Question 1

A monopolist is a price searcher because it has the ability to select the price along its demand curve of its product.

Accepted Answer

A) True 
 B)False

Question 2

Exhibit 9-6 Monopoly
​  
-The maximum possible total monopoly profit in Exhibit 9-6 is:

Accepted Answer

A)  $60. 
B)  $36. 
C)  $24. 
D)  $18. 
E)  $12. 
A)  $60. 
B)  $36. 
C)  $24. 
D)  $18. 
E)  $12.

Question 3

A monopolist will operate in the short run if which of the following is above average variable cost?

Accepted Answer

A)  Marginal cost. 
B)  Marginal revenue. 
C)  Price. 
D)  All of these. 
A)  Marginal cost. 
B)  Marginal revenue. 
C)  Price. 
D)  All of these.

Question 4

For a monopoly to successfully price discriminate, its customers must:

Accepted Answer

A)  feel that the product is a necessity. 
B)  have identical demands. 
C)  be unable to resell the product. 
D)  actively engage in arbitrage. 
A)  feel that the product is a necessity. 
B)  have identical demands. 
C)  be unable to resell the product. 
D)  actively engage in arbitrage.

Question 5

A profit maximizing monopolist sets price and output so that it always operates on the elastic portion of its straight-line demand curve when in equilibrium.

Accepted Answer

A) True 
 B)False

Question 6

Exhibit 9-9 A monopolist
​  
-In Exhibit 9-9, the profit-maximizing or loss-minimizing output for the monopolist is:

Accepted Answer

A)  200 units per day. 
B)  300 units per day. 
C)  400 units per day. 
D)  500 units per day. 
E)  600 units per day. 
A)  200 units per day. 
B)  300 units per day. 
C)  400 units per day. 
D)  500 units per day. 
E)  600 units per day.

Question 7

The monopolist faces the market demand curve.

Accepted Answer

A) True 
 B)False

Question 8

The monopolist, unlike the perfectly competitive firm, can continue to earn an economic profit in the long run because of:

Accepted Answer

A)  collusive agreements with competitors. 
B)  price leadership. 
C)  cartels. 
D)  a dominant firm. 
E)  extremely high barriers to entry. 
A)  collusive agreements with competitors. 
B)  price leadership. 
C)  cartels. 
D)  a dominant firm. 
E)  extremely high barriers to entry.

Question 9

Assume a monopolist charges a price corresponding to the intersection of the marginal cost and marginal revenue curves. If this price is between its average variable cost and average total cost curves, the firm will:

Accepted Answer

A)  earn an economic profit. 
B)  continue to operate in the short run. 
C)  shut down. 
D)  all of these are true. 
A)  earn an economic profit. 
B)  continue to operate in the short run. 
C)  shut down. 
D)  all of these are true.

Question 10

Exhibit 9-5 Demand and cost data for a monopolist $\begin{array}{|c|c|c|c|c|c|}
\hline \text { Price } & \text { Quantity } & \text { TR } & \text { MR } & \text { TC } & \text { Profit } \
\hline \$ 10 & 1 & 10 & 10 & 4 &  \
9 & 2 & & & 8 & \
8 & 3 & & &  12& \
7 & 4 & & &  16& \
6 & 5 & & &20  \
5 & 6 & & &  24& \
4 & 7 & & & 28 & \
3 & 8 & & & 32& \
2 & 9 & & &  36 & \
1 & 10 & & &40 & \
\hline
\end{array}$
-Refer to Exhibit 9-5. The demand schedule and cost schedule for a monopolist are provided. Which output level maximizes profit?

Accepted Answer

A)  2. 
B)  6. 
C)  4. 
D)  5. 
E)  7. 
A)  2. 
B)  6. 
C)  4. 
D)  5. 
E)  7.

Question 11

A monopolist will earn economic profits as long as his price exceeds:

Accepted Answer

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

Question 12

A monopoly earns the most profit by charging a price where demand is inelastic.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following statements best describes the price, output, and profit conditions of monopoly?

Accepted Answer

A)  Price will equal marginal cost at the profit-maximizing level of output and profits will be positive in the long run. 
B)  Price will always equal average variable cost in the short-run and either profits or losses may result in the long run. 
C)  In the long run, positive economic profit will be eliminated. 
D)  None of these. 
A)  Price will equal marginal cost at the profit-maximizing level of output and profits will be positive in the long run. 
B)  Price will always equal average variable cost in the short-run and either profits or losses may result in the long run. 
C)  In the long run, positive economic profit will be eliminated. 
D)  None of these.

Question 14

Exhibit 9-2 Demand and cost information for a monopoly
$$\begin{array} { | l | c | c | } 
\hline \mathbf { Q } & \mathbf { P } & \mathbf { T C } \
\hline 0 & 40 & 10 \
1 & 30 & 15 \
2 & 20 & 25 \
3 & 10 & 40 \
4 & 0 & 60 \
\hline
\end{array}$$
-The marginal revenue of the second unit of output in Exhibit 9-2 is:

Accepted Answer

A)  10. 
B)  20. 
C)  30. 
D)  40. 
E)  60. 
A)  10. 
B)  20. 
C)  30. 
D)  40. 
E)  60.

Question 15

As shown in Exhibit 9-7, in the short run, the monopoly will:

Accepted Answer

A)  earn an hourly profit of $240. 
B)  earn an hourly profit of $80. 
C)  break even (i.e., earn zero economic profit). 
D)  suffer an hourly loss of $160. 
A)  earn an hourly profit of $240. 
B)  earn an hourly profit of $80. 
C)  break even (i.e., earn zero economic profit). 
D)  suffer an hourly loss of $160.

Question 16

Which of the following best explains why the monopolist's marginal revenue is less than the selling price?

Accepted Answer

A)  To sell more units, the monopolist must reduce price on all units sold. 
B)  As the monopolist expands output, the average total cost will decline. 
C)  The monopolist charges each consumer the highest possible price. 
D)  When a firm has a monopoly, consumers have no choice other than to pay the price set by the monopolist. 
A)  To sell more units, the monopolist must reduce price on all units sold. 
B)  As the monopolist expands output, the average total cost will decline. 
C)  The monopolist charges each consumer the highest possible price. 
D)  When a firm has a monopoly, consumers have no choice other than to pay the price set by the monopolist.

Question 17

Pure economic profit must be at a maximum for a monopolist who has a level of output in which total revenue is at a maximum.

Accepted Answer

A) True 
 B)False

Question 18

A monopolist earning economic profit in the short run determines that at its present level of output, marginal revenue is $23 and marginal cost is $30. Which of the following should the firm do to increase profit?

Accepted Answer

A)  Raise price and lower output. 
B)  Lower price and lower output. 
C)  Raise price and raise output. 
D)  Lower price and raise output. 
E)  Lower output, but leave price unchanged. 
A)  Raise price and lower output. 
B)  Lower price and lower output. 
C)  Raise price and raise output. 
D)  Lower price and raise output. 
E)  Lower output, but leave price unchanged.

Question 19

Exhibit 9-3 Demand and cost curves for GeneTech, a monopolist with a patented vaccine ​
 
-In Exhibit 9-3, how much vaccine should GeneTech produce to maximize its profit?

Accepted Answer

A)  300 doses per hour. 
B)  400 doses per hour. 
C)  Between 400 and 500 doses per hour. 
D)  500 doses per hour. 
A)  300 doses per hour. 
B)  400 doses per hour. 
C)  Between 400 and 500 doses per hour. 
D)  500 doses per hour.

Question 20

The demand curve any monopolist uses in making output decisions is:

Accepted Answer

A)  the same as the demand curve facing a perfectly competitive firm. 
B)  vertical, because there are no close substitutes for its product. 
C)  horizontal, because there are no close substitutes for its product. 
D)  the same as the market demand curve. 
E)  perfectly inelastic. 
A)  the same as the demand curve facing a perfectly competitive firm. 
B)  vertical, because there are no close substitutes for its product. 
C)  horizontal, because there are no close substitutes for its product. 
D)  the same as the market demand curve. 
E)  perfectly inelastic.

A monopolist is a price searcher because it has the ability to select the price along its demand curve of its product.

Exhibit 9-6 Monopoly -The maximum possible total monopoly profit in Exhibit 9-6 is:

A monopolist will operate in the short run if which of the following is above average variable cost?

For a monopoly to successfully price discriminate, its customers must:

A profit maximizing monopolist sets price and output so that it always operates on the elastic portion of its straight-line demand curve when in equilibrium.

Exhibit 9-9 A monopolist -In Exhibit 9-9, the profit-maximizing or loss-minimizing output for the monopolist is:

The monopolist faces the market demand curve.

The monopolist, unlike the perfectly competitive firm, can continue to earn an economic profit in the long run because of:

Assume a monopolist charges a price corresponding to the intersection of the marginal cost and marginal revenue curves. If this price is between its average variable cost and average total cost curves, the firm will:

Exhibit 9-5 Demand and cost data for a monopolist Price Quantity TR MR TC Profit \ 10 1 10 10 4 9 2 8 8 3 12 7 4 16 6 5 20 5 6 24 4 7 28 3 8 32 2 9 36 1 10 40 -Refer to Exhibit 9-5. The demand schedule and cost schedule for a monopolist are provided. Which output level maximizes profit?

A monopolist will earn economic profits as long as his price exceeds:

A monopoly earns the most profit by charging a price where demand is inelastic.

Which of the following statements best describes the price, output, and profit conditions of monopoly?

Exhibit 9-2 Demand and cost information for a monopoly 0 40 10 1 30 15 2 20 25 3 10 40 4 0 60 -The marginal revenue of the second unit of output in Exhibit 9-2 is:

As shown in Exhibit 9-7, in the short run, the monopoly will:

Which of the following best explains why the monopolist's marginal revenue is less than the selling price?

Pure economic profit must be at a maximum for a monopolist who has a level of output in which total revenue is at a maximum.

A monopolist earning economic profit in the short run determines that at its present level of output, marginal revenue is $23 and marginal cost is $30. Which of the following should the firm do to increase profit?

Exhibit 9-3 Demand and cost curves for GeneTech, a monopolist with a patented vaccine -In Exhibit 9-3, how much vaccine should GeneTech produce to maximize its profit?

The demand curve any monopolist uses in making output decisions is:

Introducing the Economic Way of Thinking

Production Possibilities, Opportunity Cost, and Economic Growth

Market Demand and Supply

Markets in Action

Price Elasticity of Demand and Supply

Consumer Choice Theory

Production Costs

Perfect Competition

Monopolistic Competition and Oligopoly

Labor Markets

Income Distribution, Poverty, and Discrimination

Antitrust and Regulation

Environmental Economics

International Trade and Finance

Economies in Transition

Growth and the

Filters

Exam 9: Monopoly

A monopolist is a price searcher because it has the ability to select the price along its demand curve of its product.

Exhibit 9-6 Monopoly ​ -The maximum possible total monopoly profit in Exhibit 9-6 is:

A monopolist will operate in the short run if which of the following is above average variable cost?

For a monopoly to successfully price discriminate, its customers must:

A profit maximizing monopolist sets price and output so that it always operates on the elastic portion of its straight-line demand curve when in equilibrium.

Exhibit 9-9 A monopolist ​ -In Exhibit 9-9, the profit-maximizing or loss-minimizing output for the monopolist is:

The monopolist faces the market demand curve.

The monopolist, unlike the perfectly competitive firm, can continue to earn an economic profit in the long run because of:

Assume a monopolist charges a price corresponding to the intersection of the marginal cost and marginal revenue curves. If this price is between its average variable cost and average total cost curves, the firm will:

Exhibit 9-5 Demand and cost data for a monopolist Price Quantity TR MR TC Profit \ 10 1 10 10 4 9 2 8 8 3 12 7 4 16 6 5 20 5 6 24 4 7 28 3 8 32 2 9 36 1 10 40 -Refer to Exhibit 9-5. The demand schedule and cost schedule for a monopolist are provided. Which output level maximizes profit?

A monopolist will earn economic profits as long as his price exceeds:

A monopoly earns the most profit by charging a price where demand is inelastic.

Which of the following statements best describes the price, output, and profit conditions of monopoly?

Exhibit 9-2 Demand and cost information for a monopoly 0 40 10 1 30 15 2 20 25 3 10 40 4 0 60 -The marginal revenue of the second unit of output in Exhibit 9-2 is:

As shown in Exhibit 9-7, in the short run, the monopoly will:

Which of the following best explains why the monopolist's marginal revenue is less than the selling price?

Pure economic profit must be at a maximum for a monopolist who has a level of output in which total revenue is at a maximum.

A monopolist earning economic profit in the short run determines that at its present level of output, marginal revenue is $23 and marginal cost is $30. Which of the following should the firm do to increase profit?

Exhibit 9-3 Demand and cost curves for GeneTech, a monopolist with a patented vaccine ​ -In Exhibit 9-3, how much vaccine should GeneTech produce to maximize its profit?

The demand curve any monopolist uses in making output decisions is:

Introducing the Economic Way of Thinking

Production Possibilities, Opportunity Cost, and Economic Growth

Market Demand and Supply

Markets in Action

Price Elasticity of Demand and Supply

Consumer Choice Theory

Production Costs

Perfect Competition

Monopolistic Competition and Oligopoly

Labor Markets

Income Distribution, Poverty, and Discrimination

Antitrust and Regulation

Environmental Economics

International Trade and Finance

Economies in Transition

Growth and the

Filters

Exhibit 9-6 Monopoly -The maximum possible total monopoly profit in Exhibit 9-6 is:

Exhibit 9-9 A monopolist -In Exhibit 9-9, the profit-maximizing or loss-minimizing output for the monopolist is:

Exhibit 9-3 Demand and cost curves for GeneTech, a monopolist with a patented vaccine -In Exhibit 9-3, how much vaccine should GeneTech produce to maximize its profit?