Question 1

In the long-run, a monopolist charges the same price as a perfectly competitive firm.

Accepted Answer

A) True 
 B)False

Question 2

Figure 11-3
  
-In Figure 11-3, one can tell from the graph that the monopolist will earn a positive profit only if

Accepted Answer

A)  the price exceeds $3. 
B)  the price exceeds $2. 
C)  output is less than 60 units. 
D)  One cannot tell from the information given. 
A)  the price exceeds $3. 
B)  the price exceeds $2. 
C)  output is less than 60 units. 
D)  One cannot tell from the information given.

Question 3

Define the following terms and explain their importance to the study of economics.
a.pure monopoly
b.barriers to entry
c.patent
d.natural monopoly
e.sunk costs

Accepted Answer

a.A pure monopoly is an industry in whic

Question 4

Figure 11-3
  
-Using the graph in Figure 11-3, the profit-maximizing monopolist will charge a price

Accepted Answer

A)  of more than $3. 
B)  of $3. 
C)  between $2 and $3. 
D)  of $2. 
A)  of more than $3. 
B)  of $3. 
C)  between $2 and $3. 
D)  of $2.

Question 5

Explain why a monopolist does not have a supply curve.

Accepted Answer

Any firm, including a monopolist, has co

Question 6

Compared to perfect competition, monopoly in the long run

Accepted Answer

A)  restricts output. 
B)  charges a higher price. 
C)  produces at less than minimum average cost. 
D)  All of the above are correct. 
A)  restricts output. 
B)  charges a higher price. 
C)  produces at less than minimum average cost. 
D)  All of the above are correct.

Question 7

At a given output level, a monopolist earns a profit only if the

Accepted Answer

A)  slope of its TR curve exceeds the slope of his TC curve. 
B)  height of its MR curve exceeds the height of his MC curve. 
C)  height of its demand curve exceeds the height of his MR curve. 
D)  height of its demand curve exceeds the height of his ATC curve. 
A)  slope of its TR curve exceeds the slope of his TC curve. 
B)  height of its MR curve exceeds the height of his MC curve. 
C)  height of its demand curve exceeds the height of his MR curve. 
D)  height of its demand curve exceeds the height of his ATC curve.

Question 8

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, the price at the profit-maximizing output is how much?

Accepted Answer

A)  $15 
B)  $7 
C)  $10 
D)  $11 
A)  $15 
B)  $7 
C)  $10 
D)  $11

Question 9

Explain the source of monopoly power for DeBeers' Diamond Mine in South Africa, Microsoft (owned by Bill Gates), the American Medical Association (which licenses doctors), Polaroid's Instant Picture Cameras, USAir (which owns virtually all the gates at the airport in Charlotte, North Carolina), and electric utilities.

Accepted Answer

DeBeers' controls the scarce resource by

Question 10

The software industry has traits in common with monopoly markets.

Accepted Answer

A) True 
 B)False

Question 11

A 50 percent tax on the profits of a monopolist will

Accepted Answer

A)  be totally shifted to the consumer. 
B)  raise price and lower quantity. 
C)  cause no change in profit-maximizing price and quantity. 
D)  change price but not quantity. 
A)  be totally shifted to the consumer. 
B)  raise price and lower quantity. 
C)  cause no change in profit-maximizing price and quantity. 
D)  change price but not quantity.

Question 12

The marketing division of a firm has measured demand for its product and reports that it is 2Q = 24 - P, where Q is units and P is price per unit in dollars.The cost is given in the table below.Complete the table and determine the profit-maximizing level of output for this firm.
 \(\begin{array}{cc}
 \underline {\text { Output }} & \underline { \text { Total Cost } }& \underline {\text {Price}}& \underline {\text {Revenue}} & \underline { \text { Profit } } \
0 & 10& \underline { \quad\quad\quad\quad\quad } & \underline { \quad\quad\quad\quad\quad } & \underline { \quad\quad\quad\quad\quad } \
 1 & 18& \underline { \quad\quad\quad\quad\quad } & \underline { \quad\quad\quad\quad\quad } & \underline { \quad\quad\quad\quad\quad } \
2 & 20 & \underline { \quad\quad\quad\quad\quad } & \underline { \quad\quad\quad\quad\quad } & \underline { \quad\quad\quad\quad\quad } \
3 & 22& \underline { \quad\quad\quad\quad\quad } & \underline { \quad\quad\quad\quad\quad } & \underline { \quad\quad\quad\quad\quad } \
4 & 25 & \underline { \quad\quad\quad\quad\quad } & \underline { \quad\quad\quad\quad\quad } & \underline { \quad\quad\quad\quad\quad } \
5 &29& \underline { \quad\quad\quad\quad\quad } & \underline { \quad\quad\quad\quad\quad }& \underline { \quad\quad\quad\quad\quad }  \
6 & 34& \underline { \quad\quad\quad\quad\quad } & \underline { \quad\quad\quad\quad\quad }& \underline { \quad\quad\quad\quad\quad }  \
7 & 40 & \underline { \quad\quad\quad\quad\quad } & \underline { \quad\quad\quad\quad\quad }& \underline { \quad\quad\quad\quad\quad }  \
8 & 48 & \underline { \quad\quad\quad\quad\quad } & \underline { \quad\quad\quad\quad\quad }& \underline { \quad\quad\quad\quad\quad }  \
\end{array}\)

Accepted Answer

None

Question 13

Economists object to monopoly because

Accepted Answer

A)  monopoly profits go to the rich. 
B)  monopolies overproduce to maximize profits. 
C)  monopolies are usually polluters. 
D)  monopolists keep output below efficient levels. 
A)  monopoly profits go to the rich. 
B)  monopolies overproduce to maximize profits. 
C)  monopolies are usually polluters. 
D)  monopolists keep output below efficient levels.

Question 14

The demand curve facing a monopolist is

Accepted Answer

A)  horizontal at the market price. 
B)  identical to the market demand curve for the good. 
C)  exactly twice as steep as the market demand curve for the good. 
D)  vertical because there are no competitors. 
A)  horizontal at the market price. 
B)  identical to the market demand curve for the good. 
C)  exactly twice as steep as the market demand curve for the good. 
D)  vertical because there are no competitors.

Question 15

A monopolist will stop production when MR equals MC.

Accepted Answer

A) True 
 B)False

Question 16

There exist only two causes of monopoly: barriers to entry and government restrictions.

Accepted Answer

A) True 
 B)False

Question 17

A monopoly firm

Accepted Answer

A)  has a short-run supply curve that slopes upward. 
B)  is a price taker. 
C)  does not have a supply curve. 
D)  is at the mercy of the market-determined price. 
A)  has a short-run supply curve that slopes upward. 
B)  is a price taker. 
C)  does not have a supply curve. 
D)  is at the mercy of the market-determined price.

Question 18

Which of the following is not a barrier to entry?

Accepted Answer

A)  Legal restrictions 
B)  Patents 
C)  Large sunk costs 
D)  Survivor rights 
A)  Legal restrictions 
B)  Patents 
C)  Large sunk costs 
D)  Survivor rights

Question 19

In which of the following ways is a monopolist different from a perfect competitor?

Accepted Answer

A)  Average cost will continually drop as output expands. 
B)  Price is above marginal revenue. 
C)  Average total cost equals average fixed costs plus average variable costs. 
D)  The demand curve for the industry has a negative slope. 
A)  Average cost will continually drop as output expands. 
B)  Price is above marginal revenue. 
C)  Average total cost equals average fixed costs plus average variable costs. 
D)  The demand curve for the industry has a negative slope.

Question 20

A price-discriminating firm will always maximize profit by following the condition that

Accepted Answer

A)  MR > MC. 
B)  MR > P. 
C)  MRₐ = MRb = MC. 
D)  MR = ATC. 
A)  MR > MC. 
B)  MR > P. 
C)  MRₐ = MRb = MC. 
D)  MR = ATC.

Exam 11: Monopoly

In the long-run, a monopolist charges the same price as a perfectly competitive firm.

Figure 11-3 -In Figure 11-3, one can tell from the graph that the monopolist will earn a positive profit only if

Define the following terms and explain their importance to the study of economics. a.pure monopoly b.barriers to entry c.patent d.natural monopoly e.sunk costs

Figure 11-3 -Using the graph in Figure 11-3, the profit-maximizing monopolist will charge a price

Explain why a monopolist does not have a supply curve.

Compared to perfect competition, monopoly in the long run

At a given output level, a monopolist earns a profit only if the

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

The software industry has traits in common with monopoly markets.

A 50 percent tax on the profits of a monopolist will

Economists object to monopoly because

The demand curve facing a monopolist is

A monopolist will stop production when MR equals MC.

There exist only two causes of monopoly: barriers to entry and government restrictions.

A monopoly firm

Which of the following is not a barrier to entry?

In which of the following ways is a monopolist different from a perfect competitor?

A price-discriminating firm will always maximize profit by following the condition that

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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