Question 1

Under what conditions might a monopoly lose money?

Accepted Answer

Any firm could incur

Question 2

Exhibit 9-10 A monopolist
​  
-In Exhibit 9-10, 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 3

Exhibit 9-5 Demand and cost data for a monopolist $\begin{array}{|c|c|c|c|c|c|}
\hline \text { Price } & \text { Quantity } & \text { TR } & \text { MR } & \text { TC } & \text { Profit } \
\hline \$ 10 & 1 & 10 & 10 & 4 &  \
9 & 2 & & & 8 & \
8 & 3 & & &  12& \
7 & 4 & & &  16& \
6 & 5 & & &20  \
5 & 6 & & &  24& \
4 & 7 & & & 28 & \
3 & 8 & & & 32& \
2 & 9 & & &  36 & \
1 & 10 & & &40 & \
\hline
\end{array}$
-By calculating the data provided in Exhibit 9-5, how much is the profit if the firm decides to produce 7 units?

Accepted Answer

A)  0. 
B)  24. 
C)  16. 
D)  12. 
E)  6. 
A)  0. 
B)  24. 
C)  16. 
D)  12. 
E)  6.

Question 4

A monopoly will price its product:

Accepted Answer

A)  where total revenue is maximized. 
B)  where total costs are minimized. 
C)  at that point on the market demand curve corresponding to an output level in which marginal revenue equals marginal cost. 
D)  at that point on the market demand curve which intersects the marginal cost curve. 
A)  where total revenue is maximized. 
B)  where total costs are minimized. 
C)  at that point on the market demand curve corresponding to an output level in which marginal revenue equals marginal cost. 
D)  at that point on the market demand curve which intersects the marginal cost curve.

Question 5

The monopolist's demand curve is:

Accepted Answer

A)  identical to the market demand curve. 
B)  identical to the marginal revenue curve. 
C)  below the marginal revenue curve. 
D)  a horizontal line at the market price. 
E)  a U-shaped curve. 
A)  identical to the market demand curve. 
B)  identical to the marginal revenue curve. 
C)  below the marginal revenue curve. 
D)  a horizontal line at the market price. 
E)  a U-shaped curve.

Question 6

The monopolist faces:

Accepted Answer

A)  a perfectly inelastic demand curve. 
B)  a perfectly elastic demand curve. 
C)  the entire market demand curve. 
D)  all of these. 
A)  a perfectly inelastic demand curve. 
B)  a perfectly elastic demand curve. 
C)  the entire market demand curve. 
D)  all of these.

Question 7

One of the necessary conditions for price discrimination to occur is that:

Accepted Answer

A)  buyers in different markets have different elasticities of demand. 
B)  the demand curve is upward sloping. 
C)  buyers must be allowed to resell the good at a higher price elsewhere. 
D)  all of these are necessary for price discrimination to occur. 
A)  buyers in different markets have different elasticities of demand. 
B)  the demand curve is upward sloping. 
C)  buyers must be allowed to resell the good at a higher price elsewhere. 
D)  all of these are necessary for price discrimination to occur.

Question 8

The act of buying a commodity in one market at a lower price and selling it in another market at a higher price is known as:

Accepted Answer

A)  buying long. 
B)  selling short. 
C)  a tariff. 
D)  arbitrage. 
A)  buying long. 
B)  selling short. 
C)  a tariff. 
D)  arbitrage.

Question 9

Price discrimination occurs when:

Accepted Answer

A)  firms maximize their profit by setting price equal to marginal cost. 
B)  a seller charges different prices to different consumers of the same product or service. 
C)  a seller charges the same price to consumers of a different product or service. 
D)  a seller charges different prices to consumers, discriminating by race or gender of the consumer. 
A)  firms maximize their profit by setting price equal to marginal cost. 
B)  a seller charges different prices to different consumers of the same product or service. 
C)  a seller charges the same price to consumers of a different product or service. 
D)  a seller charges different prices to consumers, discriminating by race or gender of the consumer.

Question 10

An argument in favor of price discrimination is that this pricing strategy permits some consumers who otherwise would be excluded from a market to buy a good or service.

Accepted Answer

A) True 
 B)False

Question 11

Exhibit 9-1 Monopolist's demand curve
​  
-At an output of 100 units, marginal revenue for a monopolist with the demand curve shown in Exhibit 9-1 would be:

Accepted Answer

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

Question 12

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

Accepted Answer

A)  $20. 
B)  $40. 
C)  $60. 
D)  $70. 
E)  $100. 
A)  $20. 
B)  $40. 
C)  $60. 
D)  $70. 
E)  $100.

Question 13

Compared to a perfectly competitive firm, a monopolist:

Accepted Answer

A)  charges a higher price. 
B)  produces lower output. 
C)  fails to achieve an efficient allocation of resources. 
D)  all of these. 
A)  charges a higher price. 
B)  produces lower output. 
C)  fails to achieve an efficient allocation of resources. 
D)  all of these.

Question 14

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), how much output should the monopoly produce?

Accepted Answer

A)  2 units per hour. 
B)  4 units per hour. 
C)  6 units per hour. 
D)  8 units per hour. 
A)  2 units per hour. 
B)  4 units per hour. 
C)  6 units per hour. 
D)  8 units per hour.

Question 15

A natural monopoly is a market where:

Accepted Answer

A)  a single firm has control over a vital natural resource. 
B)  many smaller firms can produce the entire market output at the same per-unit cost as could one large firm. 
C)  a single large firm can produce the entire market output at a lower per-unit cost than a group of smaller firms. 
D)  many smaller firms can produce the entire market output at a lower per-unit cost than could one large firm. 
A)  a single firm has control over a vital natural resource. 
B)  many smaller firms can produce the entire market output at the same per-unit cost as could one large firm. 
C)  a single large firm can produce the entire market output at a lower per-unit cost than a group of smaller firms. 
D)  many smaller firms can produce the entire market output at a lower per-unit cost than could one large firm.

Question 16

A natural monopoly exists whenever economies of scale are very extensive.

Accepted Answer

A) True 
 B)False

Question 17

For a monopoly, price always equals marginal revenue.

Accepted Answer

A) True 
 B)False

Question 18

The demand curve a monopolist faces:

Accepted Answer

A)  is more elastic than a perfectly competitive firm's demand curve. 
B)  is the market demand curve. 
C)  is as elastic as a perfectly competitive firm's demand curve. 
D)  is not affected by the prices of complements. 
E)  will not shift in response to a change in consumer tastes. 
A)  is more elastic than a perfectly competitive firm's demand curve. 
B)  is the market demand curve. 
C)  is as elastic as a perfectly competitive firm's demand curve. 
D)  is not affected by the prices of complements. 
E)  will not shift in response to a change in consumer tastes.

Question 19

A monopoly sets a market price that is higher than the marginal cost of production. This fact implies that a monopoly's allocation of resources is:

Accepted Answer

A)  unfair. 
B)  inefficient. 
C)  discriminatory. 
D)  excessive. 
A)  unfair. 
B)  inefficient. 
C)  discriminatory. 
D)  excessive.

Question 20

For a monopolist to practice effective price discrimination, one necessary condition is:

Accepted Answer

A)  identical price elasticity among groups of buyers. 
B)  differences in the price elasticity of demand among groups of buyers. 
C)  that the product is homogeneous market. 
D)  none of these. 
A)  identical price elasticity among groups of buyers. 
B)  differences in the price elasticity of demand among groups of buyers. 
C)  that the product is homogeneous market. 
D)  none of these.

Under what conditions might a monopoly lose money?

Exhibit 9-10 A monopolist -In Exhibit 9-10, at the profit-maximizing or loss-minimizing output, the monopolist's total economic profit is:

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 -By calculating the data provided in Exhibit 9-5, how much is the profit if the firm decides to produce 7 units?

A monopoly will price its product:

The monopolist's demand curve is:

The monopolist faces:

One of the necessary conditions for price discrimination to occur is that:

The act of buying a commodity in one market at a lower price and selling it in another market at a higher price is known as:

Price discrimination occurs when:

An argument in favor of price discrimination is that this pricing strategy permits some consumers who otherwise would be excluded from a market to buy a good or service.

Exhibit 9-1 Monopolist's demand curve -At an output of 100 units, marginal revenue for a monopolist with the demand curve shown in Exhibit 9-1 would be:

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

Compared to a perfectly competitive firm, a monopolist:

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), how much output should the monopoly produce?

A natural monopoly is a market where:

A natural monopoly exists whenever economies of scale are very extensive.

For a monopoly, price always equals marginal revenue.

The demand curve a monopolist faces:

A monopoly sets a market price that is higher than the marginal cost of production. This fact implies that a monopoly's allocation of resources is:

For a monopolist to practice effective price discrimination, one necessary condition 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

Under what conditions might a monopoly lose money?

Exhibit 9-10 A monopolist ​ -In Exhibit 9-10, at the profit-maximizing or loss-minimizing output, the monopolist's total economic profit is:

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 -By calculating the data provided in Exhibit 9-5, how much is the profit if the firm decides to produce 7 units?

A monopoly will price its product:

The monopolist's demand curve is:

The monopolist faces:

One of the necessary conditions for price discrimination to occur is that:

The act of buying a commodity in one market at a lower price and selling it in another market at a higher price is known as:

Price discrimination occurs when:

An argument in favor of price discrimination is that this pricing strategy permits some consumers who otherwise would be excluded from a market to buy a good or service.

Exhibit 9-1 Monopolist's demand curve ​ -At an output of 100 units, marginal revenue for a monopolist with the demand curve shown in Exhibit 9-1 would be:

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

Compared to a perfectly competitive firm, a monopolist:

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), how much output should the monopoly produce?

A natural monopoly is a market where:

A natural monopoly exists whenever economies of scale are very extensive.

For a monopoly, price always equals marginal revenue.

The demand curve a monopolist faces:

A monopoly sets a market price that is higher than the marginal cost of production. This fact implies that a monopoly's allocation of resources is:

For a monopolist to practice effective price discrimination, one necessary condition 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 9-10 A monopolist -In Exhibit 9-10, at the profit-maximizing or loss-minimizing output, the monopolist's total economic profit is:

Exhibit 9-1 Monopolist's demand curve -At an output of 100 units, marginal revenue for a monopolist with the demand curve shown in Exhibit 9-1 would be:

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

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), how much output should the monopoly produce?