Question 1

Figure 11-9
  
-In Figure 11-9, which of the following is true?

Accepted Answer

A) MC = P B) MC = MR C) MU > MR D) MU < MC A) MC = P B) MC = MR C) MU > MR D) MU < MC

Question 2

The rule of MC = MR does not apply to a monopolist.

Accepted Answer

A) True 
 B)False

Question 3

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 the profit-maximizing output, what quantity is Monopoliteria producing?

Accepted Answer

A)  10 
B)  12 
C)  14 
D)  16 
A)  10 
B)  12 
C)  14 
D)  16

Question 4

One of the conclusions of the model of monopoly is that the firm earns economic profits above the required opportunity cost of the factors of production.Are these profits lost to society? Do they take spending power from the economy, and act as a brake on economic growth?

Accepted Answer

No.The profits are "transferred" from th

Question 5

In cases of natural monopoly, it is best to have only one firm producing all of the output in a market.

Accepted Answer

A) True 
 B)False

Question 6

Figure 11-7
  
-For the firm in Figure 11-7, an unregulated monopolist, output falls below the efficient level in the short run by how much?

Accepted Answer

A)  50 
B)  75 
C)  35 
D)  100 
A)  50 
B)  75 
C)  35 
D)  100

Question 7

Graphically show why one electric company can operate more cheaply than two.

Accepted Answer

Figure 11-10 shows declining long-run av

Question 8

Compared to a perfectly competitive industry, a monopoly produces a smaller output and charges a higher price.

Accepted Answer

A) True 
 B)False

Question 9

The product supplied by a monopoly firm has

Accepted Answer

A)  a few substitutes. 
B)  no close substitutes. 
C)  a large number of substitutes. 
D)  two or three close substitutes. 
A)  a few substitutes. 
B)  no close substitutes. 
C)  a large number of substitutes. 
D)  two or three close substitutes.

Question 10

To be a natural monopoly, a firm must

Accepted Answer

A)  control an essential natural resource input. 
B)  be very large. 
C)  have a continuously falling average cost curve as output rises. 
D)  have falling average costs over a substantial range of total market demand. 
A)  control an essential natural resource input. 
B)  be very large. 
C)  have a continuously falling average cost curve as output rises. 
D)  have falling average costs over a substantial range of total market demand.

Question 11

A monopolist is a price maker.

Accepted Answer

A) True 
 B)False

Question 12

It is possible that if a monopoly is broken up, the cost of production for that product could increase.

Accepted Answer

A) True 
 B)False

Question 13

The marginal revenue curve for a monopolist is the same as its demand curve.

Accepted Answer

A) True 
 B)False

Question 14

Only government restrictions serve as entry barriers.

Accepted Answer

A) True 
 B)False

Question 15

A monopoly may breed inefficiency by reducing competition and restricting production.

Accepted Answer

A) True 
 B)False

Question 16

A profit-maximizing monopolist

Accepted Answer

A)  is just as socially efficient as a perfectly competitive firm in allocating resources to production since she, too, seeks the largest return on his investment. 
B)  produces an output level at which marginal utility exceeds marginal cost. 
C)  produces more output than a perfectly competitive industry. 
D)  always produces in the inelastic region of his demand curve. 
A)  is just as socially efficient as a perfectly competitive firm in allocating resources to production since she, too, seeks the largest return on his investment. 
B)  produces an output level at which marginal utility exceeds marginal cost. 
C)  produces more output than a perfectly competitive industry. 
D)  always produces in the inelastic region of his demand curve.

Question 17

Figure 11-7
  
-The firm in Figure 11-7 is an unregulated monopolist; it will earn long-run profits of how much?

Accepted Answer

A)  500 
B)  400 
C)  300 
D)  200 
A)  500 
B)  400 
C)  300 
D)  200

Question 18

Figure 11-3
  
-In Figure 11-3, which of the following is true, whether or not the monopolist is maximizing profits?

Accepted Answer

A)  MR < P 
B)  MC = P 
C)  MC < AC 
D)  MR = P 
A)  MR < P 
B)  MC = P 
C)  MC < AC 
D)  MR = P

Question 19

A monopolist's total profit is shown by the difference between price and average cost per unit times the number of units sold.

Accepted Answer

A) True 
 B)False

Question 20

Since the Red Cross supplies 95 percent of the blood in the United States, it can be considered a monopolist.Assume that it, in fact, operates like a monopolist.The Red Cross currently charges hospitals and other users $21 for a pint of blood.In order to increase the supply of blood, the government offers the Red Cross a $10 million, lump-sum subsidy.How much more blood supply will the subsidy generate?

Accepted Answer

A)  about 500,000 pints 
B)  somewhere between 100,000 and 500,000, depending on demand elasticity 
C)  somewhere between 100,000 and 500,000, depending on the elasticity of supply 
D)  zero 
A)  about 500,000 pints 
B)  somewhere between 100,000 and 500,000, depending on demand elasticity 
C)  somewhere between 100,000 and 500,000, depending on the elasticity of supply 
D)  zero

Exam 11: Monopoly

Figure 11-9 -In Figure 11-9, which of the following is true?

The rule of MC = MR does not apply to a monopolist.

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 the profit-maximizing output, what quantity is Monopoliteria producing?

One of the conclusions of the model of monopoly is that the firm earns economic profits above the required opportunity cost of the factors of production.Are these profits lost to society? Do they take spending power from the economy, and act as a brake on economic growth?

In cases of natural monopoly, it is best to have only one firm producing all of the output in a market.

Figure 11-7 -For the firm in Figure 11-7, an unregulated monopolist, output falls below the efficient level in the short run by how much?

Graphically show why one electric company can operate more cheaply than two.

Compared to a perfectly competitive industry, a monopoly produces a smaller output and charges a higher price.

The product supplied by a monopoly firm has

To be a natural monopoly, a firm must

A monopolist is a price maker.

It is possible that if a monopoly is broken up, the cost of production for that product could increase.

The marginal revenue curve for a monopolist is the same as its demand curve.

Only government restrictions serve as entry barriers.

A monopoly may breed inefficiency by reducing competition and restricting production.

A profit-maximizing monopolist

Figure 11-7 -The firm in Figure 11-7 is an unregulated monopolist; it will earn long-run profits of how much?

Figure 11-3 -In Figure 11-3, which of the following is true, whether or not the monopolist is maximizing profits?

A monopolist's total profit is shown by the difference between price and average cost per unit times the number of units sold.

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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