Question 1

The U.S.Postal Service enjoys a monopoly position because of patent rights.

Accepted Answer

A) True 
 B)False

Question 2

A monopolist will maximize profits by producing a quantity specified by setting marginal revenue equal to marginal cost.

Accepted Answer

A) True 
 B)False

Question 3

A monopolist will operate where

Accepted Answer

A)  MR = MC and charge a price equal to marginal revenue. 
B)  MR = MC and charge a price equal to marginal cost. 
C)  MR = MC and charge a price corresponding to demand at that level. 
D)  MC = MR and charge a price corresponding to average cost. 
A)  MR = MC and charge a price equal to marginal revenue. 
B)  MR = MC and charge a price equal to marginal cost. 
C)  MR = MC and charge a price corresponding to demand at that level. 
D)  MC = MR and charge a price corresponding to average cost.

Question 4

The marginal revenue curve for a monopolist

Accepted Answer

A)  is identical to its demand curve. 
B)  is always below its demand curve if the demand curve is downward sloping. 
C)  is always below its demand curve if the demand curve is horizontal. 
D)  typically crosses the average revenue curve. 
A)  is identical to its demand curve. 
B)  is always below its demand curve if the demand curve is downward sloping. 
C)  is always below its demand curve if the demand curve is horizontal. 
D)  typically crosses the average revenue curve.

Question 5

Price discrimination is always illegal.

Accepted Answer

A) True 
 B)False

Question 6

A monopolist can earn a positive economic profit, even in the long run.

Accepted Answer

A) True 
 B)False

Question 7

Entry barriers can lead to long-run economic profits.

Accepted Answer

A) True 
 B)False

Question 8

A profit-maximizing monopolist sets

Accepted Answer

A)  her price where MC = MR. 
B)  her output where MC = MR. 
C)  Both a and b are correct. 
D)  Neither a nor b is correct. 
A)  her price where MC = MR. 
B)  her output where MC = MR. 
C)  Both a and b are correct. 
D)  Neither a nor b is correct.

Question 9

Which of the following will occur if a natural monopoly is broken into two smaller firms?

Accepted Answer

A)  The price will drop. 
B)  Industry output will increase. 
C)  Production costs will increase. 
D)  Industry output will decrease. 
A)  The price will drop. 
B)  Industry output will increase. 
C)  Production costs will increase. 
D)  Industry output will decrease.

Question 10

Table 11-1
 $ \begin{array}{lrrrrrr}\text { Quantity (units) } & 18 & 16 & 14 & 12 & 10 & 4 \ \text { Price per unit (dollars) } & 1 & 2 & 3 & 4 & 5 & 6 \ \text { Total cost (dollars) } & 44 & 38 & 32 & 26 & 20 & 14\end{array} $
-Table 11-1 shows demand and total cost schedules for Monopoliteria.At its profit-maximizing level of output, Monopoliteria's profit is

Accepted Answer

A)  $10. 
B)  $15. 
C)  $22. 
D)  $30. 
A)  $10. 
B)  $15. 
C)  $22. 
D)  $30.

Question 11

Which of the following is true for a profit-maximizing competitive firm in the long run but not a monopolist?

Accepted Answer

A)  MC = MR 
B)  MC = P 
C)  AR = P 
D)  Q > 0 
A)  MC = MR 
B)  MC = P 
C)  AR = P 
D)  Q > 0

Question 12

Assume that a firm has measured demand carefully and thinks that the following table accurately displays this.The total cost has been measured and can be given as TC = 20 + Q + Q₂ where Q is the level of output.Complete the table and determine the profit-maximizing level of output.

Accepted Answer

As indicated in the table below, the pro

Question 13

The U.S.Postal Service engages in price discrimination.

Accepted Answer

A) True 
 B)False

Question 14

The key element in preserving a monopoly is keeping rivals out of the market.

Accepted Answer

A) True 
 B)False

Question 15

Price discrimination

Accepted Answer

A)  may lead to greater output. 
B)  always leads to a reduction of output. 
C)  leads to lower profits for the firm. 
D)  causes firms to operate at a higher cost. 
A)  may lead to greater output. 
B)  always leads to a reduction of output. 
C)  leads to lower profits for the firm. 
D)  causes firms to operate at a higher cost.

Question 16

Figure 11-9
  
-In Figure 11-9, how much more than the short-run competitive price will the profit-maximizing monopolist charge?

Accepted Answer

A)  $1 
B)  $2 
C)  $3 
D)  $10 
A)  $1 
B)  $2 
C)  $3 
D)  $10

Question 17

Which of the following is not potentially a barrier to entry into the widget market?

Accepted Answer

A)  patent protection on the design of widgets 
B)  high prices for widgets 
C)  government licensing of widget producers 
D)  massive advertising by existing widget producers 
A)  patent protection on the design of widgets 
B)  high prices for widgets 
C)  government licensing of widget producers 
D)  massive advertising by existing widget producers

Question 18

Figure 11-7
  
-For the firm in Figure 11-7, an unregulated monopolist, profit-maximizing output is below the long-run competitive level by how much?

Accepted Answer

A)  100 
B)  75 
C)  50 
D)  25 
A)  100 
B)  75 
C)  50 
D)  25

Question 19

Although monopoly has lower output than competition, the level of output is efficient.

Accepted Answer

A) True 
 B)False

Question 20

The monopoly producer

Accepted Answer

A)  sets MU equal to P. 
B)  sets MR = MC. 
C)  has MC > MU. 
D)  sets MR = P. 
A)  sets MU equal to P. 
B)  sets MR = MC. 
C)  has MC > MU. 
D)  sets MR = P.

Exam 11: Monopoly

The U.S.Postal Service enjoys a monopoly position because of patent rights.

A monopolist will maximize profits by producing a quantity specified by setting marginal revenue equal to marginal cost.

A monopolist will operate where

The marginal revenue curve for a monopolist

Price discrimination is always illegal.

A monopolist can earn a positive economic profit, even in the long run.

Entry barriers can lead to long-run economic profits.

A profit-maximizing monopolist sets

Which of the following will occur if a natural monopoly is broken into two smaller firms?

Table 11-1 Quantity (units) 18 16 14 12 10 4 Price per unit (dollars) 1 2 3 4 5 6 Total cost (dollars) 44 38 32 26 20 14 -Table 11-1 shows demand and total cost schedules for Monopoliteria.At its profit-maximizing level of output, Monopoliteria's profit is

Which of the following is true for a profit-maximizing competitive firm in the long run but not a monopolist?

Assume that a firm has measured demand carefully and thinks that the following table accurately displays this.The total cost has been measured and can be given as TC = 20 + Q + Q₂ where Q is the level of output.Complete the table and determine the profit-maximizing level of output.

The U.S.Postal Service engages in price discrimination.

The key element in preserving a monopoly is keeping rivals out of the market.

Price discrimination

Figure 11-9 -In Figure 11-9, how much more than the short-run competitive price will the profit-maximizing monopolist charge?

Which of the following is not potentially a barrier to entry into the widget market?

Figure 11-7 -For the firm in Figure 11-7, an unregulated monopolist, profit-maximizing output is below the long-run competitive level by how much?

Although monopoly has lower output than competition, the level of output is efficient.

The monopoly producer

What Is Economics?

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: An Initial Look

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: The Importance of Marginal Analysis

Securities: Business Finance, and the Economy: The Tail that Wags the Dog?

The Firm and the Industry under Perfect Competition

Between Competition and Monopoly

Limiting Market Power: Regulation and Antitrust

The Case for Free Markets I: The Price System

The Shortcomings of Free Markets

The Market's Prime Achievement: Innovation and Growth

Externalities, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: The Human Inputs

Poverty, Inequality, and Discrimination

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation?

Bringing in the Supply Side: Unemployment and Inflation?

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

The Debate over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade-Off between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder?

Exchange Rates and the Macroeconomy

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