Question 1

The demand curve facing a monopolist is:

Accepted Answer

A)  horizontal, the same as that facing a perfectly competitive firm. 
B)  downward-sloping, the same as that facing a perfectly competitive firm. 
C)  upward-sloping, the same as that facing a perfectly competitive firm. 
D)  downward-sloping, unlike the horizontal demand curve facing a perfectly competitive firm. 
A)  horizontal, the same as that facing a perfectly competitive firm. 
B)  downward-sloping, the same as that facing a perfectly competitive firm. 
C)  upward-sloping, the same as that facing a perfectly competitive firm. 
D)  downward-sloping, unlike the horizontal demand curve facing a perfectly competitive firm.

Question 2

Use the following to answer questions:
Figure: Water Works  
-(Figure: Water Works) Look at the figure Water Works, which describes a small town's water works, a natural monopoly. If regulators allow the monopolist to charge a price that just covers average total cost, the water works will serve _____ customers.

Accepted Answer

A)  200 
B)  300 
C)  375 
D)  400 
A)  200 
B)  300 
C)  375 
D)  400

Question 3

Use the following to answer questions:  
-(Table: Demand for Economics Tutoring) Look at the table Demand for Economics Tutoring. Suppose Eric is the only economics tutor in town and therefore holds a monopoly. Eric can offer additional hours of tutoring at a constant marginal cost of $2 per hour, and he has no fixed costs.
A) If Eric acts as a monopolist, how many hours will he offer and what price will he charge?
B) Calculate Eric's monopoly profit.

Accepted Answer

A) Using the demand schedule to calculat

Question 4

Use the following to answer questions:
Figure: The Profit-Maximizing Output and Price  
-(Figure: The Profit-Maximizing Output and Price) Look at the figure The Profit-Maximizing Output and Price. Assume that there are no fixed costs and AC = MC = $200. At the profit-maximizing output and price for a perfectly competitive industry, total surplus is:

Accepted Answer

A)  $200. 
B)  $1,600. 
C)  $3,200. 
D)  $6,400. 
A)  $200. 
B)  $1,600. 
C)  $3,200. 
D)  $6,400.

Question 5

One government policy for dealing with natural monopoly is to:

Accepted Answer

A)  impose a price floor to eliminate the deadweight loss. 
B)  impose a price ceiling to reduce economic profit. 
C)  break it up into smaller firms. 
D)  impose fines on the monopolist. 
A)  impose a price floor to eliminate the deadweight loss. 
B)  impose a price ceiling to reduce economic profit. 
C)  break it up into smaller firms. 
D)  impose fines on the monopolist.

Question 6

Use the following to answer questions:  
-(Table: Lunch) Look at the figure Lunch. Joe makes and sells picnic lunches to people taking all-day rafting trips on the river. The marginal cost and average cost of each lunch are a constant $4. If Joe is a monopolist, what is producer surplus in the long run?

Accepted Answer

A)  $45 
B)  $90 
C)  $180 
D)  $360 
A)  $45 
B)  $90 
C)  $180 
D)  $360

Question 7

In perfect price discrimination, consumer surplus is larger than in a single-price monopoly.

Accepted Answer

A) True 
 B)False

Question 8

Control of a scarce resource or input, economies of scale, technological superiority, and government-set rules and regulations are forms of:

Accepted Answer

A)  market structure. 
B)  pricing behavior. 
C)  barriers to entry. 
D)  public policy. 
A)  market structure. 
B)  pricing behavior. 
C)  barriers to entry. 
D)  public policy.

Question 9

Which of the following is TRUE?

Accepted Answer

A)  Profit-maximizing behavior occurs only in perfectly competitive markets. 
B)  Additional units of a good should be produced as long as MR  MC. 
A)  Profit-maximizing behavior occurs only in perfectly competitive markets. 
B)  Additional units of a good should be produced as long as MR  MC.

Question 10

It is often said that the monopolist will never set the price in the inelastic range of the demand curve. Why?

Accepted Answer

If the firm is operating in the inelasti

Question 11

De Beers became a monopoly by:

Accepted Answer

A)  establishing control over diamond mines. 
B)  use of economies of scale. 
C)  use of technological superiority. 
D)  ownership of a patent. 
A)  establishing control over diamond mines. 
B)  use of economies of scale. 
C)  use of technological superiority. 
D)  ownership of a patent.

Question 12

When a monopolist practices price discrimination, compared to a single-price monopolist, monopoly profits will:

Accepted Answer

A)  remain the same. 
B)  increase. 
C)  decrease. 
D)  increase initially, and then return to their original level. 
A)  remain the same. 
B)  increase. 
C)  decrease. 
D)  increase initially, and then return to their original level.

Question 13

Use the following to answer questions:  
-(Table: Prices and Demand) Look at the table Prices and Demand. The New Orleans Saints have a monopoly on Saints logo hats. The marginal cost of producing a hat is $18. If the Saints were a perfectly competitive firm in a perfectly competitive industry, at their profit-maximizing price and output, consumer surplus would be:

Accepted Answer

A)  $24. 
B)  $30. 
C)  $18. 
D)  $36. 
A)  $24. 
B)  $30. 
C)  $18. 
D)  $36.

Question 14

A firm that has economies of scale:

Accepted Answer

A)  at low output and but diseconomies of scale at high output is a natural monopoly. 
B)  over the entire range of output demanded is a natural monopoly. 
C)  at any particular level of output is a natural monopoly. 
D)  has a continually rising long-run average cost curve. 
A)  at low output and but diseconomies of scale at high output is a natural monopoly. 
B)  over the entire range of output demanded is a natural monopoly. 
C)  at any particular level of output is a natural monopoly. 
D)  has a continually rising long-run average cost curve.

Question 15

Use the following to answer questions:
Figure: A Profit-Maximizing Monopoly Firm  
-(Figure: A Profit-Maximizing Monopoly Firm) Look at the figure A Profit-Maximizing Monopoly Firm. This firm's profit per unit is:

Accepted Answer

A)  $5. 
B)  $12. 
C)  $15. 
D)  $20. 
A)  $5. 
B)  $12. 
C)  $15. 
D)  $20.

Question 16

Monopolists are engaging in price discrimination when they charge all customers the same price.

Accepted Answer

A) True 
 B)False

Question 17

Marginal revenue for a monopolist is:

Accepted Answer

A)  equal to price. 
B)  greater than price. 
C)  less than price. 
D)  equal to average revenue. 
A)  equal to price. 
B)  greater than price. 
C)  less than price. 
D)  equal to average revenue.

Question 18

If a monopoly can engage in perfect price discrimination, then its marginal revenue is equal to price, in contrast to the usual situation for a monopoly, in which price is higher than marginal revenue.

Accepted Answer

A) True 
 B)False

Question 19

One of the major differences between a monopolist and a purely competitive firm is that the monopolist has a _____ demand curve, while the purely competitive firm has a _____ demand curve.

Accepted Answer

A)  downward-sloping; perfectly elastic 
B)  perfectly inelastic; perfectly elastic 
C)  downward-sloping; perfectly inelastic 
D)  perfectly elastic; downward-sloping 
A)  downward-sloping; perfectly elastic 
B)  perfectly inelastic; perfectly elastic 
C)  downward-sloping; perfectly inelastic 
D)  perfectly elastic; downward-sloping

Question 20

Use the following to answer questions:
Figure: Short-Run Monopoly  
-(Figure: Short-Run Monopoly) Look at the figure Short-Run Monopoly. The marginal cost of producing the profit-maximizing quantity is cost:

Accepted Answer

A)  N. 
B)  O. 
C)  P. 
D)  Q. 
A)  N. 
B)  O. 
C)  P. 
D)  Q.

The demand curve facing a monopolist is:

One government policy for dealing with natural monopoly is to:

In perfect price discrimination, consumer surplus is larger than in a single-price monopoly.

Control of a scarce resource or input, economies of scale, technological superiority, and government-set rules and regulations are forms of:

Which of the following is TRUE?

It is often said that the monopolist will never set the price in the inelastic range of the demand curve. Why?

De Beers became a monopoly by:

When a monopolist practices price discrimination, compared to a single-price monopolist, monopoly profits will:

A firm that has economies of scale:

Use the following to answer questions: Figure: A Profit-Maximizing Monopoly Firm -(Figure: A Profit-Maximizing Monopoly Firm) Look at the figure A Profit-Maximizing Monopoly Firm. This firm's profit per unit is:

Monopolists are engaging in price discrimination when they charge all customers the same price.

Marginal revenue for a monopolist is:

If a monopoly can engage in perfect price discrimination, then its marginal revenue is equal to price, in contrast to the usual situation for a monopoly, in which price is higher than marginal revenue.

One of the major differences between a monopolist and a purely competitive firm is that the monopolist has a _ demand curve, while the purely competitive firm has a _ demand curve.

Use the following to answer questions: Figure: Short-Run Monopoly -(Figure: Short-Run Monopoly) Look at the figure Short-Run Monopoly. The marginal cost of producing the profit-maximizing quantity is cost:

First Principles

Economic Models: Trade-Offs and Trade 25

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods Common Resources

The Economics of the Welfare

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Filters

Exam 13: Monopoly

The demand curve facing a monopolist is:

One government policy for dealing with natural monopoly is to:

In perfect price discrimination, consumer surplus is larger than in a single-price monopoly.

Control of a scarce resource or input, economies of scale, technological superiority, and government-set rules and regulations are forms of:

Which of the following is TRUE?

It is often said that the monopolist will never set the price in the inelastic range of the demand curve. Why?

De Beers became a monopoly by:

When a monopolist practices price discrimination, compared to a single-price monopolist, monopoly profits will:

A firm that has economies of scale:

Use the following to answer questions: Figure: A Profit-Maximizing Monopoly Firm -(Figure: A Profit-Maximizing Monopoly Firm) Look at the figure A Profit-Maximizing Monopoly Firm. This firm's profit per unit is:

Monopolists are engaging in price discrimination when they charge all customers the same price.

Marginal revenue for a monopolist is:

If a monopoly can engage in perfect price discrimination, then its marginal revenue is equal to price, in contrast to the usual situation for a monopoly, in which price is higher than marginal revenue.

One of the major differences between a monopolist and a purely competitive firm is that the monopolist has a _____ demand curve, while the purely competitive firm has a _____ demand curve.

Use the following to answer questions: Figure: Short-Run Monopoly -(Figure: Short-Run Monopoly) Look at the figure Short-Run Monopoly. The marginal cost of producing the profit-maximizing quantity is cost:

First Principles

Economic Models: Trade-Offs and Trade 25

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods Common Resources

The Economics of the Welfare

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Filters

One of the major differences between a monopolist and a purely competitive firm is that the monopolist has a _ demand curve, while the purely competitive firm has a _ demand curve.