Question 1

_____ firms have the most market power.

Accepted Answer

A)  Monopoly 
B)  Duopoly 
C)  Oligopoly 
D)  Monopolistic competition 
A)  Monopoly 
B)  Duopoly 
C)  Oligopoly 
D)  Monopolistic competition

Question 2

A monopolist _____ than a perfectly competitive industry.

Accepted Answer

A)  produces a larger quantity 
B)  charges a higher price 
C)  charges a lower price 
D)  earns less profit in the long run 
A)  produces a larger quantity 
B)  charges a higher price 
C)  charges a lower price 
D)  earns less profit in the long run

Question 3

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 price per unit is:

Accepted Answer

A)  $20. 
B)  $25. 
C)  $30. 
D)  $35. 
A)  $20. 
B)  $25. 
C)  $30. 
D)  $35.

Question 4

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 $40. If the cable company practices perfect price discrimination, producer surplus will be:

Accepted Answer

A)  $180. 
B)  $100. 
C)  $40. 
D)  $0. 
A)  $180. 
B)  $100. 
C)  $40. 
D)  $0.

Question 5

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, how many lunches will he produce in the long run?

Accepted Answer

A)  0 
B)  10 
C)  20 
D)  30 
A)  0 
B)  10 
C)  20 
D)  30

Question 6

The practice of charging different prices to different customers for the same good or service, even though the cost of supplying those customers is the same, is:

Accepted Answer

A)  privatization. 
B)  monopolization. 
C)  output competition. 
D)  price discrimination. 
A)  privatization. 
B)  monopolization. 
C)  output competition. 
D)  price discrimination.

Question 7

If your farm had the only known source of a rare cocoa bean needed to make chocolate-covered peanuts, your monopoly would result from:

Accepted Answer

A)  control of a scarce resource or input. 
B)  technological superiority. 
C)  increasing returns to scale. 
D)  government-set barriers. 
A)  control of a scarce resource or input. 
B)  technological superiority. 
C)  increasing returns to scale. 
D)  government-set barriers.

Question 8

A monopolist with a linear demand curve will:

Accepted Answer

A)  not produce in the inelastic portion of its demand curve. 
B)  produce regardless of elasticity, since it is a monopolist. 
C)  not produce in the elastic portion of its demand curve. 
D)  produce only at the unit price-elastic portion of its demand curve. 
A)  not produce in the inelastic portion of its demand curve. 
B)  produce regardless of elasticity, since it is a monopolist. 
C)  not produce in the elastic portion of its demand curve. 
D)  produce only at the unit price-elastic portion of its demand curve.

Question 9

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, what price will it charge?

Accepted Answer

A)  $20 
B)  $40 
C)  $60 
D)  $100 
A)  $20 
B)  $40 
C)  $60 
D)  $100

Question 10

A monopoly is producing output so that average total cost is $30, marginal revenue is $40, and the price is $50. If ATC is at its minimum level and the ATC curve is U-shaped, to maximize profits this firm should:

Accepted Answer

A)  increase output. 
B)  reduce output. 
C)  do nothing; it is already maximizing profits. 
D)  shut down. 
A)  increase output. 
B)  reduce output. 
C)  do nothing; it is already maximizing profits. 
D)  shut down.

Question 11

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. How many hats should the Saints produce, and what price should the organization charge to maximize its profits?

Accepted Answer

A)  1; $28 
B)  2; $26 
C)  3; $24 
D)  4; $22 
A)  1; $28 
B)  2; $26 
C)  3; $24 
D)  4; $22

Question 12

The demand curve for a monopoly is:

Accepted Answer

A)  above the marginal revenue curve. 
B)  below the marginal revenue curve. 
C)  horizontal because of economics of scale. 
D)  infinitely elastic. 
A)  above the marginal revenue curve. 
B)  below the marginal revenue curve. 
C)  horizontal because of economics of scale. 
D)  infinitely elastic.

Question 13

Which of the following statements about the differences between monopoly and perfect competition is INCORRECT?

Accepted Answer

A)  A monopolist has market power, while a perfect competitor does not. 
B)  Unlike a perfectly competitive firm, a monopoly can make positive economic profits in the long run. 
C)  A monopoly will charge a higher price and produce a smaller quantity than a competitive market with the same demand and cost structure. 
D)  Monopoly profits can continue in the long run because the monopoly produces more and charges a higher price than a comparable perfectly competitive industry. 
A)  A monopolist has market power, while a perfect competitor does not. 
B)  Unlike a perfectly competitive firm, a monopoly can make positive economic profits in the long run. 
C)  A monopoly will charge a higher price and produce a smaller quantity than a competitive market with the same demand and cost structure. 
D)  Monopoly profits can continue in the long run because the monopoly produces more and charges a higher price than a comparable perfectly competitive industry.

Question 14

Airlines that engage in price discrimination charge higher prices to business travelers because their _____ is more _____ than that of other travelers.

Accepted Answer

A)  demand; elastic 
B)  demand; inelastic 
C)  supply; elastic 
D)  supply; inelastic 
A)  demand; elastic 
B)  demand; inelastic 
C)  supply; elastic 
D)  supply; inelastic

Question 15

Why is the demand curve for a monopolist downward-sloping, while the demand curve for the perfectly competitive firm is horizontal?

Accepted Answer

The perfectly competitive firm is a pric

Question 16

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 $40. If the cable company is a single-price monopoly and maximizes profit, producer surplus will be:

Accepted Answer

A)  $0. 
B)  $45. 
C)  $70. 
D)  $90. 
A)  $0. 
B)  $45. 
C)  $70. 
D)  $90.

Question 17

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. How much is consumer surplus at the Saint's profit-maximizing output?

Accepted Answer

A)  $24 
B)  $18 
C)  $12 
D)  $9 
A)  $24 
B)  $18 
C)  $12 
D)  $9

Question 18

Use the following to answer questions:
Figure: Computing Monopoly Profit  
-(Figure: Computing Monopoly Profit) Look at the figure Computing Monopoly Profit. The profit-maximizing price is _____ and will generate total economic profit of _____.

Accepted Answer

A)  P2; EF 
B)  P3; the rectangle P1P2FG 
C)  P3; the rectangle P2P3EF 
D)  P3; EF 
A)  P2; EF 
B)  P3; the rectangle P1P2FG 
C)  P3; the rectangle P2P3EF 
D)  P3; EF

Question 19

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 there are no fixed costs and AC = MC. At the profit-maximizing quantity of production for the monopolist, total revenue is _____, total cost is _____, and profit is _____.

Accepted Answer

A)  $600; $200; $400 
B)  $1,600; $3,200; $1,600 
C)  $4,800; $3,200; $1,600 
D)  $4,800; $1,600; $3,200 
A)  $600; $200; $400 
B)  $1,600; $3,200; $1,600 
C)  $4,800; $3,200; $1,600 
D)  $4,800; $1,600; $3,200

Question 20

An oligopoly is characterized as an industry in which:

Accepted Answer

A)  there are few firms, each producing a differentiated or similar product. 
B)  there are many firms, each producing a similar product. 
C)  all market participants are price takers. 
D)  only one firm produces a very differentiated product. 
A)  there are few firms, each producing a differentiated or similar product. 
B)  there are many firms, each producing a similar product. 
C)  all market participants are price takers. 
D)  only one firm produces a very differentiated product.

_____ firms have the most market power.

A monopolist _____ than a perfectly competitive industry.

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 price per unit is:

The practice of charging different prices to different customers for the same good or service, even though the cost of supplying those customers is the same, is:

If your farm had the only known source of a rare cocoa bean needed to make chocolate-covered peanuts, your monopoly would result from:

A monopolist with a linear demand curve will:

A monopoly is producing output so that average total cost is $30, marginal revenue is $40, and the price is $50. If ATC is at its minimum level and the ATC curve is U-shaped, to maximize profits this firm should:

The demand curve for a monopoly is:

Which of the following statements about the differences between monopoly and perfect competition is INCORRECT?

Airlines that engage in price discrimination charge higher prices to business travelers because their _ is more _ than that of other travelers.

Why is the demand curve for a monopolist downward-sloping, while the demand curve for the perfectly competitive firm is horizontal?

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. How much is consumer surplus at the Saint's profit-maximizing output?

Use the following to answer questions: Figure: Computing Monopoly Profit -(Figure: Computing Monopoly Profit) Look at the figure Computing Monopoly Profit. The profit-maximizing price is _ and will generate total economic profit of _.

An oligopoly is characterized as an industry in which:

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

_____ firms have the most market power.

A monopolist _____ than a perfectly competitive industry.

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 price per unit is:

The practice of charging different prices to different customers for the same good or service, even though the cost of supplying those customers is the same, is:

If your farm had the only known source of a rare cocoa bean needed to make chocolate-covered peanuts, your monopoly would result from:

A monopolist with a linear demand curve will:

A monopoly is producing output so that average total cost is $30, marginal revenue is $40, and the price is $50. If ATC is at its minimum level and the ATC curve is U-shaped, to maximize profits this firm should:

The demand curve for a monopoly is:

Which of the following statements about the differences between monopoly and perfect competition is INCORRECT?

Airlines that engage in price discrimination charge higher prices to business travelers because their _____ is more _____ than that of other travelers.

Why is the demand curve for a monopolist downward-sloping, while the demand curve for the perfectly competitive firm is horizontal?

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. How much is consumer surplus at the Saint's profit-maximizing output?

Use the following to answer questions: Figure: Computing Monopoly Profit -(Figure: Computing Monopoly Profit) Look at the figure Computing Monopoly Profit. The profit-maximizing price is _____ and will generate total economic profit of _____.

An oligopoly is characterized as an industry in which:

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

Airlines that engage in price discrimination charge higher prices to business travelers because their _ is more _ than that of other travelers.

Use the following to answer questions: Figure: Computing Monopoly Profit -(Figure: Computing Monopoly Profit) Look at the figure Computing Monopoly Profit. The profit-maximizing price is _ and will generate total economic profit of _.