Question 1

Marginal revenue is not equal to price for a monopolist because:

Accepted Answer

A)  the monopolist's demand curve is below its marginal revenue curve. 
B)  total revenue increases as output increases. 
C)  the monopolist sets price equal to marginal cost. 
D)  the monopolist must lower the price of all units in order to sell more. 
A)  the monopolist's demand curve is below its marginal revenue curve. 
B)  total revenue increases as output increases. 
C)  the monopolist sets price equal to marginal cost. 
D)  the monopolist must lower the price of all units in order to sell more.

Question 2

The difference between a monopolist and a monopolistic competitor is that:

Accepted Answer

A)  a monopolist equates marginal revenue and marginal cost whereas a monopolistic competitor equates price and marginal cost. 
B)  the average total cost curve of a monopolistic competitor is tangent to the demand curve in long-run equilibrium, but the average total cost curve of a monopolist can be in a position below the price in long-run equilibrium. 
C)  the average total cost curve of a monopolist is tangent to the demand curve in long-run equilibrium, but the average total cost curve of a monopolistic competitor can be in a position below the price in long-run equilibrium. 
D)  the average total cost curve of a monopolist is tangent to the demand curve in long-run equilibrium, but the average total cost curve of a monopolistic competitor can be in a position above the price in long-run equilibrium. 
A)  a monopolist equates marginal revenue and marginal cost whereas a monopolistic competitor equates price and marginal cost. 
B)  the average total cost curve of a monopolistic competitor is tangent to the demand curve in long-run equilibrium, but the average total cost curve of a monopolist can be in a position below the price in long-run equilibrium. 
C)  the average total cost curve of a monopolist is tangent to the demand curve in long-run equilibrium, but the average total cost curve of a monopolistic competitor can be in a position below the price in long-run equilibrium. 
D)  the average total cost curve of a monopolist is tangent to the demand curve in long-run equilibrium, but the average total cost curve of a monopolistic competitor can be in a position above the price in long-run equilibrium.

Question 3

Refer to the graph shown. If this monopolist produces 45 units of output per day, it will:

Accepted Answer

A)  be maximizing profit. 
B)  charge a price that exceeds its marginal cost. 
C)  be able to increase profit by producing less per day. 
D)  be able to increase profit by producing more per day. 
A)  be maximizing profit. 
B)  charge a price that exceeds its marginal cost. 
C)  be able to increase profit by producing less per day. 
D)  be able to increase profit by producing more per day.

Question 4

A purpose of advertising is to make the:

Accepted Answer

A)  demand for one's product less inelastic. 
B)  demand for one's product more inelastic. 
C)  supply for one's product less elastic. 
D)  market closer to perfectly competitive. 
A)  demand for one's product less inelastic. 
B)  demand for one's product more inelastic. 
C)  supply for one's product less elastic. 
D)  market closer to perfectly competitive.

Question 5

Suppose marginal cost is constant and equal to 50 and marginal revenue equals 100 - 10Q. A profit-maximizing monopolist will set quantity equal to:

Accepted Answer

A)  3. 
B)  5. 
C)  7. 
D)  10. 
A)  3. 
B)  5. 
C)  7. 
D)  10.

Question 6

Refer to the graph shown. If hamburgers are produced by a pure monopoly firm that maximizes profit, the social cost of monopoly will be represented by the area:

Accepted Answer

A)  BFC. 
B)  GFHJ. 
C)  ABFG. 
D)  ABCG. 
A)  BFC. 
B)  GFHJ. 
C)  ABFG. 
D)  ABCG.

Question 7

The demand curve for a monopolist differs from the demand curve faced by a competitive firm because the demand curve for:

Accepted Answer

A)  a competitive firm lies above its marginal revenue curve. 
B)  a competitive firm is inelastic. 
C)  a monopolist is the market demand curve. 
D)  a monopolist lies below its marginal revenue curve. 
A)  a competitive firm lies above its marginal revenue curve. 
B)  a competitive firm is inelastic. 
C)  a monopolist is the market demand curve. 
D)  a monopolist lies below its marginal revenue curve.

Question 8

Refer to the table shown, which shows the demand schedule for a product sold by a monopolist. Marginal revenue is positive: $$\begin{array}{l}
\begin{array} { | c | c | } 
\hline \text { Price d product(\$)}& \text { Quantity demanded per year }\ 
\hline \$ 14 & 3 \
\hline \$ 12 & 4 \
\hline \$ 10 & 5 \
\hline \$ 8 & 6 \
\hline \$ 6 & 7 \
\hline
\end{array}
\end{array}$$

Accepted Answer

A)  when price is $10. 
B)  when price is above $10. 
C)  when price is below $10. 
D)  for every price. 
A)  when price is $10. 
B)  when price is above $10. 
C)  when price is below $10. 
D)  for every price.

Question 9

Refer to the graph shown. Holding cost conditions constant, if the monopolistically competitive firm represented were suddenly to find itself in a perfectly competitive market, the long-run equilibrium price would adjust to:

Accepted Answer

A)  $4. 
B)  $6. 
C)  $7. 
D)  $8. 
A)  $4. 
B)  $6. 
C)  $7. 
D)  $8.

Question 10

As firms leave a monopolistically competitive industry that is sustaining economic losses:

Accepted Answer

A)  the demand curves facing the remaining firms in the industry shift to the right. 
B)  the demand curves facing the remaining firms in the industry shift to the left. 
C)  total quantity demanded increases for the industry. 
D)  the market supply curve shifts to the right. 
A)  the demand curves facing the remaining firms in the industry shift to the right. 
B)  the demand curves facing the remaining firms in the industry shift to the left. 
C)  total quantity demanded increases for the industry. 
D)  the market supply curve shifts to the right.

Question 11

Refer to the graph shown. An unregulated, profit-maximizing monopolist will charge a price of:

Accepted Answer

A)  P1 and produce Q1 units of output. 
B)  P2 and produce Q2 units of output. 
C)  P3 and produce Q3 units of output. 
D)  P3 and produce Q1 units of output. 
A)  P1 and produce Q1 units of output. 
B)  P2 and produce Q2 units of output. 
C)  P3 and produce Q3 units of output. 
D)  P3 and produce Q1 units of output.

Question 12

Refer to the graph shown. The firm's profit-maximizing price is:

Accepted Answer

A)  e. 
B)  f. 
C)  g. 
D)  h. 
A)  e. 
B)  f. 
C)  g. 
D)  h.

Question 13

If a firm has a monopoly over the sale of camera drones and seeks to maximize profits, it:

Accepted Answer

A)  adjusts the price of the product until demand becomes perfectly inelastic. 
B)  will set the price of the product equal to the marginal cost of production. 
C)  will set the price of the product equal to the average total cost of production. 
D)  will set the price of the product so that its marginal revenue equals its marginal cost. 
A)  adjusts the price of the product until demand becomes perfectly inelastic. 
B)  will set the price of the product equal to the marginal cost of production. 
C)  will set the price of the product equal to the average total cost of production. 
D)  will set the price of the product so that its marginal revenue equals its marginal cost.

Question 14

Platform businesses are firms that:

Accepted Answer

A)  facilitate interaction among people. 
B)  produce platforms for producing goods. 
C)  focus on freedom of speech. 
D)  initiate international trade. 
A)  facilitate interaction among people. 
B)  produce platforms for producing goods. 
C)  focus on freedom of speech. 
D)  initiate international trade.

Question 15

For a monopolist, the point where the marginal revenue curve intersects the horizontal axis is:

Accepted Answer

A)  one-fourth of the distance between the origin and the point where the demand curve intersects the horizontal axis. 
B)  located at the same point where the demand curve intersects the horizontal axis, since for a monopolist, the demand curve and the marginal revenue curve overlap. 
C)  one-half the distance between the origin and the point where the demand curve intersects the horizontal axis. 
D)  unable to be determined without knowing the location of the marginal cost curve. 
A)  one-fourth of the distance between the origin and the point where the demand curve intersects the horizontal axis. 
B)  located at the same point where the demand curve intersects the horizontal axis, since for a monopolist, the demand curve and the marginal revenue curve overlap. 
C)  one-half the distance between the origin and the point where the demand curve intersects the horizontal axis. 
D)  unable to be determined without knowing the location of the marginal cost curve.

Question 16

Under monopolistic competition, there are:

Accepted Answer

A)  few barriers to entry. 
B)  only a small number of sellers in the market. 
C)  significant barriers to entry. 
D)  only a few buyers in the market. 
A)  few barriers to entry. 
B)  only a small number of sellers in the market. 
C)  significant barriers to entry. 
D)  only a few buyers in the market.

Question 17

If a monopolist increases sales from 10 to 11 by lowering its price from $40 to $38, its marginal revenue is:

Accepted Answer

A)  $2. 
B)  $18. 
C)  $400. 
D)  $418. 
A)  $2. 
B)  $18. 
C)  $400. 
D)  $418.

Question 18

A monopolistically competitive firm faces a downward-sloping demand curve.

Accepted Answer

A) True 
 B)False

Question 19

Because a monopolistic competitor has some monopoly power, advertising to increase that monopoly power makes sense as long as:

Accepted Answer

A)  the marginal benefit of advertising is positive. 
B)  the marginal cost of advertising is positive. 
C)  the marginal benefit of advertising exceeds the marginal cost of advertising. 
D)  the marginal cost of advertising exceeds the marginal benefit of advertising. 
A)  the marginal benefit of advertising is positive. 
B)  the marginal cost of advertising is positive. 
C)  the marginal benefit of advertising exceeds the marginal cost of advertising. 
D)  the marginal cost of advertising exceeds the marginal benefit of advertising.

Question 20

Dynamic pricing allows a website to use the personal information collected on a customer, such as income or location, to individualize the price of a product for each customer. Economists consider this type of pricing an example of:

Accepted Answer

A)  consumer sovereignty. 
B)  producer sovereignty. 
C)  price discrimination. 
D)  price gouging. 
A)  consumer sovereignty. 
B)  producer sovereignty. 
C)  price discrimination. 
D)  price gouging.

Exam 14: Monopoly and Monopolistic Competition

Marginal revenue is not equal to price for a monopolist because:

The difference between a monopolist and a monopolistic competitor is that:

Refer to the graph shown. If this monopolist produces 45 units of output per day, it will:

A purpose of advertising is to make the:

Suppose marginal cost is constant and equal to 50 and marginal revenue equals 100 - 10Q. A profit-maximizing monopolist will set quantity equal to:

Refer to the graph shown. If hamburgers are produced by a pure monopoly firm that maximizes profit, the social cost of monopoly will be represented by the area:

The demand curve for a monopolist differs from the demand curve faced by a competitive firm because the demand curve for:

Refer to the graph shown. Holding cost conditions constant, if the monopolistically competitive firm represented were suddenly to find itself in a perfectly competitive market, the long-run equilibrium price would adjust to:

As firms leave a monopolistically competitive industry that is sustaining economic losses:

Refer to the graph shown. An unregulated, profit-maximizing monopolist will charge a price of:

Refer to the graph shown. The firm's profit-maximizing price is:

If a firm has a monopoly over the sale of camera drones and seeks to maximize profits, it:

Platform businesses are firms that:

For a monopolist, the point where the marginal revenue curve intersects the horizontal axis is:

Under monopolistic competition, there are:

If a monopolist increases sales from 10 to 11 by lowering its price from $40 to $38, its marginal revenue is:

A monopolistically competitive firm faces a downward-sloping demand curve.

Because a monopolistic competitor has some monopoly power, advertising to increase that monopoly power makes sense as long as:

Dynamic pricing allows a website to use the personal information collected on a customer, such as income or location, to individualize the price of a product for each customer. Economists consider this type of pricing an example of:

Economics and Economic Reasoning

The Production Possibility Model, Trade, and Globalization

Economic Institutions

Supply and Demand

Using Supply and Demand

Describing Supply and Demand: Elasticities

Taxation and Government Intervention

Market Failure Versus Government Failure

Comparative Advantage, Exchange Rates, and Globalization

International Trade Policy

Production and Cost Analysis I

Production and Cost Analysis II

Perfect Competition

Oligopoly and Antitrust Policy

Real-World Competition and Technology

Work and the Labor Market

Who Gets What the Distribution of Income

The Logic of Individual Choice: the Foundation of Supply and Demand

Game Theory, Strategic Decision Making, and Behavioral Economics

Thinking Like a Modern Economist

Behavioral Economics and Modern Economic Policy

Microeconomic Policy, Economic Reasoning, and Beyond

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