Question 1

A monopolist can use its pricing strategy as a barrier to entry by other firms.

Accepted Answer

A) True 
 B)False

Question 2

If marginal costs decrease and the MC curve shifts down, a typical monopolist will

Accepted Answer

A) reduce price and reduce quantity of output. 
B) reduce price and increase quantity of output. 
C) increase price and reduce quantity of output. 
D) increase price and increase quantity of output. 
A) reduce price and reduce quantity of output. 
B) reduce price and increase quantity of output. 
C) increase price and reduce quantity of output. 
D) increase price and increase quantity of output.

Question 3

Any activity designed to transfer income or wealth to a particular individual or firm at society's expense is called

Accepted Answer

A) patent protection. 
B) X-inefficiency. 
C) price discrimination. 
D) rent-seeking. 
A) patent protection. 
B) X-inefficiency. 
C) price discrimination. 
D) rent-seeking.

Question 4

Given a downward-sloping linear demand curve, if total revenue decreases as quantity rises, marginal revenue must be

Accepted Answer

A) positive and demand is elastic. 
B) negative and demand is elastic. 
C) positive and demand is inelastic. 
D) negative and demand is inelastic. 
A) positive and demand is elastic. 
B) negative and demand is elastic. 
C) positive and demand is inelastic. 
D) negative and demand is inelastic.

Question 5

Answer the question on the basis of the demand and cost data for a pure monopolist. At the profit-maximizing price and quantity of output, the monopolist will realize profit of

Accepted Answer

A) $11.25. 
B) $10.00. 
C) $6.50. 
D) $4.50. 
A) $11.25. 
B) $10.00. 
C) $6.50. 
D) $4.50.

Question 6

At its profit-maximizing output, the nondiscriminating pure monopolist whose information is in the accompanying table

Accepted Answer

A) incurs a loss. 
B) earns an economic profit of $250. 
C) earns a normal profit of $250. 
D) earns an economic profit of $150. 
A) incurs a loss. 
B) earns an economic profit of $250. 
C) earns a normal profit of $250. 
D) earns an economic profit of $150.

Question 7

An exclusive legal right as sole producer for 20 years granted to an inventor of a product is called a

Accepted Answer

A) copyright. 
B) franchise. 
C) patent. 
D) license. 
A) copyright. 
B) franchise. 
C) patent. 
D) license.

Question 8

At its profit-maximizing output, the nondiscriminating pure monopolist whose information is in the accompanying table

Accepted Answer

A) incurs a loss. 
B) earns an economic profit of $250. 
C) earns a normal profit of $250. 
D) earns an economic profit of $150. 
A) incurs a loss. 
B) earns an economic profit of $250. 
C) earns a normal profit of $250. 
D) earns an economic profit of $150.

Question 9

The table shows the demand schedule facing Nina, a monopolist selling baskets. What is the change in total revenue if she raises the price from $10 to $12?

Accepted Answer

A) $−300 
B) $300 
C) $−120 
D) $120 
A) $−300 
B) $300 
C) $−120 
D) $120

Question 10

The economic incentive for price discrimination is based upon

Accepted Answer

A) prejudices of business managers. 
B) differences among sellers' costs. 
C) a desire to evade antitrust legislation. 
D) differences among buyers' elasticities of demand. 
A) prejudices of business managers. 
B) differences among sellers' costs. 
C) a desire to evade antitrust legislation. 
D) differences among buyers' elasticities of demand.

Question 11

X-inefficiency refers to a situation in which a firm

Accepted Answer

A) is not as technologically progressive as it might be. 
B) encounters diseconomies of scale. 
C) fails to realize all existing economies of scale. 
D) fails to achieve the minimum average total costs attainable at each level of output. 
A) is not as technologically progressive as it might be. 
B) encounters diseconomies of scale. 
C) fails to realize all existing economies of scale. 
D) fails to achieve the minimum average total costs attainable at each level of output.

Question 12

Natural monopolies result from

Accepted Answer

A) patents and copyrights. 
B) pricing strategies. 
C) extensive economies of scale in production. 
D) control over an essential natural resource. 
A) patents and copyrights. 
B) pricing strategies. 
C) extensive economies of scale in production. 
D) control over an essential natural resource.

Question 13

At the inelastic portion of a monopolist's demand curve, the marginal revenue of each extra unit of output is positive.

Accepted Answer

A) True 
 B)False

Question 14

Answer the question on the basis of the provided demand and cost data for a pure monopolist.   The profit-maximizing level of output will be

Accepted Answer

A) 4 units. 
B) 7 units. 
C) 6 units. 
D) 5 units. 
A) 4 units. 
B) 7 units. 
C) 6 units. 
D) 5 units.

Question 15

Refer to the graph, which shows a linear demand curve for a monopolist. Which of the following statements is correct?

Accepted Answer

A) The area 0 QVS is greater than the area 0 RWT. 
B) The demand curve has unit price elasticity at W. 
C) The price elasticity of demand is less at U than at V. 
D) The price elasticity of demand is greater at W than at V. 
A) The area 0 QVS is greater than the area 0 RWT. 
B) The demand curve has unit price elasticity at W. 
C) The price elasticity of demand is less at U than at V. 
D) The price elasticity of demand is greater at W than at V.

Question 16

A pure monopolist is selling nine units at a price of $50. If the marginal revenue of the tenth unit is $30, then the

Accepted Answer

A) price of the tenth unit is $49. 
B) price of the tenth unit is $48. 
C) price of the tenth unit is greater than $50. 
D) firm's demand curve is perfectly elastic. 
A) price of the tenth unit is $49. 
B) price of the tenth unit is $48. 
C) price of the tenth unit is greater than $50. 
D) firm's demand curve is perfectly elastic.

Question 17

What are network effects? How do they contribute to economies of scale?

Accepted Answer

Network effects are present if a product

Question 18

Which case best represents a case of price discrimination?

Accepted Answer

A) An insurance company offers discounts to safe drivers. 
B) A major airline sells tickets to senior citizens at lower prices than to other passengers. 
C) A professional baseball team pays two players with identical batting averages different salaries. 
D) A utility company charges less for electricity used during off-peak hours, when it does not have to operate its less-efficient generating plants. 
A) An insurance company offers discounts to safe drivers. 
B) A major airline sells tickets to senior citizens at lower prices than to other passengers. 
C) A professional baseball team pays two players with identical batting averages different salaries. 
D) A utility company charges less for electricity used during off-peak hours, when it does not have to operate its less-efficient generating plants.

Question 19

Which would definitely not be an example of price discrimination?

Accepted Answer

A) A movie theater charges children less than adults for a movie ticket. 
B) Universities charge higher tuition for out-of-state residents than for in-state students. 
C) A doctor charges for services according to the income of individual patients. 
D) An electric power company charges less for electricity used during off-peak hours, when production costs are lower. 
A) A movie theater charges children less than adults for a movie ticket. 
B) Universities charge higher tuition for out-of-state residents than for in-state students. 
C) A doctor charges for services according to the income of individual patients. 
D) An electric power company charges less for electricity used during off-peak hours, when production costs are lower.

Question 20

Which of the following is correct?

Accepted Answer

A) Both purely competitive and monopolistic firms are "price takers." 
B) Both purely competitive and monopolistic firms are "price makers." 
C) A purely competitive firm is a "price taker," while a monopolist is a "price maker." 
D) A purely competitive firm is a "price maker," while a monopolist is a "price taker." 
A) Both purely competitive and monopolistic firms are "price takers." 
B) Both purely competitive and monopolistic firms are "price makers." 
C) A purely competitive firm is a "price taker," while a monopolist is a "price maker." 
D) A purely competitive firm is a "price maker," while a monopolist is a "price taker."

Exam 12: Pure Monopoly

A monopolist can use its pricing strategy as a barrier to entry by other firms.

If marginal costs decrease and the MC curve shifts down, a typical monopolist will

Any activity designed to transfer income or wealth to a particular individual or firm at society's expense is called

Given a downward-sloping linear demand curve, if total revenue decreases as quantity rises, marginal revenue must be

Answer the question on the basis of the demand and cost data for a pure monopolist. At the profit-maximizing price and quantity of output, the monopolist will realize profit of

At its profit-maximizing output, the nondiscriminating pure monopolist whose information is in the accompanying table

An exclusive legal right as sole producer for 20 years granted to an inventor of a product is called a

At its profit-maximizing output, the nondiscriminating pure monopolist whose information is in the accompanying table

The table shows the demand schedule facing Nina, a monopolist selling baskets. What is the change in total revenue if she raises the price from $10 to $12?

The economic incentive for price discrimination is based upon

X-inefficiency refers to a situation in which a firm

Natural monopolies result from

At the inelastic portion of a monopolist's demand curve, the marginal revenue of each extra unit of output is positive.

Answer the question on the basis of the provided demand and cost data for a pure monopolist. The profit-maximizing level of output will be

Refer to the graph, which shows a linear demand curve for a monopolist. Which of the following statements is correct?

A pure monopolist is selling nine units at a price of $50. If the marginal revenue of the tenth unit is $30, then the

What are network effects? How do they contribute to economies of scale?

Which case best represents a case of price discrimination?

Which would definitely not be an example of price discrimination?

Which of the following is correct?

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures Caused by Externalities Asymmetric Information

Public Goods, Public Choice, and Government Failure

Elasticity

Utility Maximization

Behavioral Economics

Businesses and the Costs of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Monopolistic Competition

Oligopoly and Strategic Behavior

Technology, RD, and Efficiency

The Demand for Resources

Wage Determination

Rent, Interest, and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Antitrust Policy and Regulation

Agriculture: Economics and Policy

Income Inequality, Poverty, and Discrimination

Health Care

Immigration

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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