Question 1

What is the result when a monopolist is able to price-discriminate?

Accepted Answer

A)  Its profits tend to fall and its output tends to increase. 
B)  Both its profits and output tend to increase. 
C)  Its profits tend to increase and its output tends to fall. 
D)  Both its profits and output tend to decrease. 
A)  Its profits tend to fall and its output tends to increase. 
B)  Both its profits and output tend to increase. 
C)  Its profits tend to increase and its output tends to fall. 
D)  Both its profits and output tend to decrease.

Question 2

The following diagram contains information on cost and revenue curves facing a regulated monopoly.
FIGURE 9-3
  
-Refer to Figure 9-3. If regulators set a price according to marginal-cost pricing, what can we conclude about the firm?

Accepted Answer

A)  It will suffer an economic loss. 
B)  It will earn positive economic profits. 
C)  It will make zero economic profits. 
D)  It will earn the same level of profits as it would absent regulation. 
A)  It will suffer an economic loss. 
B)  It will earn positive economic profits. 
C)  It will make zero economic profits. 
D)  It will earn the same level of profits as it would absent regulation.

Question 3

Monopolists, unlike perfectly competitive firms, can continue to earn positive economic profits over time.

Accepted Answer

A) True 
 B)False

Question 4

At what level of output would a profit-maximizing monopolist choose to produce at?

Accepted Answer

A)  where total cost is minimized 
B)  where total revenue is maximized 
C)  where marginal revenue equals marginal cost 
D)  where average total cost is minimized 
A)  where total cost is minimized 
B)  where total revenue is maximized 
C)  where marginal revenue equals marginal cost 
D)  where average total cost is minimized

Question 5

How can economies of scale lead to monopoly?

Accepted Answer

A single firm, which experiences economi

Question 6

What would be the impact if the government forced the break-up of a natural monopoly to promote greater competition in an industry?

Accepted Answer

A)  The average cost of producing the good would increase. 
B)  Smaller firms would have a cost advantage over larger firms. 
C)  The average cost of producing the good would decrease. 
D)  The price paid by consumers would be unchanged. 
A)  The average cost of producing the good would increase. 
B)  Smaller firms would have a cost advantage over larger firms. 
C)  The average cost of producing the good would decrease. 
D)  The price paid by consumers would be unchanged.

Question 7

When a monopolist is able to sell its product at different prices to different customers, what is it likely engaging in?

Accepted Answer

A)  quality-adjusted pricing 
B)  illegal activities 
C)  price differentiation 
D)  price discrimination 
A)  quality-adjusted pricing 
B)  illegal activities 
C)  price differentiation 
D)  price discrimination

Question 8

Why might barriers that prevent the entry of new firms arise?

Accepted Answer

A)  There are freely available production inputs. 
B)  The government protects some firms from competition. 
C)  Price exceeds marginal cost. 
D)  Economies of scale never exist over a substantial range of industry demand. 
A)  There are freely available production inputs. 
B)  The government protects some firms from competition. 
C)  Price exceeds marginal cost. 
D)  Economies of scale never exist over a substantial range of industry demand.

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

Which of the following does NOT describe a profit-maximizing monopolist?

Accepted Answer

A)  The monopolist chooses output where marginal revenue equals marginal cost. 
B)  The monopolist charges a price that exceeds marginal cost. 
C)  The monopolist faces a perfectly elastic demand curve. 
D)  The monopolist can potentially continue to earn economic profits in the long run. 
A)  The monopolist chooses output where marginal revenue equals marginal cost. 
B)  The monopolist charges a price that exceeds marginal cost. 
C)  The monopolist faces a perfectly elastic demand curve. 
D)  The monopolist can potentially continue to earn economic profits in the long run.

Question 11

Which of the following occurs if a monopolist is able to price discriminate?

Accepted Answer

A)  the deadweight loss increases 
B)  output decreases 
C)  marginal revenue decreases 
D)  monopoly profits increase 
A)  the deadweight loss increases 
B)  output decreases 
C)  marginal revenue decreases 
D)  monopoly profits increase

Question 12

Many people believe that a monopolist can set their own price, that consumers have little recourse but to pay, and thereby reap enormous profits. Is this True?

Accepted Answer

A monopolist can set his own price for a

Question 13

"Monopolists do not worry about efficient production and cost savings since they can just pass along any increase in costs to their consumers." Is this statement True? Explain your answer.

Accepted Answer

This statement is not True. An

Question 14

Do monopolists need to worry about producing efficiently and reducing costs?

Accepted Answer

A)  Yes, because they are motivated by social considerations rather than profit. 
B)  Yes, since cost increases will decrease a monopolist's profits. 
C)  No, because the monopolist is a price taker. 
D)  No, since they can just pass along any increase in costs to their consumers. 
A)  Yes, because they are motivated by social considerations rather than profit. 
B)  Yes, since cost increases will decrease a monopolist's profits. 
C)  No, because the monopolist is a price taker. 
D)  No, since they can just pass along any increase in costs to their consumers.

Question 15

If the average total cost curve is always above the demand curve of a monopolist, what can we conclude?

Accepted Answer

A)  The monopolist will earn an economic profit. 
B)  Entry will occur, forcing the monopolist to reduce price and expand output. 
C)  The monopolist will suffer economic losses. 
D)  The monopolist must be producing inefficiently. 
A)  The monopolist will earn an economic profit. 
B)  Entry will occur, forcing the monopolist to reduce price and expand output. 
C)  The monopolist will suffer economic losses. 
D)  The monopolist must be producing inefficiently.

Question 16

Every weekend, retailers, particularly grocery stores, publish discount coupons in local papers. What is this behaviour consistent with?

Accepted Answer

A)  concern for low-income families 
B)  increasing returns to scale 
C)  price discrimination 
D)  perfect competition 
A)  concern for low-income families 
B)  increasing returns to scale 
C)  price discrimination 
D)  perfect competition

Question 17

A monopoly firm is charging $14 (the price the market will bear) at a level of output where MC equals $7 and is increasing, MR equals $7, and average variable cost equals $15. To maximize profits, what action should the firm take?

Accepted Answer

A)  shut down at least temporarily 
B)  decrease both output and price 
C)  increase output but decrease the price 
D)  decrease output and increase the price 
A)  shut down at least temporarily 
B)  decrease both output and price 
C)  increase output but decrease the price 
D)  decrease output and increase the price

Question 18

Which of the following is NOT a source of monopoly?

Accepted Answer

A)  patents given by the government to firms to encourage inventive activity 
B)  technologies that allow each of many small firms to produce at the same per-unit costs as one large firm 
C)  control of crucial inputs in the production of a good 
D)  government licensing requirements 
A)  patents given by the government to firms to encourage inventive activity 
B)  technologies that allow each of many small firms to produce at the same per-unit costs as one large firm 
C)  control of crucial inputs in the production of a good 
D)  government licensing requirements

Question 19

A monopoly firm is charging the price the market will bear at a level of output where MC equals $22 and is increasing, MR equals $20, and average variable cost equals $17. To maximize profits, what action should the firm take?

Accepted Answer

A)  Increase output but decrease the price. 
B)  Decrease output and increase the price. 
C)  Increase both output and price. 
D)  Decrease both output and price. 
A)  Increase output but decrease the price. 
B)  Decrease output and increase the price. 
C)  Increase both output and price. 
D)  Decrease both output and price.

Question 20

FIGURE 9-5
  
-Refer to Figure 9-5. If the firm sets a price to maximize profits, how much will it charge for its product?

Accepted Answer

A)  $14 
B)  $15 
C)  $18 
D)  $24 
A)  $14 
B)  $15 
C)  $18 
D)  $24

What is the result when a monopolist is able to price-discriminate?

The following diagram contains information on cost and revenue curves facing a regulated monopoly. FIGURE 9-3 -Refer to Figure 9-3. If regulators set a price according to marginal-cost pricing, what can we conclude about the firm?

Monopolists, unlike perfectly competitive firms, can continue to earn positive economic profits over time.

At what level of output would a profit-maximizing monopolist choose to produce at?

How can economies of scale lead to monopoly?

What would be the impact if the government forced the break-up of a natural monopoly to promote greater competition in an industry?

When a monopolist is able to sell its product at different prices to different customers, what is it likely engaging in?

Why might barriers that prevent the entry of new firms arise?

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

Which of the following does NOT describe a profit-maximizing monopolist?

Which of the following occurs if a monopolist is able to price discriminate?

Many people believe that a monopolist can set their own price, that consumers have little recourse but to pay, and thereby reap enormous profits. Is this True?

"Monopolists do not worry about efficient production and cost savings since they can just pass along any increase in costs to their consumers." Is this statement True? Explain your answer.

Do monopolists need to worry about producing efficiently and reducing costs?

If the average total cost curve is always above the demand curve of a monopolist, what can we conclude?

Every weekend, retailers, particularly grocery stores, publish discount coupons in local papers. What is this behaviour consistent with?

A monopoly firm is charging $14 (the price the market will bear) at a level of output where MC equals $7 and is increasing, MR equals $7, and average variable cost equals $15. To maximize profits, what action should the firm take?

Which of the following is NOT a source of monopoly?

A monopoly firm is charging the price the market will bear at a level of output where MC equals $22 and is increasing, MR equals $20, and average variable cost equals $17. To maximize profits, what action should the firm take?

FIGURE 9-5 -Refer to Figure 9-5. If the firm sets a price to maximize profits, how much will it charge for its product?

The Role and Method of Economics

Scarcity, Trade-Offs, and Production Possibilities

Supply and Demand

Bringing Supply and Demand Together

Elasticity

Market Efficiency and Market Failure

Production and Costs

Perfect Competition

Monopolistic Competition and Oligopoly

Labour Markets and the Distribution of Income

The Environment

Filters

Exam 9: Monopoly

What is the result when a monopolist is able to price-discriminate?

The following diagram contains information on cost and revenue curves facing a regulated monopoly. FIGURE 9-3 -Refer to Figure 9-3. If regulators set a price according to marginal-cost pricing, what can we conclude about the firm?

Monopolists, unlike perfectly competitive firms, can continue to earn positive economic profits over time.

At what level of output would a profit-maximizing monopolist choose to produce at?

How can economies of scale lead to monopoly?

What would be the impact if the government forced the break-up of a natural monopoly to promote greater competition in an industry?

When a monopolist is able to sell its product at different prices to different customers, what is it likely engaging in?

Why might barriers that prevent the entry of new firms arise?

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

Which of the following does NOT describe a profit-maximizing monopolist?

Which of the following occurs if a monopolist is able to price discriminate?

Many people believe that a monopolist can set their own price, that consumers have little recourse but to pay, and thereby reap enormous profits. Is this True?

"Monopolists do not worry about efficient production and cost savings since they can just pass along any increase in costs to their consumers." Is this statement True? Explain your answer.

Do monopolists need to worry about producing efficiently and reducing costs?

If the average total cost curve is always above the demand curve of a monopolist, what can we conclude?

Every weekend, retailers, particularly grocery stores, publish discount coupons in local papers. What is this behaviour consistent with?

A monopoly firm is charging $14 (the price the market will bear) at a level of output where MC equals $7 and is increasing, MR equals $7, and average variable cost equals $15. To maximize profits, what action should the firm take?

Which of the following is NOT a source of monopoly?

A monopoly firm is charging the price the market will bear at a level of output where MC equals $22 and is increasing, MR equals $20, and average variable cost equals $17. To maximize profits, what action should the firm take?

FIGURE 9-5 -Refer to Figure 9-5. If the firm sets a price to maximize profits, how much will it charge for its product?

The Role and Method of Economics

Scarcity, Trade-Offs, and Production Possibilities

Supply and Demand

Bringing Supply and Demand Together

Elasticity

Market Efficiency and Market Failure

Production and Costs

Perfect Competition

Monopolistic Competition and Oligopoly

Labour Markets and the Distribution of Income

The Environment

Filters