Question 1

At the level of output at which a single-price monopolist maximizes profit, price is

Accepted Answer

A) equal to marginal cost. 
B) equal to marginal revenue. 
C) greater than marginal cost. 
D) less than marginal cost. 
E) less than marginal revenue. 
A) equal to marginal cost. 
B) equal to marginal revenue. 
C) greater than marginal cost. 
D) less than marginal cost. 
E) less than marginal revenue.

Question 2

A price searcher

Accepted Answer

A) faces a horizontal demand curve. 
B) is a seller that searches for good employees and pays them a low wage. 
C) is a seller that searches for the best location to sell its product. 
D) is a seller that has the ability to control to some degree the price of the product it sells. 
E) none of the above 
A) faces a horizontal demand curve. 
B) is a seller that searches for good employees and pays them a low wage. 
C) is a seller that searches for the best location to sell its product. 
D) is a seller that has the ability to control to some degree the price of the product it sells. 
E) none of the above

Question 3

Which of the following statements is true?

Accepted Answer

A) The motivation for rent seeking is not the same as the motivation for profit seeking. 
B) Economic rent is a payment in excess of opportunity cost. 
C) The deadweight loss triangle is not considered the graphic representation of one of the costs of monopoly; instead, it is one of the costs of not having a monopoly. 
D) Rent seeking is almost always an irrational activity as far as the rent seekers are concerned. 
E) a and d 
A) The motivation for rent seeking is not the same as the motivation for profit seeking. 
B) Economic rent is a payment in excess of opportunity cost. 
C) The deadweight loss triangle is not considered the graphic representation of one of the costs of monopoly; instead, it is one of the costs of not having a monopoly. 
D) Rent seeking is almost always an irrational activity as far as the rent seekers are concerned. 
E) a and d

Question 4

Which of the following statements is false?

Accepted Answer

A) A price searcher must lower price to sell an additional unit of its product. 
B) For a price searcher, price equals marginal revenue for all units except the first. 
C) For a price searcher, price is greater than marginal revenue for all units except the first. 
D) A price searcher, like a price taker, produces that quantity of output for which marginal revenue equals marginal cost. 
A) A price searcher must lower price to sell an additional unit of its product. 
B) For a price searcher, price equals marginal revenue for all units except the first. 
C) For a price searcher, price is greater than marginal revenue for all units except the first. 
D) A price searcher, like a price taker, produces that quantity of output for which marginal revenue equals marginal cost.

Question 5

The single-price monopolist produces where price is ___________ than marginal cost because for it price is __________ than marginal revenue and its demand curve lies __________ its marginal revenue curve.

Accepted Answer

A) less; less; below 
B) greater; greater; above 
C) greater; greater; below 
D) less; less; above 
E) greater; less; below 
A) less; less; below 
B) greater; greater; above 
C) greater; greater; below 
D) less; less; above 
E) greater; less; below

Question 6

Exhibit 23-4
  
-Refer to Exhibit 23-4. What dollar amounts go in blanks (K), (L), (M), and (N), respectively?

Accepted Answer

A) $90; $80; $53.33; and $60 
B) $90; $70; $50; and $30 
C) $133; $45; $35; and $25 
D) $0; $90; $160; and $210 
A) $90; $80; $53.33; and $60 
B) $90; $70; $50; and $30 
C) $133; $45; $35; and $25 
D) $0; $90; $160; and $210

Question 7

Which of the following is true at the level of output which maximizes profits for a perfectly price-discriminating monopolist?

Accepted Answer

A) P > MC. B) P < ATC. C) P < MC. D) a and b E) none of the above A) P > MC. B) P < ATC. C) P < MC. D) a and b E) none of the above

Question 8

Price discrimination occurs when a seller charges different prices for its product and the price differences result from differences in the costs of production.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is an example of a legal barrier to entry?

Accepted Answer

A) a public franchise 
B) a patent 
C) exclusive ownership of a scarce resource 
D) a and b 
E) a, b, and c 
A) a public franchise 
B) a patent 
C) exclusive ownership of a scarce resource 
D) a and b 
E) a, b, and c

Question 10

Exhibit 23-1
  
-Refer to Exhibit 23-1. If the product is produced under single-price monopoly, what do total costs equal at the profit maximizing level of output?

Accepted Answer

A) area 0P1BQ1 
B) area BCA 
C) area P1P2CB 
D) area P2CAP1 
E) none of the above 
A) area 0P1BQ1 
B) area BCA 
C) area P1P2CB 
D) area P2CAP1 
E) none of the above

Question 11

For a firm that perfectly price discriminates,

Accepted Answer

A) price is less than marginal revenue. 
B) price is greater than marginal revenue. 
C) price equals marginal revenue. 
D) price has no definite relationship with marginal revenue. 
A) price is less than marginal revenue. 
B) price is greater than marginal revenue. 
C) price equals marginal revenue. 
D) price has no definite relationship with marginal revenue.

Question 12

One thing a monopoly firm has to do that a perfectly competitive firm does not have to do is

Accepted Answer

A) search for its profit-maximizing price. 
B) advertise. 
C) minimize its losses. 
D) produce the quantity of output at which P = MC. 
E) produce a high-quality product. 
A) search for its profit-maximizing price. 
B) advertise. 
C) minimize its losses. 
D) produce the quantity of output at which P = MC. 
E) produce a high-quality product.

Question 13

At the profit-maximizing level of output, price is greater than marginal cost for a seller practicing perfect price discrimination.

Accepted Answer

A) True 
 B)False

Question 14

A monopolist that practices perfect price discrimination has the same deadweight loss triangle as the single-price monopolist.

Accepted Answer

A) True 
 B)False

Question 15

Exhibit 23-1
  
-Refer to Exhibit 23-1. If the product is produced under single-price monopoly, what quantity will be produced and what price will be charged in order to maximize profit?

Accepted Answer

A) Q2 units at P1 
B) Q1 units at P1 
C) Q1 units at P2 
D) Q2 units at P2 
A) Q2 units at P1 
B) Q1 units at P1 
C) Q1 units at P2 
D) Q2 units at P2

Exam 23: Monopoly

At the level of output at which a single-price monopolist maximizes profit, price is

A price searcher

Which of the following statements is true?

Which of the following statements is false?

The single-price monopolist produces where price is ___________ than marginal cost because for it price is __________ than marginal revenue and its demand curve lies __________ its marginal revenue curve.

Exhibit 23-4 -Refer to Exhibit 23-4. What dollar amounts go in blanks (K), (L), (M), and (N), respectively?

Which of the following is true at the level of output which maximizes profits for a perfectly price-discriminating monopolist?

Price discrimination occurs when a seller charges different prices for its product and the price differences result from differences in the costs of production.

Which of the following is an example of a legal barrier to entry?

Exhibit 23-1 -Refer to Exhibit 23-1. If the product is produced under single-price monopoly, what do total costs equal at the profit maximizing level of output?

For a firm that perfectly price discriminates,

One thing a monopoly firm has to do that a perfectly competitive firm does not have to do is

At the profit-maximizing level of output, price is greater than marginal cost for a seller practicing perfect price discrimination.

A monopolist that practices perfect price discrimination has the same deadweight loss triangle as the single-price monopolist.

Exhibit 23-1 -Refer to Exhibit 23-1. If the product is produced under single-price monopoly, what quantity will be produced and what price will be charged in order to maximize profit?

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

Fiscal Policy and the Federal Budget

Money Banking and the Financial System

The Federal Reserve System

Money and the Economy

Monetary Policy

Expectations Theory and the Economy

Economic Growth Resources Technology Ideas and Institutions

Debates in Macroeconomics Over the Role and Effects of Government

Elasticity

Consumer Choice and Behavioral Economics

Production and Costs

Perfect Competition

Monopolistic Competition Oligopoly and Game Theory

Government and Product Markets Antitrust and Regulation

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

International Trade

International Finance

The Economic Case for and Against Government Five Topics Considered

Stocks Bonds Futures and Options

Filters

The single-price monopolist produces where price is _ than marginal cost because for it price is than marginal revenue and its demand curve lies __ its marginal revenue curve.