Question 1

A price-discriminating monopoly firm will tend to charge a higher price to customers with a more inelastic demand than it does to customers with a more elastic demand.

Accepted Answer

A) True 
 B)False

Question 2

How do a monopolist and a perfectly competitive firm differ?

Accepted Answer

A)  The industry demand curve slopes downward for a monopolist, but not for a perfectly competitive industry. 
B)  Price exceeds marginal cost for the monopolist. 
C)  The monopoly price equals marginal revenue, but not average revenue. 
D)  Monopoly profits are maximized by choosing output where marginal revenue equals marginal cost. 
A)  The industry demand curve slopes downward for a monopolist, but not for a perfectly competitive industry. 
B)  Price exceeds marginal cost for the monopolist. 
C)  The monopoly price equals marginal revenue, but not average revenue. 
D)  Monopoly profits are maximized by choosing output where marginal revenue equals marginal cost.

Question 3

What is a pure monopoly?

Accepted Answer

A)  It is an industry in which there are many rival firms competing for sales. 
B)  It is a market structure in which there is a single buyer. 
C)  It is a market structure in which there are many substitute products. 
D)  It is an industry in which there is a single seller. 
A)  It is an industry in which there are many rival firms competing for sales. 
B)  It is a market structure in which there is a single buyer. 
C)  It is a market structure in which there are many substitute products. 
D)  It is an industry in which there is a single seller.

Question 4

Which of the following best describes a firm that is a monopolist?

Accepted Answer

A)  The firm will definitely make an economic profit in the short run. 
B)  The firm will produce a smaller quantity of output than what would be best from the viewpoint of ideal economic efficiency. 
C)  The firm can charge whatever it wants for its product, since consumers have no alternatives. 
D)  The additional revenue that can be generated from an increase in output will exceed the firm's price. 
A)  The firm will definitely make an economic profit in the short run. 
B)  The firm will produce a smaller quantity of output than what would be best from the viewpoint of ideal economic efficiency. 
C)  The firm can charge whatever it wants for its product, since consumers have no alternatives. 
D)  The additional revenue that can be generated from an increase in output will exceed the firm's price.

Question 5

Which of the following best describes a monopolist in the short run?

Accepted Answer

A)  It always suffers an economic loss. 
B)  It always earns an economic profit. 
C)  It always earns a normal rate of return. 
D)  It may make an economic loss, an economic profit, or zero economic profits. 
A)  It always suffers an economic loss. 
B)  It always earns an economic profit. 
C)  It always earns a normal rate of return. 
D)  It may make an economic loss, an economic profit, or zero economic profits.

Question 6

Which of the following is NOT a characteristic of a successful price discriminator?

Accepted Answer

A)  It can prevent the resale of the product. 
B)  It has monopoly power. 
C)  Its elasticity of demand differs across customers. 
D)  Its marginal costs of production differ across customers. 
A)  It can prevent the resale of the product. 
B)  It has monopoly power. 
C)  Its elasticity of demand differs across customers. 
D)  Its marginal costs of production differ across customers.

Question 7

A monopoly firm can sell as much output as it wants at whatever price it sets.

Accepted Answer

A) True 
 B)False

Question 8

In Canada, what are anti-combine laws designed to do?

Accepted Answer

A)  Create perfectly competitive industries. 
B)  Increase agricultural employment. 
C)  Reduce the ability of firms to attain market power through mergers. 
D)  Prevent price discrimination. 
A)  Create perfectly competitive industries. 
B)  Increase agricultural employment. 
C)  Reduce the ability of firms to attain market power through mergers. 
D)  Prevent price discrimination.

Question 9

Figure 9-1
  
-Refer to Figure 9-1. What area indicates total cost when the monopolist is maximizing profits?

Accepted Answer

A)  0BGQ2 
B)  0AEQ1 
C)  DAEF 
D)  0DFQ1 
A)  0BGQ2 
B)  0AEQ1 
C)  DAEF 
D)  0DFQ1

Question 10

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 average-cost pricing, what can we conclude about the firm?

Accepted Answer

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

Question 11

If an unregulated monopolist operates in a market, what can we conclude?

Accepted Answer

A)  Society will be allocating its resources efficiently. 
B)  Customers will pay higher prices than if the market were competitive. 
C)  Price will be equal to average cost. 
D)  Customers will purchase more units of output than if the market were competitive. 
A)  Society will be allocating its resources efficiently. 
B)  Customers will pay higher prices than if the market were competitive. 
C)  Price will be equal to average cost. 
D)  Customers will purchase more units of output than if the market were competitive.

Question 12

What is the patent system intended to do?

Accepted Answer

A)  Reward innovators by granting them temporary monopolies. 
B)  Give small businesses a competitive edge over larger businesses. 
C)  Spread information among firms as quickly and economically as possible. 
D)  Prevent natural monopolies from unfairly exploiting their cost advantages. 
A)  Reward innovators by granting them temporary monopolies. 
B)  Give small businesses a competitive edge over larger businesses. 
C)  Spread information among firms as quickly and economically as possible. 
D)  Prevent natural monopolies from unfairly exploiting their cost advantages.

Question 13

What is the profit maximizing condition for monopolies?

Accepted Answer

A)  P = ATC 
B)  P = MR 
C)  MR = 0 
D)  MR = MC 
A)  P = ATC 
B)  P = MR 
C)  MR = 0 
D)  MR = MC

Question 14

Which of the following is NOT a criticism sometimes levelled at monopolies?

Accepted Answer

A)  A monopoly creates a welfare loss. 
B)  A monopoly leads to improved economies of scale in production. 
C)  A monopoly retards innovation. 
D)  A monopoly promotes inefficiency. 
A)  A monopoly creates a welfare loss. 
B)  A monopoly leads to improved economies of scale in production. 
C)  A monopoly retards innovation. 
D)  A monopoly promotes inefficiency.

Question 15

A monopolist restricts output and charges a higher price relative to what would occur if a market were perfectly competitive.

Accepted Answer

A) True 
 B)False

Question 16

If a firm seeks to maximize total revenue, at what quantity should it produce?

Accepted Answer

A)  where elasticity of demand is greater than 1 
B)  where marginal revenue is maximized 
C)  where marginal revenue equals 0 
D)  where elasticity of demand equals 0 
A)  where elasticity of demand is greater than 1 
B)  where marginal revenue is maximized 
C)  where marginal revenue equals 0 
D)  where elasticity of demand equals 0

Question 17

Which of the following best describes the marginal revenue curve of a monopolist graphically?

Accepted Answer

A)  It lies above the demand curve of a monopolist. 
B)  It lies below the demand curve of a monopolist. 
C)  It is the same as the marginal cost curve of a monopolist. 
D)  It is the same as the demand curve of a monopolist. 
A)  It lies above the demand curve of a monopolist. 
B)  It lies below the demand curve of a monopolist. 
C)  It is the same as the marginal cost curve of a monopolist. 
D)  It is the same as the demand curve of a monopolist.

Question 18

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

Accepted Answer

A)  The price of output exceeds marginal revenue. 
B)  The monopolist chooses output where marginal revenue equals marginal cost. 
C)  The monopolist always earns an economic profit. 
D)  The monopolist faces the downward-sloping market demand curve. 
A)  The price of output exceeds marginal revenue. 
B)  The monopolist chooses output where marginal revenue equals marginal cost. 
C)  The monopolist always earns an economic profit. 
D)  The monopolist faces the downward-sloping market demand curve.

Question 19

Canada Post historically has had a monopoly over the market for the delivery of first-class letters in Canada.

Accepted Answer

A) True 
 B)False

Question 20

A profit-maximizing monopolist will choose to operate along the inelastic portion of its demand curve.

Accepted Answer

A) True 
 B)False

A price-discriminating monopoly firm will tend to charge a higher price to customers with a more inelastic demand than it does to customers with a more elastic demand.

How do a monopolist and a perfectly competitive firm differ?

What is a pure monopoly?

Which of the following best describes a firm that is a monopolist?

Which of the following best describes a monopolist in the short run?

Which of the following is NOT a characteristic of a successful price discriminator?

A monopoly firm can sell as much output as it wants at whatever price it sets.

In Canada, what are anti-combine laws designed to do?

Figure 9-1 -Refer to Figure 9-1. What area indicates total cost when the monopolist is maximizing profits?

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 average-cost pricing, what can we conclude about the firm?

If an unregulated monopolist operates in a market, what can we conclude?

What is the patent system intended to do?

What is the profit maximizing condition for monopolies?

Which of the following is NOT a criticism sometimes levelled at monopolies?

A monopolist restricts output and charges a higher price relative to what would occur if a market were perfectly competitive.

If a firm seeks to maximize total revenue, at what quantity should it produce?

Which of the following best describes the marginal revenue curve of a monopolist graphically?

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

Canada Post historically has had a monopoly over the market for the delivery of first-class letters in Canada.

A profit-maximizing monopolist will choose to operate along the inelastic portion of its demand curve.

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

A price-discriminating monopoly firm will tend to charge a higher price to customers with a more inelastic demand than it does to customers with a more elastic demand.

How do a monopolist and a perfectly competitive firm differ?

What is a pure monopoly?

Which of the following best describes a firm that is a monopolist?

Which of the following best describes a monopolist in the short run?

Which of the following is NOT a characteristic of a successful price discriminator?

A monopoly firm can sell as much output as it wants at whatever price it sets.

In Canada, what are anti-combine laws designed to do?

Figure 9-1 -Refer to Figure 9-1. What area indicates total cost when the monopolist is maximizing profits?

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 average-cost pricing, what can we conclude about the firm?

If an unregulated monopolist operates in a market, what can we conclude?

What is the patent system intended to do?

What is the profit maximizing condition for monopolies?

Which of the following is NOT a criticism sometimes levelled at monopolies?

A monopolist restricts output and charges a higher price relative to what would occur if a market were perfectly competitive.

If a firm seeks to maximize total revenue, at what quantity should it produce?

Which of the following best describes the marginal revenue curve of a monopolist graphically?

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

Canada Post historically has had a monopoly over the market for the delivery of first-class letters in Canada.

A profit-maximizing monopolist will choose to operate along the inelastic portion of its demand curve.

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