Question 1

A right granted to a firm by government that permits the firm to provide a particular good or service and excludes others from doing the same is called

Accepted Answer

A)  a natural monopoly. 
B)  a comparative advantage. 
C)  an economy of scale. 
D)  a public franchise. 
A)  a natural monopoly. 
B)  a comparative advantage. 
C)  an economy of scale. 
D)  a public franchise.

Question 2

Which of the following is not a condition of price discrimination?

Accepted Answer

A)  The seller must be a price searcher. 
B)  The seller must be able to distinguish among customers who would be willing to pay different prices. 
C)  The possibility of arbitrage must not exist. 
D)  The seller must have zero fixed costs. 
E)  The seller must exercise some control over price. 
A)  The seller must be a price searcher. 
B)  The seller must be able to distinguish among customers who would be willing to pay different prices. 
C)  The possibility of arbitrage must not exist. 
D)  The seller must have zero fixed costs. 
E)  The seller must exercise some control over price.

Question 3

Marginal revenue is equal to __________ divided by __________.

Accepted Answer

A)  total revenue; the quantity of output 
B)  marginal cost; wages 
C)  the change in total revenue; the quantity of output 
D)  the change in total revenue; the change in quantity of output 
E)  the change in quantity of output; the change in total revenue 
A)  total revenue; the quantity of output 
B)  marginal cost; wages 
C)  the change in total revenue; the quantity of output 
D)  the change in total revenue; the change in quantity of output 
E)  the change in quantity of output; the change in total revenue

Question 4

For the monopoly firm,its demand curve is

Accepted Answer

A)  perfectly inelastic. 
B)  the market demand curve. 
C)  perfectly elastic. 
D)  necessarily unit elastic. 
E)  none of the above 
A)  perfectly inelastic. 
B)  the market demand curve. 
C)  perfectly elastic. 
D)  necessarily unit elastic. 
E)  none of the above

Question 5

The profit-maximizing single-price monopolist will charge a price

Accepted Answer

A)  equal to marginal revenue. 
B)  greater than marginal cost. 
C)  less than marginal revenue, but greater than marginal cost. 
D)  greater than marginal revenue, but equal to marginal cost. 
E)  a and b 
A)  equal to marginal revenue. 
B)  greater than marginal cost. 
C)  less than marginal revenue, but greater than marginal cost. 
D)  greater than marginal revenue, but equal to marginal cost. 
E)  a and b

Question 6

Exhibit 24-5
  
-Refer to Exhibit 24-5.What area represents the revenue gained when price goes from P2 to P1?

Accepted Answer

A)  P1CBP2 
B)  q2CAq1 
C)  0P1Aq1 
D)  CBA 
A)  P1CBP2 
B)  q2CAq1 
C)  0P1Aq1 
D)  CBA

Question 7

Exhibit 24-2
  
-Refer to Exhibit 24-2.The profit-maximizing monopolist produces Q0 units and charges a price of

Accepted Answer

A)  P0. 
B)  P1. 
C)  P3. 
D)  P2. 
E)  none of the above 
A)  P0. 
B)  P1. 
C)  P3. 
D)  P2. 
E)  none of the above

Question 8

One difference between a perfectly competitive firm and a monopoly firm is

Accepted Answer

A)  a perfectly competitive firm maximizes profit by producing the quantity of output at which MR = MC, and the monopoly firm does not. 
B)  a monopoly firm is resource allocative efficient, and a perfectly competitive firm is not. 
C)  the monopoly firm charges the highest per-unit price for its product, and the perfectly competitive firm does not. 
D)  the demand curve and the marginal revenue curve are the same for the perfectly competitive firm, but they are not the same for the monopoly firm. 
E)  c and d 
A)  a perfectly competitive firm maximizes profit by producing the quantity of output at which MR = MC, and the monopoly firm does not. 
B)  a monopoly firm is resource allocative efficient, and a perfectly competitive firm is not. 
C)  the monopoly firm charges the highest per-unit price for its product, and the perfectly competitive firm does not. 
D)  the demand curve and the marginal revenue curve are the same for the perfectly competitive firm, but they are not the same for the monopoly firm. 
E)  c and d

Question 9

Exhibit 24-10
  
-Refer to Exhibit 24-10.The area that is subject to socially wasteful rent seeking is

Accepted Answer

A)  ABGH 
B)  HGCD 
C)  DCE 
D)  ABCD 
E)  AFD 
A)  ABGH 
B)  HGCD 
C)  DCE 
D)  ABCD 
E)  AFD

Question 10

For the perfectly price-discriminating monopolist,its __________ curve is the same as its __________ curve.

Accepted Answer

A)  marginal cost; average fixed cost 
B)  average variable cost; average total cost 
C)  demand; marginal revenue 
D)  demand; marginal cost 
E)  marginal revenue; marginal product of labor 
A)  marginal cost; average fixed cost 
B)  average variable cost; average total cost 
C)  demand; marginal revenue 
D)  demand; marginal cost 
E)  marginal revenue; marginal product of labor

Question 11

"Rent seeking" is socially wasteful because

Accepted Answer

A)  resources devoted to transferring rents are not used to produce goods. 
B)  wage income is converted into profit income. 
C)  it results in higher prices than would exist without monopoly. 
D)  it discourages innovation and risk taking. 
A)  resources devoted to transferring rents are not used to produce goods. 
B)  wage income is converted into profit income. 
C)  it results in higher prices than would exist without monopoly. 
D)  it discourages innovation and risk taking.

Question 12

By adhering to the MR = MC rule,a single-price monopoly

Accepted Answer

A)  will always have an above-zero profit. 
B)  will always have a normal profit. 
C)  maximizes its profit, which may in some cases mean minimizing its losses. 
D)  is not earning as large a profit as it can by setting MR = (MC - P). 
A)  will always have an above-zero profit. 
B)  will always have a normal profit. 
C)  maximizes its profit, which may in some cases mean minimizing its losses. 
D)  is not earning as large a profit as it can by setting MR = (MC - P).

Question 13

Exhibit 24-9
  
-Refer to Exhibit 24-9.A single-price monopolist that seeks to maximize profits by setting MR equal to MC will sell __________ units and charge a per-unit price of __________ dollars.

Accepted Answer

A)  20; 9 
B)  40; 7 
C)  50; 6 
D)  10; 10 
E)  7; 40 
A)  20; 9 
B)  40; 7 
C)  50; 6 
D)  10; 10 
E)  7; 40

Question 14

A price searcher is

Accepted Answer

A)  a person who actively seeks out the best price for a product that he or she wishes to buy. 
B)  a firm that seeks out buyers who are willing to pay the price that the seller is asking for the product. 
C)  a firm that has the ability to control to some degree the price of the product it sells. 
D)  actually any firm or consumer, because each market "player" searches for the best price at which it can sell or buy. 
A)  a person who actively seeks out the best price for a product that he or she wishes to buy. 
B)  a firm that seeks out buyers who are willing to pay the price that the seller is asking for the product. 
C)  a firm that has the ability to control to some degree the price of the product it sells. 
D)  actually any firm or consumer, because each market "player" searches for the best price at which it can sell or buy.

Question 15

In order for a monopolist to be earning a profit,price must be greater than

Accepted Answer

A)  average total cost. 
B)  marginal revenue. 
C)  total cost. 
D)  marginal cost. 
A)  average total cost. 
B)  marginal revenue. 
C)  total cost. 
D)  marginal cost.

Question 16

The monopolist's demand curve is

Accepted Answer

A)  upward sloping. 
B)  perfectly elastic. 
C)  perfectly inelastic. 
D)  downward sloping. 
A)  upward sloping. 
B)  perfectly elastic. 
C)  perfectly inelastic. 
D)  downward sloping.

Question 17

In general,electric,gas,and water companies are examples of __________ monopolies.

Accepted Answer

A)  unregulated 
B)  patent 
C)  natural 
D)  government 
A)  unregulated 
B)  patent 
C)  natural 
D)  government

Question 18

For a monopoly firm,marginal revenue equals marginal cost at 100 units (of output).At 100 units,price is above marginal cost.It follows that the monopoly firm

Accepted Answer

A)  earns profit. 
B)  takes losses. 
C)  faces some close substitutes for its product. 
D)  faces no substitutes for its product. 
E)  is not resource-allocative efficient. 
A)  earns profit. 
B)  takes losses. 
C)  faces some close substitutes for its product. 
D)  faces no substitutes for its product. 
E)  is not resource-allocative efficient.

Question 19

Exhibit 24-1
  
-Refer to Exhibit 24-1 The deadweight loss of the profit-maximizing monopoly is identified by what area?

Accepted Answer

A)  area Q1BAQ2 
B)  area BCA 
C)  area P1P2CB 
D)  area 0P1BQ1 
E)  none of the above 
A)  area Q1BAQ2 
B)  area BCA 
C)  area P1P2CB 
D)  area 0P1BQ1 
E)  none of the above

Question 20

A price searcher

Accepted Answer

A)  faces a horizontal demand curve. 
B)  is a seller that searches for good employees and pays them a low wage. 
C)  is a seller that searches for the best location to sell its product. 
D)  is a seller that has the ability to control to some degree the price of the product it sells. 
E)  none of the above 
A)  faces a horizontal demand curve. 
B)  is a seller that searches for good employees and pays them a low wage. 
C)  is a seller that searches for the best location to sell its product. 
D)  is a seller that has the ability to control to some degree the price of the product it sells. 
E)  none of the above

Exam 24: Monopoly

A right granted to a firm by government that permits the firm to provide a particular good or service and excludes others from doing the same is called

Which of the following is not a condition of price discrimination?

Marginal revenue is equal to __________ divided by __________.

For the monopoly firm,its demand curve is

The profit-maximizing single-price monopolist will charge a price

Exhibit 24-5 -Refer to Exhibit 24-5.What area represents the revenue gained when price goes from P2 to P1?

Exhibit 24-2 -Refer to Exhibit 24-2.The profit-maximizing monopolist produces Q0 units and charges a price of

One difference between a perfectly competitive firm and a monopoly firm is

Exhibit 24-10 -Refer to Exhibit 24-10.The area that is subject to socially wasteful rent seeking is

For the perfectly price-discriminating monopolist,its __________ curve is the same as its __________ curve.

"Rent seeking" is socially wasteful because

By adhering to the MR = MC rule,a single-price monopoly

Exhibit 24-9 -Refer to Exhibit 24-9.A single-price monopolist that seeks to maximize profits by setting MR equal to MC will sell __________ units and charge a per-unit price of __________ dollars.

A price searcher is

In order for a monopolist to be earning a profit,price must be greater than

The monopolist's demand curve is

In general,electric,gas,and water companies are examples of __________ monopolies.

For a monopoly firm,marginal revenue equals marginal cost at 100 units (of output).At 100 units,price is above marginal cost.It follows that the monopoly firm

Exhibit 24-1 -Refer to Exhibit 24-1 The deadweight loss of the profit-maximizing monopoly is identified by what area?

A price searcher

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free, Controlled, and Relative

Supply, Demand, and Price: Applications

Macroeconomic Measurements: Prices and Unemployment

Macroeconomic Measurements: GDP and Real GDP

Aggregate Demand and Aggregate Supply

Classical Macroeconomics and the Self Regulating Economy

Keynesian Macroeconomics and Economic Instability: A Critique of the Self-Regulating Economy

Fiscal Policy and the Federal Budget

Money, Banking,and the Financial System

The Federal Reserve System

Money and the Economy

Monetary Policy

Expectations Theory and the Economy

Economic Growth: Resources, Technology, Ideas, and Institutions

The Financial Crisis of 2007-2009

Debates in Macroeconomics Over the Role and Effects of Government

Elasticity

Consumer Choice: Maximizing Utility and Behavioral Economics

Production and Costs

Perfect Competition

Monopolistic Competition, Oligopoly, and Game Theory

Government and Product Markets: Antitrust and Regulation

Factor Markets: With Emphasis on the Labor Market

Wages,Unions,and Labor

The Distribution of Income and Poverty

Interest, Rent, and Profit

Market Failure: Externalities, Public Goods, and Asymmetric Information

Public Choice and Special-Interest-Group Politics

Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

International Trade

International Finance

Globalization and International Impacts on the Economy

The Economic Case For and Against Government: Five Topics Considered

Stocks, Bonds, Futures, and Options

Agriculture: Problems, Policies, and Unintended Effects

Filters

Marginal revenue is equal to divided by .

Exhibit 24-5 -Refer to Exhibit 24-5.What area represents the revenue gained when price goes from P₂ to P₁?

Exhibit 24-2 -Refer to Exhibit 24-2.The profit-maximizing monopolist produces Q₀units and charges a price of

For the perfectly price-discriminating monopolist,its curve is the same as its curve.

Exhibit 24-9 -Refer to Exhibit 24-9.A single-price monopolist that seeks to maximize profits by setting MR equal to MC will sell units and charge a per-unit price of dollars.