 for men and 0.3 for women.To use price discrimination to increase profits,the producers should charge higher prices to _____ because their demand is more _____.

Consumer surplus is higher under a single-price monopoly than it is under a perfectly price-discriminating monopoly.

Suppose that a profit-maximizing monopoly firm undergoes a substantial technological change that reduces its marginal and average total costs by $40.If in response to its reduction in cost the firm changes its price in a profit-maximizing way,then we can predict that its total output will:

A monopoly is a market characterized by a:

When a monopolist practices price discrimination,producer surplus will be higher than it is in a single-price monopoly.

When a natural monopoly is regulated to charge a price equal to average total cost,consumer surplus increases,but total surplus decreases.

One government policy for dealing with natural monopoly is to:

Which statement is TRUE?

The monopoly firm's profit-maximizing price is:

A monopolist's marginal cost curve shifts up,but the firm's demand curve remains the same and the firm does not shut down.Compared with the condition before the increase in marginal costs,the monopolist will _____ its price and _____ its level of production.

The GoSports Company is a profit-maximizing firm with a monopoly in the production of school team pennants.The firm sells its pennants for $10 each.We can conclude that GoSports is producing a level of output at which:

Use the following to answer question: Figure: The Monopolist -(Figure: The Monopolist)Use Figure: The Monopolist.At the profit-maximizing level,this monopolist will:

Use the following to answer question: Figure: Monopoly Model -(Figure: Monopoly Model)Use Figure: Monopoly Model.When the firm is in equilibrium (that is,maximizing its economic profit),its total cost is the area of rectangle:

Price discrimination is the practice of:

Because of monopoly,consumers experience _____ than they do with perfect competition.

Consumer surplus in monopoly is smaller than it is in the same industry operating under perfect competition.

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 the elasticity of demand for tickets to Broadway shows is 2.0 for men and 0.3 for women.To use price discrimination to increase profits,the producers should charge higher prices to _ because their demand is more _.

A monopolist's marginal cost curve shifts up,but the firm's demand curve remains the same and the firm does not shut down.Compared with the condition before the increase in marginal costs,the monopolist will _ its price and _ its level of production.