Question 1

A monopolist earns an economic profit only when:

Accepted Answer

A)  average total cost equals than price. 
B)  marginal cost equals price. 
C)  marginal revenue equals price. 
D)  average total cost is less than price. 
A)  average total cost equals than price. 
B)  marginal cost equals price. 
C)  marginal revenue equals price. 
D)  average total cost is less than price.

Question 2

Price discrimination requires:

Accepted Answer

A)  a firm to be a competitive firm. 
B)  a firm to be able to segment its customers based on different price elasticities of demand. 
C)  arbitrage. 
D)  that the product can be easily resold. 
A)  a firm to be a competitive firm. 
B)  a firm to be able to segment its customers based on different price elasticities of demand. 
C)  arbitrage. 
D)  that the product can be easily resold.

Question 3

A monopolist can earn an economic profit only when:

Accepted Answer

A)  marginal cost equals marginal revenue. 
B)  marginal cost equals price. 
C)  average total cost is less than price. 
D)  all of these. 
A)  marginal cost equals marginal revenue. 
B)  marginal cost equals price. 
C)  average total cost is less than price. 
D)  all of these.

Question 4

Monopolies may earn economic losses in the long run.

Accepted Answer

A) True 
 B)False

Question 5

A monopolist will maximize profits by:

Accepted Answer

A)  setting his price as high as possible. 
B)  setting his price at the level that will maximize per-unit profit. 
C)  producing the output where marginal revenue equals marginal cost. 
D)  producing the output where price equals marginal cost. 
A)  setting his price as high as possible. 
B)  setting his price at the level that will maximize per-unit profit. 
C)  producing the output where marginal revenue equals marginal cost. 
D)  producing the output where price equals marginal cost.

Question 6

Which barrier to entry results in the creation of a natural monopoly?

Accepted Answer

A)  Legal barriers like government franchises. 
B)  Economies of scale. 
C)  Ownership of a vital resource. 
D)  Patents and copyrights. 
A)  Legal barriers like government franchises. 
B)  Economies of scale. 
C)  Ownership of a vital resource. 
D)  Patents and copyrights.

Question 7

Which of the following is a market structure of monopoly?

Accepted Answer

A)  Few firms operating as price takers. 
B)  Single firm operating as a price taker. 
C)  Single firm that is a price maker. 
D)  All of these are true. 
A)  Few firms operating as price takers. 
B)  Single firm operating as a price taker. 
C)  Single firm that is a price maker. 
D)  All of these are true.

Question 8

Which of the following factors is not a barrier limiting the entry of potential competitors into a market?

Accepted Answer

A)  legally enforced patent rights 
B)  an inelastic demand for a product 
C)  licensing 
D)  control over an essential resource 
A)  legally enforced patent rights 
B)  an inelastic demand for a product 
C)  licensing 
D)  control over an essential resource

Question 9

For a monopolist with a downward-sloping demand curve,

Accepted Answer

A)  the coefficient of price elasticity of demand is infinite. 
B)  the coefficient of price elasticity of demand is zero. 
C)  as price increases, marginal revenue decreases. 
D)  as price decreases, marginal revenue decreases. 
E)  when the price is equal to zero, marginal revenue is equal to zero. 
A)  the coefficient of price elasticity of demand is infinite. 
B)  the coefficient of price elasticity of demand is zero. 
C)  as price increases, marginal revenue decreases. 
D)  as price decreases, marginal revenue decreases. 
E)  when the price is equal to zero, marginal revenue is equal to zero.

Question 10

A monopolized market is characterized by:

Accepted Answer

A)  a sole seller of a product for which there are few suitable substitutes. 
B)  very strong barriers to entry. 
C)  a single firm facing the market demand curve. 
D)  all of these. 
A)  a sole seller of a product for which there are few suitable substitutes. 
B)  very strong barriers to entry. 
C)  a single firm facing the market demand curve. 
D)  all of these.

Question 11

To maximize its profits, a monopoly should produce the quantity where its marginal cost equals its:

Accepted Answer

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

Question 12

Exhibit 9-6 Monopoly
​  
-When the monopolist is maximizing total profit in Exhibit 9-6, the average total cost of producing that output level is:

Accepted Answer

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

Question 13

A natural monopoly maximizes profits at the point at which price equals minimum average total cost.

Accepted Answer

A) True 
 B)False

Question 14

There is only one gas station within hundreds of miles. The owner finds that when she charges $3 a gallon, she sells 199 gallons a day, and when she charges $2.99 a gallon, she sells 200 gallons a day. The marginal revenue of the 200th gallon of gas is:

Accepted Answer

A)  $.01. 
B)  $1. 
C)  $2.99. 
D)  $3. 
E)  $600. 
A)  $.01. 
B)  $1. 
C)  $2.99. 
D)  $3. 
E)  $600.

Question 15

Because monopolists are protected by high barriers to entry, they:

Accepted Answer

A)  may be able to earn long-run economic profits. 
B)  will not minimize the per-unit cost of producing their output. 
C)  will price their product at the highest possible price. 
D)  seek economic profit; however, they are not able to earn it in the long run. 
A)  may be able to earn long-run economic profits. 
B)  will not minimize the per-unit cost of producing their output. 
C)  will price their product at the highest possible price. 
D)  seek economic profit; however, they are not able to earn it in the long run.

Question 16

In a natural monopoly, the long-run average cost curve declines and therefore average cost is lower when there is only one seller.

Accepted Answer

A) True 
 B)False

Question 17

Exhibit 9-3 Demand and cost curves for GeneTech, a monopolist with a patented vaccine ​
 
-As shown in Exhibit 9-3, in order to maximize its profit, what price should GeneTech charge for its vaccine?

Accepted Answer

A)  $20 per dose. 
B)  $25 per dose. 
C)  $35 per dose 
D)  $50 per dose. 
A)  $20 per dose. 
B)  $25 per dose. 
C)  $35 per dose 
D)  $50 per dose.

Question 18

In contrast to a perfectly competitive firm, a monopolist earns:

Accepted Answer

A)  negative economic profit in the long run. 
B)  zero economic profit in the long run. 
C)  positive economic profit in the long run. 
D)  positive economic profit in the short run. 
A)  negative economic profit in the long run. 
B)  zero economic profit in the long run. 
C)  positive economic profit in the long run. 
D)  positive economic profit in the short run.

Question 19

An industry in which total costs are kept to a minimum because only one firm serves the whole market is called a:

Accepted Answer

A)  natural monopoly. 
B)  competitive monopoly. 
C)  patent monopoly. 
D)  limit monopoly. 
A)  natural monopoly. 
B)  competitive monopoly. 
C)  patent monopoly. 
D)  limit monopoly.

Question 20

What is the name of the monopolist having a declining long-run average cost throughout the market?

Accepted Answer

A)  Monopolistic competition. 
B)  Monopoly by legal barrier. 
C)  Natural monopoly. 
D)  Contrived monopoly. 
A)  Monopolistic competition. 
B)  Monopoly by legal barrier. 
C)  Natural monopoly. 
D)  Contrived monopoly.

A monopolist earns an economic profit only when:

Price discrimination requires:

A monopolist can earn an economic profit only when:

Monopolies may earn economic losses in the long run.

A monopolist will maximize profits by:

Which barrier to entry results in the creation of a natural monopoly?

Which of the following is a market structure of monopoly?

Which of the following factors is not a barrier limiting the entry of potential competitors into a market?

For a monopolist with a downward-sloping demand curve,

A monopolized market is characterized by:

To maximize its profits, a monopoly should produce the quantity where its marginal cost equals its:

Exhibit 9-6 Monopoly -When the monopolist is maximizing total profit in Exhibit 9-6, the average total cost of producing that output level is:

A natural monopoly maximizes profits at the point at which price equals minimum average total cost.

There is only one gas station within hundreds of miles. The owner finds that when she charges $3 a gallon, she sells 199 gallons a day, and when she charges $2.99 a gallon, she sells 200 gallons a day. The marginal revenue of the 200th gallon of gas is:

Because monopolists are protected by high barriers to entry, they:

In a natural monopoly, the long-run average cost curve declines and therefore average cost is lower when there is only one seller.

Exhibit 9-3 Demand and cost curves for GeneTech, a monopolist with a patented vaccine -As shown in Exhibit 9-3, in order to maximize its profit, what price should GeneTech charge for its vaccine?

In contrast to a perfectly competitive firm, a monopolist earns:

An industry in which total costs are kept to a minimum because only one firm serves the whole market is called a:

What is the name of the monopolist having a declining long-run average cost throughout the market?

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 earns an economic profit only when:

Price discrimination requires:

A monopolist can earn an economic profit only when:

Monopolies may earn economic losses in the long run.

A monopolist will maximize profits by:

Which barrier to entry results in the creation of a natural monopoly?

Which of the following is a market structure of monopoly?

Which of the following factors is not a barrier limiting the entry of potential competitors into a market?

For a monopolist with a downward-sloping demand curve,

A monopolized market is characterized by:

To maximize its profits, a monopoly should produce the quantity where its marginal cost equals its:

Exhibit 9-6 Monopoly ​ -When the monopolist is maximizing total profit in Exhibit 9-6, the average total cost of producing that output level is:

A natural monopoly maximizes profits at the point at which price equals minimum average total cost.

There is only one gas station within hundreds of miles. The owner finds that when she charges $3 a gallon, she sells 199 gallons a day, and when she charges $2.99 a gallon, she sells 200 gallons a day. The marginal revenue of the 200th gallon of gas is:

Because monopolists are protected by high barriers to entry, they:

In a natural monopoly, the long-run average cost curve declines and therefore average cost is lower when there is only one seller.

Exhibit 9-3 Demand and cost curves for GeneTech, a monopolist with a patented vaccine ​ -As shown in Exhibit 9-3, in order to maximize its profit, what price should GeneTech charge for its vaccine?

In contrast to a perfectly competitive firm, a monopolist earns:

An industry in which total costs are kept to a minimum because only one firm serves the whole market is called a:

What is the name of the monopolist having a declining long-run average cost throughout the market?

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 -When the monopolist is maximizing total profit in Exhibit 9-6, the average total cost of producing that output level is:

Exhibit 9-3 Demand and cost curves for GeneTech, a monopolist with a patented vaccine -As shown in Exhibit 9-3, in order to maximize its profit, what price should GeneTech charge for its vaccine?