Question 1

Suppose firm X is a monopolist and is receiving positive economic profits. What prevents other firms from directly competing away the profits?

Accepted Answer

A) high barriers to entry 
B) antitrust laws 
C) low barriers to entry 
D) diseconomies of scale 
E) none of the above 
A) high barriers to entry 
B) antitrust laws 
C) low barriers to entry 
D) diseconomies of scale 
E) none of the above

Question 2

Exhibit 23-4
  
-Refer to Exhibit 23-4. The profit-maximizing single-price monopolist's maximum profit is

Accepted Answer

A) $22. 
B) $42. 
C) $82. 
D) $130. 
E) $140. 
A) $22. 
B) $42. 
C) $82. 
D) $130. 
E) $140.

Question 3

Which of the following statements is true?

Accepted Answer

A) The monopolist can sell all it can produce at the market price. 
B) The marginal revenue curve of the single-price monopolist lies above its demand curve. 
C) The marginal revenue curve of the single-price monopolist is the same as its demand curve. 
D) The marginal revenue curve of the single-price monopolist lies below its demand curve. 
A) The monopolist can sell all it can produce at the market price. 
B) The marginal revenue curve of the single-price monopolist lies above its demand curve. 
C) The marginal revenue curve of the single-price monopolist is the same as its demand curve. 
D) The marginal revenue curve of the single-price monopolist lies below its demand curve.

Question 4

Which of the following is not a condition of price discrimination?

Accepted Answer

A) The seller must be a price searcher. 
B) The seller must be able to distinguish among customers who would be willing to pay different prices. 
C) The possibility of arbitrage must not exist. 
D) The seller must have zero fixed costs. 
E) The seller must exercise some control over price. 
A) The seller must be a price searcher. 
B) The seller must be able to distinguish among customers who would be willing to pay different prices. 
C) The possibility of arbitrage must not exist. 
D) The seller must have zero fixed costs. 
E) The seller must exercise some control over price.

Question 5

Firm X is a single seller of good X. There are, however, two substitutes for good X. Given this,

Accepted Answer

A) firm X cannot be a monopolist because the theory of monopoly assumes there are no substitutes for the good the single seller sells. 
B) firm X may be a monopolist because the two substitutes may be close substitutes. 
C) firm X cannot be a monopolist because if substitutes exist for the good it produces, its demand curve is horizontal but monopolists face downward-sloping demand curves. 
D) none of the above 
A) firm X cannot be a monopolist because the theory of monopoly assumes there are no substitutes for the good the single seller sells. 
B) firm X may be a monopolist because the two substitutes may be close substitutes. 
C) firm X cannot be a monopolist because if substitutes exist for the good it produces, its demand curve is horizontal but monopolists face downward-sloping demand curves. 
D) none of the above

Question 6

Exhibit 23-9
  
-Refer to Exhibit 23-9. Total fixed costs are equal to.

Accepted Answer

A) $0. 
B) $10. 
C) $25. 
D) $59. 
E) There is not enough information to answer the question. 
A) $0. 
B) $10. 
C) $25. 
D) $59. 
E) There is not enough information to answer the question.

Question 7

When the monopoly firm sells two units of its product, it earns total revenue of $960 and it incurs a total cost of $870. If its marginal revenue for the second unit was $475, what was the marginal revenue of the first unit?

Accepted Answer

A) $90 
B) $485 
C) $395 
D) $1,355 
E) There is not enough information to answer the question. 
A) $90 
B) $485 
C) $395 
D) $1,355 
E) There is not enough information to answer the question.

Question 8

A monopoly exhibits resource-allocative efficiency if it

Accepted Answer

A) is a single-price monopolist. 
B) is a perfectly price-discriminating monopolist. 
C) engages in second-degree price discrimination. 
D) engages in third-degree price discrimination. 
E) all of the above 
A) is a single-price monopolist. 
B) is a perfectly price-discriminating monopolist. 
C) engages in second-degree price discrimination. 
D) engages in third-degree price discrimination. 
E) all of the above

Question 9

Exhibit 23-4
  
-Refer to Exhibit 23-4. What dollar amounts go in blanks (F), (G), (H), (I), and (J), respectively?

Accepted Answer

A) $120; $125; $8; $28; and $38 
B) $9; $70; $50; $30; and $10 
C) $250; $15; $10; $30; and $50 
D) $100; $90; $8; $28; and $48 
A) $120; $125; $8; $28; and $38 
B) $9; $70; $50; $30; and $10 
C) $250; $15; $10; $30; and $50 
D) $100; $90; $8; $28; and $48

Question 10

Exhibit 23-5
  
-Refer to Exhibit 23-5. Suppose a single-price monopolist sells its product at the price P2. Profits are equal to

Accepted Answer

A) P2 times q2. 
B) (P2 - P1) times q2. 
C) (P2 - P1) times (q1 - q2). 
D) This cannot be determined without the average total cost curve. 
A) P2 times q2. 
B) (P2 - P1) times q2. 
C) (P2 - P1) times (q1 - q2). 
D) This cannot be determined without the average total cost curve.

Question 11

The ________________________ Acts, passed by the British Parliament in the 1760s, imposed taxes on a variety of products imported into the American colonies.

Accepted Answer

A) Smoot-Hawley Tariff 
B) Tea 
C) Townsend 
D) British East India 
A) Smoot-Hawley Tariff 
B) Tea 
C) Townsend 
D) British East India

Question 12

A right granted to a firm by government that permits the firm to provide a particular good or service and excludes others from doing the same is called

Accepted Answer

A) a natural monopoly. 
B) a comparative advantage. 
C) an economy of scale. 
D) a public franchise. 
A) a natural monopoly. 
B) a comparative advantage. 
C) an economy of scale. 
D) a public franchise.

Question 13

Exhibit 23-4
  
-Refer to Exhibit 23-4. What dollar amounts go in blanks (A), (B), (C), (D), and (E), respectively?

Accepted Answer

A) $8; $60; $0; $10; and $130 
B) $8; $70; $50; $30; and $10 
C) $25; $10; $10; $30; and $50 
D) $8; $85; $0; $45; and $80 
A) $8; $60; $0; $10; and $130 
B) $8; $70; $50; $30; and $10 
C) $25; $10; $10; $30; and $50 
D) $8; $85; $0; $45; and $80

Question 14

As long as the demand curve lies above the marginal revenue curve for a monopolist, it will charge a price for its product that is

Accepted Answer

A) above total cost. 
B) below marginal cost. 
C) above marginal cost. 
D) above average total cost. 
E) c and d 
A) above total cost. 
B) below marginal cost. 
C) above marginal cost. 
D) above average total cost. 
E) c and d

Question 15

The difference between profit seeking under perfect competition and profit seeking under monopoly is that

Accepted Answer

A) under the former output will increase and price will decrease, whereas under the latter only output will increase. 
B) under the former output will increase and price may increase, whereas under the latter output will increase and price will decrease. 
C) under the former new firms will enter the industry, whereas under the latter the firm will simply raise its price and earn higher profits. 
D) none of the above 
A) under the former output will increase and price will decrease, whereas under the latter only output will increase. 
B) under the former output will increase and price may increase, whereas under the latter output will increase and price will decrease. 
C) under the former new firms will enter the industry, whereas under the latter the firm will simply raise its price and earn higher profits. 
D) none of the above

Question 16

Describe the condition under which a profit-maximizing monopolist will be resource allocative efficient.

Accepted Answer

To be resource allocative efficient, the

Question 17

When a store offers an incentive for buying more, such as charging $50 for one sweater or $90 for two sweaters, it is an example of price discrimination.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is not an example of a legal barrier to entry?

Accepted Answer

A) a beautician's license 
B) a patent 
C) exclusive ownership of raw materials 
D) a public franchise 
E) a copyright 
A) a beautician's license 
B) a patent 
C) exclusive ownership of raw materials 
D) a public franchise 
E) a copyright

Question 19

Exhibit 23-6
  
-Refer to Exhibit 23-6. The marginal revenue curve of a perfectly competitive firm producing X and selling it at the price P0 is represented by

Accepted Answer

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

Question 20

Public franchises, patents, and government licenses are examples of __________ barriers to entry.

Accepted Answer

A) social 
B) legal 
C) cultural 
D) geographic 
A) social 
B) legal 
C) cultural 
D) geographic

Exam 23: Monopoly

Suppose firm X is a monopolist and is receiving positive economic profits. What prevents other firms from directly competing away the profits?

Exhibit 23-4 -Refer to Exhibit 23-4. The profit-maximizing single-price monopolist's maximum profit is

Which of the following statements is true?

Which of the following is not a condition of price discrimination?

Firm X is a single seller of good X. There are, however, two substitutes for good X. Given this,

Exhibit 23-9 -Refer to Exhibit 23-9. Total fixed costs are equal to.

When the monopoly firm sells two units of its product, it earns total revenue of $960 and it incurs a total cost of $870. If its marginal revenue for the second unit was $475, what was the marginal revenue of the first unit?

A monopoly exhibits resource-allocative efficiency if it

Exhibit 23-4 -Refer to Exhibit 23-4. What dollar amounts go in blanks (F), (G), (H), (I), and (J), respectively?

Exhibit 23-5 -Refer to Exhibit 23-5. Suppose a single-price monopolist sells its product at the price P2. Profits are equal to

The ________________________ Acts, passed by the British Parliament in the 1760s, imposed taxes on a variety of products imported into the American colonies.

A right granted to a firm by government that permits the firm to provide a particular good or service and excludes others from doing the same is called

Exhibit 23-4 -Refer to Exhibit 23-4. What dollar amounts go in blanks (A), (B), (C), (D), and (E), respectively?

As long as the demand curve lies above the marginal revenue curve for a monopolist, it will charge a price for its product that is

The difference between profit seeking under perfect competition and profit seeking under monopoly is that

Describe the condition under which a profit-maximizing monopolist will be resource allocative efficient.

When a store offers an incentive for buying more, such as charging $50 for one sweater or $90 for two sweaters, it is an example of price discrimination.

Which of the following is not an example of a legal barrier to entry?

Exhibit 23-6 -Refer to Exhibit 23-6. The marginal revenue curve of a perfectly competitive firm producing X and selling it at the price P0 is represented by

Public franchises, patents, and government licenses are examples of __________ barriers to entry.

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

Exhibit 23-5 -Refer to Exhibit 23-5. Suppose a single-price monopolist sells its product at the price P₂. Profits are equal to

Exhibit 23-6 -Refer to Exhibit 23-6. The marginal revenue curve of a perfectly competitive firm producing X and selling it at the price P₀ is represented by