Question 1

Advertising by the monopolist

Accepted Answer

A)  is not done because the monopolist has the only supply of the product and doesn't need to advertise. 
B)  would have the effect of shifting its demand curve to the left. 
C)  may lead to expanded production by the monopolist. 
D)  makes no sense because there are no substitute commodities available to consumers. 
A)  is not done because the monopolist has the only supply of the product and doesn't need to advertise. 
B)  would have the effect of shifting its demand curve to the left. 
C)  may lead to expanded production by the monopolist. 
D)  makes no sense because there are no substitute commodities available to consumers.

Question 2

Figure 11-5
  
-Crown Theater is the only movie theater in the city.Its cost and revenue curves are shown in Figure 11-5.Monopolist Crown Theater would set the price of its tickets at

Accepted Answer

A)  $7.50. 
B)  $6.00. 
C)  $4.50. 
D)  $3.00. 
A)  $7.50. 
B)  $6.00. 
C)  $4.50. 
D)  $3.00.

Question 3

Unlike a perfectly competitive firm, a monopolist

Accepted Answer

A)  can choose how much output to produce. 
B)  cannot increase production without affecting the price she receives for her good. 
C)  usually sells in a market with a downward-sloping demand curve. 
D)  has an MR from increasing output by one unit equal to the price of his product. 
A)  can choose how much output to produce. 
B)  cannot increase production without affecting the price she receives for her good. 
C)  usually sells in a market with a downward-sloping demand curve. 
D)  has an MR from increasing output by one unit equal to the price of his product.

Question 4

Table 11-2
 $$\begin{array} { l c c } 
 \underline{ Q }  &  \underline{ T R }  &  \underline{ T C }  \
{ 8 }&{ 95 }&{ 90 }\
9 & 102 & 93 \
10 & 110 & 100 \
11 & 112 & 105 \
12 & 115 & 110
\end{array}$$
-In Table 11-2, marginal revenue at the profit-maximizing output is how much?

Accepted Answer

A)  $5 
B)  $7 
C)  $8 
D)  $110 
A)  $5 
B)  $7 
C)  $8 
D)  $110

Question 5

In the long run, a profit-maximizing monopolist

Accepted Answer

A)  earns zero economic profit. 
B)  produces the same amount as a perfectly competitive industry. 
C)  receives a higher price for his output than a perfectly competitive firm. 
D)  produces at the output level that minimizes his long-run average total cost. 
A)  earns zero economic profit. 
B)  produces the same amount as a perfectly competitive industry. 
C)  receives a higher price for his output than a perfectly competitive firm. 
D)  produces at the output level that minimizes his long-run average total cost.

Question 6

Price discrimination leads to higher prices for all consumers.

Accepted Answer

A) True 
 B)False

Question 7

Natural monopolies are of theoretical, but not practical interest.

Accepted Answer

A) True 
 B)False

Question 8

A monopolist's cost curves will

Accepted Answer

A)  be identical to those of a competitive firm. 
B)  be higher than a competitive firm's cost curves. 
C)  be peculiar to the individual producer since there is only one. 
D)  drop more steeply as output increases. 
A)  be identical to those of a competitive firm. 
B)  be higher than a competitive firm's cost curves. 
C)  be peculiar to the individual producer since there is only one. 
D)  drop more steeply as output increases.

Question 9

A monopolist is a price maker who will lose some business if the price is increased.

Accepted Answer

A) True 
 B)False

Question 10

In perfect competition P = MR, but in monopoly P > MR.Why? Substantiate this statement with an example.

Accepted Answer

In perfect competition the demand curve

Question 11

Pure monopoly is not studied because of its descriptive realism, but because it is a stepping stone toward more realistic models.

Accepted Answer

A) True 
 B)False

Question 12

A natural monopoly is defined as an industry in which one firm

Accepted Answer

A)  can produce the entire industry output at a lower average cost than a larger number of firms could. 
B)  can produce the entire industry output at a lower marginal cost than a larger number of firms could. 
C)  is very large relative to other firms that could enter the industry. 
D)  can earn higher profits if it is the only firm in the industry rather than if other firms also enter the industry. 
A)  can produce the entire industry output at a lower average cost than a larger number of firms could. 
B)  can produce the entire industry output at a lower marginal cost than a larger number of firms could. 
C)  is very large relative to other firms that could enter the industry. 
D)  can earn higher profits if it is the only firm in the industry rather than if other firms also enter the industry.

Question 13

Economists object to monopolies on the grounds of efficiency.Why is this? Explain.

Accepted Answer

Monopolies produce an inefficiently low

Question 14

Price discrimination allows a monopolist to make higher profits.

Accepted Answer

A) True 
 B)False

Question 15

Give a complete and concise definition of each of the following terms.
a.deliberately erected entry barriers
b.inefficiency of monopoly
c.price discrimination
d.profit-maximizing equilibrium for a monopolist

Accepted Answer

a.Deliberately erected entry barriers ar

Question 16

The presence of large sunk costs often serves as a naturally imposed barrier to entry.

Accepted Answer

A) True 
 B)False

Question 17

Figure 11-5
  
-In Figure 11-5, Crown Theater, a monopolist movie theater, will make a profit of ____ at its profit-maximizing price and quantity of theater tickets.

Accepted Answer

A)  $450 
B)  $150 
C)  $300 
D)  $750 
A)  $450 
B)  $150 
C)  $300 
D)  $750

Question 18

The drug maker Roche enjoyed a monopoly of the antibiotic Rocephin because of patent rights.

Accepted Answer

A) True 
 B)False

Question 19

The marginal revenue curve for a monopolist is always below the demand curve.

Accepted Answer

A) True 
 B)False

Question 20

What is the equilibrium condition for price discriminating monopoly firm? Give some examples for price discrimination.

Accepted Answer

The equilibrium condition is:
MC = MRₐ =

Exam 11: Monopoly

Advertising by the monopolist

Figure 11-5 -Crown Theater is the only movie theater in the city.Its cost and revenue curves are shown in Figure 11-5.Monopolist Crown Theater would set the price of its tickets at

Unlike a perfectly competitive firm, a monopolist

Table 11-2 8 95 90 9 102 93 10 110 100 11 112 105 12 115 110 -In Table 11-2, marginal revenue at the profit-maximizing output is how much?

In the long run, a profit-maximizing monopolist

Price discrimination leads to higher prices for all consumers.

Natural monopolies are of theoretical, but not practical interest.

A monopolist's cost curves will

A monopolist is a price maker who will lose some business if the price is increased.

In perfect competition P = MR, but in monopoly P > MR.Why? Substantiate this statement with an example.

Pure monopoly is not studied because of its descriptive realism, but because it is a stepping stone toward more realistic models.

A natural monopoly is defined as an industry in which one firm

Economists object to monopolies on the grounds of efficiency.Why is this? Explain.

Price discrimination allows a monopolist to make higher profits.

Give a complete and concise definition of each of the following terms. a.deliberately erected entry barriers b.inefficiency of monopoly c.price discrimination d.profit-maximizing equilibrium for a monopolist

The presence of large sunk costs often serves as a naturally imposed barrier to entry.

Figure 11-5 -In Figure 11-5, Crown Theater, a monopolist movie theater, will make a profit of ____ at its profit-maximizing price and quantity of theater tickets.

The drug maker Roche enjoyed a monopoly of the antibiotic Rocephin because of patent rights.

The marginal revenue curve for a monopolist is always below the demand curve.

What is the equilibrium condition for price discriminating monopoly firm? Give some examples for price discrimination.

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

Filters