Question 1

A natural monopoly market is characterized diseconomies of scale over the entire range of output.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is not potentially a barrier to entry into the widget market?

Accepted Answer

A) Patent protection on the design of widgets 
B) High prices for widgets 
C) Government licensing of widget producers 
D) Massive advertising by existing widget producers 
A) Patent protection on the design of widgets 
B) High prices for widgets 
C) Government licensing of widget producers 
D) Massive advertising by existing widget producers

Question 3

A monopolist can sell 10 lunchboxes if he or she charges $10 per lunchbox and 11 lunchboxes if he or she charges $9.The MR from selling the 11th lunchbox is

Accepted Answer

A) −$1. 
B) $1. 
C) $9. 
D) $99. 
A) −$1. 
B) $1. 
C) $9. 
D) $99.

Question 4

The differences between a competitive market and a monopoly include all of these except

Accepted Answer

A) excess profits would be competed away in a competitive market, but persist in a monopolistic market. 
B) a competitive market would work toward production of the quantity consumers seek, while a monopolistic market may restrict output to raise short term prices. 
C) a competitive market's cost curves will shift with the market, while a monopoly's cost curves will remain stable. 
D) a competitive market would work toward production of the quantity consumers seek, while a monopolistic market may restrict output to raise long term prices. 
A) excess profits would be competed away in a competitive market, but persist in a monopolistic market. 
B) a competitive market would work toward production of the quantity consumers seek, while a monopolistic market may restrict output to raise short term prices. 
C) a competitive market's cost curves will shift with the market, while a monopoly's cost curves will remain stable. 
D) a competitive market would work toward production of the quantity consumers seek, while a monopolistic market may restrict output to raise long term prices.

Question 5

A monopolist supply curve can be defined in the same way that it can for a perfectly competitive firm.

Accepted Answer

A) True 
 B)False

Question 6

It is possible to distinguish a monopoly from perfect competition by noting that only competitive firms can earn economic profits in the short run.

Accepted Answer

A) True 
 B)False

Question 7

In the long run,

Accepted Answer

A) both monopolists and perfectly competitive firms produce at minimum long-run average total cost. 
B) a monopolist will exit the industry if he or she is earning zero economic profit. 
C) a monopolist will always charge a higher price than he or she charges in the short run. 
D) consumer surplus is smaller if an industry is a monopoly than if it is perfectly competitive. 
A) both monopolists and perfectly competitive firms produce at minimum long-run average total cost. 
B) a monopolist will exit the industry if he or she is earning zero economic profit. 
C) a monopolist will always charge a higher price than he or she charges in the short run. 
D) consumer surplus is smaller if an industry is a monopoly than if it is perfectly competitive.

Question 8

A profit maximizing monopolist always chooses to operate at the output level where

Accepted Answer

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

Question 9

Table 11-1  
-Table 11-1 shows demand and total cost schedules for Monopoliteria.At its profit-maximizing level of output, Monopoliteria's profit is

Accepted Answer

A) $10. 
B) $15. 
C) $22. 
D) $30. 
A) $10. 
B) $15. 
C) $22. 
D) $30.

Question 10

What is a key criterion involved in deciding a natural monopoly?

Accepted Answer

A) Size of the firm relative to its competitors 
B) Size of the firm relative to the total market demand for a product 
C) Magnitude of profits generated by the company 
D) A firm's ability to adapt to market changes 
A) Size of the firm relative to its competitors 
B) Size of the firm relative to the total market demand for a product 
C) Magnitude of profits generated by the company 
D) A firm's ability to adapt to market changes

Question 11

Under what conditions might a monopoly be more efficient than a perfectly competitive firm?

Accepted Answer

When there is a natural monopoly, one fi

Question 12

Under monopoly, resources are allocated as efficiently as in perfect competition.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Assume that a firm has measured demand carefully and thinks that the following table accurately displays this.The total cost has been measured and can be given as TC = 20 + Q + Q2, where Q is the level of output.Complete the table and determine the profit-maximizing level of output.

Accepted Answer

As indicated in the table belo

Question 15

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 16

The key element in preserving a monopoly is

Accepted Answer

A) government subsidy of critical enterprises. 
B) keeping potential rivals out of the market. 
C) guaranteeing availability of substitute products. 
D) increased advertising expenditure. 
A) government subsidy of critical enterprises. 
B) keeping potential rivals out of the market. 
C) guaranteeing availability of substitute products. 
D) increased advertising expenditure.

Exam 12: Monopoly

A natural monopoly market is characterized diseconomies of scale over the entire range of output.

Which of the following is not potentially a barrier to entry into the widget market?

A monopolist can sell 10 lunchboxes if he or she charges $10 per lunchbox and 11 lunchboxes if he or she charges $9.The MR from selling the 11th lunchbox is

The differences between a competitive market and a monopoly include all of these except

A monopolist supply curve can be defined in the same way that it can for a perfectly competitive firm.

It is possible to distinguish a monopoly from perfect competition by noting that only competitive firms can earn economic profits in the short run.

In the long run,

A profit maximizing monopolist always chooses to operate at the output level where

Table 11-1 -Table 11-1 shows demand and total cost schedules for Monopoliteria.At its profit-maximizing level of output, Monopoliteria's profit is

What is a key criterion involved in deciding a natural monopoly?

Under what conditions might a monopoly be more efficient than a perfectly competitive firm?

Under monopoly, resources are allocated as efficiently as in perfect competition.

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

Assume that a firm has measured demand carefully and thinks that the following table accurately displays this.The total cost has been measured and can be given as TC = 20 + Q + Q2, where Q is the level of output.Complete the table and determine the profit-maximizing level of output.

The product supplied by a monopoly firm has

The key element in preserving a monopoly is

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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Assume that a firm has measured demand carefully and thinks that the following table accurately displays this.The total cost has been measured and can be given as TC = 20 + Q + Q₂, where Q is the level of output.Complete the table and determine the profit-maximizing level of output.