Question 1

Which of the following statements is true?

Accepted Answer

A)  As a consequence of the monopoly firm producing the quantity of output at which price equals marginal cost, it is resource allocative efficient. 
B)  As a consequence of the perfectly competitive firm producing the quantity of output at which price equals marginal cost, it is resource allocative efficient. 
C)  a and b 
D)  none of the above 
A)  As a consequence of the monopoly firm producing the quantity of output at which price equals marginal cost, it is resource allocative efficient. 
B)  As a consequence of the perfectly competitive firm producing the quantity of output at which price equals marginal cost, it is resource allocative efficient. 
C)  a and b 
D)  none of the above

Question 2

Which of the following statements is false?

Accepted Answer

A)  For a price taker, P = MR, but for a price searcher, P > MR. 
B)  A monopoly firm's demand curve lies above its marginal revenue curve. 
C)  A single-price monopolist charges the same price for all units of its product. 
D)  If a single-price monopolist sells the first unit of its product for $11, it cannot sell two units of its product for $11 each. 
E)  none of the above 
A)  For a price taker, P = MR, but for a price searcher, P > MR. 
B)  A monopoly firm's demand curve lies above its marginal revenue curve. 
C)  A single-price monopolist charges the same price for all units of its product. 
D)  If a single-price monopolist sells the first unit of its product for $11, it cannot sell two units of its product for $11 each. 
E)  none of the above

Question 3

Exhibit 24-8
  
-Refer to Exhibit 24-8.A profit-maximizing single-price monopolist will produce which quantity of output?

Accepted Answer

A)  3 units 
B)  4 units 
C)  5 units 
D)  6 units 
E)  There is not enough information given to answer this question. 
A)  3 units 
B)  4 units 
C)  5 units 
D)  6 units 
E)  There is not enough information given to answer this question.

Question 4

Exhibit 24-8
  
-Refer to Exhibit 24-8.The maximum profits earned by a single-price monopolist will be

Accepted Answer

A)  $127. 
B)  $50. 
C)  $95. 
D)  $32. 
A)  $127. 
B)  $50. 
C)  $95. 
D)  $32.

Question 5

Exhibit 24-1
  
-Refer to Exhibit 24-1.If the product is produced under single-price monopoly,what quantity will be produced and what price will be charged in order to maximize profit?

Accepted Answer

A)  Q2 units at P1 
B)  Q1 units at P1 
C)  Q1 units at P2 
D)  Q2 units at P2 
A)  Q2 units at P1 
B)  Q1 units at P1 
C)  Q1 units at P2 
D)  Q2 units at P2

Question 6

Which of the following is not an example of a legal barrier to entry?

Accepted Answer

A)  a public franchise 
B)  economies of scale 
C)  a government license 
D)  a patent 
A)  a public franchise 
B)  economies of scale 
C)  a government license 
D)  a patent

Question 7

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

Accepted Answer

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

Question 8

Which of the following statements is true?

Accepted Answer

A)  The motivation for rent seeking is not the same as the motivation for profit seeking. 
B)  Economic rent is a payment in excess of opportunity cost. 
C)  The deadweight loss triangle is not considered the graphic representation of one of the costs of monopoly; instead, it is one of the costs of not having a monopoly. 
D)  Rent seeking is almost always an irrational activity as far as the rent seekers are concerned. 
E)  a and d 
A)  The motivation for rent seeking is not the same as the motivation for profit seeking. 
B)  Economic rent is a payment in excess of opportunity cost. 
C)  The deadweight loss triangle is not considered the graphic representation of one of the costs of monopoly; instead, it is one of the costs of not having a monopoly. 
D)  Rent seeking is almost always an irrational activity as far as the rent seekers are concerned. 
E)  a and d

Question 9

The perfectly competitive firm produces the quantity of output at which __________,and the single-price monopolist produces the quantity of output at which __________.The perfectly price-discriminating monopolist is like the __________ in this regard.

Accepted Answer

A)  P = MC; P > MC; single-price monopolist 
B)  P > MC; P = MC; perfectly competitive firm 
C)  P = MC; P > MC; perfectly competitive firm 
D)  P > MC; P = MC; single-price monopolist 
A)  P = MC; P > MC; single-price monopolist 
B)  P > MC; P = MC; perfectly competitive firm 
C)  P = MC; P > MC; perfectly competitive firm 
D)  P > MC; P = MC; single-price monopolist

Question 10

A monopolist can sell 8,000 units at a price of $15.Lowering price by $2 raises the quantity demanded by 2,000 units.What is the change in total revenue that results from this price change?

Accepted Answer

A)  $10,000 
B)  $4,000 
C)  $130,000 
D)  $90,000 
A)  $10,000 
B)  $4,000 
C)  $130,000 
D)  $90,000

Question 11

Exhibit 24-8
  
-Refer to Exhibit 24-8.Assuming that total fixed costs are $80,the average variable cost of producing 5 units of output is

Accepted Answer

A)  $34.40. 
B)  $50.40. 
C)  $10.67. 
D)  $38.67. 
E)  There is not enough information given to answer this question. 
A)  $34.40. 
B)  $50.40. 
C)  $10.67. 
D)  $38.67. 
E)  There is not enough information given to answer this question.

Question 12

Which of the following is false?

Accepted Answer

A)  Some economists believe that in areas where realtors are not allowed to negotiate commissions it is because of the rent seeking activities of the real estate brokers. 
B)  According to the text, the real estate commission rate is higher in the United States than it is in the United Kingdom. 
C)  Real estate brokers are paid commissions for helping clients attend to the details involved with selling homes. 
D)  It is currently illegal (in all 50 states) for realtors to negotiate commissions with home buyers and sellers. 
A)  Some economists believe that in areas where realtors are not allowed to negotiate commissions it is because of the rent seeking activities of the real estate brokers. 
B)  According to the text, the real estate commission rate is higher in the United States than it is in the United Kingdom. 
C)  Real estate brokers are paid commissions for helping clients attend to the details involved with selling homes. 
D)  It is currently illegal (in all 50 states) for realtors to negotiate commissions with home buyers and sellers.

Question 13

Which of the following is characteristic of the monopoly firm?

Accepted Answer

A)  It produces the quantity of output at which marginal revenue equals marginal cost, MR = MC. 
B)  It charges a price per unit for its product that is equal to marginal cost. 
C)  It always earns a profit, because it is a single seller of a product. 
D)  a and b 
E)  a and c 
A)  It produces the quantity of output at which marginal revenue equals marginal cost, MR = MC. 
B)  It charges a price per unit for its product that is equal to marginal cost. 
C)  It always earns a profit, because it is a single seller of a product. 
D)  a and b 
E)  a and c

Question 14

Perfect price discrimination is discrimination among

Accepted Answer

A)  units. 
B)  quantities. 
C)  buyers. 
D)  prices. 
A)  units. 
B)  quantities. 
C)  buyers. 
D)  prices.

Question 15

A monopoly exhibits resource-allocative efficiency if it

Accepted Answer

A)  is a single-price monopolist. 
B)  is a perfectly price-discriminating monopolist. 
C)  engages in second-degree price discrimination. 
D)  engages in third-degree price discrimination. 
E)  all of the above 
A)  is a single-price monopolist. 
B)  is a perfectly price-discriminating monopolist. 
C)  engages in second-degree price discrimination. 
D)  engages in third-degree price discrimination. 
E)  all of the above

Question 16

If economies of scale are so pronounced in an industry that only one firm can survive in the industry,this firm is called a(n)__________ monopoly.

Accepted Answer

A)  financial 
B)  natural 
C)  structured 
D)  independent 
A)  financial 
B)  natural 
C)  structured 
D)  independent

Question 17

Exhibit 24-3
  
-Refer to Exhibit 24-3.The level of output the profit-maximizing perfectly price-discriminating monopolist produces is

Accepted Answer

A)  q1. 
B)  q2. 
C)  q3. 
D)  q4. 
A)  q1. 
B)  q2. 
C)  q3. 
D)  q4.

Question 18

Third-degree price discrimination is sometimes called discrimination among buyers.

Accepted Answer

A) True 
 B)False

Question 19

The single-price monopolist produces where price is ___________ than marginal cost because for it price is __________ than marginal revenue and its demand curve lies __________ its marginal revenue curve.

Accepted Answer

A)  less; less; below 
B)  greater; greater; above 
C)  greater; greater; below 
D)  less; less; above 
E)  greater; less; below 
A)  less; less; below 
B)  greater; greater; above 
C)  greater; greater; below 
D)  less; less; above 
E)  greater; less; below

Question 20

If a single-price monopolist has to lower price to sell an additional unit of its good,and it charges the same price for all units of its good,it follows that

Accepted Answer

A)  its demand curve will be its marginal revenue curve. 
B)  it will maximize profits by maximizing revenue. 
C)  it will sell its good for a price above average total cost. 
D)  b and c 
E)  none of the above 
A)  its demand curve will be its marginal revenue curve. 
B)  it will maximize profits by maximizing revenue. 
C)  it will sell its good for a price above average total cost. 
D)  b and c 
E)  none of the above

Exam 24: Monopoly

Which of the following statements is true?

Which of the following statements is false?

Exhibit 24-8 -Refer to Exhibit 24-8.A profit-maximizing single-price monopolist will produce which quantity of output?

Exhibit 24-8 -Refer to Exhibit 24-8.The maximum profits earned by a single-price monopolist will be

Exhibit 24-1 -Refer to Exhibit 24-1.If the product is produced under single-price monopoly,what quantity will be produced and what price will be charged in order to maximize profit?

Which of the following is not an example of a legal barrier to entry?

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

Which of the following statements is true?

The perfectly competitive firm produces the quantity of output at which __________,and the single-price monopolist produces the quantity of output at which __________.The perfectly price-discriminating monopolist is like the __________ in this regard.

A monopolist can sell 8,000 units at a price of $15.Lowering price by $2 raises the quantity demanded by 2,000 units.What is the change in total revenue that results from this price change?

Exhibit 24-8 -Refer to Exhibit 24-8.Assuming that total fixed costs are $80,the average variable cost of producing 5 units of output is

Which of the following is false?

Which of the following is characteristic of the monopoly firm?

Perfect price discrimination is discrimination among

A monopoly exhibits resource-allocative efficiency if it

If economies of scale are so pronounced in an industry that only one firm can survive in the industry,this firm is called a(n)__________ monopoly.

Exhibit 24-3 -Refer to Exhibit 24-3.The level of output the profit-maximizing perfectly price-discriminating monopolist produces is

Third-degree price discrimination is sometimes called discrimination among buyers.

The single-price monopolist produces where price is ___________ than marginal cost because for it price is __________ than marginal revenue and its demand curve lies __________ its marginal revenue curve.

If a single-price monopolist has to lower price to sell an additional unit of its good,and it charges the same price for all units of its good,it follows that

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The perfectly competitive firm produces the quantity of output at which ,and the single-price monopolist produces the quantity of output at which .The perfectly price-discriminating monopolist is like the __ in this regard.

The single-price monopolist produces where price is _ than marginal cost because for it price is than marginal revenue and its demand curve lies __ its marginal revenue curve.