Question 1

One thing a monopoly firm has to do that a perfectly competitive firm does not have to do is

Accepted Answer

A)  search for its profit-maximizing price. 
B)  advertise. 
C)  minimize its losses. 
D)  produce the quantity of output at which P = MC. 
E)  produce a high-quality product. 
A)  search for its profit-maximizing price. 
B)  advertise. 
C)  minimize its losses. 
D)  produce the quantity of output at which P = MC. 
E)  produce a high-quality product.

Question 2

Exhibit 24-4
  
-Refer to Exhibit 24-4. What dollar amounts go in blanks (A),(B),(C),(D),and (E),respectively?

Accepted Answer

A)  $8; $60; $0; $10; and $130 
B)  $8; $70; $50; $30; and $10 
C)  $25; $10; $10; $30; and $50 
D)  $8; $85; $0; $45; and $80 
A)  $8; $60; $0; $10; and $130 
B)  $8; $70; $50; $30; and $10 
C)  $25; $10; $10; $30; and $50 
D)  $8; $85; $0; $45; and $80

Question 3

A public franchise is a right granted

Accepted Answer

A)  to one firm by another firm; for example, McDonald's Corporation grants restaurant owners a franchise to make its hamburgers. 
B)  to a firm by government that prevents other firms from producing the same product or service. 
C)  to a cooperative of buyers that allows the group to purchase goods at wholesale prices. 
D)  by government that enables a person to engage in arbitrage. 
A)  to one firm by another firm; for example, McDonald's Corporation grants restaurant owners a franchise to make its hamburgers. 
B)  to a firm by government that prevents other firms from producing the same product or service. 
C)  to a cooperative of buyers that allows the group to purchase goods at wholesale prices. 
D)  by government that enables a person to engage in arbitrage.

Question 4

Maximizing total revenue turns out to be the same as maximizing profit only when

Accepted Answer

A)  average fixed cost declines continually as output rises. 
B)  a firm has no fixed costs. 
C)  a firm has no variable costs. 
D)  a firm has both variable and fixed costs. 
A)  average fixed cost declines continually as output rises. 
B)  a firm has no fixed costs. 
C)  a firm has no variable costs. 
D)  a firm has both variable and fixed costs.

Question 5

At the quantity where a single-price monopolist maximizes profit,price will be

Accepted Answer

A)  equal to marginal cost. 
B)  equal to marginal revenue. 
C)  greater than marginal cost. 
D)  less than marginal cost. 
E)  less than marginal revenue. 
A)  equal to marginal cost. 
B)  equal to marginal revenue. 
C)  greater than marginal cost. 
D)  less than marginal cost. 
E)  less than marginal revenue.

Question 6

Which of the following is false?

Accepted Answer

A)  For a monopolist, the law of diminishing marginal returns does not hold. 
B)  A monopoly firm will earn profit if it produces the quantity of output at which MR = MC, and charges a price that is above its average total cost. 
C)  The monopolist firm searches for the highest per-unit price it can charge for the quantity of output it produces. 
D)  The highest per-unit price a monopoly firm can charge is determined by the height of its demand curve. 
A)  For a monopolist, the law of diminishing marginal returns does not hold. 
B)  A monopoly firm will earn profit if it produces the quantity of output at which MR = MC, and charges a price that is above its average total cost. 
C)  The monopolist firm searches for the highest per-unit price it can charge for the quantity of output it produces. 
D)  The highest per-unit price a monopoly firm can charge is determined by the height of its demand curve.

Question 7

In the United States,patents are granted to inventors of a product or process for a period of

Accepted Answer

A)  unlimited time. 
B)  10 years. 
C)  20 years. 
D)  25 years. 
A)  unlimited time. 
B)  10 years. 
C)  20 years. 
D)  25 years.

Question 8

X-inefficiency refers to

Accepted Answer

A)  the tendency for an economy to allocate too many resources to the monopolist. 
B)  the increase in costs and organizational slack in a monopoly resulting from the lack of competitive pressure. 
C)  the resources used to regulate the behavior of a monopolist. 
D)  a and b 
E)  a and c 
A)  the tendency for an economy to allocate too many resources to the monopolist. 
B)  the increase in costs and organizational slack in a monopoly resulting from the lack of competitive pressure. 
C)  the resources used to regulate the behavior of a monopolist. 
D)  a and b 
E)  a and c

Question 9

For a monopolist,if price is above average total cost,the monopolist is

Accepted Answer

A)  earning an economic profit. 
B)  taking an economic loss. 
C)  minimizing total fixed costs. 
D)  minimizing total variable costs. 
A)  earning an economic profit. 
B)  taking an economic loss. 
C)  minimizing total fixed costs. 
D)  minimizing total variable costs.

Question 10

Describe the condition under which a profit-maximizing monopolist will be resource allocative efficient.

Accepted Answer

To be resource allocative efficient,the

Question 11

Exhibit 24-1
  
-Refer to Exhibit 24-1.If the product is produced under single-price monopoly,what does total revenue equal at the profit maximizing level of output?

Accepted Answer

A)  area 0P2CQ1 
B)  area BCA 
C)  area P1P2CB 
D)  area P2CAP1 
E)  none of the above 
A)  area 0P2CQ1 
B)  area BCA 
C)  area P1P2CB 
D)  area P2CAP1 
E)  none of the above

Question 12

Exhibit 24-8
  
-Refer to Exhibit 24-8.A profit-maximizing single-price monopolist will set the price at

Accepted Answer

A)  $90 per unit. 
B)  $82 per unit. 
C)  $65 per unit. 
D)  $75 per unit. 
E)  There is not enough information provided to answer this question. 
A)  $90 per unit. 
B)  $82 per unit. 
C)  $65 per unit. 
D)  $75 per unit. 
E)  There is not enough information provided to answer this question.

Question 13

Which of the following is not an assumption of the theory of monopoly?

Accepted Answer

A)  There is one seller. 
B)  The single seller sells a product for which there are many close substitutes. 
C)  There are extremely high barriers to entry. 
D)  b and c 
E)  a and c 
A)  There is one seller. 
B)  The single seller sells a product for which there are many close substitutes. 
C)  There are extremely high barriers to entry. 
D)  b and c 
E)  a and c

Question 14

If a perfectly competitive firm and a single-price monopolist face the same demand and cost curves,then

Accepted Answer

A)  the competitive firm will attain resource-allocative efficiency, but the monopolist will not. 
B)  the competitive firm will attain resource-allocative efficiency, but the monopolist may or may not, depending upon the demand for its product. 
C)  the competitive firm will not attain resource-allocative efficiency, but the monopolist will. 
D)  both the competitive firm and the monopolist will attain resource-allocative efficiency. 
E)  neither the competitive firm nor the monopolist will attain resource-allocative efficiency. 
A)  the competitive firm will attain resource-allocative efficiency, but the monopolist will not. 
B)  the competitive firm will attain resource-allocative efficiency, but the monopolist may or may not, depending upon the demand for its product. 
C)  the competitive firm will not attain resource-allocative efficiency, but the monopolist will. 
D)  both the competitive firm and the monopolist will attain resource-allocative efficiency. 
E)  neither the competitive firm nor the monopolist will attain resource-allocative efficiency.

Question 15

Public franchises,patents,and government licenses are examples of __________ barriers to entry.

Accepted Answer

A)  social 
B)  legal 
C)  cultural 
D)  geographic 
A)  social 
B)  legal 
C)  cultural 
D)  geographic

Question 16

Barriers to entry include all of the following except

Accepted Answer

A)  exclusive ownership of a scarce resource. 
B)  patents. 
C)  public franchises. 
D)  diseconomies of scale. 
E)  government licenses. 
A)  exclusive ownership of a scarce resource. 
B)  patents. 
C)  public franchises. 
D)  diseconomies of scale. 
E)  government licenses.

Question 17

For a single-price monopoly,marginal revenue is

Accepted Answer

A)  equal to price for the first unit of output. 
B)  less than price for all units of output after the first unit. 
C)  greater than price. 
D)  horizontal. 
E)  a and b 
A)  equal to price for the first unit of output. 
B)  less than price for all units of output after the first unit. 
C)  greater than price. 
D)  horizontal. 
E)  a and b

Question 18

Which of the following statements is true?

Accepted Answer

A)  The monopolist can sell all it can produce at the market price. 
B)  The marginal revenue curve of the single-price monopolist lies above its demand curve. 
C)  The marginal revenue curve of the single-price monopolist is the same as its demand curve. 
D)  The marginal revenue curve of the single-price monopolist lies below its demand curve. 
A)  The monopolist can sell all it can produce at the market price. 
B)  The marginal revenue curve of the single-price monopolist lies above its demand curve. 
C)  The marginal revenue curve of the single-price monopolist is the same as its demand curve. 
D)  The marginal revenue curve of the single-price monopolist lies below its demand curve.

Question 19

The monopolist's marginal revenue curve is

Accepted Answer

A)  downward sloping and lies below the firm's demand curve. 
B)  upward sloping and lies above the firm's demand curve. 
C)  perfectly inelastic. 
D)  downward sloping and lies above the firm's demand curve. 
E)  the same as the industry demand curve. 
A)  downward sloping and lies below the firm's demand curve. 
B)  upward sloping and lies above the firm's demand curve. 
C)  perfectly inelastic. 
D)  downward sloping and lies above the firm's demand curve. 
E)  the same as the industry demand curve.

Question 20

Economic rent is a payment received in excess of marginal cost.

Accepted Answer

A) True 
 B)False

Exam 24: Monopoly

One thing a monopoly firm has to do that a perfectly competitive firm does not have to do is

Exhibit 24-4 -Refer to Exhibit 24-4. What dollar amounts go in blanks (A),(B),(C),(D),and (E),respectively?

A public franchise is a right granted

Maximizing total revenue turns out to be the same as maximizing profit only when

At the quantity where a single-price monopolist maximizes profit,price will be

Which of the following is false?

In the United States,patents are granted to inventors of a product or process for a period of

X-inefficiency refers to

For a monopolist,if price is above average total cost,the monopolist is

Describe the condition under which a profit-maximizing monopolist will be resource allocative efficient.

Exhibit 24-1 -Refer to Exhibit 24-1.If the product is produced under single-price monopoly,what does total revenue equal at the profit maximizing level of output?

Exhibit 24-8 -Refer to Exhibit 24-8.A profit-maximizing single-price monopolist will set the price at

Which of the following is not an assumption of the theory of monopoly?

If a perfectly competitive firm and a single-price monopolist face the same demand and cost curves,then

Public franchises,patents,and government licenses are examples of __________ barriers to entry.

Barriers to entry include all of the following except

For a single-price monopoly,marginal revenue is

Which of the following statements is true?

The monopolist's marginal revenue curve is

Economic rent is a payment received in excess of marginal cost.

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

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