Question 1

Refer to the graph shown. The profit-maximizing monopolist would be:

Accepted Answer

A) earning accounting but not economic profits. 
B) sustaining a loss. 
C) making zero economic profits. 
D) making economic profits. 
A) earning accounting but not economic profits. 
B) sustaining a loss. 
C) making zero economic profits. 
D) making economic profits.

Question 2

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 3

Of the following, the most likely example of price discrimination is when:

Accepted Answer

A) a firm sells different shoes for different prices. 
B) hotels charge different rates for the same rooms when conventions are held. 
C) restaurants charge different prices for chicken and beef. 
D) supermarkets charge different prices for oranges and apples. 
A) a firm sells different shoes for different prices. 
B) hotels charge different rates for the same rooms when conventions are held. 
C) restaurants charge different prices for chicken and beef. 
D) supermarkets charge different prices for oranges and apples.

Question 4

When you use a service like Facebook for free, it is likely that:

Accepted Answer

A) you are both the customer and the product. 
B) you are not the customer; you are the product. 
C) the provider is almost invariably a nonprofit company. 
D) the provider is almost never a nonprofit company. 
A) you are both the customer and the product. 
B) you are not the customer; you are the product. 
C) the provider is almost invariably a nonprofit company. 
D) the provider is almost never a nonprofit company.

Question 5

A profit-maximizing monopolist will always set price equal to marginal cost.

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

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

Question 7

What does it mean to say that a monopolist is practicing price discrimination?

Accepted Answer

A monopolist is practicing pri

Question 8

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 9

A significant difference between monopoly and perfect competition is that:

Accepted Answer

A) free entry and exit is possible in a monopolized industry but impossible in a competitive industry. 
B) competitive firms control market supply, but monopolies do not. 
C) the monopolist's demand curve is the industry demand curve, whereas the competitive firm's demand curve is perfectly elastic. 
D) profits are driven to zero in a monopolized industry but may be positive in a competitive industry. 
A) free entry and exit is possible in a monopolized industry but impossible in a competitive industry. 
B) competitive firms control market supply, but monopolies do not. 
C) the monopolist's demand curve is the industry demand curve, whereas the competitive firm's demand curve is perfectly elastic. 
D) profits are driven to zero in a monopolized industry but may be positive in a competitive industry.

Question 10

The profit-maximizing output level for a monopolist occurs where marginal revenue equals marginal cost.

Accepted Answer

A) True 
 B)False

Question 11

Refer to the graph shown. If this graph represents a competitive market, the equilibrium price and quantity will be:

Accepted Answer

A) $13.50 and 325, respectively. 
B) $7 and 325, respectively. 
C) $10 and 500, respectively. 
D) $7 and 750, respectively. 
A) $13.50 and 325, respectively. 
B) $7 and 325, respectively. 
C) $10 and 500, respectively. 
D) $7 and 750, respectively.

Question 12

If a monopolist produces beyond the quantity where MC = MR:

Accepted Answer

A) the increase in revenue is less than the increase in cost. 
B) total revenue is less than total cost. 
C) the increase in revenue exceeds the increase in cost. 
D) total revenue exceeds total cost. 
A) the increase in revenue is less than the increase in cost. 
B) total revenue is less than total cost. 
C) the increase in revenue exceeds the increase in cost. 
D) total revenue exceeds total cost.

Question 13

Refer to the graph shown. If this monopolist were forced to set price equal to marginal cost, in the long run it probably would produce:

Accepted Answer

A) 0 units of output. 
B) 300 units of output. 
C) 500 units of output. 
D) 900 units of output. 
A) 0 units of output. 
B) 300 units of output. 
C) 500 units of output. 
D) 900 units of output.

Question 14

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

Accepted Answer

A) $4. 
B) $6. 
C) $7. 
D) $10. 
A) $4. 
B) $6. 
C) $7. 
D) $10.

Question 15

As the owner/operator of One-of-a-Kind Gifts (the only gift shop in town),you want to make as much profit as you can.Suppose that at your current level of production,you determine that your MR > MC.What should you do? Explain.What would you do if you had discovered that MR < MC at your current production level? (Assume marginal cost rises as output rises. )Explain.

Accepted Answer

In the case where you have discovered yo

Question 16

All of the following are good examples of network externalities except:

Accepted Answer

A) Facebook. 
B) cigarettes. 
C) computer software. 
D) the Internet. 
A) Facebook. 
B) cigarettes. 
C) computer software. 
D) the Internet.

Question 17

A monopolist:

Accepted Answer

A) earns a profit in the short run and the long run. 
B) earns a profit in the short run but not in the long run. 
C) can earn profits or incur losses in the short run. 
D) can never incur losses. 
A) earns a profit in the short run and the long run. 
B) earns a profit in the short run but not in the long run. 
C) can earn profits or incur losses in the short run. 
D) can never incur losses.

Question 18

Network externalities exist when:

Accepted Answer

A) set-up costs of production are high, keeping competitors out of the market. 
B) the first firm to enter the market takes the greatest risk of failure. 
C) marginal costs decline as production levels rise. 
D) the greater use of a product increases the benefit of that product to everyone. 
A) set-up costs of production are high, keeping competitors out of the market. 
B) the first firm to enter the market takes the greatest risk of failure. 
C) marginal costs decline as production levels rise. 
D) the greater use of a product increases the benefit of that product to everyone.

Question 19

If P = Q/15 represents market supply for a competitive industry and market demand is given by Qd = 500 - 10P, the equilibrium quantity is:

Accepted Answer

A) 150. 
B) 187.5. 
C) 250. 
D) 300. 
A) 150. 
B) 187.5. 
C) 250. 
D) 300.

Question 20

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 monopolist is currently producing 400 computers per year and it seeks to maximize profit, it should: $$\begin{array} { | r | r | } 
\hline   { \begin{array} { c } 
\text { Price df } \
\text { computers(\$) }
\end{array} } & \text { Quantity demanded per year } \
\hline 5,000 & 100 \
\hline 4,000 & 200 \
\hline 3,000 & 300 \
\hline 2,000 & 400 \
\hline 1,000 & 500 \
\hline
\end{array}$$

Accepted Answer

A) increase output. 
B) decrease output. 
C) continue producing 400 units per year. 
D) lower the price of computers. 
A) increase output. 
B) decrease output. 
C) continue producing 400 units per year. 
D) lower the price of computers.

Exam 14: Monopoly and Monopolistic Competition

Refer to the graph shown. The profit-maximizing monopolist would be:

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:

Of the following, the most likely example of price discrimination is when:

When you use a service like Facebook for free, it is likely that:

A profit-maximizing monopolist will always set price equal to marginal cost.

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

What does it mean to say that a monopolist is practicing price discrimination?

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

A significant difference between monopoly and perfect competition is that:

The profit-maximizing output level for a monopolist occurs where marginal revenue equals marginal cost.

Refer to the graph shown. If this graph represents a competitive market, the equilibrium price and quantity will be:

If a monopolist produces beyond the quantity where MC = MR:

Refer to the graph shown. If this monopolist were forced to set price equal to marginal cost, in the long run it probably would produce:

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

All of the following are good examples of network externalities except:

A monopolist:

Network externalities exist when:

If P = Q/15 represents market supply for a competitive industry and market demand is given by Qd = 500 - 10P, the equilibrium quantity 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

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Measuring and Describing the Aggregate Economy

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

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Financial Crises, Panics, and Unconventional Monetary Policy

Deficits and Debt: the Austerity Debate

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Structural Stagnation and Globalization

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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 quantity is:

If P = Q/15 represents market supply for a competitive industry and market demand is given by Q_d = 500 - 10P, the equilibrium quantity is: