Question 1

Being a monopolist in the market

Accepted Answer

A) guarantees a positive short-run profit. 
B) guarantees a positive long-run profit. 
C) does not contradict with the rule that profit is maximized where MR = MC. 
D) All of these responses are correct. 
A) guarantees a positive short-run profit. 
B) guarantees a positive long-run profit. 
C) does not contradict with the rule that profit is maximized where MR = MC. 
D) All of these responses are correct.

Question 2

The software industry has traits in common with monopoly markets.

Accepted Answer

A) True 
 B)False

Question 3

Monopolies are always large firms with great economies of scale.

Accepted Answer

A) True 
 B)False

Question 4

Firms that engage in price discrimination

Accepted Answer

A) will earn less profit than those that do not discriminate. 
B) will earn more profit than those that do not discriminate. 
C) are biased against certain buyers in the market. 
D) will always produce less output than firms that do not discriminate. 
A) will earn less profit than those that do not discriminate. 
B) will earn more profit than those that do not discriminate. 
C) are biased against certain buyers in the market. 
D) will always produce less output than firms that do not discriminate.

Question 5

Figure 11-8
 
Given the average cost curve shown in Figure 11-8 for dry cleaning, where Q1 is the quantity demanded in a small town, and Q2 for a larger town, you would expect dry cleaning to be a monopoly

Accepted Answer

A) in a small town, but not a large one. 
B) in both large and small towns. 
C) in a large town, but not a small one. 
D) only if the process is patented. 
A) in a small town, but not a large one. 
B) in both large and small towns. 
C) in a large town, but not a small one. 
D) only if the process is patented.

Question 6

Explain why a monopolist does not have a supply curve.

Accepted Answer

Any firm, including a monopolist, has co

Question 7

The demand curve facing a monopolist is

Accepted Answer

A) horizontal at the market price. 
B) identical to the market demand curve for the good. 
C) exactly twice as steep as the market demand curve for the good. 
D) vertical because there are no competitors. 
A) horizontal at the market price. 
B) identical to the market demand curve for the good. 
C) exactly twice as steep as the market demand curve for the good. 
D) vertical because there are no competitors.

Question 8

It is not true in the long run of monopolies that

Accepted Answer

A) other firms seeking positive economic profit enter the market. 
B) they earn positive economic profit. 
C) they sell their output at a price greater than marginal cost. 
D) they benefit from barriers to entry. 
A) other firms seeking positive economic profit enter the market. 
B) they earn positive economic profit. 
C) they sell their output at a price greater than marginal cost. 
D) they benefit from barriers to entry.

Question 9

A major difference between a monopoly and perfect competition is that monopolies can earn an economic profit in the long run and a perfectly competitive firm cannot.

Accepted Answer

A) True 
 B)False

Question 10

Which of these would NOT be a factor that would permit the existence of monopoly power?

Accepted Answer

A) High levels of sunk costs 
B) Control of a scarce resource 
C) Diseconomies of scale in the production of the product 
D) All of these responses are correct 
A) High levels of sunk costs 
B) Control of a scarce resource 
C) Diseconomies of scale in the production of the product 
D) All of these responses are correct

Question 11

Under what circumstances would having multiple firms in a market result in higher prices for all customers?

Accepted Answer

A) Perfect competition 
B) Natural monopoly 
C) Price Discrimination 
D) Patented products 
A) Perfect competition 
B) Natural monopoly 
C) Price Discrimination 
D) Patented products

Question 12

High sunk costs in the jet aircraft market has assured Boeing of a monopoly in the production of jets for the air travel market.

Accepted Answer

A) True 
 B)False

Question 13

The monopoly producer

Accepted Answer

A) sets MU equal to P. 
B) sets MR = MC. 
C) has MC > MU. 
D) sets MR = P. 
A) sets MU equal to P. 
B) sets MR = MC. 
C) has MC > MU. 
D) sets MR = P.

Question 14

Under monopoly, resources are allocated as efficiently as in perfect competition.

Accepted Answer

A) True 
 B)False

Question 15

Natural monopolies are of theoretical, but not practical interest.

Accepted Answer

A) True 
 B)False

Question 16

Figure 11-5
 
In Figure 11-5, Crown Theater, a monopolist movie theater, will make a profit of ____ at its profit-maximizing price and quantity of theater tickets.

Accepted Answer

A) $450 
B) $150 
C) $300 
D) $750 
A) $450 
B) $150 
C) $300 
D) $750

Question 17

Economists object to monopoly because

Accepted Answer

A) monopoly profits go to the rich. 
B) monopolies overproduce to maximize profits. 
C) monopolies are usually polluters. 
D) monopolists keep output below efficient levels. 
A) monopoly profits go to the rich. 
B) monopolies overproduce to maximize profits. 
C) monopolies are usually polluters. 
D) monopolists keep output below efficient levels.

Question 18

A monopolist that is making a profit is producing where which of the following occurs?

Accepted Answer

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

Question 19

Monopoly firms may lead to higher costs than perfectly competitive firms.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 12: Monopoly

Being a monopolist in the market

The software industry has traits in common with monopoly markets.

Monopolies are always large firms with great economies of scale.

Firms that engage in price discrimination

Figure 11-8 Given the average cost curve shown in Figure 11-8 for dry cleaning, where Q1 is the quantity demanded in a small town, and Q2 for a larger town, you would expect dry cleaning to be a monopoly

Explain why a monopolist does not have a supply curve.

The demand curve facing a monopolist is

It is not true in the long run of monopolies that

A major difference between a monopoly and perfect competition is that monopolies can earn an economic profit in the long run and a perfectly competitive firm cannot.

Which of these would NOT be a factor that would permit the existence of monopoly power?

Under what circumstances would having multiple firms in a market result in higher prices for all customers?

High sunk costs in the jet aircraft market has assured Boeing of a monopoly in the production of jets for the air travel market.

The monopoly producer

Under monopoly, resources are allocated as efficiently as in perfect competition.

Natural monopolies are of theoretical, but not practical interest.

Figure 11-5 In Figure 11-5, Crown Theater, a monopolist movie theater, will make a profit of ____ at its profit-maximizing price and quantity of theater tickets.

Economists object to monopoly because

A monopolist that is making a profit is producing where which of the following occurs?

Monopoly firms may lead to higher costs than perfectly competitive firms.

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

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 Given the average cost curve shown in Figure 11-8 for dry cleaning, where Q₁ is the quantity demanded in a small town, and Q₂ for a larger town, you would expect dry cleaning to be a monopoly