Question 1

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 2

Figure 11-8
 
Consider the average cost curve shown in Figure 11-8, for the production of cleaning. If the firm serves the entire market and sells Q1 units. Based upon this information, the firm is experiencing

Accepted Answer

A) constant returns to scale . 
B) increasing returns to scale. 
C) decreasing returns to scale. 
D) externalities. 
A) constant returns to scale . 
B) increasing returns to scale. 
C) decreasing returns to scale. 
D) externalities.

Question 3

Figure 11-5
 
In Figure 11-5, Crown Theater, a monopolist movie theater, has chosen the profit-maximizing output. At this output level, the value of MR is what value?

Accepted Answer

A) $7.50 
B) $6.00 
C) $4.50 
D) $3.00 
A) $7.50 
B) $6.00 
C) $4.50 
D) $3.00

Question 4

In Figure 11-9, which of the following is true?

Accepted Answer

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

Question 5

A natural monopoly is characterized by the fact that its average costs increase rather than decrease when its output expands.

Accepted Answer

A) True 
 B)False

Question 6

Figure 11-3
 
Using the graph in Figure 11-3, the profit-maximizing monopolist will charge a price

Accepted Answer

A) of more than $3. 
B) of $3. 
C) between $2 and $3. 
D) of $2. 
A) of more than $3. 
B) of $3. 
C) between $2 and $3. 
D) of $2.

Question 7

Figure 11-9
 
In Figure 11-9, at the profit-maximizing monopolist output, this firm receives how much profit per unit?

Accepted Answer

A) $1 
B) $2 
C) $3 
D) $11 
A) $1 
B) $2 
C) $3 
D) $11

Question 8

A monopolist will maximize profits by producing a quantity specified by setting marginal revenue equal to marginal cost.

Accepted Answer

A) True 
 B)False

Question 9

Figure 11-7
 
For the firm in Figure 11-7, an unregulated monopolist, profit-maximizing output is below the long-run competitive level by how much?

Accepted Answer

A) 100 
B) 75 
C) 50 
D) 25 
A) 100 
B) 75 
C) 50 
D) 25

Question 10

Draw the demand, marginal revenue, and marginal cost curve for a monopolist. Show the equilibrium price and quantity supplied and total profit. Show the equilibrium price and quantity supplied and total profit.

Accepted Answer

Refer to F

Question 11

When airlines offer lower fares to passengers who stay over a Saturday night, compared to regular fares, is an example of

Accepted Answer

A) vacation airfares. 
B) market pricing. 
C) collusion. 
D) price discrimination. 
A) vacation airfares. 
B) market pricing. 
C) collusion. 
D) price discrimination.

Question 12

Which of the following is true for a profit-maximizing competitive firm in the long run but not a monopolist?

Accepted Answer

A) MC = MR. 
B) MC = P. 
C) AR = P. 
D) Q > 0. 
A) MC = MR. 
B) MC = P. 
C) AR = P. 
D) Q > 0.

Question 13

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

Accepted Answer

A) $1 
B) $2 
C) $3 
D) $11 
A) $1 
B) $2 
C) $3 
D) $11

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

Since a monopolist has a unique product, it makes no sense for the firm to advertise.

Accepted Answer

A) True 
 B)False

Question 16

Perfect Competition is an industry in which there is only one supplier of a product that has no close substitutes.

Accepted Answer

A) True 
 B)False

Question 17

A monopolist sets price at $10 and sells 100 units. The corresponding marginal revenue is $5 and marginal cost $3. What recommendation regarding price and quantity would you give this monopolist? Use a graph if you wish.

Accepted Answer

Since MR exceeds MC, recommend

Question 18

The key element in preserving a monopoly is

Accepted Answer

A) government subsidy of critical enterprises. 
B) keeping potential rivals out of the market. 
C) guaranteeing availability of substitute products. 
D) increased advertising expenditure. 
A) government subsidy of critical enterprises. 
B) keeping potential rivals out of the market. 
C) guaranteeing availability of substitute products. 
D) increased advertising expenditure.

Question 19

Suppose a monopolist can charge different prices to different customers, such as doctors charging different prices depending on whether the patient is insured. How will profits and marginal revenue of such a price-discriminating monopolist compare to profits and MR of an ordinary monopolist who must charge all patients the same fee?

Accepted Answer

The price-discriminating monopolist will

Question 20

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

Accepted Answer

A) $15 
B) $7 
C) $10 
D) $11 
A) $15 
B) $7 
C) $10 
D) $11

Exam 12: Monopoly

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

Figure 11-8 Consider the average cost curve shown in Figure 11-8, for the production of cleaning. If the firm serves the entire market and sells Q1 units. Based upon this information, the firm is experiencing

Figure 11-5 In Figure 11-5, Crown Theater, a monopolist movie theater, has chosen the profit-maximizing output. At this output level, the value of MR is what value?

In Figure 11-9, which of the following is true?

A natural monopoly is characterized by the fact that its average costs increase rather than decrease when its output expands.

Figure 11-3 Using the graph in Figure 11-3, the profit-maximizing monopolist will charge a price

Figure 11-9 In Figure 11-9, at the profit-maximizing monopolist output, this firm receives how much profit per unit?

A monopolist will maximize profits by producing a quantity specified by setting marginal revenue equal to marginal cost.

Figure 11-7 For the firm in Figure 11-7, an unregulated monopolist, profit-maximizing output is below the long-run competitive level by how much?

Draw the demand, marginal revenue, and marginal cost curve for a monopolist. Show the equilibrium price and quantity supplied and total profit. Show the equilibrium price and quantity supplied and total profit.

When airlines offer lower fares to passengers who stay over a Saturday night, compared to regular fares, is an example of

Which of the following is true for a profit-maximizing competitive firm in the long run but not a monopolist?

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

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

Since a monopolist has a unique product, it makes no sense for the firm to advertise.

Perfect Competition is an industry in which there is only one supplier of a product that has no close substitutes.

A monopolist sets price at $10 and sells 100 units. The corresponding marginal revenue is $5 and marginal cost $3. What recommendation regarding price and quantity would you give this monopolist? Use a graph if you wish.

The key element in preserving a monopoly is

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

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

Filters

Figure 11-8 Consider the average cost curve shown in Figure 11-8, for the production of cleaning. If the firm serves the entire market and sells Q₁ units. Based upon this information, the firm is experiencing