Question 1

If the quantity demanded at a price of $10 is 2,000 and the quantity demanded at a price of $8 is 2,400, a price-discriminating monopolist would want to:

Accepted Answer

A)  charge all consumers the higher price of $10 and sell 2,000 units. 
B)  charge all consumers $8 in order to increase quantity sold to 2,400. 
C)  sell 2,000 units for $8 each and then sell an additional 400 units for $10 each. 
D)  sell 2,000 units for $10 each and then sell an additional 400 units for $8 each. 
A)  charge all consumers the higher price of $10 and sell 2,000 units. 
B)  charge all consumers $8 in order to increase quantity sold to 2,400. 
C)  sell 2,000 units for $8 each and then sell an additional 400 units for $10 each. 
D)  sell 2,000 units for $10 each and then sell an additional 400 units for $8 each.

Question 2

Refer to the graph shown of a monopolistically competitive firm. The graph shows that:

Accepted Answer

A)  the industry is in long-run equilibrium. 
B)  new firms will enter the industry. 
C)  some existing firms will leave the industry. 
D)  the price of the product is $90. 
A)  the industry is in long-run equilibrium. 
B)  new firms will enter the industry. 
C)  some existing firms will leave the industry. 
D)  the price of the product is $90.

Question 3

Refer to the graph shown. At an output of a, the monopolist should:

Accepted Answer

A)  not change output since profits are maximized. 
B)  reduce output to increase profits. 
C)  increase output to increase profits. 
D)  increase price to increase profits. 
A)  not change output since profits are maximized. 
B)  reduce output to increase profits. 
C)  increase output to increase profits. 
D)  increase price to increase profits.

Question 4

Refer to the graph shown. Producer surplus that is lost to society as a result of monopoly is:

Accepted Answer

A)  $2.50. 
B)  $5.00. 
C)  $15.625. 
D)  $16.875. 
A)  $2.50. 
B)  $5.00. 
C)  $15.625. 
D)  $16.875.

Question 5

Refer to the graph shown. If hamburgers are produced by a pure monopoly that maximizes profit, the monopoly firm will:

Accepted Answer

A)  earn $200 economic profit per day. 
B)  just cover its opportunity cost. 
C)  earn $100 per day. 
D)  go out of business. 
A)  earn $200 economic profit per day. 
B)  just cover its opportunity cost. 
C)  earn $100 per day. 
D)  go out of business.

Question 6

Natural monopoly exists when:

Accepted Answer

A)  one firm can supply the entire quantity demanded at higher cost than two or more firms. 
B)  one firm can supply the entire quantity demanded at lower cost than two or more firms. 
C)  one firm can supply the entire quantity demanded at the same cost as two or more firms. 
D)  the long-run average cost curve exhibits constant returns to scale. 
A)  one firm can supply the entire quantity demanded at higher cost than two or more firms. 
B)  one firm can supply the entire quantity demanded at lower cost than two or more firms. 
C)  one firm can supply the entire quantity demanded at the same cost as two or more firms. 
D)  the long-run average cost curve exhibits constant returns to scale.

Question 7

The price at which a monopolistic competitor sells its product in both the long run and the short run is equal to:

Accepted Answer

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

Question 8

If a monopolist increases output from 14 to 15 by lowering its price from $32 to $31, marginal revenue is:

Accepted Answer

A)  $1. 
B)  $17. 
C)  $448. 
D)  $465. 
A)  $1. 
B)  $17. 
C)  $448. 
D)  $465.

Question 9

Refer to the graph shown. If this monopolist charges a price of $8 for its product, it:

Accepted Answer

A)  maximizes profit. 
B)  incurs losses. 
C)  earns zero economic profits. 
D)  can increase profits by increasing output. 
A)  maximizes profit. 
B)  incurs losses. 
C)  earns zero economic profits. 
D)  can increase profits by increasing output.

Question 10

Refer to the graph shown of average costs for a firm. This firm exhibits:

Accepted Answer

A)  economies of scale. 
B)  diseconomies of scale. 
C)  profits. 
D)  X-inefficiency. 
A)  economies of scale. 
B)  diseconomies of scale. 
C)  profits. 
D)  X-inefficiency.

Question 11

Refer to the graph shown. If a natural monopolist were not regulated, the firm would charge:

Accepted Answer

A)  P1. 
B)  P2. 
C)  P3. 
D)  P4. 
A)  P1. 
B)  P2. 
C)  P3. 
D)  P4.

Question 12

Refer to the graph shown of a monopolistically competitive firm. If the firm maximizes profit, it will earn:

Accepted Answer

A)  zero economic profit this year. 
B)  $320,000 economic profit this year. 
C)  $84,000 economic profit this year. 
D)  $56,000 economic profit this year. 
A)  zero economic profit this year. 
B)  $320,000 economic profit this year. 
C)  $84,000 economic profit this year. 
D)  $56,000 economic profit this year.

Question 13

If a natural monopolist were forced to set price equal to average cost, it would:

Accepted Answer

A)  earn a normal profit. 
B)  suffer losses. 
C)  earn excessive profit. 
D)  be forced to produce more than the socially optimal level of output. 
A)  earn a normal profit. 
B)  suffer losses. 
C)  earn excessive profit. 
D)  be forced to produce more than the socially optimal level of output.

Question 14

If MC = Q/15 represents marginal cost for a monopolist and market demand is given by Qd = 500 - 10P, the monopolist maximizes profit by setting price equal to:

Accepted Answer

A)  $12.50. 
B)  $20.00. 
C)  $31.25. 
D)  $50.00. 
A)  $12.50. 
B)  $20.00. 
C)  $31.25. 
D)  $50.00.

Question 15

Refer to the graph shown. If hamburgers are produced by a perfectly competitive industry with a market demand D:

Accepted Answer

A)  output will be the same as it would be under monopoly. 
B)  price will equal marginal cost. 
C)  price will equal $6. 
D)  price will be greater than marginal revenue. 
A)  output will be the same as it would be under monopoly. 
B)  price will equal marginal cost. 
C)  price will equal $6. 
D)  price will be greater than marginal revenue.

Question 16

Suppose marginal cost is constant and equal to 100 and market demand is given by Qd = 20- 1/10P. A profit-maximizing monopolist will set price equal to:

Accepted Answer

A)  10. 
B)  100. 
C)  150. 
D)  300. 
A)  10. 
B)  100. 
C)  150. 
D)  300.

Question 17

A monopoly firm is different from a competitive firm in that:

Accepted Answer

A)  there are many substitutes for a monopolist's product whereas there are no substitutes for a competitive firm's product. 
B)  a monopolist's demand curve is perfectly inelastic whereas a competitive firm's demand curve is perfectly elastic. 
C)  a monopolist can influence market price whereas a competitive firm cannot. 
D)  a competitive firm has a U-shaped average cost curve whereas a monopolist does not. 
A)  there are many substitutes for a monopolist's product whereas there are no substitutes for a competitive firm's product. 
B)  a monopolist's demand curve is perfectly inelastic whereas a competitive firm's demand curve is perfectly elastic. 
C)  a monopolist can influence market price whereas a competitive firm cannot. 
D)  a competitive firm has a U-shaped average cost curve whereas a monopolist does not.

Question 18

Under normal monopoly, price exceeds marginal cost, which implies that the:

Accepted Answer

A)  total cost to society of producing output is less than the total benefit. 
B)  total benefit to society of producing output is less than the total cost. 
C)  marginal cost to society of increasing output is lower than the marginal benefit. 
D)  marginal cost to society of increasing output is greater than the marginal benefit. 
A)  total cost to society of producing output is less than the total benefit. 
B)  total benefit to society of producing output is less than the total cost. 
C)  marginal cost to society of increasing output is lower than the marginal benefit. 
D)  marginal cost to society of increasing output is greater than the marginal benefit.

Question 19

Refer to the graph shown. If the monopolist produces at the output level at which price equals marginal cost, it will:

Accepted Answer

A)  maximize profits. 
B)  earn zero profits. 
C)  earn positive profits but not maximum profits. 
D)  incur a loss. 
A)  maximize profits. 
B)  earn zero profits. 
C)  earn positive profits but not maximum profits. 
D)  incur a loss.

Question 20

Refer to the graph shown. The short-run equilibrium price for the monopolistically competitive firm represented is:

Accepted Answer

A)  $0.60. 
B)  $0.85. 
C)  $0.95. 
D)  $1.00. 
A)  $0.60. 
B)  $0.85. 
C)  $0.95. 
D)  $1.00.

Exam 14: Monopoly and Monopolistic Competition

If the quantity demanded at a price of $10 is 2,000 and the quantity demanded at a price of $8 is 2,400, a price-discriminating monopolist would want to:

Refer to the graph shown of a monopolistically competitive firm. The graph shows that:

Refer to the graph shown. At an output of a, the monopolist should:

Refer to the graph shown. Producer surplus that is lost to society as a result of monopoly is:

Refer to the graph shown. If hamburgers are produced by a pure monopoly that maximizes profit, the monopoly firm will:

Natural monopoly exists when:

The price at which a monopolistic competitor sells its product in both the long run and the short run is equal to:

If a monopolist increases output from 14 to 15 by lowering its price from $32 to $31, marginal revenue is:

Refer to the graph shown. If this monopolist charges a price of $8 for its product, it:

Refer to the graph shown of average costs for a firm. This firm exhibits:

Refer to the graph shown. If a natural monopolist were not regulated, the firm would charge:

Refer to the graph shown of a monopolistically competitive firm. If the firm maximizes profit, it will earn:

If a natural monopolist were forced to set price equal to average cost, it would:

If MC = Q/15 represents marginal cost for a monopolist and market demand is given by Qd = 500 - 10P, the monopolist maximizes profit by setting price equal to:

Refer to the graph shown. If hamburgers are produced by a perfectly competitive industry with a market demand D:

Suppose marginal cost is constant and equal to 100 and market demand is given by Qd = 20- 1/10P. A profit-maximizing monopolist will set price equal to:

A monopoly firm is different from a competitive firm in that:

Under normal monopoly, price exceeds marginal cost, which implies that the:

Refer to the graph shown. If the monopolist produces at the output level at which price equals marginal cost, it will:

Refer to the graph shown. The short-run equilibrium price for the monopolistically competitive firm represented is:

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

If MC = Q/15 represents marginal cost for a monopolist and market demand is given by Q_d = 500 - 10P, the monopolist maximizes profit by setting price equal to:

Suppose marginal cost is constant and equal to 100 and market demand is given by Q_d = 20- 1/10P. A profit-maximizing monopolist will set price equal to: