Question 1

For a monopoly, the maximum profit per unit produced is the difference between price and average total cost at the output level at which marginal revenue equals marginal cost.

Accepted Answer

A) True 
 B)False

Question 2

Price discrimination can occur only if the elasticities of demand are the same across different markets.

Accepted Answer

A) True 
 B)False

Question 3

Exhibit 10-1  
-A monopoly will expand output until

Accepted Answer

A) total revenue is maximized. 
B) marginal revenue equals marginal cost. 
C) price elasticity is equal to 1. 
D) average revenue is maximized. 
E) marginal revenue equals zero. 
A) total revenue is maximized. 
B) marginal revenue equals marginal cost. 
C) price elasticity is equal to 1. 
D) average revenue is maximized. 
E) marginal revenue equals zero.

Question 4

When we say that a monopoly has market power, does it mean that the monopoly can produce and charge any amount it wants? Explain.

Accepted Answer

The monopoly cannot produce and charge a

Question 5

Which of the following is true of a monopoly?

Accepted Answer

A) Producers sell a product for which there are many substitutes. 
B) Producers enjoy complete freedom of entry into and out of the industry. 
C) The demand curve facing the producer is the market demand curve. 
D) Producers always charge the highest possible price. 
E) Producers are price-takers. 
A) Producers sell a product for which there are many substitutes. 
B) Producers enjoy complete freedom of entry into and out of the industry. 
C) The demand curve facing the producer is the market demand curve. 
D) Producers always charge the highest possible price. 
E) Producers are price-takers.

Question 6

When marginal cost is equal to marginal revenue,

Accepted Answer

A) an increase in output will increase revenue more than cost. 
B) production is being maximized. 
C) an increase in price will cause revenue to rise. 
D) a decrease in output will decrease revenue more than cost. 
E) economic profit is equal to zero. 
A) an increase in output will increase revenue more than cost. 
B) production is being maximized. 
C) an increase in price will cause revenue to rise. 
D) a decrease in output will decrease revenue more than cost. 
E) economic profit is equal to zero.

Question 7

In order to maximize profit, a monopoly will set output so that marginal revenue equals marginal cost and will charge a price equal to marginal revenue.

Accepted Answer

A) True 
 B)False

Question 8

When the government requires that a firm procure a license to operate a business, one can rest assured that such a regulation is always intended to protect consumers.

Accepted Answer

A) True 
 B)False

Question 9

The following table gives data for a monopolist. Fill in the missing data.

Accepted Answer

The answer of The following table gives data for a...

Question 10

The table below gives the total costs for a typical firm in a competitive industry.

Accepted Answer

The answer of The table below gives the total costs...

Question 11

Exhibit 10-3  
-Refer to Exhibit 10-3. Total revenue at the profit-maximizing output level is

Accepted Answer

A) $170. 
B) $192. 
C) $220. 
D) $240. 
E) $100. 
A) $170. 
B) $192. 
C) $220. 
D) $240. 
E) $100.

Question 12

Exhibit 10-6  
-Refer to Exhibit 10-6. The firm's maximum economic profits are

Accepted Answer

A) $0. 
B) $8. 
C) $13. 
D) $240. 
E) $300. 
A) $0. 
B) $8. 
C) $13. 
D) $240. 
E) $300.

Question 13

Given the same unit costs, a monopoly will

Accepted Answer

A) charge a lower price than a competitive firm. 
B) produce the same output as a competitive firm. 
C) produce less output than a competitive firm. 
D) produce more output than a competitive firm. 
E) charge the same price as a competitive firm. 
A) charge a lower price than a competitive firm. 
B) produce the same output as a competitive firm. 
C) produce less output than a competitive firm. 
D) produce more output than a competitive firm. 
E) charge the same price as a competitive firm.

Question 14

Why do we not call the consumer surplus that is transferred to a monopoly a deadweight loss?

Accepted Answer

The consumer surplus transferr

Question 15

At any positive level of output, the monopoly's marginal revenue

Accepted Answer

A) curve is greater than its demand curve. 
B) is greater than its average revenue. 
C) equals marginal cost. 
D) is less than price. 
E) equals price. 
A) curve is greater than its demand curve. 
B) is greater than its average revenue. 
C) equals marginal cost. 
D) is less than price. 
E) equals price.

Question 16

Which of the following is true about market power?

Accepted Answer

A) An industry with 100 firms has more market power than the same industry with a single firm. 
B) An industry with 100 firms has less market power than the same industry with a single firm. 
C) An industry with 100 firms has the same market power as the same industry with any number of firms. 
D) An industry with 100 firms has more market power than the same industry with 10 firms but less market power than the same industry with one firm. 
E) An industry with 100 firms has less market power than the same industry with 10 firms but more market power than the same industry with one firm. 
A) An industry with 100 firms has more market power than the same industry with a single firm. 
B) An industry with 100 firms has less market power than the same industry with a single firm. 
C) An industry with 100 firms has the same market power as the same industry with any number of firms. 
D) An industry with 100 firms has more market power than the same industry with 10 firms but less market power than the same industry with one firm. 
E) An industry with 100 firms has less market power than the same industry with 10 firms but more market power than the same industry with one firm.

Question 17

When economies of scale exist, a monopoly produces more than a competitive industry with identical costs.

Accepted Answer

A) True 
 B)False

Question 18

Barriers to entry to a monopoly include

Accepted Answer

A) unions. 
B) high economic profits carried by a monopoly. 
C) patents. 
D) high transportation costs. 
E) low production costs. 
A) unions. 
B) high economic profits carried by a monopoly. 
C) patents. 
D) high transportation costs. 
E) low production costs.

Question 19

How does the fact that marginal benefit is greater than marginal cost indicate a deadweight loss?

Accepted Answer

Given that marginal benefit is reflected

Question 20

Suppose a firm is able to distinguish among its customers in terms of how much they are willing to pay. Will the firm be able to price-discriminate?

Accepted Answer

If a firm is able to distinguish among i

Exam 10: Monopoly

For a monopoly, the maximum profit per unit produced is the difference between price and average total cost at the output level at which marginal revenue equals marginal cost.

Price discrimination can occur only if the elasticities of demand are the same across different markets.

Exhibit 10-1 -A monopoly will expand output until

When we say that a monopoly has market power, does it mean that the monopoly can produce and charge any amount it wants? Explain.

Which of the following is true of a monopoly?

When marginal cost is equal to marginal revenue,

In order to maximize profit, a monopoly will set output so that marginal revenue equals marginal cost and will charge a price equal to marginal revenue.

When the government requires that a firm procure a license to operate a business, one can rest assured that such a regulation is always intended to protect consumers.

The following table gives data for a monopolist. Fill in the missing data.

The table below gives the total costs for a typical firm in a competitive industry.

Exhibit 10-3 -Refer to Exhibit 10-3. Total revenue at the profit-maximizing output level is

Exhibit 10-6 -Refer to Exhibit 10-6. The firm's maximum economic profits are

Given the same unit costs, a monopoly will

Why do we not call the consumer surplus that is transferred to a monopoly a deadweight loss?

At any positive level of output, the monopoly's marginal revenue

Which of the following is true about market power?

When economies of scale exist, a monopoly produces more than a competitive industry with identical costs.

Barriers to entry to a monopoly include

How does the fact that marginal benefit is greater than marginal cost indicate a deadweight loss?

Suppose a firm is able to distinguish among its customers in terms of how much they are willing to pay. Will the firm be able to price-discriminate?

The Central Idea

Observing and Explaining the Economy

The Supply and Demand Model

Subtleties of the Supply and Demand Model

The Demand Curve and the Behavior of Consumers

The Supply Curve and the Behavior of Firms

The Efficiency of Markets

Costs and the Changes at Firms Over Time

The Rise and Fall of Industries

Product Differentiation, Monopolistic Competition, and Oligopoly

Antitrust Policy and Regulation

Labor Markets

Taxes, Transfers, and Income Distribution

Public Goods, Externalities, and Government Behavior

Capital and Financial Markets

Macroeconomics: the Big Picture

Measuring the Production, Income, and Spending of Nations

The Spending Allocation Model

Unemployment and Employment

Productivity and Economic Growth

Money and Inflation

The Nature and Causes of Economic Fluctuations

The Economic Fluctuations Model

Using the Economic Fluctuations Model

Fiscal Policy

Monetary Policy

Economic Growth Around the World

International Trade

International Finance

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