Question 1

A price-discriminating monopolist will charge a higher price to individuals whose demand is:

Accepted Answer

A)  more inelastic. 
B)  more elastic. 
C)  unit elastic. 
D)  unit inelastic. 
A)  more inelastic. 
B)  more elastic. 
C)  unit elastic. 
D)  unit inelastic.

Question 2

Refer to the graph shown depicting a monopolistically competitive firm. The marginal cost curve is represented by curve:

Accepted Answer

A)  A. 
B)  B. 
C)  C. 
D)  D. 
A)  A. 
B)  B. 
C)  C. 
D)  D.

Question 3

What is a central reason monopoly forces are especially strong in sectors dominated by platform businesses?

Accepted Answer

A)  High marginal costs of production 
B)  International trade restrictions 
C)  Network externalities 
D)  Patent protections 
A)  High marginal costs of production 
B)  International trade restrictions 
C)  Network externalities 
D)  Patent protections

Question 4

Currently, it is illegal to import prescription drugs into the United States despite the fact that U.S. consumers could buy drugs from Canada at lower prices than those available in the United States. What set of cost curves is most consistent with the price difference between the United States and Canada?

Accepted Answer

A)  Producing a drug has a high and constant marginal cost. 
B)  Producing a drug has a high fixed cost with a relatively low marginal cost. 
C)  Producing a drug has a low fixed cost with a relatively high marginal cost. 
D)  Producing a drug has a low fixed cost and a rising marginal cost. 
A)  Producing a drug has a high and constant marginal cost. 
B)  Producing a drug has a high fixed cost with a relatively low marginal cost. 
C)  Producing a drug has a low fixed cost with a relatively high marginal cost. 
D)  Producing a drug has a low fixed cost and a rising marginal cost.

Question 5

If a market with monopolistic competition became a monopoly market, output would:

Accepted Answer

A)  rise. 
B)  fall. 
C)  not change. 
D)  be incomparable. 
A)  rise. 
B)  fall. 
C)  not change. 
D)  be incomparable.

Question 6

Which of the following is the best example of a network externality?

Accepted Answer

A)  Pollution 
B)  Parks 
C)  Museums 
D)  The Internet 
A)  Pollution 
B)  Parks 
C)  Museums 
D)  The Internet

Question 7

Which of the following is the best example of a market that exhibits network externalities?

Accepted Answer

A)  Social media 
B)  Agriculture 
C)  Education 
D)  Electricity 
A)  Social media 
B)  Agriculture 
C)  Education 
D)  Electricity

Question 8

Refer to the graph shown. Assuming that the monopoly maximizes profit, it will earn profits of:

Accepted Answer

A)  $8,000 per day. 
B)  $20,000 per day. 
C)  $40,000 per day. 
D)  $160,000 per day. 
A)  $8,000 per day. 
B)  $20,000 per day. 
C)  $40,000 per day. 
D)  $160,000 per day.

Question 9

If government regulators want a natural monopolist to earn only zero economic profit, they will set price equal to:

Accepted Answer

A)  marginal cost (M
C) . 
B)  average variable cost (AV
C) . 
C)  average fixed cost (AF
C) . 
D)  average total cost (AT
C) . 
A)  marginal cost (M
C) . 
B)  average variable cost (AV
C) . 
C)  average fixed cost (AF
C) . 
D)  average total cost (AT
C) .

Question 10

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

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 11

When starting up, platform monopolies often spend money like it was free, and investors often are willing to provide money for them to do so. A likely explanation for this is that

Accepted Answer

A)  firms are competing for first mover advantage. 
B)  investors are irrational. 
C)  monopolies play by different rules than do competitive firms. 
D)  successful monopolies receive benefits from government. 
A)  firms are competing for first mover advantage. 
B)  investors are irrational. 
C)  monopolies play by different rules than do competitive firms. 
D)  successful monopolies receive benefits from government.

Question 12

Refer to the graph shown. If this monopolist were forced to set price equal to average total cost, it would charge a price of:

Accepted Answer

A)  $0.15. 
B)  $0.30. 
C)  $0.75. 
D)  $0.90. 
A)  $0.15. 
B)  $0.30. 
C)  $0.75. 
D)  $0.90.

Question 13

Refer to the graph shown depicting a monopolistically competitive firm. The demand curve is represented by curve:

Accepted Answer

A)  A. 
B)  B. 
C)  C. 
D)  D. 
A)  A. 
B)  B. 
C)  C. 
D)  D.

Question 14

An industry that has many sellers offering slightly differentiated products is called:

Accepted Answer

A)  perfectly competitive. 
B)  monopolistically competitive. 
C)  oligopolistic. 
D)  monopolistic. 
A)  perfectly competitive. 
B)  monopolistically competitive. 
C)  oligopolistic. 
D)  monopolistic.

Question 15

Refer to the graph shown. At the price of $1.60, given market demand for the product:

Accepted Answer

A)  the firm will incur losses. 
B)  the firm will make zero economic profits. 
C)  there will be a shortage of the product. 
D)  the firm will go out of business. 
A)  the firm will incur losses. 
B)  the firm will make zero economic profits. 
C)  there will be a shortage of the product. 
D)  the firm will go out of business.

Question 16

Refer to the graph shown of average costs for a typical firm. If this industry consisted of one firm producing 1,000 units and one firm producing 500 units:

Accepted Answer

A)  the larger firm probably would be forced out through price competition. 
B)  the larger firm would earn higher profit than the smaller firm, but they could both survive indefinitely. 
C)  the smaller firm probably would be forced out through price competition. 
D)  there is no way to predict which firm would have a competitive advantage. 
A)  the larger firm probably would be forced out through price competition. 
B)  the larger firm would earn higher profit than the smaller firm, but they could both survive indefinitely. 
C)  the smaller firm probably would be forced out through price competition. 
D)  there is no way to predict which firm would have a competitive advantage.

Question 17

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

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 18

Why are patents important to those who hold them?

Accepted Answer

A)  Without patents, there will no longer be economies of scale in production. 
B)  Patents act as a barrier to entry, allowing monopoly profits. 
C)  Without patents, there would be considerably more price discrimination in the market. 
D)  Patents actually do not matter because they do not guarantee that a firm will make a profit. 
A)  Without patents, there will no longer be economies of scale in production. 
B)  Patents act as a barrier to entry, allowing monopoly profits. 
C)  Without patents, there would be considerably more price discrimination in the market. 
D)  Patents actually do not matter because they do not guarantee that a firm will make a profit.

Question 19

If MR = MC, a monopolist should:

Accepted Answer

A)  decrease production. 
B)  increase production. 
C)  maintain the same level of production. 
D)  stop producing. 
A)  decrease production. 
B)  increase production. 
C)  maintain the same level of production. 
D)  stop producing.

Question 20

Refer to the graph shown. If this monopolist were allowed to choose the profit-maximizing level of output, it would charge a price of:

Accepted Answer

A)  $2. 
B)  $3. 
C)  $8. 
D)  $12. 
A)  $2. 
B)  $3. 
C)  $8. 
D)  $12.

A price-discriminating monopolist will charge a higher price to individuals whose demand is:

Refer to the graph shown depicting a monopolistically competitive firm. The marginal cost curve is represented by curve:

What is a central reason monopoly forces are especially strong in sectors dominated by platform businesses?

If a market with monopolistic competition became a monopoly market, output would:

Which of the following is the best example of a network externality?

Which of the following is the best example of a market that exhibits network externalities?

Refer to the graph shown. Assuming that the monopoly maximizes profit, it will earn profits of:

If government regulators want a natural monopolist to earn only zero economic profit, they will set price equal to:

When starting up, platform monopolies often spend money like it was free, and investors often are willing to provide money for them to do so. A likely explanation for this is that

Refer to the graph shown. If this monopolist were forced to set price equal to average total cost, it would charge a price of:

Refer to the graph shown depicting a monopolistically competitive firm. The demand curve is represented by curve:

An industry that has many sellers offering slightly differentiated products is called:

Refer to the graph shown. At the price of $1.60, given market demand for the product:

Refer to the graph shown of average costs for a typical firm. If this industry consisted of one firm producing 1,000 units and one firm producing 500 units:

Why are patents important to those who hold them?

If MR = MC, a monopolist should:

Refer to the graph shown. If this monopolist were allowed to choose the profit-maximizing level of output, it would charge a price 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

Filters

Exam 14: Monopoly and Monopolistic Competition

A price-discriminating monopolist will charge a higher price to individuals whose demand is:

Refer to the graph shown depicting a monopolistically competitive firm. The marginal cost curve is represented by curve:

What is a central reason monopoly forces are especially strong in sectors dominated by platform businesses?

If a market with monopolistic competition became a monopoly market, output would:

Which of the following is the best example of a network externality?

Which of the following is the best example of a market that exhibits network externalities?

Refer to the graph shown. Assuming that the monopoly maximizes profit, it will earn profits of:

If government regulators want a natural monopolist to earn only zero economic profit, they will set price equal to:

When starting up, platform monopolies often spend money like it was free, and investors often are willing to provide money for them to do so. A likely explanation for this is that

Refer to the graph shown. If this monopolist were forced to set price equal to average total cost, it would charge a price of:

Refer to the graph shown depicting a monopolistically competitive firm. The demand curve is represented by curve:

An industry that has many sellers offering slightly differentiated products is called:

Refer to the graph shown. At the price of $1.60, given market demand for the product:

Refer to the graph shown of average costs for a typical firm. If this industry consisted of one firm producing 1,000 units and one firm producing 500 units:

Why are patents important to those who hold them?

If MR = MC, a monopolist should:

Refer to the graph shown. If this monopolist were allowed to choose the profit-maximizing level of output, it would charge a price 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

Filters