Question 1

Which of the following is not associated with the monopoly market structure?

Accepted Answer

A)  many sellers 
B)  a single seller 
C)  a unique product 
D)  impossible entry into the market 
A)  many sellers 
B)  a single seller 
C)  a unique product 
D)  impossible entry into the market

Question 2

Which of the following best explains why the monopolist's marginal revenue is less than the selling price?

Accepted Answer

A)  To sell more units, the monopolist must reduce price on all units sold. 
B)  As the monopolist expands output, the average total cost will decline. 
C)  The monopolist charges each consumer the highest possible price. 
D)  When a firm has a monopoly, consumers have no choice other than to pay the price set by the monopolist. 
A)  To sell more units, the monopolist must reduce price on all units sold. 
B)  As the monopolist expands output, the average total cost will decline. 
C)  The monopolist charges each consumer the highest possible price. 
D)  When a firm has a monopoly, consumers have no choice other than to pay the price set by the monopolist.

Question 3

Which of the following scenarios demonstrates price discrimination?

Accepted Answer

A)  Bananas at the grocery store are sold for $0.69 per pound. 
B)  Tickets to a play are sold for $15 for students and $25 for adults. 
C)  General admission concert tickets are sold for $40. 
D)  Strawberries are sold for $2.00 per quart in the early summer and $5.00 per quart in the winter. 
A)  Bananas at the grocery store are sold for $0.69 per pound. 
B)  Tickets to a play are sold for $15 for students and $25 for adults. 
C)  General admission concert tickets are sold for $40. 
D)  Strawberries are sold for $2.00 per quart in the early summer and $5.00 per quart in the winter.

Question 4

At any point where a monopolist's marginal revenue is positive, the downward-sloping straight-line demand curve is:

Accepted Answer

A)  perfectly elastic, as is the perfectly competitive firm's. 
B)  elastic but not perfectly elastic, and a perfectly competitive firm's demand curve is perfectly elastic. 
C)  elastic but not perfectly elastic, as is the perfectly competitive firm's. 
D)  inelastic, while a perfectly competitive firm's demand curve is perfectly elastic. 
A)  perfectly elastic, as is the perfectly competitive firm's. 
B)  elastic but not perfectly elastic, and a perfectly competitive firm's demand curve is perfectly elastic. 
C)  elastic but not perfectly elastic, as is the perfectly competitive firm's. 
D)  inelastic, while a perfectly competitive firm's demand curve is perfectly elastic.

Question 5

A monopolist always faces a demand curve that is:

Accepted Answer

A)  perfectly inelastic. 
B)  perfectly elastic. 
C)  unit elastic. 
D)  the same as the entire market demand curve. 
A)  perfectly inelastic. 
B)  perfectly elastic. 
C)  unit elastic. 
D)  the same as the entire market demand curve.

Question 6

Which of the following is not a necessary condition for effective price discrimination?

Accepted Answer

A)  The seller must be able to separate buyers based on their elasticities. 
B)  The seller must not be a price taker. 
C)  Consumers must not be able to resell the products to other consumers. 
D)  Consumers must tell the seller how much they are willing to pay for the product. 
A)  The seller must be able to separate buyers based on their elasticities. 
B)  The seller must not be a price taker. 
C)  Consumers must not be able to resell the products to other consumers. 
D)  Consumers must tell the seller how much they are willing to pay for the product.

Question 7

The monopolist's demand curve is:

Accepted Answer

A)  identical to the market demand curve. 
B)  identical to the marginal revenue curve. 
C)  below the marginal revenue curve. 
D)  a horizontal line at the market price. 
A)  identical to the market demand curve. 
B)  identical to the marginal revenue curve. 
C)  below the marginal revenue curve. 
D)  a horizontal line at the market price.

Question 8

Suppose both a monopolist and a perfectly competitive firm are producing in their respective markets at a point where marginal cost is $8 and marginal revenue is $10. What should the profit-maximizing firms do?

Accepted Answer

A)  Both the monopolist and the perfectly competitive firm should increase output until MC = MR. 
B)  Both the monopolist and the perfectly competitive firm should decrease output until MC = MR. 
C)  The monopolist should increase output but the perfectly competitive firm should shut down. 
D)  The monopolist should keep producing at this level but the perfectly competitive firm should decrease output until MC = MR. 
A)  Both the monopolist and the perfectly competitive firm should increase output until MC = MR. 
B)  Both the monopolist and the perfectly competitive firm should decrease output until MC = MR. 
C)  The monopolist should increase output but the perfectly competitive firm should shut down. 
D)  The monopolist should keep producing at this level but the perfectly competitive firm should decrease output until MC = MR.

Question 9

Exhibit 9-2 Demand and cost information for a monopoly
 
The marginal revenue of the second unit of output in Exhibit 9-2 is:

Accepted Answer

A)  10. 
B)  20. 
C)  30. 
D)  40. 
A)  10. 
B)  20. 
C)  30. 
D)  40.

Question 10

Which of the following best explains an economic criticism of unregulated monopolists?

Accepted Answer

A)  Monopolists do not try to minimize their fixed costs of production. 
B)  Monopolists produce where marginal revenue is greater than marginal costs. 
C)  Monopolists attempt to produce too many products, and as a result, their prices are high, and consumer's waste time trying to choose between too many options. 
D)  Monopolists restrict output, and as a result, they fail to produce units that are valued more than the marginal cost of producing them. 
A)  Monopolists do not try to minimize their fixed costs of production. 
B)  Monopolists produce where marginal revenue is greater than marginal costs. 
C)  Monopolists attempt to produce too many products, and as a result, their prices are high, and consumer's waste time trying to choose between too many options. 
D)  Monopolists restrict output, and as a result, they fail to produce units that are valued more than the marginal cost of producing them.

Question 11

Which of the following is true about a monopoly?

Accepted Answer

A)  A monopoly charges a higher price and produces a lower output level than if the market were competitive. 
B)  A monopoly is guaranteed an economic profit. 
C)  A monopoly charges the highest possible price. 
D)  A monopoly will shut down whenever losses are incurred. 
A)  A monopoly charges a higher price and produces a lower output level than if the market were competitive. 
B)  A monopoly is guaranteed an economic profit. 
C)  A monopoly charges the highest possible price. 
D)  A monopoly will shut down whenever losses are incurred.

Question 12

A monopolist will maximize profits by:

Accepted Answer

A)  setting his price as high as possible, while a perfectly competitive firm will take price from the market. 
B)  setting his price at the level that will maximize per-unit profit, while a perfectly competitive firm will minimize per-unit loss. 
C)  producing the output where marginal revenue equals marginal cost, just as a perfectly competitive firm will. 
D)  producing the output where price equals marginal cost, while a perfectly competitive firm will produce where marginal revenue equals marginal cost. 
A)  setting his price as high as possible, while a perfectly competitive firm will take price from the market. 
B)  setting his price at the level that will maximize per-unit profit, while a perfectly competitive firm will minimize per-unit loss. 
C)  producing the output where marginal revenue equals marginal cost, just as a perfectly competitive firm will. 
D)  producing the output where price equals marginal cost, while a perfectly competitive firm will produce where marginal revenue equals marginal cost.

Question 13

Exhibit 9-5 Demand and cost data for a monopolist
 
By calculating the data provided in Exhibit 9-5, how much is the profit if the firm decides to produce 7 units?

Accepted Answer

A)  0. 
B)  24. 
C)  16. 
D)  12. 
A)  0. 
B)  24. 
C)  16. 
D)  12.

Question 14

Exhibit 9-6 Monopoly
​
 
When the monopolist is maximizing total profit in Exhibit 9-6, the average total cost of producing that output level is:

Accepted Answer

A)  $4. 
B)  $6. 
C)  $7. 
D)  $8. 
A)  $4. 
B)  $6. 
C)  $7. 
D)  $8.

Question 15

Suppose a monopolist and a perfectly competitive firm have the same cost curves. The monopolistic firm would:

Accepted Answer

A)  charge a lower price than the perfectly competitive firm. 
B)  charge a higher price than the perfectly competitive firm. 
C)  charge the same price as the perfectly competitive firm. 
D)  refuse to operate in the short run unless an economic profit could be made. 
A)  charge a lower price than the perfectly competitive firm. 
B)  charge a higher price than the perfectly competitive firm. 
C)  charge the same price as the perfectly competitive firm. 
D)  refuse to operate in the short run unless an economic profit could be made.

Question 16

Which of the following is true under natural monopoly?

Accepted Answer

A)  The marginal cost curve will be above the average cost curve. 
B)  The monopolist will set price equal to marginal cost and will earn economic profits. 
C)  Economies of scale exist. 
D)  Output is produced under conditions of constant cost. 
A)  The marginal cost curve will be above the average cost curve. 
B)  The monopolist will set price equal to marginal cost and will earn economic profits. 
C)  Economies of scale exist. 
D)  Output is produced under conditions of constant cost.

Question 17

For a monopolist:

Accepted Answer

A)  price equals average total cost. 
B)  price is above marginal revenue. 
C)  marginal revenue equals zero. 
D)  marginal cost equals zero. 
A)  price equals average total cost. 
B)  price is above marginal revenue. 
C)  marginal revenue equals zero. 
D)  marginal cost equals zero.

Question 18

Exhibit 9-5 Demand and cost data for a monopolist
 
Refer to Exhibit 9-5. The demand schedule and cost schedule for a monopolist are provided. Which output level maximizes profit?

Accepted Answer

A)  2. 
B)  6. 
C)  4. 
D)  7. 
A)  2. 
B)  6. 
C)  4. 
D)  7.

Question 19

Suppose both a monopolist and a perfectly competitive firm charge a price corresponding to the quantity at the intersection of the marginal cost and marginal revenue curves. If this price is between each firm's average variable cost and average total cost curves,

Accepted Answer

A)  the perfectly competitive firm will continue to operate in the short run but the monopolist will shut down. 
B)  both firms will continue to operate in the short run. 
C)  both firms will shut down in the short run. 
D)  the perfectly competitive firm will continue to operate in spite of the loss but the monopolist will earn a profit. 
A)  the perfectly competitive firm will continue to operate in the short run but the monopolist will shut down. 
B)  both firms will continue to operate in the short run. 
C)  both firms will shut down in the short run. 
D)  the perfectly competitive firm will continue to operate in spite of the loss but the monopolist will earn a profit.

Question 20

Exhibit 9-8 Profit maximizing for a monopolist
​
 
As shown in Exhibit 9-8, if the monopolist produces the profit-maximizing output, total revenue is the rectangular area:

Accepted Answer

A)  OQAP1. 
B)  OQ2BP2. 
C)  OQ3CP3. 
D)  OQ2DP4. 
A)  OQAP1. 
B)  OQ2BP2. 
C)  OQ3CP3. 
D)  OQ2DP4.

Exam 9: Monopoly

Which of the following is not associated with the monopoly market structure?

Which of the following best explains why the monopolist's marginal revenue is less than the selling price?

Which of the following scenarios demonstrates price discrimination?

At any point where a monopolist's marginal revenue is positive, the downward-sloping straight-line demand curve is:

A monopolist always faces a demand curve that is:

Which of the following is not a necessary condition for effective price discrimination?

The monopolist's demand curve is:

Suppose both a monopolist and a perfectly competitive firm are producing in their respective markets at a point where marginal cost is $8 and marginal revenue is $10. What should the profit-maximizing firms do?

Exhibit 9-2 Demand and cost information for a monopoly The marginal revenue of the second unit of output in Exhibit 9-2 is:

Which of the following best explains an economic criticism of unregulated monopolists?

Which of the following is true about a monopoly?

A monopolist will maximize profits by:

Exhibit 9-5 Demand and cost data for a monopolist By calculating the data provided in Exhibit 9-5, how much is the profit if the firm decides to produce 7 units?

Exhibit 9-6 Monopoly ​ When the monopolist is maximizing total profit in Exhibit 9-6, the average total cost of producing that output level is:

Suppose a monopolist and a perfectly competitive firm have the same cost curves. The monopolistic firm would:

Which of the following is true under natural monopoly?

For a monopolist:

Exhibit 9-5 Demand and cost data for a monopolist Refer to Exhibit 9-5. The demand schedule and cost schedule for a monopolist are provided. Which output level maximizes profit?

Suppose both a monopolist and a perfectly competitive firm charge a price corresponding to the quantity at the intersection of the marginal cost and marginal revenue curves. If this price is between each firm's average variable cost and average total cost curves,

Exhibit 9-8 Profit maximizing for a monopolist ​ As shown in Exhibit 9-8, if the monopolist produces the profit-maximizing output, total revenue is the rectangular area:

Introducing the Economic Way of Thinking

Production Possibilities Opportunity Cost and Economic Growth

Market Demand and Supply

Markets in Action

Price Elasticity of Demand and Supply

Consumer Choice Theory

Production Costs

Perfect Competition

Monopolistic Competition and Oligopoly

Labor Markets

Income Distribution Poverty and Discrimination

Antitrust and Regulation

Environmental Economics

Gross Domestic Product

Business Cycles and Unemployment

Inflation

The Keynesian Model

The Keynesian Model in Action

Aggregate Demand and Supply

Fiscal Policy

The Public Sector

Federal Deficits Surpluses and the National Debt

Money and the Federal Reserve System

Money Creation

Monetary Policy

The Phillips Curve and Expectations Theory

International Trade and Finance

Economies in Transition

Growth and the Less Developed Countries

Understanding Direct and Inverse Relationships between Variables

Filters

Exhibit 9-6 Monopoly When the monopolist is maximizing total profit in Exhibit 9-6, the average total cost of producing that output level is:

Exhibit 9-8 Profit maximizing for a monopolist As shown in Exhibit 9-8, if the monopolist produces the profit-maximizing output, total revenue is the rectangular area: