Question 1

Owning a patent can provide a firm with monopolistic power.

Accepted Answer

A) True 
 B)False

Question 2

Describe the types of entry barriers which can exist and their importance to the study of monopoly.

Accepted Answer

There are seven types of barriers discus

Question 3

As the demand for a product falls, it is not uncommon for the industry to become a monopoly.This is most likely due to

Accepted Answer

A)  an increase in the number of barriers. 
B)  legal restrictions being imposed. 
C)  the surviving firm operating on the declining part of its average cost curve. 
D)  patent protection causing high prices. 
A)  an increase in the number of barriers. 
B)  legal restrictions being imposed. 
C)  the surviving firm operating on the declining part of its average cost curve. 
D)  patent protection causing high prices.

Question 4

A major difference between a monopoly and perfect competition is that monopolies can earn an economic profit in the long run and a perfectly competitive firm cannot.

Accepted Answer

A) True 
 B)False

Question 5

"Intel Inside" accompanies virtually all IBM-compatible computers.Intel manufactures the Celeron and Pentium chips that are a key component of personal computers.Does Intel have a monopoly?

Accepted Answer

To be a monopoly, a firm must not only b

Question 6

Which of the following can serve as an entry barrier?

Accepted Answer

A)  legal restrictions 
B)  patents 
C)  control of scarce resources or inputs 
D)  All of the above are correct. 
A)  legal restrictions 
B)  patents 
C)  control of scarce resources or inputs 
D)  All of the above are correct.

Question 7

The demand curve of the monopoly firm is always the

Accepted Answer

A)  average revenue curve. 
B)  marginal revenue curve. 
C)  total revenue curve. 
D)  marginal cost curve above average variable cost. 
A)  average revenue curve. 
B)  marginal revenue curve. 
C)  total revenue curve. 
D)  marginal cost curve above average variable cost.

Question 8

Too much of society's scarce resources are used to produce goods in monopoly markets.

Accepted Answer

A) True 
 B)False

Question 9

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, average cost at the profit-maximizing output is how much?

Accepted Answer

A)  $5 
B)  $8 
C)  $10 
D)  $11 
A)  $5 
B)  $8 
C)  $10 
D)  $11

Question 10

Provide two circumstances where monopoly may offer efficiency advantages over competition.

Accepted Answer

The first is when production is characte

Question 11

Figure 11-6
  
-The profit-maximizing monopolist in Figure 11-6 will produce ____ units of output.

Accepted Answer

A)  Q₁ 
B)  Q₂ 
C)  Q₃ 
D)  Q₄ 
A)  Q₁ 
B)  Q₂ 
C)  Q₃ 
D)  Q₄

Question 12

The average total cost curve of a natural monopoly is always

Accepted Answer

A)  upward sloping. 
B)  horizontal. 
C)  downward sloping at all points. 
D)  downward sloping where it crosses the market demand curve for the good. 
A)  upward sloping. 
B)  horizontal. 
C)  downward sloping at all points. 
D)  downward sloping where it crosses the market demand curve for the good.

Question 13

A monopolist's demand curve implies that

Accepted Answer

A)  the monopolist is a price taker. 
B)  the monopolist is a price maker. 
C)  it has nothing to do with the amount a monopolist can sell. 
D)  it can be downward sloping or horizontal depending on the price. 
A)  the monopolist is a price taker. 
B)  the monopolist is a price maker. 
C)  it has nothing to do with the amount a monopolist can sell. 
D)  it can be downward sloping or horizontal depending on the price.

Question 14

Many public utilities are permitted to operate as monopolies because they enjoy economies of large-scale production.

Accepted Answer

A) True 
 B)False

Question 15

A monopolist faces a horizontal demand schedule.

Accepted Answer

A) True 
 B)False

Question 16

____ mean that the costs involved cannot be recouped for a considerable period of time.

Accepted Answer

A)  Sunk costs 
B)  Opportunity costs 
C)  Overheads 
D)  Restructuring costs 
A)  Sunk costs 
B)  Opportunity costs 
C)  Overheads 
D)  Restructuring costs

Question 17

A monopolist's profit per unit is shown by the difference between price and average cost per unit.

Accepted Answer

A) True 
 B)False

Question 18

A market is not a pure monopoly if firms

Accepted Answer

A)  can enter it freely. 
B)  sell unique products. 
C)  can exit the market freely. 
D)  require government permission to sell in the market. 
A)  can enter it freely. 
B)  sell unique products. 
C)  can exit the market freely. 
D)  require government permission to sell in the market.

Question 19

Since a monopoly faces a downward-sloping demand curve,

Accepted Answer

A)  then, as Adam Smith wrote, "the price of monopoly is upon every occasion the highest which can be got." 
B)  price always exceeds average revenue. 
C)  marginal revenue increases as output increases. 
D)  the monopolist is a price maker. 
A)  then, as Adam Smith wrote, "the price of monopoly is upon every occasion the highest which can be got." 
B)  price always exceeds average revenue. 
C)  marginal revenue increases as output increases. 
D)  the monopolist is a price maker.

Question 20

Figure 11-6
  
-At its optimal output level, the profit-maximizing monopolist in Figure 11-6 will earn a profit equal to

Accepted Answer

A)  zero. 
B)  (P₂ - P₃)Q. 
C)  P > Q. 
D)  (P₅ - P₆ )Q. 
A)  zero. 
B)  (P₂ - P₃)Q. 
C)  P > Q. 
D)  (P₅ - P₆ )Q.

Exam 11: Monopoly

Owning a patent can provide a firm with monopolistic power.

Describe the types of entry barriers which can exist and their importance to the study of monopoly.

As the demand for a product falls, it is not uncommon for the industry to become a monopoly.This is most likely due to

A major difference between a monopoly and perfect competition is that monopolies can earn an economic profit in the long run and a perfectly competitive firm cannot.

"Intel Inside" accompanies virtually all IBM-compatible computers.Intel manufactures the Celeron and Pentium chips that are a key component of personal computers.Does Intel have a monopoly?

Which of the following can serve as an entry barrier?

The demand curve of the monopoly firm is always the

Too much of society's scarce resources are used to produce goods in monopoly markets.

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

Provide two circumstances where monopoly may offer efficiency advantages over competition.

Figure 11-6 -The profit-maximizing monopolist in Figure 11-6 will produce ____ units of output.

The average total cost curve of a natural monopoly is always

A monopolist's demand curve implies that

Many public utilities are permitted to operate as monopolies because they enjoy economies of large-scale production.

A monopolist faces a horizontal demand schedule.

____ mean that the costs involved cannot be recouped for a considerable period of time.

A monopolist's profit per unit is shown by the difference between price and average cost per unit.

A market is not a pure monopoly if firms

Since a monopoly faces a downward-sloping demand curve,

Figure 11-6 -At its optimal output level, the profit-maximizing monopolist in Figure 11-6 will earn a profit equal to

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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