Question 1

Lawsuits can act as a barrier to entry in monopoly markets.

Accepted Answer

A) True 
 B)False  True

Question 2

Which of the following contributes to a firm maintaining a monopoly?

Accepted Answer

A) Exclusive franchises. 
B) The existence of substitute goods. 
C) A large number of firms in the industry. 
D) Homogeneous products in the market. 
A) Exclusive franchises. 
B) The existence of substitute goods. 
C) A large number of firms in the industry. 
D) Homogeneous products in the market. A

Question 3

Compared with a competitive market with the same cost and market demand circumstances,a monopolist has

Accepted Answer

A) Less pressure to reduce costs and less reason to improve quality. 
B) Less pressure to reduce costs and more reason to improve quality. 
C) More pressure to reduce costs and less reason to improve quality. 
D) More pressure to reduce costs and more reason to improve quality. 
A) Less pressure to reduce costs and less reason to improve quality. 
B) Less pressure to reduce costs and more reason to improve quality. 
C) More pressure to reduce costs and less reason to improve quality. 
D) More pressure to reduce costs and more reason to improve quality. A

Question 4

Table 24.1 Monopoly Costs and Revenue
$$\begin{array} { | c | c | c | } 
\hline \text { Quantity } & \text { Price } & \text { Total Cost } \
\hline 1 & \$ 500 & \$ 400 \
\hline 2 & \$ 450 & \$ 650 \
\hline 3 & \$ 400 & \$ 950 \
\hline 4 & \$ 350 & \$ 1,300 \
\hline 5 & \$ 300 & \$ 1,700 \
\hline
\end{array}$$ In Table 24.1,according to the profit maximization rule,at the profit-maximizing level of output,the average total cost is

Accepted Answer

A) $316.67. 
B) $325. 
C) $400. 
D) $340. 
A) $316.67. 
B) $325. 
C) $400. 
D) $340.

Question 5

The In the News article "A Sirius Mistake? FCC Approves XM-Sirius Merger" discusses the merger of two satellite radio companies.In some industries,mergers can be economically justified if economies of scale

Accepted Answer

A) Lower the average cost of production. 
B) Result in more product variety. 
C) Act as a barrier to entry. 
D) Increase the total cost of production. 
A) Lower the average cost of production. 
B) Result in more product variety. 
C) Act as a barrier to entry. 
D) Increase the total cost of production.

Question 6

In Figure 24.2,a profit-maximizing monopolist will charge a price of

Accepted Answer

A) $6.40. 
B) $4.70. 
C) $4.00. 
D) $5.50. 
A) $6.40. 
B) $4.70. 
C) $4.00. 
D) $5.50.

Question 7

Price discrimination allows a producer to

Accepted Answer

A) Reap the highest possible average price for the quantity supplied. 
B) Increase the elasticity of consumer demand. 
C) Minimize marginal costs. 
D) Decrease total costs. 
A) Reap the highest possible average price for the quantity supplied. 
B) Increase the elasticity of consumer demand. 
C) Minimize marginal costs. 
D) Decrease total costs.

Question 8

Which of the following was the first to prohibit "conspiracies in restraint of trade"?

Accepted Answer

A) The Sherman Act. 
B) The Federal Trade Commission Act. 
C) The Clayton Act. 
D) The Gramm-Rudman Act. 
A) The Sherman Act. 
B) The Federal Trade Commission Act. 
C) The Clayton Act. 
D) The Gramm-Rudman Act.

Question 9

Which of the following prohibits price discrimination,certain types of mergers,and interlocking boards of directors among competing companies?

Accepted Answer

A) The Sherman Act. 
B) The Clayton Act. 
C) The Federal Trade Commission Act. 
D) The Full Employment and Balanced Growth Act. 
A) The Sherman Act. 
B) The Clayton Act. 
C) The Federal Trade Commission Act. 
D) The Full Employment and Balanced Growth Act.

Question 10

In Figure 24.1,the profit-maximizing monopolist will charge a price of

Accepted Answer

A) J. 
B) L. 
C) C. 
D) A. 
A) J. 
B) L. 
C) C. 
D) A.

Question 11

Markets that exhibit economies of scale over the entire range of market output

Accepted Answer

A) Are natural monopolies. 
B) Are perfectly competitive. 
C) Have downward-sloping short-run average total cost curves. 
D) Have upward-sloping long-run average total cost curves. 
A) Are natural monopolies. 
B) Are perfectly competitive. 
C) Have downward-sloping short-run average total cost curves. 
D) Have upward-sloping long-run average total cost curves.

Question 12

Even when a market appears to be a monopoly,it can be contestable if there are many potential entrants.

Accepted Answer

A) True 
 B)False

Question 13

If tourists are charged a much higher price than the natives of a country for exactly the same item,what kind of pricing is involved?

Accepted Answer

A) Monopoly pricing. 
B) Price discrimination. 
C) Competitive pricing. 
D) MC = MR pricing. 
A) Monopoly pricing. 
B) Price discrimination. 
C) Competitive pricing. 
D) MC = MR pricing.

Question 14

Which of the following is true for a monopolist?

Accepted Answer

A) It faces a perfectly elastic demand curve. 
B) It must lower its price on all of its units in order to sell any additional units. 
C) Its marginal revenue curve is equal to its demand curve. 
D) It faces many competitors. 
A) It faces a perfectly elastic demand curve. 
B) It must lower its price on all of its units in order to sell any additional units. 
C) Its marginal revenue curve is equal to its demand curve. 
D) It faces many competitors.

Question 15

If a monopolist is producing a level of output where MR is less than MC,then it should

Accepted Answer

A) Shift its marginal cost curve upward. 
B) Increase its output. 
C) Lower its output. 
D) Lower its price. 
A) Shift its marginal cost curve upward. 
B) Increase its output. 
C) Lower its output. 
D) Lower its price.

Question 16

Which of the following does not contribute to a firm maintaining a monopoly?

Accepted Answer

A) A patent. 
B) Exclusive control of important resources. 
C) Mergers and acquisitions. 
D) The presence of many close substitutes for its product. 
A) A patent. 
B) Exclusive control of important resources. 
C) Mergers and acquisitions. 
D) The presence of many close substitutes for its product.

Question 17

Refer to Figure 24.3.Which of the following statements is true about the price elasticity of demand at price P3?

Accepted Answer

A) The price elasticity is elastic. 
B) The price elasticity is unitary. 
C) The price elasticity is inelastic. 
D) The price elasticity is zero. 
A) The price elasticity is elastic. 
B) The price elasticity is unitary. 
C) The price elasticity is inelastic. 
D) The price elasticity is zero.

Question 18

A monopolist that does not practice price discrimination should never produce in the

Accepted Answer

A) Elastic portion of its demand curve because it can increase total revenue and reduce total costs by lowering the price. 
B) Inelastic portion of its demand curve because it can increase total revenue and reduce total costs by increasing the price. 
C) Inelastic portion of its demand curve because it can increase total revenue by more than it increases total cost by reducing the price. 
D) Segment of its demand curve where the price elasticity of demand is greater than 1. 
A) Elastic portion of its demand curve because it can increase total revenue and reduce total costs by lowering the price. 
B) Inelastic portion of its demand curve because it can increase total revenue and reduce total costs by increasing the price. 
C) Inelastic portion of its demand curve because it can increase total revenue by more than it increases total cost by reducing the price. 
D) Segment of its demand curve where the price elasticity of demand is greater than 1.

Question 19

Antitrust laws can restrain the abuse of monopoly power.

Accepted Answer

A) True 
 B)False

Question 20

Sky-High Skywriters charges competitive prices for its skywriting services even though it has no competition.This is most likely because

Accepted Answer

A) There are no economies of scale in this industry. 
B) It operates in a contestable market. 
C) It is a natural monopoly. 
D) It cares more about customers' well-being than its own well-being. 
A) There are no economies of scale in this industry. 
B) It operates in a contestable market. 
C) It is a natural monopoly. 
D) It cares more about customers' well-being than its own well-being.

Exam 24: Monopoly

Lawsuits can act as a barrier to entry in monopoly markets.

Which of the following contributes to a firm maintaining a monopoly?

Compared with a competitive market with the same cost and market demand circumstances,a monopolist has

Table 24.1 Monopoly Costs and Revenue Quantity Price Total Cost 1 \ 500 \ 400 2 \ 450 \ 650 3 \ 400 \ 950 4 \ 350 \ 1,300 5 \ 300 \ 1,700 In Table 24.1,according to the profit maximization rule,at the profit-maximizing level of output,the average total cost is

The In the News article "A Sirius Mistake? FCC Approves XM-Sirius Merger" discusses the merger of two satellite radio companies.In some industries,mergers can be economically justified if economies of scale

In Figure 24.2,a profit-maximizing monopolist will charge a price of

Price discrimination allows a producer to

Which of the following was the first to prohibit "conspiracies in restraint of trade"?

Which of the following prohibits price discrimination,certain types of mergers,and interlocking boards of directors among competing companies?

In Figure 24.1,the profit-maximizing monopolist will charge a price of

Markets that exhibit economies of scale over the entire range of market output

Even when a market appears to be a monopoly,it can be contestable if there are many potential entrants.

If tourists are charged a much higher price than the natives of a country for exactly the same item,what kind of pricing is involved?

Which of the following is true for a monopolist?

If a monopolist is producing a level of output where MR is less than MC,then it should

Which of the following does not contribute to a firm maintaining a monopoly?

Refer to Figure 24.3.Which of the following statements is true about the price elasticity of demand at price P3?

A monopolist that does not practice price discrimination should never produce in the

Antitrust laws can restrain the abuse of monopoly power.

Sky-High Skywriters charges competitive prices for its skywriting services even though it has no competition.This is most likely because

Economics: the Core Issues

The Useconomy: a Global View

Supply and Demand

The Role of Government

National Income Accounting

Unemployment

Inflation

The Business Cycle

Aggregate Demand

Self-Adjustment or Instability

Fiscal Policy

Deficits and Debt

Money and Banks

The Federal Reserve System

Monetary Policy

Supply-Side Policy: Short-Run Options

Growth and Productivity: Long-Run Possibilities

Theory Versus Reality

Consumer Choice

Elasticity

The Costs of Production

The Competitive Firm

Competitive Markets

Oligopoly

Monopolistic Competition

Natural Monopolies: Deregulation

Environmental Protection

The Farm Problem

The Labor Market

Labor Unions

Financial Markets

Taxes: Equity Versus Efficiency

Transfer Payments: Welfare and Social Security

International Trade

International Finance

Global Poverty

Filters

Refer to Figure 24.3.Which of the following statements is true about the price elasticity of demand at price P₃?