Question 1

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 2

A monopoly firm's supply curve

Accepted Answer

A) has a supply curve identical to that for a perfectly competitive firm. 
B) is always equal to marginal cost. 
C) does not exist. 
D) is determined by market demand. 
A) has a supply curve identical to that for a perfectly competitive firm. 
B) is always equal to marginal cost. 
C) does not exist. 
D) is determined by market demand.

Question 3

Which of the following is NOT a characteristic of a pure monopoly?

Accepted Answer

A) Firms cannot enter freely. 
B) Firms sell unique products. 
C) Firms can control a scarce resource. 
D) Firms are unable to acquire patents. 
A) Firms cannot enter freely. 
B) Firms sell unique products. 
C) Firms can control a scarce resource. 
D) Firms are unable to acquire patents.

Question 4

The marginal revenue curve for a monopolist

Accepted Answer

A) is identical to its demand curve. 
B) is always below its demand curve if the demand curve is downward sloping. 
C) is always below its demand curve if the demand curve is horizontal. 
D) typically crosses the average revenue curve. 
A) is identical to its demand curve. 
B) is always below its demand curve if the demand curve is downward sloping. 
C) is always below its demand curve if the demand curve is horizontal. 
D) typically crosses the average revenue curve.

Question 5

Discrepancies in profitability tempt rivals to charge the more profitable consumers somewhat lower prices in order to lure them away from the firm that is "overcharging" them.This practice is referred to as

Accepted Answer

A) collusion. 
B) price dealing. 
C) skimming. 
D) market penetration. 
A) collusion. 
B) price dealing. 
C) skimming. 
D) market penetration.

Question 6

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 7

For a monopoly, MC = MR < P so that MC < MU.

Accepted Answer

A) True 
 B)False

Question 8

A monopolist maximizes profits by producing where which of the following occurs?

Accepted Answer

A) MC = P. 
B) AC = P. 
C) MC = MR. 
D) AC = AR. 
A) MC = P. 
B) AC = P. 
C) MC = MR. 
D) AC = AR.

Question 9

A natural monopoly is defined as an industry in which one firm

Accepted Answer

A) can produce the entire industry output at a lower average cost than a larger number of firms could. 
B) can produce the entire industry output at a lower marginal cost than a larger number of firms could. 
C) is very large relative to other firms that could enter the industry. 
D) can earn higher profits if it is the only firm in the industry rather than if other firms also enter the industry. 
A) can produce the entire industry output at a lower average cost than a larger number of firms could. 
B) can produce the entire industry output at a lower marginal cost than a larger number of firms could. 
C) is very large relative to other firms that could enter the industry. 
D) can earn higher profits if it is the only firm in the industry rather than if other firms also enter the industry.

Question 10

Providing medical services for smaller fees to the poor than to the rich is

Accepted Answer

A) misplaced charity. 
B) benevolent pricing. 
C) price discrimination. 
D) social pricing. 
A) misplaced charity. 
B) benevolent pricing. 
C) price discrimination. 
D) social pricing.

Question 11

A monopolist is a price maker.

Accepted Answer

A) True 
 B)False

Question 12

Perfect Competition is an industry in which there is only one supplier of a product that has no close substitutes.

Accepted Answer

A) True 
 B)False

Question 13

A profit-maximizing monopolist

Accepted Answer

A) engages in more research and development activity than a perfectly competitive firm. 
B) produces the output level where P = MC. 
C) produces less output than a perfectly competitive industry. 
D) produces at the unit elastic point on the market demand curve. 
A) engages in more research and development activity than a perfectly competitive firm. 
B) produces the output level where P = MC. 
C) produces less output than a perfectly competitive industry. 
D) produces at the unit elastic point on the market demand curve.

Question 14

What are the reasons for preferring competition to monopoly?

Accepted Answer

Monopolists sell at too high a price and

Question 15

What is true in a market characterized by a natural monopoly?

Accepted Answer

A) The firm is always extremely large 
B) The existence of economies of scale over the entire market demand 
C) The size of the firm's profits 
D) The amount of innovation carried out by the firm 
A) The firm is always extremely large 
B) The existence of economies of scale over the entire market demand 
C) The size of the firm's profits 
D) The amount of innovation carried out by the firm

Question 16

A natural monopoly would benefit by being broken into many smaller firms.

Accepted Answer

A) True 
 B)False

Question 17

Entry barriers can lead to long-run economic profits.

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

How does the monopolist calculate profit per unit and total profit?

Accepted Answer

A monopolist computes profit per unit by

Question 20

Why is the advent of monopoly likely to shift cost curves?

Accepted Answer

The advent of a monopoly may shift the a

Exam 12: Monopoly

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

A monopoly firm's supply curve

Which of the following is NOT a characteristic of a pure monopoly?

The marginal revenue curve for a monopolist

Discrepancies in profitability tempt rivals to charge the more profitable consumers somewhat lower prices in order to lure them away from the firm that is "overcharging" them.This practice is referred to as

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

For a monopoly, MC = MR < P so that MC < MU.

A monopolist maximizes profits by producing where which of the following occurs?

A natural monopoly is defined as an industry in which one firm

Providing medical services for smaller fees to the poor than to the rich is

A monopolist is a price maker.

Perfect Competition is an industry in which there is only one supplier of a product that has no close substitutes.

A profit-maximizing monopolist

What are the reasons for preferring competition to monopoly?

What is true in a market characterized by a natural monopoly?

A natural monopoly would benefit by being broken into many smaller firms.

Entry barriers can lead to long-run economic profits.

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

How does the monopolist calculate profit per unit and total profit?

Why is the advent of monopoly likely to shift cost curves?

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

Filters