Question 1

Figure 11-2
 
For the monopolist show in Figure 11-2, how much profit is the monopolist making per unit?

Accepted Answer

A) The amount shown as HE 
B) The amount shown as GE 
C) The amount shown as HF 
D) The amount shown as FE 
A) The amount shown as HE 
B) The amount shown as GE 
C) The amount shown as HF 
D) The amount shown as FE

Question 2

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

Accepted Answer

A) can obtain profits greater than their opportunity costs of capital. 
B) can produce where average total costs are minimized 
C) can have a price that is the same as marginal revenue. 
D) All of these responses are correct. 
A) can obtain profits greater than their opportunity costs of capital. 
B) can produce where average total costs are minimized 
C) can have a price that is the same as marginal revenue. 
D) All of these responses are correct.

Question 3

Figure 11-3
 
In Figure 11-3, one can tell from the graph that the monopolist will earn a positive profit only if

Accepted Answer

A) the price exceeds $3. 
B) the price exceeds $2. 
C) output is less than 60 units. 
D) One cannot tell from the information given. 
A) the price exceeds $3. 
B) the price exceeds $2. 
C) output is less than 60 units. 
D) One cannot tell from the information given.

Question 4

The marketing division of a firm has measured demand for its product and reports that it is 2Q = 24 − P, where Q is units and P is price per unit in dollars. The cost is given in the table below. Complete the table and determine the profit-maximizing level of output for this firm.

Accepted Answer

The answer of The marketing division of a firm has...

Question 5

The demand curve facing a monopolist is

Accepted Answer

A) perfectly elastic. 
B) identical the demand curve for a perfectly competitive firm. 
C) perfectly inelastic. 
D) downward sloping. 
A) perfectly elastic. 
B) identical the demand curve for a perfectly competitive firm. 
C) perfectly inelastic. 
D) downward sloping.

Question 6

The ability to keep rivals out of the market is the recipe for creating and maintaining a monopoly.

Accepted Answer

A) True 
 B)False

Question 7

____ mean that the costs involved cannot be recouped for a considerable period of time.

Accepted Answer

A) Sunk costs 
B) Opportunity costs 
C) Overheads 
D) Restructuring costs 
A) Sunk costs 
B) Opportunity costs 
C) Overheads 
D) Restructuring costs

Question 8

In perfect competition P = MR, but in monopoly P > MR. Why? Substantiate this statement with an example.

Accepted Answer

In perfect competition, the demand curve

Question 9

Figure 11-6
 
At its optimal output level, the profit-maximizing monopolist in Figure 11-6 has total costs equal to

Accepted Answer

A) zero. 
B) P2 × Q2. 
C) P3 × Q2. 
D) P4 × Q3. 
A) zero. 
B) P2 × Q2. 
C) P3 × Q2. 
D) P4 × Q3.

Question 10

What arguments have been advanced in defense of price discrimination?

Accepted Answer

Some would support price discrimination

Question 11

Wendy retails motor homes, which she buys for a sum that does not vary with the number she purchases from the manufacturer. She can sell 11 per week at $40,000. If she limits sales to 10, she can charge $41,000 each. She will sell 11 per week if the cost of each vehicle is no more than

Accepted Answer

A) $20,000. 
B) $30,000. 
C) $40,000. 
D) $41,000. 
A) $20,000. 
B) $30,000. 
C) $40,000. 
D) $41,000.

Question 12

Assume that a firm has measured demand carefully and thinks that the following table accurately displays this. The total cost has been measured and can be given as TC = 20 + Q + Q2, where Q is the level of output. Complete the table and determine the profit-maximizing level of output.

Accepted Answer

As indicated in the table belo

Question 13

In which of the following ways is a monopolist different from a perfect competitor?

Accepted Answer

A) Average cost will continually drop as output expands. 
B) Price is above marginal revenue. 
C) Average total cost equals average fixed costs plus average variable costs. 
D) The demand curve for the industry has a negative slope. 
A) Average cost will continually drop as output expands. 
B) Price is above marginal revenue. 
C) Average total cost equals average fixed costs plus average variable costs. 
D) The demand curve for the industry has a negative slope.

Question 14

Pure monopoly is able to exist because the firm's product is better than the substitutes that are available in the market.

Accepted Answer

A) True 
 B)False

Question 15

"Intel Inside" accompanies virtually all IBM-compatible computers. Intel manufactures the i3, i5 and i7 chips that are a key component of personal computers. Does Intel have a monopoly?

Accepted Answer

To be a monopoly, a firm must not only b

Question 16

Which of these contributes to the existence of monopoly power?

Accepted Answer

A) A continuously decreasing long-run average cost curve 
B) Possession of a patent 
C) Control over essential output 
D) All of these responses are correct. 
A) A continuously decreasing long-run average cost curve 
B) Possession of a patent 
C) Control over essential output 
D) All of these responses are correct.

Question 17

In the long run, a profit-maximizing monopolist

Accepted Answer

A) earns zero economic profit. 
B) produces the same amount as a perfectly competitive industry. 
C) receives a higher price for his output than a perfectly competitive firm. 
D) produces at the output level that minimizes his long-run average total cost. 
A) earns zero economic profit. 
B) produces the same amount as a perfectly competitive industry. 
C) receives a higher price for his output than a perfectly competitive firm. 
D) produces at the output level that minimizes his long-run average total cost.

Question 18

A monopolist in the radio industry has two radio-making plants. The marginal cost of radio production by Plant A is $4Q (where Q is the number of radios produced)and the marginal cost of radio production by Plant B is always $16. If the demand curve for radios is downward sloping, the monopolist will

Accepted Answer

A) never produce radios at Plant A. 
B) always produce four times as many radios at Plant B as at A. 
C) never produce more than four radios at Plant A. 
D) produce radios at Plant A only as a last resort. 
A) never produce radios at Plant A. 
B) always produce four times as many radios at Plant B as at A. 
C) never produce more than four radios at Plant A. 
D) produce radios at Plant A only as a last resort.

Question 19

A monopolist is willing to lose some customers by charging higher prices, since this results in higher profits.

Accepted Answer

A) True 
 B)False

Question 20

If the government charged a tax on monopolists equal to, say, 75 percent of their economic profits, what would happen to the level of output the firm would produce? What about the price? Explain.

Accepted Answer

There would be no effect on the price or

Exam 12: Monopoly

Figure 11-2 For the monopolist show in Figure 11-2, how much profit is the monopolist making per unit?

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

Figure 11-3 In Figure 11-3, one can tell from the graph that the monopolist will earn a positive profit only if

The marketing division of a firm has measured demand for its product and reports that it is 2Q = 24 − P, where Q is units and P is price per unit in dollars. The cost is given in the table below. Complete the table and determine the profit-maximizing level of output for this firm.

The demand curve facing a monopolist is

The ability to keep rivals out of the market is the recipe for creating and maintaining a monopoly.

____ mean that the costs involved cannot be recouped for a considerable period of time.

In perfect competition P = MR, but in monopoly P > MR. Why? Substantiate this statement with an example.

Figure 11-6 At its optimal output level, the profit-maximizing monopolist in Figure 11-6 has total costs equal to

What arguments have been advanced in defense of price discrimination?

Wendy retails motor homes, which she buys for a sum that does not vary with the number she purchases from the manufacturer. She can sell 11 per week at $40,000. If she limits sales to 10, she can charge $41,000 each. She will sell 11 per week if the cost of each vehicle is no more than

Assume that a firm has measured demand carefully and thinks that the following table accurately displays this. The total cost has been measured and can be given as TC = 20 + Q + Q2, where Q is the level of output. Complete the table and determine the profit-maximizing level of output.

In which of the following ways is a monopolist different from a perfect competitor?

Pure monopoly is able to exist because the firm's product is better than the substitutes that are available in the market.

"Intel Inside" accompanies virtually all IBM-compatible computers. Intel manufactures the i3, i5 and i7 chips that are a key component of personal computers. Does Intel have a monopoly?

Which of these contributes to the existence of monopoly power?

In the long run, a profit-maximizing monopolist

A monopolist is willing to lose some customers by charging higher prices, since this results in higher profits.

If the government charged a tax on monopolists equal to, say, 75 percent of their economic profits, what would happen to the level of output the firm would produce? What about the price? Explain.

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

Assume that a firm has measured demand carefully and thinks that the following table accurately displays this. The total cost has been measured and can be given as TC = 20 + Q + Q₂, where Q is the level of output. Complete the table and determine the profit-maximizing level of output.