Question 1

Price discrimination may occur in monopoly.

Accepted Answer

A) True 
 B)False

Question 2

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 is producer surplus when the monopolist maximizes profit?

Accepted Answer

A)  $0 
B)  $20 
C)  $80 
D)  $160 
A)  $0 
B)  $20 
C)  $80 
D)  $160

Question 3

The GoSports Company is a profit-maximizing firm with a monopoly in the production of school team pennants. The firm sells its pennants for $10 each. We can conclude that GoSports is producing a level of output at which:

Accepted Answer

A)  average total cost equals $10. 
B)  average total cost is greater than $10. 
C)  marginal revenue equals $10. 
D)  marginal cost equals marginal revenue. 
A)  average total cost equals $10. 
B)  average total cost is greater than $10. 
C)  marginal revenue equals $10. 
D)  marginal cost equals marginal revenue.

Question 4

Which of the following statements about monopoly equilibrium and perfectly competitive equilibrium is INCORRECT?

Accepted Answer

A)  Price is greater than marginal cost in monopoly, and price equals marginal cost in perfect competition. 
B)  When a monopoly exists, the consumer surplus is less than if the market were perfectly competitive. 
C)  Monopoly output will be less than the output of a comparable perfectly competitive industry. 
D)  In the long run, economic profits are driven to zero in both a monopoly and a perfectly competitive market. 
A)  Price is greater than marginal cost in monopoly, and price equals marginal cost in perfect competition. 
B)  When a monopoly exists, the consumer surplus is less than if the market were perfectly competitive. 
C)  Monopoly output will be less than the output of a comparable perfectly competitive industry. 
D)  In the long run, economic profits are driven to zero in both a monopoly and a perfectly competitive market.

Question 5

Use the following to answer questions:
Figure: Computing Monopoly Profit  
-(Figure: Computing Monopoly Profit) Look at the figure Computing Monopoly Profit. To obtain maximum profits, the monopoly should produce the output determined by point:

Accepted Answer

A)  G. 
B)  N. 
C)  H. 
D)  K. 
A)  G. 
B)  N. 
C)  H. 
D)  K.

Question 6

An increase in the fixed costs of a monopoly firm would _____ price and _____ quantity in the short run.

Accepted Answer

A)  increase; decrease 
B)  increase; increase 
C)  not change; not change 
D)  decrease; decrease 
A)  increase; decrease 
B)  increase; increase 
C)  not change; not change 
D)  decrease; decrease

Question 7

Public policies toward monopoly in the United States often consist of:

Accepted Answer

A)  laws outlawing all of them. 
B)  the regulation of natural monopolies. 
C)  government takeover if monopoly profit exceeds a certain level. 
D)  forcing monopoly industries to become perfectly competitive. 
A)  laws outlawing all of them. 
B)  the regulation of natural monopolies. 
C)  government takeover if monopoly profit exceeds a certain level. 
D)  forcing monopoly industries to become perfectly competitive.

Question 8

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 require the water works to charge the price that just covers average total cost, the water works will:

Accepted Answer

A)  earn profits. 
B)  break even. 
C)  incur losses. 
D)  have a large producer surplus. 
A)  earn profits. 
B)  break even. 
C)  incur losses. 
D)  have a large producer surplus.

Question 9

The main reason a monopoly engages in price discrimination is that:

Accepted Answer

A)  it wants to discriminate against a particular ethnic group. 
B)  doing so increases its profits. 
C)  it wants to discourage potential competitors. 
D)  by charging a lower price to some people, it may succeed in discouraging efforts to regulate it. 
A)  it wants to discriminate against a particular ethnic group. 
B)  doing so increases its profits. 
C)  it wants to discourage potential competitors. 
D)  by charging a lower price to some people, it may succeed in discouraging efforts to regulate it.

Question 10

The demand curve for a monopoly is:

Accepted Answer

A)  the MR curve above the AVC curve. 
B)  the MR curve above the horizontal axis. 
C)  the entire MR curve. 
D)  above the MR curve. 
A)  the MR curve above the AVC curve. 
B)  the MR curve above the horizontal axis. 
C)  the entire MR curve. 
D)  above the MR curve.

Question 11

When a monopoly maximizes profit, the loss of surplus by consumers is _____ the monopolist's gain in profit.

Accepted Answer

A)  less than 
B)  equal to 
C)  more than 
D)  sometimes more than and sometimes less than 
A)  less than 
B)  equal to 
C)  more than 
D)  sometimes more than and sometimes less than

Question 12

For a monopolist, the market demand curve:

Accepted Answer

A)  is also the demand for the monopolist's product. 
B)  is equal to the monopolist's MR curve. 
C)  must be horizontal. 
D)  is not important, since the monopolist is the only producer. 
A)  is also the demand for the monopolist's product. 
B)  is equal to the monopolist's MR curve. 
C)  must be horizontal. 
D)  is not important, since the monopolist is the only producer.

Question 13

When regulating a natural monopoly, the government always sets a price ceiling where marginal cost intersects the demand curve.

Accepted Answer

A) True 
 B)False

Question 14

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 price will he charge for a lunch in the long run?

Accepted Answer

A)  $9 
B)  $7 
C)  $5 
D)  $3 
A)  $9 
B)  $7 
C)  $5 
D)  $3

Question 15

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 producer surplus would be:

Accepted Answer

A)  $0. 
B)  $12. 
C)  $18. 
D)  $24. 
A)  $0. 
B)  $12. 
C)  $18. 
D)  $24.

Question 16

The profit-maximizing rule MR = MC is:

Accepted Answer

A)  followed by a monopoly but not by a perfectly competitive firm. 
B)  followed by a perfectly competitive firm but not by a monopoly. 
C)  followed by all types of firms. 
D)  not followed by a monopoly because it would reduce economic profit to zero. 
A)  followed by a monopoly but not by a perfectly competitive firm. 
B)  followed by a perfectly competitive firm but not by a monopoly. 
C)  followed by all types of firms. 
D)  not followed by a monopoly because it would reduce economic profit to zero.

Question 17

To practice price discrimination, the producer must have some control over the price of the product.

Accepted Answer

A) True 
 B)False

Question 18

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 deadweight loss 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 19

An industry with a single producer that sells a single product with no substitutes is a:

Accepted Answer

A)  perfectly competitive industry. 
B)  monopoly. 
C)  oligopoly. 
D)  monopolistically competitive industry. 
A)  perfectly competitive industry. 
B)  monopoly. 
C)  oligopoly. 
D)  monopolistically competitive industry.

Question 20

In general, economists are critical of monopoly where there is (are):

Accepted Answer

A)  no natural monopoly. 
B)  a natural monopoly. 
C)  only a few firms. 
D)  persistent economies of scale. 
A)  no natural monopoly. 
B)  a natural monopoly. 
C)  only a few firms. 
D)  persistent economies of scale.

Price discrimination may occur in monopoly.

The GoSports Company is a profit-maximizing firm with a monopoly in the production of school team pennants. The firm sells its pennants for $10 each. We can conclude that GoSports is producing a level of output at which:

Which of the following statements about monopoly equilibrium and perfectly competitive equilibrium is INCORRECT?

Use the following to answer questions: Figure: Computing Monopoly Profit -(Figure: Computing Monopoly Profit) Look at the figure Computing Monopoly Profit. To obtain maximum profits, the monopoly should produce the output determined by point:

An increase in the fixed costs of a monopoly firm would _ price and _ quantity in the short run.

Public policies toward monopoly in the United States often consist of:

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 require the water works to charge the price that just covers average total cost, the water works will:

The main reason a monopoly engages in price discrimination is that:

The demand curve for a monopoly is:

When a monopoly maximizes profit, the loss of surplus by consumers is _____ the monopolist's gain in profit.

For a monopolist, the market demand curve:

When regulating a natural monopoly, the government always sets a price ceiling where marginal cost intersects the demand curve.

The profit-maximizing rule MR = MC is:

To practice price discrimination, the producer must have some control over the price of the product.

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 deadweight loss at the Saint's profit-maximizing output?

An industry with a single producer that sells a single product with no substitutes is a:

In general, economists are critical of monopoly where there is (are):

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

Price discrimination may occur in monopoly.

The GoSports Company is a profit-maximizing firm with a monopoly in the production of school team pennants. The firm sells its pennants for $10 each. We can conclude that GoSports is producing a level of output at which:

Which of the following statements about monopoly equilibrium and perfectly competitive equilibrium is INCORRECT?

Use the following to answer questions: Figure: Computing Monopoly Profit -(Figure: Computing Monopoly Profit) Look at the figure Computing Monopoly Profit. To obtain maximum profits, the monopoly should produce the output determined by point:

An increase in the fixed costs of a monopoly firm would _____ price and _____ quantity in the short run.

Public policies toward monopoly in the United States often consist of:

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 require the water works to charge the price that just covers average total cost, the water works will:

The main reason a monopoly engages in price discrimination is that:

The demand curve for a monopoly is:

When a monopoly maximizes profit, the loss of surplus by consumers is _____ the monopolist's gain in profit.

For a monopolist, the market demand curve:

When regulating a natural monopoly, the government always sets a price ceiling where marginal cost intersects the demand curve.

The profit-maximizing rule MR = MC is:

To practice price discrimination, the producer must have some control over the price of the product.

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 deadweight loss at the Saint's profit-maximizing output?

An industry with a single producer that sells a single product with no substitutes is a:

In general, economists are critical of monopoly where there is (are):

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

An increase in the fixed costs of a monopoly firm would _ price and _ quantity in the short run.