Question 1

Which of the following statements is false?

Accepted Answer

A) For a monopolist, the law of diminishing marginal returns does not hold. 
B) A monopoly firm will earn profit if it produces the quantity of output at which MR = MC, and charges a price that is above its average total cost. 
C) The monopolist firm searches for the highest per-unit price it can charge for the quantity of output it produces. 
D) The highest per-unit price a monopoly firm can charge is determined by the height of its demand curve. 
A) For a monopolist, the law of diminishing marginal returns does not hold. 
B) A monopoly firm will earn profit if it produces the quantity of output at which MR = MC, and charges a price that is above its average total cost. 
C) The monopolist firm searches for the highest per-unit price it can charge for the quantity of output it produces. 
D) The highest per-unit price a monopoly firm can charge is determined by the height of its demand curve.

Question 2

The profit-maximizing monopolist produces the quantity of output at which marginal revenue equals marginal cost.

Accepted Answer

A) True 
 B)False

Question 3

Exhibit 23-10
  
-Refer to Exhibit 23-10. The profit-maximizing single-price monopolist incurs total cost equal to what area?

Accepted Answer

A) 0BCQ1 
B) 0ADQ1 
C) 0AEQ2 
D) ABCD 
E) GFC 
A) 0BCQ1 
B) 0ADQ1 
C) 0AEQ2 
D) ABCD 
E) GFC

Question 4

Exhibit 23-1
  
-Refer to Exhibit 23-1 The deadweight loss of the profit-maximizing monopoly is identified by what area?

Accepted Answer

A) area Q1BAQ2 
B) area BCA 
C) area P1P2CB 
D) area 0P1BQ1 
E) none of the above 
A) area Q1BAQ2 
B) area BCA 
C) area P1P2CB 
D) area 0P1BQ1 
E) none of the above

Question 5

Exhibit 23-8
   ​
​
-Refer to Exhibit 23-8. Assuming that total fixed costs are $80, the average variable cost of producing 5 units of output is

Accepted Answer

A) $38.00. 
B) $74.00. 
C) $10.67. 
D) $38.67. 
E) There is not enough information given to answer this question. 
A) $38.00. 
B) $74.00. 
C) $10.67. 
D) $38.67. 
E) There is not enough information given to answer this question.

Question 6

The monopoly firm may earn positive economic profits in the long run because

Accepted Answer

A) it produces a homogeneous product. 
B) it is the only firm that wishes to produce the product. 
C) of high barriers to entry. 
D) a and c 
E) all of the above 
A) it produces a homogeneous product. 
B) it is the only firm that wishes to produce the product. 
C) of high barriers to entry. 
D) a and c 
E) all of the above

Question 7

By definition, monopolists sell a product for which there are absolutely no substitutes.

Accepted Answer

A) True 
 B)False

Question 8

Explain why price is greater than marginal revenue for a single-price monopolist and how this differs from perfect competition.

Accepted Answer

A monopolist faces a downward-sloping de

Question 9

The perfectly price-discriminating monopolist achieves resource allocative efficiency, while the single-price monopolist does not.

Accepted Answer

A) True 
 B)False

Question 10

The Townsend Acts, passed by the British Parliament in 1767, imposed taxes on various products imported into the American colonies.

Accepted Answer

A) True 
 B)False

Question 11

Since price __________ for a monopoly firm, the profit-maximizing monopoly firm does not produce the quantity of output for which price equals marginal cost.

Accepted Answer

A) does not equal marginal revenue 
B) does equal marginal revenue 
C) is higher for a perfectly competitive firm than 
D) is lower for a perfectly competitive firm than 
E) a and d 
A) does not equal marginal revenue 
B) does equal marginal revenue 
C) is higher for a perfectly competitive firm than 
D) is lower for a perfectly competitive firm than 
E) a and d

Question 12

At one time, monopolies were granted to people who were in the favor of kings and queens.

Accepted Answer

A) True 
 B)False

Question 13

Legal barriers to entry include patents, government licenses and economies of scale.

Accepted Answer

A) True 
 B)False

Question 14

A single-price monopolist receives the maximum price for each unit of the good it sells; a perfectly price-discriminating monopolist does not.

Accepted Answer

A) True 
 B)False

Question 15

Second-degree price discrimination is discrimination among

Accepted Answer

A) units. 
B) quantities. 
C) buyers. 
D) prices. 
A) units. 
B) quantities. 
C) buyers. 
D) prices.

Question 16

In maximizing profits, a single-price monopolist will charge a price that is

Accepted Answer

A) less than marginal cost. 
B) equal to marginal cost. 
C) greater than marginal cost. 
D) There is not enough information to answer the question. 
A) less than marginal cost. 
B) equal to marginal cost. 
C) greater than marginal cost. 
D) There is not enough information to answer the question.

Question 17

Exhibit 23-9
  
-Refer to Exhibit 23-9. A single-price monopolist that seeks to maximize profits will sell __________ units and charge a per-unit price of __________.

Accepted Answer

A) 20; $9 
B) 40; $7 
C) 50; $6 
D) 10; $10 
E) 7; $40 
A) 20; $9 
B) 40; $7 
C) 50; $6 
D) 10; $10 
E) 7; $40

Question 18

If a perfectly competitive firm and a single-price monopolist face the same demand and cost curves, then

Accepted Answer

A) the competitive firm will attain resource-allocative efficiency, but the monopolist will not. 
B) the competitive firm will attain resource-allocative efficiency, but the monopolist may or may not, depending upon the demand for its product. 
C) the competitive firm will not attain resource-allocative efficiency, but the monopolist will. 
D) both the competitive firm and the monopolist will attain resource-allocative efficiency. 
E) neither the competitive firm nor the monopolist will attain resource-allocative efficiency. 
A) the competitive firm will attain resource-allocative efficiency, but the monopolist will not. 
B) the competitive firm will attain resource-allocative efficiency, but the monopolist may or may not, depending upon the demand for its product. 
C) the competitive firm will not attain resource-allocative efficiency, but the monopolist will. 
D) both the competitive firm and the monopolist will attain resource-allocative efficiency. 
E) neither the competitive firm nor the monopolist will attain resource-allocative efficiency.

Question 19

Barriers to entry include all of the following except

Accepted Answer

A) exclusive ownership of a scarce resource. 
B) patents. 
C) public franchises. 
D) diseconomies of scale. 
E) government licenses. 
A) exclusive ownership of a scarce resource. 
B) patents. 
C) public franchises. 
D) diseconomies of scale. 
E) government licenses.

Question 20

Exhibit 23-4
  
-Refer to Exhibit 23-4. What dollar amounts go in blanks (P), (Q), (R), and (S), respectively?

Accepted Answer

A) $90;$80; $53.33; and $60 
B) $10; $0; $28; and $19 
C) $15; $5; $20; and $10 
D) $75; $45; $33.33; and $32.50 
A) $90;$80; $53.33; and $60 
B) $10; $0; $28; and $19 
C) $15; $5; $20; and $10 
D) $75; $45; $33.33; and $32.50

Exam 23: Monopoly

Which of the following statements is false?

The profit-maximizing monopolist produces the quantity of output at which marginal revenue equals marginal cost.

Exhibit 23-10 -Refer to Exhibit 23-10. The profit-maximizing single-price monopolist incurs total cost equal to what area?

Exhibit 23-1 -Refer to Exhibit 23-1 The deadweight loss of the profit-maximizing monopoly is identified by what area?

Exhibit 23-8 ​ ​ -Refer to Exhibit 23-8. Assuming that total fixed costs are $80, the average variable cost of producing 5 units of output is

The monopoly firm may earn positive economic profits in the long run because

By definition, monopolists sell a product for which there are absolutely no substitutes.

Explain why price is greater than marginal revenue for a single-price monopolist and how this differs from perfect competition.

The perfectly price-discriminating monopolist achieves resource allocative efficiency, while the single-price monopolist does not.

The Townsend Acts, passed by the British Parliament in 1767, imposed taxes on various products imported into the American colonies.

Since price __________ for a monopoly firm, the profit-maximizing monopoly firm does not produce the quantity of output for which price equals marginal cost.

At one time, monopolies were granted to people who were in the favor of kings and queens.

Legal barriers to entry include patents, government licenses and economies of scale.

A single-price monopolist receives the maximum price for each unit of the good it sells; a perfectly price-discriminating monopolist does not.

Second-degree price discrimination is discrimination among

In maximizing profits, a single-price monopolist will charge a price that is

Exhibit 23-9 -Refer to Exhibit 23-9. A single-price monopolist that seeks to maximize profits will sell __________ units and charge a per-unit price of __________.

If a perfectly competitive firm and a single-price monopolist face the same demand and cost curves, then

Barriers to entry include all of the following except

Exhibit 23-4 -Refer to Exhibit 23-4. What dollar amounts go in blanks (P), (Q), (R), and (S), respectively?

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 23-8 -Refer to Exhibit 23-8. Assuming that total fixed costs are $80, the average variable cost of producing 5 units of output is

Exhibit 23-9 -Refer to Exhibit 23-9. A single-price monopolist that seeks to maximize profits will sell units and charge a per-unit price of .