Question 1

Figure 11-7
 
The firm in Figure 11-7 is an unregulated monopolist; it will produce which of the following?

Accepted Answer

A) 175 units at a price of 7 
B) 100 units at a price of 6 
C) 100 units at a price of 9 
D) 150 units at a price of about 7.5 
A) 175 units at a price of 7 
B) 100 units at a price of 6 
C) 100 units at a price of 9 
D) 150 units at a price of about 7.5

Question 2

Which of the following will occur if a natural monopoly is broken into two smaller firms?

Accepted Answer

A) The price will drop. 
B) Industry output will increase. 
C) Production costs will increase. 
D) Industry output will decrease. 
A) The price will drop. 
B) Industry output will increase. 
C) Production costs will increase. 
D) Industry output will decrease.

Question 3

Figure 11-9
 
In Figure 11-9, how much more than the short-run competitive price will the profit-maximizing monopolist charge?

Accepted Answer

A) $1 
B) $2 
C) $3 
D) $10 
A) $1 
B) $2 
C) $3 
D) $10

Question 4

Economists consider price discrimination to always be undesirable.

Accepted Answer

A) True 
 B)False

Question 5

Pure monopoly is not studied because of its descriptive realism, but because it is a stepping stone toward more realistic models.

Accepted Answer

A) True 
 B)False

Question 6

It is possible to distinguish a monopoly from perfect competition by noting that only competitive firms can earn economic profits in the short run.

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

In the long run under monopoly,

Accepted Answer

A) the MC curve will lie to the left of the output at which AC and AR meet. 
B) MC = MR = P. 
C) MC = MR = AR. 
D) the MC curve will lie to the right of the output at which AC and AR meet. 
A) the MC curve will lie to the left of the output at which AC and AR meet. 
B) MC = MR = P. 
C) MC = MR = AR. 
D) the MC curve will lie to the right of the output at which AC and AR meet.

Question 9

Since a monopolist firm will lose some customers when the price is increased, it will make every effort to keep the price as low as possible.

Accepted Answer

A) True 
 B)False

Question 10

A profit-maximizing monopolist sets

Accepted Answer

A) his or her price where MC = MR. 
B) his or her output where MC = MR. 
C) his or her price where MR > MC. 
D) his or her output where P = MC. 
A) his or her price where MC = MR. 
B) his or her output where MC = MR. 
C) his or her price where MR > MC. 
D) his or her output where P = MC.

Question 11

A profit maximizing monopolist always chooses to operate at the output level where

Accepted Answer

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

Question 12

Table 11-2   In Table 11-2, average cost at the profit-maximizing output is how much?

Accepted Answer

A) $5 
B) $8 
C) $10 
D) $11 
A) $5 
B) $8 
C) $10 
D) $11

Question 13

Provide two circumstances where monopoly may offer efficiency advantages over competition.

Accepted Answer

The first is when production is characte

Question 14

Pure monopoly

Accepted Answer

A) is defined as having only one supplier. 
B) has no close substitutes for its product. 
C) exists when entry and survival of potential competitors is extremely unlikely. 
D) All of these responses are correct. 
A) is defined as having only one supplier. 
B) has no close substitutes for its product. 
C) exists when entry and survival of potential competitors is extremely unlikely. 
D) All of these responses are correct.

Question 15

A monopolist will increase output to the point where MR equals MC and not beyond.

Accepted Answer

A) True 
 B)False

Question 16

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 17

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 18

Price discrimination allows a monopolist to make higher profits.

Accepted Answer

A) True 
 B)False

Question 19

A market is not a pure monopoly if firms

Accepted Answer

A) can enter it freely. 
B) sell unique products. 
C) can exit the market freely. 
D) require government permission to sell in the market. 
A) can enter it freely. 
B) sell unique products. 
C) can exit the market freely. 
D) require government permission to sell in the market.

Question 20

Successful advertising by a monopolist will

Accepted Answer

A) reduce the gap between the monopoly and competitive output. 
B) increase the gap between the monopoly and competitive output. 
C) cause the monopolist to overproduce. 
D) cause the monopolist to decrease output. 
A) reduce the gap between the monopoly and competitive output. 
B) increase the gap between the monopoly and competitive output. 
C) cause the monopolist to overproduce. 
D) cause the monopolist to decrease output.

Exam 12: Monopoly

Figure 11-7 The firm in Figure 11-7 is an unregulated monopolist; it will produce which of the following?

Which of the following will occur if a natural monopoly is broken into two smaller firms?

Figure 11-9 In Figure 11-9, how much more than the short-run competitive price will the profit-maximizing monopolist charge?

Economists consider price discrimination to always be undesirable.

Pure monopoly is not studied because of its descriptive realism, but because it is a stepping stone toward more realistic models.

It is possible to distinguish a monopoly from perfect competition by noting that only competitive firms can earn economic profits in the short run.

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

In the long run under monopoly,

Since a monopolist firm will lose some customers when the price is increased, it will make every effort to keep the price as low as possible.

A profit-maximizing monopolist sets

A profit maximizing monopolist always chooses to operate at the output level where

Table 11-2 In Table 11-2, average cost at the profit-maximizing output is how much?

Provide two circumstances where monopoly may offer efficiency advantages over competition.

Pure monopoly

A monopolist will increase output to the point where MR equals MC and not beyond.

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

The marginal revenue curve for a monopolist

Price discrimination allows a monopolist to make higher profits.

A market is not a pure monopoly if firms

Successful advertising by a monopolist will

What Is Economics

The Economy: 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

Externalities, Externaliteis, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

International Trade and Comparative Advantage

Contemporary Issues in the Us Economy

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