Question 1

In the absence of economies of scale, advertising and product differentiation:

Accepted Answer

A) reduce social welfare by increasing average total cost. 
B) increase social welfare by giving consumers a greater variety of goods to choose from. 
C) have an uncertain effect on welfare because they increase both average total cost and product variety. 
D) benefit consumers if product variety increases. 
A) reduce social welfare by increasing average total cost. 
B) increase social welfare by giving consumers a greater variety of goods to choose from. 
C) have an uncertain effect on welfare because they increase both average total cost and product variety. 
D) benefit consumers if product variety increases.

Question 2

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

Accepted Answer

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

Question 3

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 4

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 5

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 6

Refer to the graph shown. Areas C and D represent:

Accepted Answer

A) the 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 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 7

Using the diagram below compare the monopoly price and quantity (label them PM and QM,respectively)to the perfectly competitive price and quantity (label them PC and QC,respectively).

Accepted Answer

Note that the monopolist's quantity is w

Question 8

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 9

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 10

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 11

Graphically show the transition from short-run to long-run equilibrium for a monopolistic competitor.Begin by drawing a graph of short-run equilibrium.In the graph,have the firm make an economic profit at its profit-maximizing level of output.Identify its short-run profit,and then show and describe how profits will disappear in long-run equilibrium.

Accepted Answer

In the graph shown below,the short-run e

Question 12

Under monopolistic competition, a firm's ability to influence the price of the product it sells arises because:

Accepted Answer

A) sellers in the market have large market shares. 
B) sellers in the market have small market shares. 
C) the product of each seller is differentiated from that of others. 
D) each seller sells a standardized product. 
A) sellers in the market have large market shares. 
B) sellers in the market have small market shares. 
C) the product of each seller is differentiated from that of others. 
D) each seller sells a standardized product.

Question 13

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.

Question 14

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.

Exam 14: Monopoly and Monopolistic Competition

In the absence of economies of scale, advertising and product differentiation:

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

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

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

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

Refer to the graph shown. Areas C and D represent:

Using the diagram below compare the monopoly price and quantity (label them PM and QM,respectively)to the perfectly competitive price and quantity (label them PC and QC,respectively).

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

The price a monopolist sets is equal to:

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

Under monopolistic competition, a firm's ability to influence the price of the product it sells arises because:

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:

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

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

Economic Growth, Business Cycles, and Unemployment

Measuring and Describing the Aggregate Economy

The Keynesian Short-Run Policy Model: Demand-Side Policies

The Classical Long-Run Policy Model: Growth and Supply-Side Policies

The Financial Sector and the Economy

Monetary Policy

Financial Crises, Panics, and Unconventional Monetary Policy

Deficits and Debt: the Austerity Debate

The Fiscal Policy Dilemma

Jobs and Unemployment

Inflation, Deflation, and Macro Policy

International Financial Policy

Macro Policy in a Global Setting

Structural Stagnation and Globalization

Macro Policy in Developing Countries

Filters

Using the diagram below compare the monopoly price and quantity (label them P_M and Q_M,respectively)to the perfectly competitive price and quantity (label them P_C and Q_C,respectively).