Question 1

If marginal costs increase, a monopolist will:

Accepted Answer

A)  decrease price and increase output. 
B)  decrease both price and output. 
C)  increase price and decrease output. 
D)  increase both price and output. 
E)  keep both price and output at the same level. 
A)  decrease price and increase output. 
B)  decrease both price and output. 
C)  increase price and decrease output. 
D)  increase both price and output. 
E)  keep both price and output at the same level.

Question 2

Under monopoly, a firm:

Accepted Answer

A)  is a price taker. 
B)  maximizes profit by setting marginal cost equal to marginal revenue. 
C)  will shut down in the short-run if price falls short of average total cost. 
D)  always earns a pure economic profit. 
A)  is a price taker. 
B)  maximizes profit by setting marginal cost equal to marginal revenue. 
C)  will shut down in the short-run if price falls short of average total cost. 
D)  always earns a pure economic profit.

Question 3

A price-discriminating monopoly charges the lowest price to the group that:

Accepted Answer

A)  has the most elastic demand. 
B)  purchases the largest quantity. 
C)  engages in the most arbitrage. 
D)  is least responsive to price changes. 
A)  has the most elastic demand. 
B)  purchases the largest quantity. 
C)  engages in the most arbitrage. 
D)  is least responsive to price changes.

Question 4

Exhibit 9-4 Demand and cost curves for a monopolist
​  
-As shown in Exhibit 9-4, in order to maximize its profit (or minimize its loss), what price should the monopoly charge for its product?

Accepted Answer

A)  $60 per unit. 
B)  $90 per unit. 
C)  $120 per unit. 
D)  $150 per unit. 
A)  $60 per unit. 
B)  $90 per unit. 
C)  $120 per unit. 
D)  $150 per unit.

Question 5

One necessary condition for effective price discrimination is:

Accepted Answer

A)  identical tastes among buyers. 
B)  difference in the price elasticity of demand among buyers. 
C)  a single, homogeneous market. 
D)  two or more markets with easy resale of products between them. 
A)  identical tastes among buyers. 
B)  difference in the price elasticity of demand among buyers. 
C)  a single, homogeneous market. 
D)  two or more markets with easy resale of products between them.

Question 6

Exhibit 9-8 Profit maximizing for a monopolist
​  
-As shown in Exhibit 9-8, if the monopolist produces the profit-maximizing output, total revenue is the rectangular area:

Accepted Answer

A)  OQAP1. 
B)  OQ2BP2. 
C)  OQ3CP3. 
D)  OQ2DP4. 
A)  OQAP1. 
B)  OQ2BP2. 
C)  OQ3CP3. 
D)  OQ2DP4.

Question 7

Exhibit 9-4 Demand and cost curves for a monopolist
​  
-What should a profit maximizing monopolist do if she is currently producing where MC < MR?

Accepted Answer

A)  Increase output until MC = MR. 
B)  Decrease output until MC = MR. 
C)  Shut down in the long run. 
D)  Keep producing at this level. 
E)  Operate only in the short run. 
A)  Increase output until MC = MR. 
B)  Decrease output until MC = MR. 
C)  Shut down in the long run. 
D)  Keep producing at this level. 
E)  Operate only in the short run.

Question 8

A monopolist will be able to earn positive pure economic profits regardless of the price elasticity of demand.

Accepted Answer

A) True 
 B)False

Question 9

Compared to a perfectly competitive industry, a monopolist with the same marginal cost and demand curve will charge:

Accepted Answer

A)  a higher price and produce a higher volume of output. 
B)  a lower price and produce a higher volume of output. 
C)  a lower price and produce a lower volume of output. 
D)  a higher price and produce a lower volume of output. 
E)  the same price and produce the same volume of output. 
A)  a higher price and produce a higher volume of output. 
B)  a lower price and produce a higher volume of output. 
C)  a lower price and produce a lower volume of output. 
D)  a higher price and produce a lower volume of output. 
E)  the same price and produce the same volume of output.

Question 10

Exhibit 9-10 A monopolist
​  
-In Exhibit 9-10, the monopolist would charge which of the following prices to maximize profit or minimize its loss?

Accepted Answer

A)  $10. 
B)  $20. 
C)  $30. 
D)  $35. 
E)  $50. 
A)  $10. 
B)  $20. 
C)  $30. 
D)  $35. 
E)  $50.

Question 11

Exhibit 9-2 Demand and cost information for a monopoly
$$\begin{array} { | l | c | c | } 
\hline \mathbf { Q } & \mathbf { P } & \mathbf { T C } \
\hline 0 & 40 & 10 \
1 & 30 & 15 \
2 & 20 & 25 \
3 & 10 & 40 \
4 & 0 & 60 \
\hline
\end{array}$$
-Refer to Exhibit 9-2. Using the rule that focuses on the marginal approach to maximizing profits, the monopolist maximizes profit by choosing price equal to:

Accepted Answer

A)  $40. 
B)  $20. 
C)  $0. 
D)  $10. 
E)  $30. 
A)  $40. 
B)  $20. 
C)  $0. 
D)  $10. 
E)  $30.

Question 12

In order for a monopolist to earn an economic profit in short-run equilibrium, marginal revenue must be equal to zero.

Accepted Answer

A) True 
 B)False

Question 13

The demand curve for a monopolist is:

Accepted Answer

A)  the demand curve for the industry. 
B)  less than the market demand curve. 
C)  below the marginal revenue curve. 
D)  nonexistent. 
E)  the sum of the demand curves of the perfectly competitive firms in the industry. 
A)  the demand curve for the industry. 
B)  less than the market demand curve. 
C)  below the marginal revenue curve. 
D)  nonexistent. 
E)  the sum of the demand curves of the perfectly competitive firms in the industry.

Question 14

Exhibit 9-10 A monopolist
​  
-In Exhibit 9-10, the profit-maximizing or loss-minimizing output for the monopolist is:

Accepted Answer

A)  100 units per day. 
B)  150 units per day. 
C)  200 units per day. 
D)  250 units per day. 
E)  300 units per day. 
A)  100 units per day. 
B)  150 units per day. 
C)  200 units per day. 
D)  250 units per day. 
E)  300 units per day.

Question 15

The two theoretical extremes of the market structure spectrum are occupied at one end by perfect competition and on the other end by monopoly.

Accepted Answer

A) True 
 B)False

Question 16

A monopoly market is characterized by a single seller of a product which has few, if any, suitable substitutes.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is true about a monopoly?

Accepted Answer

A)  A monopoly charges a higher price and produces a lower output level than if the market were competitive. 
B)  A monopoly is guaranteed an economic profit. 
C)  A monopoly charges the highest possible price. 
D)  A monopoly will shut down whenever losses are incurred. 
E)  All of these. 
A)  A monopoly charges a higher price and produces a lower output level than if the market were competitive. 
B)  A monopoly is guaranteed an economic profit. 
C)  A monopoly charges the highest possible price. 
D)  A monopoly will shut down whenever losses are incurred. 
E)  All of these.

Question 18

Exhibit 9-9 A monopolist
​  
-In Exhibit 9-9, at the profit-maximizing or loss-minimizing output, the monopolist's total economic profit is:

Accepted Answer

A)  positive. 
B)  negative. 
C)  zero. 
D)  minimum. 
A)  positive. 
B)  negative. 
C)  zero. 
D)  minimum.

Question 19

In contrast to a perfectly competitive firm, a monopolist operates in the long run at a quantity of output at which:

Accepted Answer

A)  P = MC. 
B)  MR = MC. 
C)  P = ATC. 
D)  P > MR. 
A)  P = MC. 
B)  MR = MC. 
C)  P = ATC. 
D)  P > MR.

Question 20

The monopolist faces the market demand curve.

Accepted Answer

A) True 
 B)False

If marginal costs increase, a monopolist will:

Under monopoly, a firm:

A price-discriminating monopoly charges the lowest price to the group that:

Exhibit 9-4 Demand and cost curves for a monopolist -As shown in Exhibit 9-4, in order to maximize its profit (or minimize its loss), what price should the monopoly charge for its product?

One necessary condition for effective price discrimination is:

Exhibit 9-8 Profit maximizing for a monopolist -As shown in Exhibit 9-8, if the monopolist produces the profit-maximizing output, total revenue is the rectangular area:

Exhibit 9-4 Demand and cost curves for a monopolist -What should a profit maximizing monopolist do if she is currently producing where MC < MR?

A monopolist will be able to earn positive pure economic profits regardless of the price elasticity of demand.

Compared to a perfectly competitive industry, a monopolist with the same marginal cost and demand curve will charge:

Exhibit 9-10 A monopolist -In Exhibit 9-10, the monopolist would charge which of the following prices to maximize profit or minimize its loss?

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 -Refer to Exhibit 9-2. Using the rule that focuses on the marginal approach to maximizing profits, the monopolist maximizes profit by choosing price equal to:

In order for a monopolist to earn an economic profit in short-run equilibrium, marginal revenue must be equal to zero.

The demand curve for a monopolist is:

Exhibit 9-10 A monopolist -In Exhibit 9-10, the profit-maximizing or loss-minimizing output for the monopolist is:

The two theoretical extremes of the market structure spectrum are occupied at one end by perfect competition and on the other end by monopoly.

A monopoly market is characterized by a single seller of a product which has few, if any, suitable substitutes.

Which of the following is true about a monopoly?

Exhibit 9-9 A monopolist -In Exhibit 9-9, at the profit-maximizing or loss-minimizing output, the monopolist's total economic profit is:

In contrast to a perfectly competitive firm, a monopolist operates in the long run at a quantity of output at which:

The monopolist faces the market demand curve.

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

If marginal costs increase, a monopolist will:

Under monopoly, a firm:

A price-discriminating monopoly charges the lowest price to the group that:

Exhibit 9-4 Demand and cost curves for a monopolist ​ -As shown in Exhibit 9-4, in order to maximize its profit (or minimize its loss), what price should the monopoly charge for its product?

One necessary condition for effective price discrimination is:

Exhibit 9-8 Profit maximizing for a monopolist ​ -As shown in Exhibit 9-8, if the monopolist produces the profit-maximizing output, total revenue is the rectangular area:

Exhibit 9-4 Demand and cost curves for a monopolist ​ -What should a profit maximizing monopolist do if she is currently producing where MC < MR?

A monopolist will be able to earn positive pure economic profits regardless of the price elasticity of demand.

Compared to a perfectly competitive industry, a monopolist with the same marginal cost and demand curve will charge:

Exhibit 9-10 A monopolist ​ -In Exhibit 9-10, the monopolist would charge which of the following prices to maximize profit or minimize its loss?

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 -Refer to Exhibit 9-2. Using the rule that focuses on the marginal approach to maximizing profits, the monopolist maximizes profit by choosing price equal to:

In order for a monopolist to earn an economic profit in short-run equilibrium, marginal revenue must be equal to zero.

The demand curve for a monopolist is:

Exhibit 9-10 A monopolist ​ -In Exhibit 9-10, the profit-maximizing or loss-minimizing output for the monopolist is:

The two theoretical extremes of the market structure spectrum are occupied at one end by perfect competition and on the other end by monopoly.

A monopoly market is characterized by a single seller of a product which has few, if any, suitable substitutes.

Which of the following is true about a monopoly?

Exhibit 9-9 A monopolist ​ -In Exhibit 9-9, at the profit-maximizing or loss-minimizing output, the monopolist's total economic profit is:

In contrast to a perfectly competitive firm, a monopolist operates in the long run at a quantity of output at which:

The monopolist faces the market demand curve.

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 9-4 Demand and cost curves for a monopolist -As shown in Exhibit 9-4, in order to maximize its profit (or minimize its loss), what price should the monopoly charge for its product?

Exhibit 9-8 Profit maximizing for a monopolist -As shown in Exhibit 9-8, if the monopolist produces the profit-maximizing output, total revenue is the rectangular area:

Exhibit 9-4 Demand and cost curves for a monopolist -What should a profit maximizing monopolist do if she is currently producing where MC < MR?

Exhibit 9-10 A monopolist -In Exhibit 9-10, the monopolist would charge which of the following prices to maximize profit or minimize its loss?

Exhibit 9-10 A monopolist -In Exhibit 9-10, the profit-maximizing or loss-minimizing output for the monopolist is:

Exhibit 9-9 A monopolist -In Exhibit 9-9, at the profit-maximizing or loss-minimizing output, the monopolist's total economic profit is: