Question 1

An oligopoly is characterized as an industry in which:

Accepted Answer

A) there are few firms,each producing a differentiated or similar product. 
B) there are many firms,each producing a similar product. 
C) all market participants are price takers. 
D) only one firm produces a very differentiated product. 
A) there are few firms,each producing a differentiated or similar product. 
B) there are many firms,each producing a similar product. 
C) all market participants are price takers. 
D) only one firm produces a very differentiated product.

Question 2

Price-discriminating firms will impose a price structure that offers customers with a _____ demand a _____ price and offers customers with a(n)_____ demand a _____ price.

Accepted Answer

A) less elastic;lower;more elastic;higher 
B) less elastic;higher;more elastic;lower 
C) lower;higher;higher;lower 
D) seasonal;lower;unchanging;higher 
A) less elastic;lower;more elastic;higher 
B) less elastic;higher;more elastic;lower 
C) lower;higher;higher;lower 
D) seasonal;lower;unchanging;higher

Question 3

To maximize profits,an airline will offer _____ prices to customers with _____ demand.

Accepted Answer

A) higher;inelastic 
B) higher;elastic 
C) lower;inelastic 
D) the lowest;the least 
A) higher;inelastic 
B) higher;elastic 
C) lower;inelastic 
D) the lowest;the least

Question 4

At the profit-maximizing level of production,a perfectly competitive industry will produce an _____ amount of output,and a monopolist produces an _____ amount of output.

Accepted Answer

A) efficient;efficient 
B) inefficient;efficient 
C) inefficient;inefficient 
D) efficient;inefficient 
A) efficient;efficient 
B) inefficient;efficient 
C) inefficient;inefficient 
D) efficient;inefficient

Question 5

A natural monopoly exists whenever a single firm:

Accepted Answer

A) is owned and operated by the government. 
B) is investor owned but has been granted the exclusive right by the government to operate in a market. 
C) has economies of scale over the entire range of production that is relevant to its market. 
D) has gained control over a strategic input of an important production process. 
A) is owned and operated by the government. 
B) is investor owned but has been granted the exclusive right by the government to operate in a market. 
C) has economies of scale over the entire range of production that is relevant to its market. 
D) has gained control over a strategic input of an important production process.

Question 6

Suppose that you build a high-speed,magnetically powered transportation system from New York to Los Angeles,and you are the only firm providing this service.High fixed costs resulting from the enormous quantity of capital used in this system enable decreasing average cost for any conceivable level of demand.Your monopoly is the result of your:

Accepted Answer

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

Question 7

When a monopolist practices price discrimination as opposed to setting a single price,deadweight loss decreases.

Accepted Answer

A) True 
 B)False

Question 8

A natural monopolist that is price-regulated at the marginal cost output level will:

Accepted Answer

A) produce the optimal level of output and earn a normal profit. 
B) eventually incur losses if MC is less than ATC. 
C) be producing at the same output and price that an unregulated natural monopolist would choose. 
D) produce the optimal level of output and earn an economic profit greater than zero. 
A) produce the optimal level of output and earn a normal profit. 
B) eventually incur losses if MC is less than ATC. 
C) be producing at the same output and price that an unregulated natural monopolist would choose. 
D) produce the optimal level of output and earn an economic profit greater than zero.

Question 9

When a monopolist practices price discrimination,the monopolist's profits will be lower than it is in a single-price monopoly.

Accepted Answer

A) True 
 B)False

Question 10

The land you own has the only known source of aloe needed to make anti-itch lotion.In this case,your monopoly results from:

Accepted Answer

A) government restrictions. 
B) location. 
C) sunk costs. 
D) ownership of scarce inputs. 
A) government restrictions. 
B) location. 
C) sunk costs. 
D) ownership of scarce inputs.

Question 11

Suppose that a monopoly firm is required to pay a new annual license fee to do business in its city and that the fee is somewhat less than the economic profit the firm is now earning.In response to the increase in fees,the firm will:

Accepted Answer

A) raise its price by less than the amount of the license fee. 
B) raise its price by the amount of the license fee. 
C) raise its price by somewhat more than amount of the license fee. 
D) not change its price. 
A) raise its price by less than the amount of the license fee. 
B) raise its price by the amount of the license fee. 
C) raise its price by somewhat more than amount of the license fee. 
D) not change its price.

Question 12

Use the following to answer question:
Figure: A Rock Climbing Shoe Monopoly  
-(Figure: A Rock Climbing Shoe Monopoly)Use Figure: A Rock Climbing Shoe Monopoly.If the firm acts to maximize profit,the firm will earn profit equal to:

Accepted Answer

A) (P1 - P5)× Q2. 
B) (P1 - P4)× Q2. 
C) (P4 - P5)× Q2. 
D) (P2 - P3)× Q3. 
A) (P1 - P5)× Q2. 
B) (P1 - P4)× Q2. 
C) (P4 - P5)× Q2. 
D) (P2 - P3)× Q3.

Question 13

A monopoly is producing output so that average total cost is $30,marginal revenue is $40,and the price is $50.If ATC is at its minimum level and the ATC curve is U-shaped,to maximize profits,this firm should:

Accepted Answer

A) increase output. 
B) reduce output. 
C) do nothing;it is already maximizing profits. 
D) shut down. 
A) increase output. 
B) reduce output. 
C) do nothing;it is already maximizing profits. 
D) shut down.

Question 14

Use the following to answer question:
Figure: Demand,Revenue,and Cost Curves  
-(Figure: Demand,Revenue,and Cost Curves)Use Figure: Demand,Revenue,and Cost Curves.Figglenuts-R-Us is a monopolist in the figglenut market.If the government regulated the figglenut market by setting a price ceiling of $40,Figglenuts-R-Us might:

Accepted Answer

A) produce 60 figglenuts to maximize profits. 
B) produce 120 figglenuts in the long run to maximize profits. 
C) exit in the long run. 
D) increase the price to $60. 
A) produce 60 figglenuts to maximize profits. 
B) produce 120 figglenuts in the long run to maximize profits. 
C) exit in the long run. 
D) increase the price to $60.

Question 15

Wendy has a monopoly in the retailing of motor homes.She can sell five per week at $21,000 each.If she wants to sell six,she can only charge $20,000 each.The price effect of selling the sixth motor home is:

Accepted Answer

A) $20,000. 
B) -$15,000. 
C) -$5,000. 
D) $25,000. 
A) $20,000. 
B) -$15,000. 
C) -$5,000. 
D) $25,000.

Question 16

The demand curve facing a monopolist is:

Accepted Answer

A) downward sloping. 
B) vertical. 
C) horizontal. 
D) upward sloping. 
A) downward sloping. 
B) vertical. 
C) horizontal. 
D) upward sloping.

Question 17

Wendy has a monopoly in the retailing of motor homes.She can sell five per week at $21,000 each.If she wants to sell six,she can charge only $20,000 each.The quantity effect of selling the sixth motor home is:

Accepted Answer

A) $20,000. 
B) $10,000. 
C) $15,000. 
D) $21,000. 
A) $20,000. 
B) $10,000. 
C) $15,000. 
D) $21,000.

Question 18

In perfect competition,the firm produces the output such that _____,and in monopoly,the firm produces the output such that _____.

Accepted Answer

A) P > MR = MC;P = MR = MC 
B) P = MR = MC;P  MR = MC 
D) P = MR = MC;P = MR = MC 
A) P > MR = MC;P = MR = MC 
B) P = MR = MC;P  MR = MC 
D) P = MR = MC;P = MR = MC

Question 19

If a monopoly can engage in perfect price discrimination,then its marginal revenue is equal to price,in contrast to the usual situation for a monopoly,in which price is higher than is marginal revenue.

Accepted Answer

A) True 
 B)False

Question 20

De Beers became a monopoly by:

Accepted Answer

A) establishing control over diamond mines. 
B) use of economies of scale. 
C) use of technological superiority. 
D) ownership of a patent. 
A) establishing control over diamond mines. 
B) use of economies of scale. 
C) use of technological superiority. 
D) ownership of a patent.

An oligopoly is characterized as an industry in which:

Price-discriminating firms will impose a price structure that offers customers with a ___ demand a _ price and offers customers with a(n)_ demand a ___ price.

To maximize profits,an airline will offer _ prices to customers with _ demand.

At the profit-maximizing level of production,a perfectly competitive industry will produce an _ amount of output,and a monopolist produces an _ amount of output.

A natural monopoly exists whenever a single firm:

When a monopolist practices price discrimination as opposed to setting a single price,deadweight loss decreases.

A natural monopolist that is price-regulated at the marginal cost output level will:

When a monopolist practices price discrimination,the monopolist's profits will be lower than it is in a single-price monopoly.

The land you own has the only known source of aloe needed to make anti-itch lotion.In this case,your monopoly results from:

Suppose that a monopoly firm is required to pay a new annual license fee to do business in its city and that the fee is somewhat less than the economic profit the firm is now earning.In response to the increase in fees,the firm will:

Use the following to answer question: Figure: A Rock Climbing Shoe Monopoly -(Figure: A Rock Climbing Shoe Monopoly)Use Figure: A Rock Climbing Shoe Monopoly.If the firm acts to maximize profit,the firm will earn profit equal to:

A monopoly is producing output so that average total cost is $30,marginal revenue is $40,and the price is $50.If ATC is at its minimum level and the ATC curve is U-shaped,to maximize profits,this firm should:

Wendy has a monopoly in the retailing of motor homes.She can sell five per week at $21,000 each.If she wants to sell six,she can only charge $20,000 each.The price effect of selling the sixth motor home is:

The demand curve facing a monopolist is:

Wendy has a monopoly in the retailing of motor homes.She can sell five per week at $21,000 each.If she wants to sell six,she can charge only $20,000 each.The quantity effect of selling the sixth motor home is:

In perfect competition,the firm produces the output such that _,and in monopoly,the firm produces the output such that _.

If a monopoly can engage in perfect price discrimination,then its marginal revenue is equal to price,in contrast to the usual situation for a monopoly,in which price is higher than is marginal revenue.

De Beers became a monopoly by:

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

An oligopoly is characterized as an industry in which:

Price-discriminating firms will impose a price structure that offers customers with a _____ demand a _____ price and offers customers with a(n)_____ demand a _____ price.

To maximize profits,an airline will offer _____ prices to customers with _____ demand.

At the profit-maximizing level of production,a perfectly competitive industry will produce an _____ amount of output,and a monopolist produces an _____ amount of output.

A natural monopoly exists whenever a single firm:

When a monopolist practices price discrimination as opposed to setting a single price,deadweight loss decreases.

A natural monopolist that is price-regulated at the marginal cost output level will:

When a monopolist practices price discrimination,the monopolist's profits will be lower than it is in a single-price monopoly.

The land you own has the only known source of aloe needed to make anti-itch lotion.In this case,your monopoly results from:

Suppose that a monopoly firm is required to pay a new annual license fee to do business in its city and that the fee is somewhat less than the economic profit the firm is now earning.In response to the increase in fees,the firm will:

Use the following to answer question: Figure: A Rock Climbing Shoe Monopoly -(Figure: A Rock Climbing Shoe Monopoly)Use Figure: A Rock Climbing Shoe Monopoly.If the firm acts to maximize profit,the firm will earn profit equal to:

A monopoly is producing output so that average total cost is $30,marginal revenue is $40,and the price is $50.If ATC is at its minimum level and the ATC curve is U-shaped,to maximize profits,this firm should:

Wendy has a monopoly in the retailing of motor homes.She can sell five per week at $21,000 each.If she wants to sell six,she can only charge $20,000 each.The price effect of selling the sixth motor home is:

The demand curve facing a monopolist is:

Wendy has a monopoly in the retailing of motor homes.She can sell five per week at $21,000 each.If she wants to sell six,she can charge only $20,000 each.The quantity effect of selling the sixth motor home is:

In perfect competition,the firm produces the output such that _____,and in monopoly,the firm produces the output such that _____.

If a monopoly can engage in perfect price discrimination,then its marginal revenue is equal to price,in contrast to the usual situation for a monopoly,in which price is higher than is marginal revenue.

De Beers became a monopoly by:

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

Price-discriminating firms will impose a price structure that offers customers with a ___ demand a _ price and offers customers with a(n)_ demand a ___ price.

To maximize profits,an airline will offer _ prices to customers with _ demand.

At the profit-maximizing level of production,a perfectly competitive industry will produce an _ amount of output,and a monopolist produces an _ amount of output.

In perfect competition,the firm produces the output such that _,and in monopoly,the firm produces the output such that _.