Question 1

If economies of scale are so pronounced in an industry that only one firm can survive in the industry, this firm is called a(n) __________ monopoly.

Accepted Answer

A) financial 
B) natural 
C) structured 
D) independent 
A) financial 
B) natural 
C) structured 
D) independent B

Question 2

Exhibit 23-6
  
-Refer to Exhibit 23-6. If C is the demand curve facing a perfectly price-discriminating monopolist selling qC units of X, its marginal revenue curve is

Accepted Answer

A) A. 
B) B. 
C) C. 
D) D. 
A) A. 
B) B. 
C) C. 
D) D. C

Question 3

Exhibit 23-10
  
-Refer to Exhibit 23-10. The profit-maximizing single-price monopolist will produce which quantity of output?

Accepted Answer

A) Q2 
B) Q1 
C) Q3 
D) Q4 
E) none of the above 
A) Q2 
B) Q1 
C) Q3 
D) Q4 
E) none of the above B

Question 4

Exhibit 23-2
  
-Refer to Exhibit 23-2. The profit-maximizing monopolist produces Q0 units and charges a price of

Accepted Answer

A) P0. 
B) P1. 
C) P3. 
D) P2. 
E) none of the above 
A) P0. 
B) P1. 
C) P3. 
D) P2. 
E) none of the above

Question 5

Exhibit 23-3
  
-Refer to Exhibit 23-3. The profit of the single-price monopolist is

Accepted Answer

A) positive. 
B) zero. 
C) negative. 
D) uncertain without more information. 
A) positive. 
B) zero. 
C) negative. 
D) uncertain without more information.

Question 6

Marginal revenue is equal to __________ divided by __________.

Accepted Answer

A) total revenue; the quantity of output 
B) marginal cost; wages 
C) the change in total revenue; the quantity of output 
D) the change in total revenue; the change in quantity of output 
E) the change in quantity of output; the change in total revenue 
A) total revenue; the quantity of output 
B) marginal cost; wages 
C) the change in total revenue; the quantity of output 
D) the change in total revenue; the change in quantity of output 
E) the change in quantity of output; the change in total revenue

Question 7

Exhibit 23-5
  
-Refer to Exhibit 23-5. What area represents the revenue gained when price goes from P2 to P1?

Accepted Answer

A) P1CBP2 
B) q2CAq1 
C) 0P1Aq1 
D) CBA 
A) P1CBP2 
B) q2CAq1 
C) 0P1Aq1 
D) CBA

Question 8

Exhibit 23-9
  
-Refer to Exhibit 23-9. A single-price monopolist earns a total profit of __________ when it produces the profit maximizing level of output.

Accepted Answer

A) $120 
B) $110 
C) $180 
D) $80 
E) $49 
A) $120 
B) $110 
C) $180 
D) $80 
E) $49

Question 9

Exhibit 23-4
  
-Refer to Exhibit 23-4. What dollar amounts go in blanks (T), (U) and (V), respectively?

Accepted Answer

A) $25; $30; and $40 
B) $16; $19.50; and $23.60 
C) $30; $40; and $29 
D) $23; $15; and $28 
A) $25; $30; and $40 
B) $16; $19.50; and $23.60 
C) $30; $40; and $29 
D) $23; $15; and $28

Question 10

Economic rent is a payment received in excess of marginal cost.

Accepted Answer

A) True 
 B)False

Question 11

Cents-off coupons can be seen as a form of third-degree price discrimination.

Accepted Answer

A) True 
 B)False

Question 12

If a firm has no variable costs, the profit-maximizing price is also the revenue-maximizing price.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following statements is true?

Accepted Answer

A) As a consequence of the monopoly firm producing the quantity of output at which price equals marginal cost, it is resource allocative efficient. 
B) As a consequence of the perfectly competitive firm producing the quantity of output at which price equals marginal cost, it is resource allocative efficient. 
C) a and b 
D) none of the above 
A) As a consequence of the monopoly firm producing the quantity of output at which price equals marginal cost, it is resource allocative efficient. 
B) As a consequence of the perfectly competitive firm producing the quantity of output at which price equals marginal cost, it is resource allocative efficient. 
C) a and b 
D) none of the above

Question 14

The seller of good X sells 1,000 units of the good. Each unit is being sold for the highest price each consumer is willing to pay for the good. The seller practices

Accepted Answer

A) second-degree price discrimination. 
B) third-degree price discrimination. 
C) perfect price discrimination. 
D) marginal revenue pricing. 
E) rent seeking. 
A) second-degree price discrimination. 
B) third-degree price discrimination. 
C) perfect price discrimination. 
D) marginal revenue pricing. 
E) rent seeking.

Question 15

Suppose a monopolist practices perfect price discrimination. Its marginal revenue curve

Accepted Answer

A) will lie below its demand curve. 
B) will lie above its demand curve. 
C) will coincide with its demand curve. 
D) has no definite relationship with its demand curve. 
A) will lie below its demand curve. 
B) will lie above its demand curve. 
C) will coincide with its demand curve. 
D) has no definite relationship with its demand curve.

Question 16

In the United States, patents are granted to inventors of a product or process for a period of

Accepted Answer

A) unlimited time. 
B) 10 years. 
C) 20 years. 
D) 25 years. 
A) unlimited time. 
B) 10 years. 
C) 20 years. 
D) 25 years.

Question 17

Which of the following is characteristic of the monopoly firm?

Accepted Answer

A) It produces the quantity of output at which marginal revenue equals marginal cost, MR = MC. 
B) It charges a price per unit for its product that is equal to marginal cost. 
C) It always earns a profit, because it is a single seller of a product. 
D) a and b 
E) a and c 
A) It produces the quantity of output at which marginal revenue equals marginal cost, MR = MC. 
B) It charges a price per unit for its product that is equal to marginal cost. 
C) It always earns a profit, because it is a single seller of a product. 
D) a and b 
E) a and c

Question 18

A monopolist can sell 8,000 units at a price of $10 per unit. Lowering price to all buyers by $1 raises the quantity demanded by 500 units. What is the change in total revenue resulting from this price change?

Accepted Answer

A) $3,500 
B) -$12,500 
C) -$3,500 
D) -$18,000 
E) ​There is not enough information provided to answer the question. 
A) $3,500 
B) -$12,500 
C) -$3,500 
D) -$18,000 
E) ​There is not enough information provided to answer the question.

Question 19

The theory of monopoly assumes that the monopoly firm

Accepted Answer

A) faces a downward-sloping supply curve that is the same as its marginal revenue curve. 
B) faces a downward-sloping demand curve. 
C) produces more than the perfectly competitive firm under identical demand and cost conditions. 
D) produces a product for which there are many close substitutes. 
E) none of the above 
A) faces a downward-sloping supply curve that is the same as its marginal revenue curve. 
B) faces a downward-sloping demand curve. 
C) produces more than the perfectly competitive firm under identical demand and cost conditions. 
D) produces a product for which there are many close substitutes. 
E) none of the above

Question 20

Which of the following is not an assumption of the theory of monopoly?

Accepted Answer

A) There is one seller. 
B) The single seller sells a product for which there are many close substitutes. 
C) There are extremely high barriers to entry. 
D) b and c 
E) a and c 
A) There is one seller. 
B) The single seller sells a product for which there are many close substitutes. 
C) There are extremely high barriers to entry. 
D) b and c 
E) a and c

Exam 23: Monopoly

If economies of scale are so pronounced in an industry that only one firm can survive in the industry, this firm is called a(n) __________ monopoly.

Exhibit 23-6 -Refer to Exhibit 23-6. If C is the demand curve facing a perfectly price-discriminating monopolist selling qC units of X, its marginal revenue curve is

Exhibit 23-10 -Refer to Exhibit 23-10. The profit-maximizing single-price monopolist will produce which quantity of output?

Exhibit 23-2 -Refer to Exhibit 23-2. The profit-maximizing monopolist produces Q0 units and charges a price of

Exhibit 23-3 -Refer to Exhibit 23-3. The profit of the single-price monopolist is

Marginal revenue is equal to __________ divided by __________.

Exhibit 23-5 -Refer to Exhibit 23-5. What area represents the revenue gained when price goes from P2 to P1?

Exhibit 23-9 -Refer to Exhibit 23-9. A single-price monopolist earns a total profit of __________ when it produces the profit maximizing level of output.

Exhibit 23-4 -Refer to Exhibit 23-4. What dollar amounts go in blanks (T), (U) and (V), respectively?

Economic rent is a payment received in excess of marginal cost.

Cents-off coupons can be seen as a form of third-degree price discrimination.

If a firm has no variable costs, the profit-maximizing price is also the revenue-maximizing price.

Which of the following statements is true?

The seller of good X sells 1,000 units of the good. Each unit is being sold for the highest price each consumer is willing to pay for the good. The seller practices

Suppose a monopolist practices perfect price discrimination. Its marginal revenue curve

In the United States, patents are granted to inventors of a product or process for a period of

Which of the following is characteristic of the monopoly firm?

A monopolist can sell 8,000 units at a price of $10 per unit. Lowering price to all buyers by $1 raises the quantity demanded by 500 units. What is the change in total revenue resulting from this price change?

The theory of monopoly assumes that the monopoly firm

Which of the following is not an assumption of the theory of monopoly?

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand Theory

Prices Free Controlled and Relative

Supply Demand and Price Applications

Macroeconomic Measurements Part I Prices and Unemployment

Macroeconomic Measurements Part II Gdp and Real Gdp

Aggregate Demand and Aggregate Supply

Classical Macroeconomics and the Self Regulating Economy

Keynesian Macroeconomics and Economic Instability a Critique of the Self Regulating Economy

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Expectations Theory and the Economy

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Debates in Macroeconomics Over the Role and Effects of Government

Elasticity

Consumer Choice and Behavioral Economics

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Perfect Competition

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Factor Markets With Emphasis on the Labor Market

Wages Unions and Labor

The Distribution of Income and Poverty

Interest Rent and Profit

Market Failure Externalities Public Goods and Asymmetric Information

Public Choice and Special Interest Group Politics

Building Theories to Explain Everyday Life From Observations to Questions to Theories to Predictions

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The Economic Case for and Against Government Five Topics Considered

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Exhibit 23-6 -Refer to Exhibit 23-6. If C is the demand curve facing a perfectly price-discriminating monopolist selling q_C units of X, its marginal revenue curve is

Exhibit 23-2 -Refer to Exhibit 23-2. The profit-maximizing monopolist produces Q₀ units and charges a price of

Marginal revenue is equal to divided by .

Exhibit 23-5 -Refer to Exhibit 23-5. What area represents the revenue gained when price goes from P₂ to P₁?