Question 1

A monopolist's profit per unit is shown by the difference between price and average cost per unit.

Accepted Answer

A) True 
 B)False

Question 2

A monopolist firm may be more innovative than a competitive firm.

Accepted Answer

A) True 
 B)False

Question 3

Because a monopolist must cut its price to increase its sales by one unit,

Accepted Answer

A) MR > P at every output level. 
B) MC > MR at every output level. 
C) P > MR at every output level. 
D) MC > P at every output level. 
A) MR > P at every output level. 
B) MC > MR at every output level. 
C) P > MR at every output level. 
D) MC > P at every output level.

Question 4

Figure 11-4
 
Physicians have two types of patients: private patients who pay directly or with insurance, and Medicaid patients whose care is paid for by the state. Physicians must lower prices to attract more private patients, but they can add unlimited Medicaid patients at a constant price. The situation facing Dr. Casey is depicted in Figure 11-4. Units of medical service (say, number of patients × number of visits)are measured on the horizontal axis. How many units of medical service will Dr. Casey deliver?

Accepted Answer

A) OA 
B) OB 
C) OC 
D) OD 
A) OA 
B) OB 
C) OC 
D) OD

Question 5

Define the following terms and explain their importance to the study of economics. 
a. Pure monopoly 
b. Barriers to entry 
c. Patent 
d. Natural monopoly 
e. Sunk costs

Accepted Answer

a. A pure monopoly is an industry in whi

Question 6

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

Accepted Answer

A) $5 
B) $7 
C) $8 
D) $110 
A) $5 
B) $7 
C) $8 
D) $110

Question 7

Figure 11-7
 
For the firm in Figure 11-7, an unregulated monopolist, output falls below the efficient level in the short run by how much?

Accepted Answer

A) 50 
B) 75 
C) 35 
D) 100 
A) 50 
B) 75 
C) 35 
D) 100

Question 8

A monopolist can sell 10 lunchboxes if he or she charges $10 per lunchbox and 11 lunchboxes if he or she charges $9. The MR from selling the 11th lunchbox is

Accepted Answer

A) −$1. 
B) $1. 
C) $9. 
D) $99. 
A) −$1. 
B) $1. 
C) $9. 
D) $99.

Question 9

A monopolist will operate where

Accepted Answer

A) MR = MC and charge a price equal to marginal revenue. 
B) MR = MC and charge a price equal to marginal cost. 
C) MR = MC and charge a price corresponding to demand at that level. 
D) MC = MR and charge a price corresponding to average cost. 
A) MR = MC and charge a price equal to marginal revenue. 
B) MR = MC and charge a price equal to marginal cost. 
C) MR = MC and charge a price corresponding to demand at that level. 
D) MC = MR and charge a price corresponding to average cost.

Question 10

A monopolist can earn a positive economic profit, even in the long run.

Accepted Answer

A) True 
 B)False

Question 11

Technical superiority can be a source of entry barriers.

Accepted Answer

A) True 
 B)False

Question 12

A monopolist is a price taker, just like a perfect competitor.

Accepted Answer

A) True 
 B)False

Question 13

Figure 11-2
 
In Figure 11-2, at what quantity would the monopolist maximize profit?

Accepted Answer

A) A 
B) B 
C) C 
D) D 
A) A 
B) B 
C) C 
D) D

Question 14

Pure monopoly markets are very common in the real world.

Accepted Answer

A) True 
 B)False

Question 15

If the monopolist's supply curve is drawn, it is a positively sloped curve similar to that for the perfectly competitive market.

Accepted Answer

A) True 
 B)False

Question 16

Figure 11-5
 
In Figure 11-5 are the cost and revenue curves of a monopolist in the theater market, Crown Theater, which is the only movie theater in the city. At its profit-maximizing quantity of tickets sold, movie goers will buy ____ tickets.

Accepted Answer

A) 60 
B) 100 
C) 120 
D) 140 
A) 60 
B) 100 
C) 120 
D) 140

Question 17

Figure 11-6
 
The profit-maximizing monopolist in Figure 11-6 will sell its output at

Accepted Answer

A) P1. 
B) P2. 
C) P3. 
D) P4. 
A) P1. 
B) P2. 
C) P3. 
D) P4.

Question 18

A profit-maximizing monopolist

Accepted Answer

A) is just as socially efficient as a perfectly competitive firm in allocating resources to production since he or she, too, seeks the largest return on his or her investment. 
B) produces an output level at which marginal utility exceeds marginal cost. 
C) produces more output than a perfectly competitive industry. 
D) always produces in the inelastic region of his or her demand curve. 
A) is just as socially efficient as a perfectly competitive firm in allocating resources to production since he or she, too, seeks the largest return on his or her investment. 
B) produces an output level at which marginal utility exceeds marginal cost. 
C) produces more output than a perfectly competitive industry. 
D) always produces in the inelastic region of his or her demand curve.

Question 19

A price-discriminating firm will always maximize profit by following the condition that

Accepted Answer

A) MR > MC. 
B) MR > P. 
C) MRa = MRb = MC. 
D) MR = ATC. 
A) MR > MC. 
B) MR > P. 
C) MRa = MRb = MC. 
D) MR = ATC.

Question 20

In the long run, profit-maximizing monopolists facing a downward-sloping demand curve

Accepted Answer

A) may earn profits greater than their opportunity costs of capital. 
B) do not produce every possible unit of output for which marginal utility is greater than or equal to marginal cost. 
C) may or may not have lower costs than perfectly competitive firms in the same industry. 
D) All of these responses are correct. 
A) may earn profits greater than their opportunity costs of capital. 
B) do not produce every possible unit of output for which marginal utility is greater than or equal to marginal cost. 
C) may or may not have lower costs than perfectly competitive firms in the same industry. 
D) All of these responses are correct.

Exam 12: Monopoly

A monopolist's profit per unit is shown by the difference between price and average cost per unit.

A monopolist firm may be more innovative than a competitive firm.

Because a monopolist must cut its price to increase its sales by one unit,

Define the following terms and explain their importance to the study of economics. a. Pure monopoly b. Barriers to entry c. Patent d. Natural monopoly e. Sunk costs

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

Figure 11-7 For the firm in Figure 11-7, an unregulated monopolist, output falls below the efficient level in the short run by how much?

A monopolist can sell 10 lunchboxes if he or she charges $10 per lunchbox and 11 lunchboxes if he or she charges $9. The MR from selling the 11th lunchbox is

A monopolist will operate where

A monopolist can earn a positive economic profit, even in the long run.

Technical superiority can be a source of entry barriers.

A monopolist is a price taker, just like a perfect competitor.

Figure 11-2 In Figure 11-2, at what quantity would the monopolist maximize profit?

Pure monopoly markets are very common in the real world.

If the monopolist's supply curve is drawn, it is a positively sloped curve similar to that for the perfectly competitive market.

Figure 11-5 In Figure 11-5 are the cost and revenue curves of a monopolist in the theater market, Crown Theater, which is the only movie theater in the city. At its profit-maximizing quantity of tickets sold, movie goers will buy ____ tickets.

Figure 11-6 The profit-maximizing monopolist in Figure 11-6 will sell its output at

A profit-maximizing monopolist

A price-discriminating firm will always maximize profit by following the condition that

In the long run, profit-maximizing monopolists facing a downward-sloping demand curve

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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