Question 1

The software industry has traits in common with monopoly markets.

Accepted Answer

A) True 
 B)False  True

Question 2

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

Accepted Answer

A) True 
 B)False  True

Question 3

Figure 11-1  
-The Red Cross is virtually the only operator of blood banks in the United States.In Figure 11-1 are the demand and supply curves facing the Red Cross blood bank.If it were to operate like a profit-maximizing business, how many units of blood would it sell?

Accepted Answer

A) OA 
B) OB 
C) OC 
D) OD 
A) OA 
B) OB 
C) OC 
D) OD A

Question 4

A monopolist is a price taker, just like a perfect competitor.

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

A monopolist is willing to lose some customers by charging higher prices, since this results in higher profits.

Accepted Answer

A) True 
 B)False

Question 7

Pure monopoly

Accepted Answer

A) is defined as having only one supplier. 
B) has no close substitutes for its product. 
C) exists when entry and survival of potential competitors is extremely unlikely. 
D) All of these responses are correct. 
A) is defined as having only one supplier. 
B) has no close substitutes for its product. 
C) exists when entry and survival of potential competitors is extremely unlikely. 
D) All of these responses are correct.

Question 8

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 these responses are correct. 
A) Legal restrictions 
B) Patents 
C) Control of scarce resources or inputs 
D) All of these responses are correct.

Question 9

It is true in monopoly pricing that the

Accepted Answer

A) sky is not the limit. 
B) market cannot impose a price on a monopolist. 
C) monopolist is a price maker. 
D) All of these responses are correct. 
A) sky is not the limit. 
B) market cannot impose a price on a monopolist. 
C) monopolist is a price maker. 
D) All of these responses are correct.

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

The two basic reasons why a monopoly exists are barriers to entry and cost advantages.

Accepted Answer

A) True 
 B)False

Question 13

Monopolies are always large firms with great economies of scale.

Accepted Answer

A) True 
 B)False

Question 14

Control of a scarce resource or input can serve as an entry barrier.

Accepted Answer

A) True 
 B)False

Question 15

The monopoly's ability to restrict output results in lower profits than other types of firms.

Accepted Answer

A) True 
 B)False

Question 16

Which of these would NOT be a factor that would permit the existence of monopoly power?

Accepted Answer

A) High levels of sunk costs 
B) Control of a scarce resource 
C) Diseconomies of scale in the production of the product 
D) All of these responses are correct 
A) High levels of sunk costs 
B) Control of a scarce resource 
C) Diseconomies of scale in the production of the product 
D) All of these responses are correct

Question 17

Table 11-1  
-Table 11-1 shows demand and total cost schedules for the monopolist Monopoliteria.Monopoliteria's profit-maximizing price per unit in dollars is

Accepted Answer

A) 1 
B) 3 
C) 5 
D) 4 
E) 6 
A) 1 
B) 3 
C) 5 
D) 4 
E) 6

Question 18

Economists consider price discrimination to always be undesirable.

Accepted Answer

A) True 
 B)False

Question 19

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 20

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.

Exam 12: Monopoly

The software industry has traits in common with monopoly markets.

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

Figure 11-1 -The Red Cross is virtually the only operator of blood banks in the United States.In Figure 11-1 are the demand and supply curves facing the Red Cross blood bank.If it were to operate like a profit-maximizing business, how many units of blood would it sell?

A monopolist is a price taker, just like a perfect competitor.

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

A monopolist is willing to lose some customers by charging higher prices, since this results in higher profits.

Pure monopoly

Which of the following can serve as an entry barrier?

It is true in monopoly pricing that the

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.

The two basic reasons why a monopoly exists are barriers to entry and cost advantages.

Monopolies are always large firms with great economies of scale.

Control of a scarce resource or input can serve as an entry barrier.

The monopoly's ability to restrict output results in lower profits than other types of firms.

Which of these would NOT be a factor that would permit the existence of monopoly power?

Table 11-1 -Table 11-1 shows demand and total cost schedules for the monopolist Monopoliteria.Monopoliteria's profit-maximizing price per unit in dollars is

Economists consider price discrimination to always be undesirable.

Advertising by the monopolist

A monopolist will operate where

What Is Economics

The Economony: 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

The Financial Markets and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

The Case for Free Markets: the Price System

Between Competition and Monopoly

Limiting Market Power: Antitrust and Regulation

The Shortcomings of Free Markets

The Economics of 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

Contemporary Issues in the Useconomy

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