Question 1

At the level of output where the marginal cost and marginal revenue curves intersect, a monopolist's demand curve passes above its average total cost curve. The firm will:

Accepted Answer

A)  be able to make a pure economic profit. 
B)  stay in operation in the short-run, but shut down. 
C)  shut down in the short-run. 
D)  increase its price. 
A)  be able to make a pure economic profit. 
B)  stay in operation in the short-run, but shut down. 
C)  shut down in the short-run. 
D)  increase its price.

Question 2

The profit-maximizing output level for a monopolist is where the:

Accepted Answer

A)  price is maximized. 
B)  output sold is maximized. 
C)  ATC curve is minimized. 
D)  maximum efficiency is achieved. 
E)  MR = MC. 
A)  price is maximized. 
B)  output sold is maximized. 
C)  ATC curve is minimized. 
D)  maximum efficiency is achieved. 
E)  MR = MC.

Question 3

The goal of any monopolist is to maximize:

Accepted Answer

A)  economic profits. 
B)  normal profits. 
C)  price. 
D)  consumer welfare. 
E)  output. 
A)  economic profits. 
B)  normal profits. 
C)  price. 
D)  consumer welfare. 
E)  output.

Question 4

A monopoly:

Accepted Answer

A)  faces the market demand curve which is downward sloping. 
B)  has a marginal revenue curve which slopes downward and lies below its demand curve. 
C)  will maximize profits by producing an output level where MR = MC. 
D)  all of these. 
A)  faces the market demand curve which is downward sloping. 
B)  has a marginal revenue curve which slopes downward and lies below its demand curve. 
C)  will maximize profits by producing an output level where MR = MC. 
D)  all of these.

Question 5

If the average total cost curve is always above the demand curve for a monopolist:

Accepted Answer

A)  the profits of the monopolist will be large. 
B)  the monopolist must be producing inefficiently. 
C)  the monopolist will suffer economic losses. 
D)  entry will occur, forcing the monopolist to reduce price and expand output. 
A)  the profits of the monopolist will be large. 
B)  the monopolist must be producing inefficiently. 
C)  the monopolist will suffer economic losses. 
D)  entry will occur, forcing the monopolist to reduce price and expand output.

Question 6

To earn an economic profit in the short-run, a monopolist sets marginal revenue equal to zero.

Accepted Answer

A) True 
 B)False

Question 7

Exhibit 9-6 Monopoly
​  
-The monopoly price that maximizes profits in Exhibit 9-6 is:

Accepted Answer

A)  $4. 
B)  $6. 
C)  $7. 
D)  $8. 
E)  $10. 
A)  $4. 
B)  $6. 
C)  $7. 
D)  $8. 
E)  $10.

Question 8

A monopoly can successfully price discriminate as long as there are no close substitutes for its product.

Accepted Answer

A) True 
 B)False

Question 9

Compared to a perfectly competitive firm with the same cost structure, a monopoly firm will charge a:

Accepted Answer

A)  higher price and sell more. 
B)  lower price and sell more. 
C)  higher price and sell less. 
D)  lower price and sell less. 
E)  similar price and sell the same. 
A)  higher price and sell more. 
B)  lower price and sell more. 
C)  higher price and sell less. 
D)  lower price and sell less. 
E)  similar price and sell the same.

Question 10

Under both perfect competition and monopoly, a firm:

Accepted Answer

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

Question 11

Price discrimination often permits some consumers who otherwise would be excluded from a market to buy a good or service.

Accepted Answer

A) True 
 B)False

Question 12

Exhibit 9-7 Monopolist
​  
-According to the information provided in Exhibit 9-7, if the Rudd Ice Company was a monopoly and is currently charging a price of $10, what would you advise Rudd to do?

Accepted Answer

A)  Stay where he is currently operating because he is charging the profit-maximizing price. 
B)  Increase price and increase output. 
C)  Decrease price and increase output. 
D)  Increase output and hold price constant. 
E)  Increase price and hold output constant. 
A)  Stay where he is currently operating because he is charging the profit-maximizing price. 
B)  Increase price and increase output. 
C)  Decrease price and increase output. 
D)  Increase output and hold price constant. 
E)  Increase price and hold output constant.

Question 13

A monopolist maximizes total revenue.

Accepted Answer

A) True 
 B)False

Question 14

A monopoly will be maximizing profits if it is operating at the point where:

Accepted Answer

A)  price is at a maximum. 
B)  average cost is at a minimum. 
C)  average cost is at a maximum. 
D)  marginal cost is at a minimum. 
E)  marginal revenue = marginal cost. 
A)  price is at a maximum. 
B)  average cost is at a minimum. 
C)  average cost is at a maximum. 
D)  marginal cost is at a minimum. 
E)  marginal revenue = marginal cost.

Question 15

Which of the following correctly describes price discrimination?

Accepted Answer

A)  Selling different products to different people for the same price. 
B)  Selling different products to identical people for different prices. 
C)  Selling the same product to different people for different prices. 
D)  Selling the same product to the same person for the same price. 
A)  Selling different products to different people for the same price. 
B)  Selling different products to identical people for different prices. 
C)  Selling the same product to different people for different prices. 
D)  Selling the same product to the same person for the same price.

Question 16

Graphically, the marginal revenue curve of a monopolist:

Accepted Answer

A)  will sometimes lie below the demand curve of the monopolist. 
B)  will always lie below the demand curve of the monopolist. 
C)  is the same as the demand curve of the monopolist. 
D)  will equal −1 when the elasticity of demand is unitary. 
A)  will sometimes lie below the demand curve of the monopolist. 
B)  will always lie below the demand curve of the monopolist. 
C)  is the same as the demand curve of the monopolist. 
D)  will equal −1 when the elasticity of demand is unitary.

Question 17

Exhibit 9-4 Demand and cost curves for a monopolist
​  
-Although a monopoly can charge any price it wishes, it chooses:

Accepted Answer

A)  the highest price. 
B)  price equal to marginal cost. 
C)  the price that maximizes profit. 
D)  competitive prices. 
E)  a fair price. 
A)  the highest price. 
B)  price equal to marginal cost. 
C)  the price that maximizes profit. 
D)  competitive prices. 
E)  a fair price.

Question 18

Which of the following statements accurately describes a difference between a firm that is a monopolist and one that is a competitive price taker?

Accepted Answer

A)  Marginal revenue and market price are equal for the competitive price taker but not for the monopolist. 
B)  The monopolist does not always produce the output that equates marginal cost and marginal revenue; the competitive price taker does. 
C)  The monopolist charges the highest price possible; the competitive price taker charges a price equal to its per-unit cost. 
D)  A monopolist can earn economic profit in the short run; a competitive price taker cannot. 
A)  Marginal revenue and market price are equal for the competitive price taker but not for the monopolist. 
B)  The monopolist does not always produce the output that equates marginal cost and marginal revenue; the competitive price taker does. 
C)  The monopolist charges the highest price possible; the competitive price taker charges a price equal to its per-unit cost. 
D)  A monopolist can earn economic profit in the short run; a competitive price taker cannot.

Question 19

Exhibit 9-6 Monopoly
​  
-Exhibit 9-6 indicates that a monopolist maximizes profits at output equal to:

Accepted Answer

A)  0. 
B)  6. 
C)  8. 
D)  9. 
E)  10. 
A)  0. 
B)  6. 
C)  8. 
D)  9. 
E)  10.

Question 20

Which of the following firms best fits the definition of a monopoly?

Accepted Answer

A)  General Motors 
B)  Exxon Mobile 
C)  Local electric utility 
D)  AT&T 
A)  General Motors 
B)  Exxon Mobile 
C)  Local electric utility 
D)  AT&T

At the level of output where the marginal cost and marginal revenue curves intersect, a monopolist's demand curve passes above its average total cost curve. The firm will:

The profit-maximizing output level for a monopolist is where the:

The goal of any monopolist is to maximize:

A monopoly:

If the average total cost curve is always above the demand curve for a monopolist:

To earn an economic profit in the short-run, a monopolist sets marginal revenue equal to zero.

Exhibit 9-6 Monopoly -The monopoly price that maximizes profits in Exhibit 9-6 is:

A monopoly can successfully price discriminate as long as there are no close substitutes for its product.

Compared to a perfectly competitive firm with the same cost structure, a monopoly firm will charge a:

Under both perfect competition and monopoly, a firm:

Price discrimination often permits some consumers who otherwise would be excluded from a market to buy a good or service.

Exhibit 9-7 Monopolist -According to the information provided in Exhibit 9-7, if the Rudd Ice Company was a monopoly and is currently charging a price of $10, what would you advise Rudd to do?

A monopolist maximizes total revenue.

A monopoly will be maximizing profits if it is operating at the point where:

Which of the following correctly describes price discrimination?

Graphically, the marginal revenue curve of a monopolist:

Exhibit 9-4 Demand and cost curves for a monopolist -Although a monopoly can charge any price it wishes, it chooses:

Which of the following statements accurately describes a difference between a firm that is a monopolist and one that is a competitive price taker?

Exhibit 9-6 Monopoly -Exhibit 9-6 indicates that a monopolist maximizes profits at output equal to:

Which of the following firms best fits the definition of a monopoly?

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

At the level of output where the marginal cost and marginal revenue curves intersect, a monopolist's demand curve passes above its average total cost curve. The firm will:

The profit-maximizing output level for a monopolist is where the:

The goal of any monopolist is to maximize:

A monopoly:

If the average total cost curve is always above the demand curve for a monopolist:

To earn an economic profit in the short-run, a monopolist sets marginal revenue equal to zero.

Exhibit 9-6 Monopoly ​ -The monopoly price that maximizes profits in Exhibit 9-6 is:

A monopoly can successfully price discriminate as long as there are no close substitutes for its product.

Compared to a perfectly competitive firm with the same cost structure, a monopoly firm will charge a:

Under both perfect competition and monopoly, a firm:

Price discrimination often permits some consumers who otherwise would be excluded from a market to buy a good or service.

Exhibit 9-7 Monopolist ​ -According to the information provided in Exhibit 9-7, if the Rudd Ice Company was a monopoly and is currently charging a price of $10, what would you advise Rudd to do?

A monopolist maximizes total revenue.

A monopoly will be maximizing profits if it is operating at the point where:

Which of the following correctly describes price discrimination?

Graphically, the marginal revenue curve of a monopolist:

Exhibit 9-4 Demand and cost curves for a monopolist ​ -Although a monopoly can charge any price it wishes, it chooses:

Which of the following statements accurately describes a difference between a firm that is a monopolist and one that is a competitive price taker?

Exhibit 9-6 Monopoly ​ -Exhibit 9-6 indicates that a monopolist maximizes profits at output equal to:

Which of the following firms best fits the definition of a monopoly?

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 monopoly price that maximizes profits in Exhibit 9-6 is:

Exhibit 9-7 Monopolist -According to the information provided in Exhibit 9-7, if the Rudd Ice Company was a monopoly and is currently charging a price of $10, what would you advise Rudd to do?

Exhibit 9-4 Demand and cost curves for a monopolist -Although a monopoly can charge any price it wishes, it chooses:

Exhibit 9-6 Monopoly -Exhibit 9-6 indicates that a monopolist maximizes profits at output equal to: