Question 1

For a monopolist to practice price discrimination, one necessary condition is that the product offered for sale must be:

Accepted Answer

A)  high quality. 
B)  expensive. 
C)  cheap. 
D)  impossible or difficult to resell. 
A)  high quality. 
B)  expensive. 
C)  cheap. 
D)  impossible or difficult to resell.

Question 2

A monopolist always selects a price on the elastic portion of its demand curve.

Accepted Answer

A) True 
 B)False

Question 3

A monopolist faces a downward-sloping demand curve because:

Accepted Answer

A)  the demand for its product is inelastic. 
B)  the industry demand curve is horizontal. 
C)  resource prices increase as the monopolist expands output. 
D)  the entire market demand curve is the monopolist's demand curve. 
A)  the demand for its product is inelastic. 
B)  the industry demand curve is horizontal. 
C)  resource prices increase as the monopolist expands output. 
D)  the entire market demand curve is the monopolist's demand curve.

Question 4

Exhibit 9-8 Profit maximizing for a monopolist
​  
-As shown in Exhibit 9-8, the profit-maximizing price for the monopolist is:

Accepted Answer

A)  OP1. 
B)  OP2. 
C)  OP3. 
D)  OP4. 
E)  OP5. 
A)  OP1. 
B)  OP2. 
C)  OP3. 
D)  OP4. 
E)  OP5.

Question 5

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 $8, 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 6

A monopolist always faces a demand curve that is:

Accepted Answer

A)  perfectly inelastic. 
B)  perfectly elastic. 
C)  unit elastic. 
D)  the same as the entire market demand curve. 
A)  perfectly inelastic. 
B)  perfectly elastic. 
C)  unit elastic. 
D)  the same as the entire market demand curve.

Question 7

When a monopoly price discriminates, it charges the highest price to the group of buyers with the least elastic demand.

Accepted Answer

A) True 
 B)False

Question 8

A profit-maximizing monopolist will continue expanding output as long as:

Accepted Answer

A)  marginal revenue exceeds marginal cost. 
B)  marginal revenue is positive. 
C)  the cost of producing an additional unit exceeds the marginal revenue derived from the unit. 
D)  economic profit is more than zero. 
A)  marginal revenue exceeds marginal cost. 
B)  marginal revenue is positive. 
C)  the cost of producing an additional unit exceeds the marginal revenue derived from the unit. 
D)  economic profit is more than zero.

Question 9

At the long-run equilibrium level of output, the monopolist's marginal cost will:

Accepted Answer

A)  exceed price. 
B)  equal price. 
C)  be less than price. 
D)  be less than marginal revenue. 
A)  exceed price. 
B)  equal price. 
C)  be less than price. 
D)  be less than marginal revenue.

Question 10

A monopoly firm can sell its fourth unit of output for a price of $250. In order to sell more than five units, it must expect to receive a price:

Accepted Answer

A)  equal to $250. 
B)  greater than $250. 
C)  less than $250. 
D)  equal to $340. 
E)  the price is impossible to calculate with the information given. 
A)  equal to $250. 
B)  greater than $250. 
C)  less than $250. 
D)  equal to $340. 
E)  the price is impossible to calculate with the information given.

Question 11

Suppose a monopolist and a perfectly competitive firm have the same cost curves. The monopolistic firm would:

Accepted Answer

A)  charge a lower price than the perfectly competitive firm. 
B)  charge a higher price than the perfectly competitive firm. 
C)  charge the same price as the perfectly competitive firm. 
D)  refuse to operate in the short run unless an economic profit could be made. 
E)  refuse to operate in the short run if an economic loss was present. 
A)  charge a lower price than the perfectly competitive firm. 
B)  charge a higher price than the perfectly competitive firm. 
C)  charge the same price as the perfectly competitive firm. 
D)  refuse to operate in the short run unless an economic profit could be made. 
E)  refuse to operate in the short run if an economic loss was present.

Question 12

A monopoly:

Accepted Answer

A)  can increase price and increase output at the same time. 
B)  can charge any price it wants and still sell all of its output. 
C)  can sell any output it produces provided it accepts the market price. 
D)  must lower price in order to increase output. 
E)  faces a perfectly elastic demand curve. 
A)  can increase price and increase output at the same time. 
B)  can charge any price it wants and still sell all of its output. 
C)  can sell any output it produces provided it accepts the market price. 
D)  must lower price in order to increase output. 
E)  faces a perfectly elastic demand curve.

Question 13

If a monopolist finds that at the present level of output marginal revenue exceeds marginal cost, the firm should:

Accepted Answer

A)  shut down. 
B)  expand output. 
C)  maintain the current output. 
D)  reduce output (but still produce). 
E)  raise prices. 
A)  shut down. 
B)  expand output. 
C)  maintain the current output. 
D)  reduce output (but still produce). 
E)  raise prices.

Question 14

Which of the following represents an arbitrage transaction?

Accepted Answer

A)  Traders buy silks where they are abundant and cheap, and haul them along a trail to another place where they would be quite scarce and valued. 
B)  A trader buys a block of government bonds in one market where it is temporarily priced below where it can be immediately resold in a different market. 
C)  Someone buys a block of Final Four tickets and scalp them at the game. 
D)  A senior citizen buys a block of theater tickets at a senior discount and scalps them to teenagers behind the theater. 
E)  All of the above are example of arbitrage. 
A)  Traders buy silks where they are abundant and cheap, and haul them along a trail to another place where they would be quite scarce and valued. 
B)  A trader buys a block of government bonds in one market where it is temporarily priced below where it can be immediately resold in a different market. 
C)  Someone buys a block of Final Four tickets and scalp them at the game. 
D)  A senior citizen buys a block of theater tickets at a senior discount and scalps them to teenagers behind the theater. 
E)  All of the above are example of arbitrage.

Question 15

An example of price discrimination is the price charged for:

Accepted Answer

A)  an economics textbook at a campus bookstore. 
B)  gasoline. 
C)  theater tickets that offer lower prices for children. 
D)  a postage stamp. 
A)  an economics textbook at a campus bookstore. 
B)  gasoline. 
C)  theater tickets that offer lower prices for children. 
D)  a postage stamp.

Question 16

Suppose 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)  stay in operation in the short-run, but shut down in the long run if demand remains the same. 
C)  shut down. 
D)  none of these. 
A)  earn an economic profit. 
B)  stay in operation in the short-run, but shut down in the long run if demand remains the same. 
C)  shut down. 
D)  none of these.

Question 17

Regardless of the demand for its product, a monopolist will be able to earn positive economic profits.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following best explains an economic criticism of unregulated monopolists?

Accepted Answer

A)  Monopolists do not try to minimize their costs of production. 
B)  Monopolists produce where marginal revenue is greater than marginal costs. 
C)  Monopolists attempt to produce too many products, and as a result, their prices are high, and consumer's waste time trying to choose between too many options. 
D)  Monopolists restrict output, and as a result, they fail to produce units that are valued more than the marginal cost of producing them. 
A)  Monopolists do not try to minimize their costs of production. 
B)  Monopolists produce where marginal revenue is greater than marginal costs. 
C)  Monopolists attempt to produce too many products, and as a result, their prices are high, and consumer's waste time trying to choose between too many options. 
D)  Monopolists restrict output, and as a result, they fail to produce units that are valued more than the marginal cost of producing them.

Question 19

What is a natural monopoly? Why is government justified in regulating a natural monopoly?

Accepted Answer

A natural monopoly is a monopoly that re

Question 20

Assume a monopolist's marginal cost and marginal revenue curves intersect and the demand curve passes above its average total cost curve. The firm will:

Accepted Answer

A)  make an economic profit. 
B)  stay in operation in the short run, but shut down in the long run. 
C)  shut down in the short run. 
D)  lower the price. 
A)  make an economic profit. 
B)  stay in operation in the short run, but shut down in the long run. 
C)  shut down in the short run. 
D)  lower the price.

For a monopolist to practice price discrimination, one necessary condition is that the product offered for sale must be:

A monopolist always selects a price on the elastic portion of its demand curve.

A monopolist faces a downward-sloping demand curve because:

Exhibit 9-8 Profit maximizing for a monopolist -As shown in Exhibit 9-8, the profit-maximizing price for the monopolist 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 $8, what would you advise Rudd to do?

A monopolist always faces a demand curve that is:

When a monopoly price discriminates, it charges the highest price to the group of buyers with the least elastic demand.

A profit-maximizing monopolist will continue expanding output as long as:

At the long-run equilibrium level of output, the monopolist's marginal cost will:

A monopoly firm can sell its fourth unit of output for a price of $250. In order to sell more than five units, it must expect to receive a price:

Suppose a monopolist and a perfectly competitive firm have the same cost curves. The monopolistic firm would:

A monopoly:

If a monopolist finds that at the present level of output marginal revenue exceeds marginal cost, the firm should:

Which of the following represents an arbitrage transaction?

An example of price discrimination is the price charged for:

Suppose 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:

Regardless of the demand for its product, a monopolist will be able to earn positive economic profits.

Which of the following best explains an economic criticism of unregulated monopolists?

What is a natural monopoly? Why is government justified in regulating a natural monopoly?

Assume a monopolist's marginal cost and marginal revenue curves intersect and the demand curve passes above its average total cost curve. The firm will:

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

For a monopolist to practice price discrimination, one necessary condition is that the product offered for sale must be:

A monopolist always selects a price on the elastic portion of its demand curve.

A monopolist faces a downward-sloping demand curve because:

Exhibit 9-8 Profit maximizing for a monopolist ​ -As shown in Exhibit 9-8, the profit-maximizing price for the monopolist 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 $8, what would you advise Rudd to do?

A monopolist always faces a demand curve that is:

When a monopoly price discriminates, it charges the highest price to the group of buyers with the least elastic demand.

A profit-maximizing monopolist will continue expanding output as long as:

At the long-run equilibrium level of output, the monopolist's marginal cost will:

A monopoly firm can sell its fourth unit of output for a price of $250. In order to sell more than five units, it must expect to receive a price:

Suppose a monopolist and a perfectly competitive firm have the same cost curves. The monopolistic firm would:

A monopoly:

If a monopolist finds that at the present level of output marginal revenue exceeds marginal cost, the firm should:

Which of the following represents an arbitrage transaction?

An example of price discrimination is the price charged for:

Suppose 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:

Regardless of the demand for its product, a monopolist will be able to earn positive economic profits.

Which of the following best explains an economic criticism of unregulated monopolists?

What is a natural monopoly? Why is government justified in regulating a natural monopoly?

Assume a monopolist's marginal cost and marginal revenue curves intersect and the demand curve passes above its average total cost curve. The firm will:

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 9-8 Profit maximizing for a monopolist -As shown in Exhibit 9-8, the profit-maximizing price for the monopolist 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 $8, what would you advise Rudd to do?