Question 1

Refer to the graph shown. Area C represents:

Accepted Answer

A)  the total loss of surplus by consumers resulting from a monopoly. 
B)  the cost to society of increasing output from Qm to Qc. 
C)  consumer surplus redistributed to the monopolist. 
D)  the loss of surplus by producers resulting from a monopoly. 
A)  the total loss of surplus by consumers resulting from a monopoly. 
B)  the cost to society of increasing output from Qm to Qc. 
C)  consumer surplus redistributed to the monopolist. 
D)  the loss of surplus by producers resulting from a monopoly.

Question 2

A monopolist engages in price discrimination to:

Accepted Answer

A)  increase price beyond the profit-maximizing level. 
B)  further restrict output to increase its profits. 
C)  increase consumer surplus. 
D)  maximize profits. 
A)  increase price beyond the profit-maximizing level. 
B)  further restrict output to increase its profits. 
C)  increase consumer surplus. 
D)  maximize profits.

Question 3

For a natural monopoly:

Accepted Answer

A) ATC > MC. B) ATC < MC. C) ATC = MC. D) there is no relationship between ATC and MC. A) ATC > MC. B) ATC < MC. C) ATC = MC. D) there is no relationship between ATC and MC.

Question 4

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

Accepted Answer

A)  300. 
B)  500. 
C)  900. 
D)  1,000. 
A)  300. 
B)  500. 
C)  900. 
D)  1,000.

Question 5

Refer to the graph shown. The profits earned by the monopolistically competitive firm represented equal:

Accepted Answer

A)  $15. 
B)  $45. 
C)  $120. 
D)  $0. 
A)  $15. 
B)  $45. 
C)  $120. 
D)  $0.

Question 6

Refer to the graph shown. The equilibrium quantity for the monopolistically competitive firm represented is:

Accepted Answer

A)  30. 
B)  50. 
C)  60. 
D)  70. 
A)  30. 
B)  50. 
C)  60. 
D)  70.

Question 7

Microsoft has a special version of its Windows operating system that it sells at a low price in countries where cheap pirated software is widespread. The cost of producing another copy of this software is the same as the cost of producing another copy of the regular Windows product. Selling this "special edition" software at a low price in certain countries is very similar to what economists call:

Accepted Answer

A)  price discrimination. 
B)  natural monopoly. 
C)  a price taker. 
D)  welfare loss. 
A)  price discrimination. 
B)  natural monopoly. 
C)  a price taker. 
D)  welfare loss.

Question 8

Refer to the graph shown of average costs for a typical firm. If there were two firms each producing 500 units, per-unit costs would be:

Accepted Answer

A)  $6. 
B)  $8. 
C)  $10. 
D)  $800. 
A)  $6. 
B)  $8. 
C)  $10. 
D)  $800.

Question 9

Significant barriers to entry exist in a monopolistically competitive industry.

Accepted Answer

A) True 
 B)False

Question 10

The best-selling mystery To the Nines by Janet Evanovich was sold in hardcover for $25.95 when it was released. One year later, the publisher issued a softcover edition for $7.99. If the marginal cost of printing a softcover book is not much less than the marginal cost of printing a hardcover, the pricing difference:

Accepted Answer

A)  cannot be explained by economic theory. 
B)  is probably due to price discrimination in which the seller charges a higher price to consumers with a more elastic demand. 
C)  is probably due to price discrimination in which the seller charges a higher price to consumers with less elastic demand. 
D)  must be due to a difference in fixed costs. 
A)  cannot be explained by economic theory. 
B)  is probably due to price discrimination in which the seller charges a higher price to consumers with a more elastic demand. 
C)  is probably due to price discrimination in which the seller charges a higher price to consumers with less elastic demand. 
D)  must be due to a difference in fixed costs.

Question 11

Platform monopolies:

Accepted Answer

A)  are bad because they earn monopoly profits. 
B)  are good because they earn monopoly profits. 
C)  earn low profits because of network externalities and ought to be broken up. 
D)  provide an importance service, but present new types of antitrust problems. 
A)  are bad because they earn monopoly profits. 
B)  are good because they earn monopoly profits. 
C)  earn low profits because of network externalities and ought to be broken up. 
D)  provide an importance service, but present new types of antitrust problems.

Question 12

The price a monopolist sets is equal to:

Accepted Answer

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

Question 13

The price at which a monopolistically competitive firm sells its product:

Accepted Answer

A)  exceeds the marginal cost of production. 
B)  produces economic profits in both the long run and the short run. 
C)  equals the marginal cost of production. 
D)  is less than the marginal cost of production. 
A)  exceeds the marginal cost of production. 
B)  produces economic profits in both the long run and the short run. 
C)  equals the marginal cost of production. 
D)  is less than the marginal cost of production.

Question 14

Refer to the graph shown. If the firm maximizes profit, its daily output will be:

Accepted Answer

A)  10 units. 
B)  20 units. 
C)  30 units. 
D)  45 units. 
A)  10 units. 
B)  20 units. 
C)  30 units. 
D)  45 units.

Question 15

Refer to the table shown, which shows the demand schedule for a firm that has a monopoly on the sale of computers in the country of Oz. If the marginal cost of producing computers is $1,000 no matter how many are produced and the monopolist seeks to maximize profit, it should set the price of computers at: $$\begin{array} { | r | r | } 
\hline{ \begin{array} { c } 
\text { Price of } \
\text { computers (\$) }
\end{array} } & \text { Quantity demanded per year } \
\hline 5,000 & 100 \
\hline 4,000 & 200 \
\hline 3,000 & 300 \
\hline 2,000 & 400 \
\hline 1,000 & 500 \
\hline
\end{array}$$

Accepted Answer

A)  $1,000. 
B)  $2,000. 
C)  $3,000. 
D)  $4,000. 
A)  $1,000. 
B)  $2,000. 
C)  $3,000. 
D)  $4,000.

Question 16

A monopolist will always make a profit in the short run.

Accepted Answer

A) True 
 B)False

Question 17

If P = 3Qs + 3 represents market supply for a competitive industry and market demand is given by Qd = 31 - 1/3 P, the equilibrium price is:

Accepted Answer

A)  $10. 
B)  $15. 
C)  $20. 
D)  $48. 
A)  $10. 
B)  $15. 
C)  $20. 
D)  $48.

Question 18

Refer to the graph shown. If the monopoly firm maximizes profit, it will produce:

Accepted Answer

A)  15 units of output and charge a price of $3.50 per unit. 
B)  15 units of output and charge a price of $2.00 per unit. 
C)  25 units of output and charge a price of $2.50 per unit. 
D)  30 units of output and charge a price of $2.00 per unit. 
A)  15 units of output and charge a price of $3.50 per unit. 
B)  15 units of output and charge a price of $2.00 per unit. 
C)  25 units of output and charge a price of $2.50 per unit. 
D)  30 units of output and charge a price of $2.00 per unit.

Question 19

Refer to the graph shown. The firm in this monopolistically competitive industry will:

Accepted Answer

A)  earn economic profits of $70,000 per year. 
B)  earn economic profits of $140,000 per year. 
C)  incur economic losses of $140,000 per year. 
D)  incur economic losses of $70,000 per year. 
A)  earn economic profits of $70,000 per year. 
B)  earn economic profits of $140,000 per year. 
C)  incur economic losses of $140,000 per year. 
D)  incur economic losses of $70,000 per year.

Question 20

As the number of people who use Facebook increases, the value of Facebook to its users increases. This is an example of:

Accepted Answer

A)  platform externalities. 
B)  platform economics. 
C)  network efficiencies. 
D)  network externalities. 
A)  platform externalities. 
B)  platform economics. 
C)  network efficiencies. 
D)  network externalities.

Refer to the graph shown. Area C represents:

A monopolist engages in price discrimination to:

For a natural monopoly:

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

Refer to the graph shown. The profits earned by the monopolistically competitive firm represented equal:

Refer to the graph shown. The equilibrium quantity for the monopolistically competitive firm represented is:

Refer to the graph shown of average costs for a typical firm. If there were two firms each producing 500 units, per-unit costs would be:

Significant barriers to entry exist in a monopolistically competitive industry.

Platform monopolies:

The price a monopolist sets is equal to:

The price at which a monopolistically competitive firm sells its product:

Refer to the graph shown. If the firm maximizes profit, its daily output will be:

A monopolist will always make a profit in the short run.

If P = 3Q_s + 3 represents market supply for a competitive industry and market demand is given by Q_d = 31 - 1/3 P, the equilibrium price is:

Refer to the graph shown. If the monopoly firm maximizes profit, it will produce:

Refer to the graph shown. The firm in this monopolistically competitive industry will:

As the number of people who use Facebook increases, the value of Facebook to its users increases. This is 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

Filters

Exam 14: Monopoly and Monopolistic Competition

Refer to the graph shown. Area C represents:

A monopolist engages in price discrimination to:

For a natural monopoly:

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

Refer to the graph shown. The profits earned by the monopolistically competitive firm represented equal:

Refer to the graph shown. The equilibrium quantity for the monopolistically competitive firm represented is:

Refer to the graph shown of average costs for a typical firm. If there were two firms each producing 500 units, per-unit costs would be:

Significant barriers to entry exist in a monopolistically competitive industry.

Platform monopolies:

The price a monopolist sets is equal to:

The price at which a monopolistically competitive firm sells its product:

Refer to the graph shown. If the firm maximizes profit, its daily output will be:

A monopolist will always make a profit in the short run.

If P = 3Qs + 3 represents market supply for a competitive industry and market demand is given by Qd = 31 - 1/3 P, the equilibrium price is:

Refer to the graph shown. If the monopoly firm maximizes profit, it will produce:

Refer to the graph shown. The firm in this monopolistically competitive industry will:

As the number of people who use Facebook increases, the value of Facebook to its users increases. This is 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

Filters

If P = 3Q_s + 3 represents market supply for a competitive industry and market demand is given by Q_d = 31 - 1/3 P, the equilibrium price is: