Question 1

A monopoly is an industry structure characterized by:

Accepted Answer

A)  a single buyer and several sellers. 
B)  a product with many close substitutes. 
C)  a large number of small firms. 
D)  barriers to entry and exit. 
A)  a single buyer and several sellers. 
B)  a product with many close substitutes. 
C)  a large number of small firms. 
D)  barriers to entry and exit.

Question 2

In an industry characterized by extensive economies of scale:

Accepted Answer

A)  small companies are more profitable than large companies. 
B)  large companies are more profitable than small companies. 
C)  small and large companies are equally profitable. 
D)  small companies will drive out large companies. 
A)  small companies are more profitable than large companies. 
B)  large companies are more profitable than small companies. 
C)  small and large companies are equally profitable. 
D)  small companies will drive out large companies.

Question 3

A price-discriminating firm will adjust prices so that customers with more _____ demand pay _____ than (as) customers with _____ elastic demand.

Accepted Answer

A)  inelastic; less; less 
B)  elastic; less; less 
C)  elastic; the same; more 
D)  elastic; more; less 
A)  inelastic; less; less 
B)  elastic; less; less 
C)  elastic; the same; more 
D)  elastic; more; less

Question 4

Use the following to answer questions:
Scenario: Monopolist
The demand curve for a monopolist is P = 75 - 0.5Q, and the monopolist has the following MC expressed as P = 2Q. Assume also that ATC at the profit-maximizing level of production is equal to $12.50.
-(Scenario: Monopolist) Look at the scenario Monopolist. The deadweight loss from this monopolist's production is:

Accepted Answer

A)  $31.25. 
B)  $12.50. 
C)  $0.00 
D)  $30.00. 
A)  $31.25. 
B)  $12.50. 
C)  $0.00 
D)  $30.00.

Question 5

Use the following to answer questions:
Figure: PPV  
-(Figure: PPV) Look at the figure PPV, which shows the demand and marginal revenue for a pay-per-view football game on cable TV. Assume that the marginal cost and average cost are a constant $20. If the cable company is a monopoly, how much will it produce?

Accepted Answer

A)  2 
B)  4 
C)  6 
D)  8 
A)  2 
B)  4 
C)  6 
D)  8

Question 6

When a monopolist practices price discrimination as opposed to setting a single price, the monopolist increases its profits by decreasing producer surplus.

Accepted Answer

A) True 
 B)False

Question 7

_____ is the practice of selling _____ product(s) at different prices to different consumers, without corresponding differences in costs.

Accepted Answer

A)  Price discrimination; the same 
B)  Privatizing; the same 
C)  Monopolizing; similar 
D)  Price fixing; different 
A)  Price discrimination; the same 
B)  Privatizing; the same 
C)  Monopolizing; similar 
D)  Price fixing; different

Question 8

The demand curve for a monopoly is:

Accepted Answer

A)  the sum of the supply curves of all of the firms in the monopoly's industry. 
B)  the industry demand curve. 
C)  horizontal because no one can enter. 
D)  perfectly elastic. 
A)  the sum of the supply curves of all of the firms in the monopoly's industry. 
B)  the industry demand curve. 
C)  horizontal because no one can enter. 
D)  perfectly elastic.

Question 9

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 cost per unit at its profit-maximizing quantity is:

Accepted Answer

A)  $8. 
B)  $15. 
C)  $18. 
D)  $20. 
A)  $8. 
B)  $15. 
C)  $18. 
D)  $20.

Question 10

To engage in price discrimination a firm must be:

Accepted Answer

A)  a price taker. 
B)  a price setter. 
C)  able to identify consumers whose elasticities differ. 
D)  a price setter, and it must be able to identify consumers whose elasticities differ. 
A)  a price taker. 
B)  a price setter. 
C)  able to identify consumers whose elasticities differ. 
D)  a price setter, and it must be able to identify consumers whose elasticities differ.

Question 11

Conditions that keep new firms out of a monopoly market are:

Accepted Answer

A)  barriers to entry. 
B)  terms of sale. 
C)  labor market stipulations. 
D)  production controls. 
A)  barriers to entry. 
B)  terms of sale. 
C)  labor market stipulations. 
D)  production controls.

Question 12

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 monopolist, total surplus is:

Accepted Answer

A)  $3,200. 
B)  $4,800 
C)  $1,000. 
D)  $1,600. 
A)  $3,200. 
B)  $4,800 
C)  $1,000. 
D)  $1,600.

Question 13

A profit-maximizing monopoly will never set price in the inelastic region of the demand curve.

Accepted Answer

A) True 
 B)False

Question 14

To maintain profits in the long run, a monopoly must be protected by barriers to the entry of other firms into the industry.

Accepted Answer

A) True 
 B)False

Question 15

When a monopolist practices price discrimination, compared to a single-price monopolist, consumer surplus will:

Accepted Answer

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

Question 16

A monopoly's short-run supply curve is upward-sloping because of diminishing marginal returns.

Accepted Answer

A) True 
 B)False

Question 17

A monopoly may continue to make economic profits in the long run because of the barriers to entry.

Accepted Answer

A) True 
 B)False

Question 18

What makes a natural monopoly a distinct form of monopoly? Use an example of a natural monopoly in your explanation.

Accepted Answer

A natural monopoly is a firm that has be

Question 19

A monopolist that charges each customer a different price based on the customer's individual willingness to pay is called a single-price monopolist.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is TRUE?

Accepted Answer

A)  Monopolies produce too much and charge too much from the standpoint of efficiency. 
B)  Monopolies usually are economically efficient because they have economic profits with which to work. 
C)  Monopolies produce too little and charge too much from the standpoint of efficiency. 
D)  Monopolies cause an efficiency problem but are not associated with a deadweight loss. 
A)  Monopolies produce too much and charge too much from the standpoint of efficiency. 
B)  Monopolies usually are economically efficient because they have economic profits with which to work. 
C)  Monopolies produce too little and charge too much from the standpoint of efficiency. 
D)  Monopolies cause an efficiency problem but are not associated with a deadweight loss.

A monopoly is an industry structure characterized by:

In an industry characterized by extensive economies of scale:

A price-discriminating firm will adjust prices so that customers with more ___ demand pay _ than (as) customers with ___ elastic demand.

When a monopolist practices price discrimination as opposed to setting a single price, the monopolist increases its profits by decreasing producer surplus.

_ is the practice of selling _ product(s) at different prices to different consumers, without corresponding differences in costs.

The demand curve for a monopoly is:

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 cost per unit at its profit-maximizing quantity is:

To engage in price discrimination a firm must be:

Conditions that keep new firms out of a monopoly market are:

A profit-maximizing monopoly will never set price in the inelastic region of the demand curve.

To maintain profits in the long run, a monopoly must be protected by barriers to the entry of other firms into the industry.

When a monopolist practices price discrimination, compared to a single-price monopolist, consumer surplus will:

A monopoly's short-run supply curve is upward-sloping because of diminishing marginal returns.

A monopoly may continue to make economic profits in the long run because of the barriers to entry.

What makes a natural monopoly a distinct form of monopoly? Use an example of a natural monopoly in your explanation.

A monopolist that charges each customer a different price based on the customer's individual willingness to pay is called a single-price monopolist.

Which of the following is TRUE?

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

A monopoly is an industry structure characterized by:

In an industry characterized by extensive economies of scale:

A price-discriminating firm will adjust prices so that customers with more _____ demand pay _____ than (as) customers with _____ elastic demand.

When a monopolist practices price discrimination as opposed to setting a single price, the monopolist increases its profits by decreasing producer surplus.

_____ is the practice of selling _____ product(s) at different prices to different consumers, without corresponding differences in costs.

The demand curve for a monopoly is:

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 cost per unit at its profit-maximizing quantity is:

To engage in price discrimination a firm must be:

Conditions that keep new firms out of a monopoly market are:

A profit-maximizing monopoly will never set price in the inelastic region of the demand curve.

To maintain profits in the long run, a monopoly must be protected by barriers to the entry of other firms into the industry.

When a monopolist practices price discrimination, compared to a single-price monopolist, consumer surplus will:

A monopoly's short-run supply curve is upward-sloping because of diminishing marginal returns.

A monopoly may continue to make economic profits in the long run because of the barriers to entry.

What makes a natural monopoly a distinct form of monopoly? Use an example of a natural monopoly in your explanation.

A monopolist that charges each customer a different price based on the customer's individual willingness to pay is called a single-price monopolist.

Which of the following is TRUE?

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

A price-discriminating firm will adjust prices so that customers with more ___ demand pay _ than (as) customers with ___ elastic demand.

_ is the practice of selling _ product(s) at different prices to different consumers, without corresponding differences in costs.