Question 1

If a firm was able to acquire control over access to bauxite, the ore used in aluminum manufacturing, it would gain monopoly control of the aluminum industry because that firm

Accepted Answer

A) holds a patent. 
B) is given the right to control the market by government. 
C) controls an essential input. 
D) is a natural monopoly. 
A) holds a patent. 
B) is given the right to control the market by government. 
C) controls an essential input. 
D) is a natural monopoly.

Question 2

Public utilities, due to their economies of scale, are permitted by government to charge whatever price that they wish.

Accepted Answer

A) True 
 B)False

Question 3

Bargain airline fares in which airlines charge varying rates to passengers for the same flight and service is an example of

Accepted Answer

A) market penetration. 
B) transaction pricing. 
C) collusion. 
D) price discrimination. 
A) market penetration. 
B) transaction pricing. 
C) collusion. 
D) price discrimination.

Question 4

Figure 11-9  
-In assessing the difference between monopoly performance and that of perfect competition, the best approach is to

Accepted Answer

A) measure the output of the monopolist and the output of the perfectly competitive firm. 
B) measure the output of the monopolist and the output of the perfectly competitive industry. 
C) measure the output purchased by consumers from the monopolist and from the perfectly competitive firm. 
D) calculate the marginal cost of the monopolist and of the perfectly competitive firm. 
A) measure the output of the monopolist and the output of the perfectly competitive firm. 
B) measure the output of the monopolist and the output of the perfectly competitive industry. 
C) measure the output purchased by consumers from the monopolist and from the perfectly competitive firm. 
D) calculate the marginal cost of the monopolist and of the perfectly competitive firm.

Question 5

The key element in preserving a monopoly is keeping rivals out of the market.

Accepted Answer

A) True 
 B)False

Question 6

____ 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 7

Figure 11-7  
-The firm shown in Figure 11-7 is an unregulated monopolist; it totals equals _____ .

Accepted Answer

A) $300 
B) $600 
C) $400 
D) $625 
A) $300 
B) $600 
C) $400 
D) $625

Question 8

The industry described in Figure 11-6

Accepted Answer

A) is not a natural monopoly because no firm would produce in the long run unless the government intervened in the market. 
B) is not a natural monopoly because the average total cost curve is U shaped. 
C) is a natural monopoly because the economic profit is positive for a monopolist if the government doesn't intervene. 
D) is a natural monopoly because price is less than average total cost at the output that would be produced by the industry under perfect competition. 
A) is not a natural monopoly because no firm would produce in the long run unless the government intervened in the market. 
B) is not a natural monopoly because the average total cost curve is U shaped. 
C) is a natural monopoly because the economic profit is positive for a monopolist if the government doesn't intervene. 
D) is a natural monopoly because price is less than average total cost at the output that would be produced by the industry under perfect competition.

Question 9

Pure monopoly is able to exist because the firm's product is better than the substitutes that are available in the market.

Accepted Answer

A) True 
 B)False

Question 10

Figure 11-5  
-In Figure 11-5, Crown Theater, a monopolist movie theater, has chosen the profit-maximizing output.At this output level, what is total cost for the firm?

Accepted Answer

A) $750 
B) $600 
C) $450 
D) $300 
A) $750 
B) $600 
C) $450 
D) $300

Question 11

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 12

The difference in prices for first-class and coach airline tickets exemplifies price discrimination.

Accepted Answer

A) True 
 B)False

Question 13

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 14

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 15

Offering discounts to senior citizens is

Accepted Answer

A) a philanthropic decision. 
B) peak-level pricing. 
C) price discrimination. 
D) an inefficient practice. 
A) a philanthropic decision. 
B) peak-level pricing. 
C) price discrimination. 
D) an inefficient practice.

Question 16

Figure 11-4  
-Physicians have two types of patients: private patients who pay directly or with insurance, and Medicaid patients whose care is paid for by the state.Physicians must lower prices to attract more private patients, but they can add unlimited Medicaid patients at a constant price.The situation facing Dr.Casey is depicted in Figure 11-4.Units of medical service (say, number of patients × number of visits) are measured on the horizontal axis.How many units of medical service will Dr.Casey deliver?

Accepted Answer

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

Question 17

In the long run, profit-maximizing monopolists facing a downward-sloping demand curve

Accepted Answer

A) may earn profits greater than their opportunity costs of capital. 
B) do not produce every possible unit of output for which marginal utility is greater than or equal to marginal cost. 
C) may or may not have lower costs than perfectly competitive firms in the same industry. 
D) All of these responses are correct. 
A) may earn profits greater than their opportunity costs of capital. 
B) do not produce every possible unit of output for which marginal utility is greater than or equal to marginal cost. 
C) may or may not have lower costs than perfectly competitive firms in the same industry. 
D) All of these responses are correct.

Question 18

There exist only two causes of monopoly: barriers to entry and government restrictions.

Accepted Answer

A) True 
 B)False

Question 19

Figure 11-2  
-For the monopolist show in Figure 11-2, how much profit is the monopolist making per unit?

Accepted Answer

A) The amount shown as HE 
B) The amount shown as GE 
C) The amount shown as HF 
D) The amount shown as FE 
A) The amount shown as HE 
B) The amount shown as GE 
C) The amount shown as HF 
D) The amount shown as FE

Question 20

Monopoly as a market structure leads to

Accepted Answer

A) prices equal to average cost. 
B) quick response to economic change. 
C) prices that equal minimum long-run average cost. 
D) persistent economic profits. 
A) prices equal to average cost. 
B) quick response to economic change. 
C) prices that equal minimum long-run average cost. 
D) persistent economic profits.

Exam 12: Monopoly

If a firm was able to acquire control over access to bauxite, the ore used in aluminum manufacturing, it would gain monopoly control of the aluminum industry because that firm

Public utilities, due to their economies of scale, are permitted by government to charge whatever price that they wish.

Bargain airline fares in which airlines charge varying rates to passengers for the same flight and service is an example of

Figure 11-9 -In assessing the difference between monopoly performance and that of perfect competition, the best approach is to

The key element in preserving a monopoly is keeping rivals out of the market.

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

Figure 11-7 -The firm shown in Figure 11-7 is an unregulated monopolist; it totals equals _____ .

The industry described in Figure 11-6

Pure monopoly is able to exist because the firm's product is better than the substitutes that are available in the market.

Figure 11-5 -In Figure 11-5, Crown Theater, a monopolist movie theater, has chosen the profit-maximizing output.At this output level, what is total cost for the firm?

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

The difference in prices for first-class and coach airline tickets exemplifies price discrimination.

The demand curve of the monopoly firm is always the

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?

Offering discounts to senior citizens is

In the long run, profit-maximizing monopolists facing a downward-sloping demand curve

There exist only two causes of monopoly: barriers to entry and government restrictions.

Figure 11-2 -For the monopolist show in Figure 11-2, how much profit is the monopolist making per unit?

Monopoly as a market structure leads to

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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