Question 1

The monopolist faces the market demand curve.

Accepted Answer

A) True 
 B)False

Question 2

A monopoly can successfully price discriminate as long as there are no close substitutes for its product.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is a market structure of monopoly?

Accepted Answer

A)  Few firms operating as price takers. 
B)  Single firm operating as a price taker. 
C)  Single firm that is a price maker. 
D)  All of the above are true. 
A)  Few firms operating as price takers. 
B)  Single firm operating as a price taker. 
C)  Single firm that is a price maker. 
D)  All of the above are true.

Question 4

Exhibit 8-6  Monopoly   When the monopolist is maximizing total profit in Exhibit 8-6, the average total cost of producing that output level is:

Accepted Answer

A)  $4. 
B)  $6. 
C)  $7. 
D)  $8. 
E)  $10. 
A)  $4. 
B)  $6. 
C)  $7. 
D)  $8. 
E)  $10.

Question 5

If marginal costs increase, a monopolist will:

Accepted Answer

A)  decrease price and increase output. 
B)  decrease both price and output. 
C)  increase price and decrease output. 
D)  increase both price and output. 
E)  keep both price and output at the same level. 
A)  decrease price and increase output. 
B)  decrease both price and output. 
C)  increase price and decrease output. 
D)  increase both price and output. 
E)  keep both price and output at the same level.

Question 6

Although a monopoly can charge any price it wishes, it chooses: ​

Accepted Answer

A)  ​the highest price. 
B)  ​price equal to marginal cost. 
C)  ​the price that maximizes profit. 
D)  ​competitive prices. 
E)  ​ a fair price. 
A)  ​the highest price. 
B)  ​price equal to marginal cost. 
C)  ​the price that maximizes profit. 
D)  ​competitive prices. 
E)  ​ a fair price.

Question 7

For a monopoly to successfully price discriminate, its customers must:

Accepted Answer

A)  feel that the product is a necessity. 
B)  have identical demands. 
C)  be unable to resell the product. 
D)  actively engage in arbitrage. 
A)  feel that the product is a necessity. 
B)  have identical demands. 
C)  be unable to resell the product. 
D)  actively engage in arbitrage.

Question 8

Monopolies may earn economic losses in the long run.

Accepted Answer

A) True 
 B)False

Question 9

Exhibit 8-10  A monopolist   In Exhibit 8-10, the monopolist would charge which of the following prices to maximize profit or minimize its loss?

Accepted Answer

A)  $10. 
B)  $20. 
C)  $30. 
D)  $35. 
E)  $50. 
A)  $10. 
B)  $20. 
C)  $30. 
D)  $35. 
E)  $50.

Question 10

Because monopolists are protected by high barriers to entry, they:

Accepted Answer

A)  may be able to earn long-run economic profits. 
B)  will not minimize the per-unit cost of producing their output. 
C)  will price their product at the highest possible price. 
D)  seek economic profit; however, they are not able to earn it in the long run. 
A)  may be able to earn long-run economic profits. 
B)  will not minimize the per-unit cost of producing their output. 
C)  will price their product at the highest possible price. 
D)  seek economic profit; however, they are not able to earn it in the long run.

Question 11

Why can a monopoly earn economic profits in the long run?

Accepted Answer

Because a monopoly experiences very stro

Question 12

An example of price discrimination is the price charged for:

Accepted Answer

A)  troll dolls. 
B)  college admission. 
C)  textbooks. 
D)  diamonds. 
A)  troll dolls. 
B)  college admission. 
C)  textbooks. 
D)  diamonds.

Question 13

Exhibit 8-4  Demand and cost curves for a monopolist   As shown in Exhibit 8-4, in order to maximize its profit (or minimize its loss), what price should the monopoly charge for its product?

Accepted Answer

A)  $60 per unit. 
B)  $90 per unit. 
C)  $120 per unit. 
D)  $150 per unit. 
A)  $60 per unit. 
B)  $90 per unit. 
C)  $120 per unit. 
D)  $150 per unit.

Question 14

Assume a monopolist charges a price corresponding to the intersection of the marginal cost and marginal revenue curves. If this price is between its average variable cost and average total cost curves, the firm will:

Accepted Answer

A)  earn an economic profit. 
B)  continue to operate in the short run. 
C)  shut down. 
D)  all of the above are true. 
A)  earn an economic profit. 
B)  continue to operate in the short run. 
C)  shut down. 
D)  all of the above are true.

Question 15

Graphically, the marginal revenue curve of a monopolist:

Accepted Answer

A)  will sometimes lie below the demand curve of the monopolist. 
B)  will always lie below the demand curve of the monopolist. 
C)  is the same as the demand curve of the monopolist. 
D)  will equal -1 when the elasticity of demand is unitary. 
A)  will sometimes lie below the demand curve of the monopolist. 
B)  will always lie below the demand curve of the monopolist. 
C)  is the same as the demand curve of the monopolist. 
D)  will equal -1 when the elasticity of demand is unitary.

Question 16

A monopoly firm can sell its fourth unit of output for a price of $250. In order to sell more than five units, it must expect to receive a price:

Accepted Answer

A)  equal to $250. 
B)  greater than $250. 
C)  less than $250. 
D)  equal to $340. 
E)  the price is impossible to calculate with the information given. 
A)  equal to $250. 
B)  greater than $250. 
C)  less than $250. 
D)  equal to $340. 
E)  the price is impossible to calculate with the information given.

Question 17

If the average total cost curve is always above the demand curve for a monopolist:

Accepted Answer

A)  the profits of the monopolist will be large. 
B)  the monopolist must be producing inefficiently. 
C)  the monopolist will suffer economic losses. 
D)  entry will occur, forcing the monopolist to reduce price and expand output. 
A)  the profits of the monopolist will be large. 
B)  the monopolist must be producing inefficiently. 
C)  the monopolist will suffer economic losses. 
D)  entry will occur, forcing the monopolist to reduce price and expand output.

Question 18

Which of the following statements best describes the price, output, and profit conditions of monopoly?

Accepted Answer

A)  Price will equal marginal cost at the profit-maximizing level of output and profits will be positive in the long run. 
B)  Price will always equal average variable cost in the short-run and either profits or losses may result in the long run. 
C)  In the long run, positive economic profit will be eliminated. 
D)  None of the above. 
A)  Price will equal marginal cost at the profit-maximizing level of output and profits will be positive in the long run. 
B)  Price will always equal average variable cost in the short-run and either profits or losses may result in the long run. 
C)  In the long run, positive economic profit will be eliminated. 
D)  None of the above.

Question 19

The monopolist faces the market demand curve.

Accepted Answer

A) True 
 B)False

Question 20

Suppose a monopolist's demand curve lies below its average variable cost curve. The firm will:

Accepted Answer

A)  earn an economic profit. 
B)  stay in operation in the short-run. 
C)  shut down. 
D)  none of the above. 
A)  earn an economic profit. 
B)  stay in operation in the short-run. 
C)  shut down. 
D)  none of the above.

Exam 8: Monopoly

The monopolist faces the market demand curve.

A monopoly can successfully price discriminate as long as there are no close substitutes for its product.

Which of the following is a market structure of monopoly?

Exhibit 8-6 Monopoly When the monopolist is maximizing total profit in Exhibit 8-6, the average total cost of producing that output level is:

If marginal costs increase, a monopolist will:

Although a monopoly can charge any price it wishes, it chooses: ​

For a monopoly to successfully price discriminate, its customers must:

Monopolies may earn economic losses in the long run.

Exhibit 8-10 A monopolist In Exhibit 8-10, the monopolist would charge which of the following prices to maximize profit or minimize its loss?

Because monopolists are protected by high barriers to entry, they:

Why can a monopoly earn economic profits in the long run?

An example of price discrimination is the price charged for:

Exhibit 8-4 Demand and cost curves for a monopolist As shown in Exhibit 8-4, in order to maximize its profit (or minimize its loss), what price should the monopoly charge for its product?

Assume a monopolist charges a price corresponding to the intersection of the marginal cost and marginal revenue curves. If this price is between its average variable cost and average total cost curves, the firm will:

Graphically, the marginal revenue curve of a monopolist:

A monopoly firm can sell its fourth unit of output for a price of $250. In order to sell more than five units, it must expect to receive a price:

If the average total cost curve is always above the demand curve for a monopolist:

Which of the following statements best describes the price, output, and profit conditions of monopoly?

The monopolist faces the market demand curve.

Suppose a monopolist's demand curve lies below its average variable cost curve. The firm will:

Introducing the Economic Way of Thinking

Production Possibilities, Opportunity Cost, and Economic Growth

Market Demand and Supply

Markets in Action

Price Elasticity of Demand

Production Costs

Perfect Competition

Monopolistic Competition and Oligopoly

Labor Markets and Income Distribution

Gross Domestic Product

Business Cycles and Unemployment

Inflation

Aggregate Demand and Supply

Fiscal Policy

The Public Sector

Federal Deficits, Surpluses, and the National Debt

Money and the Federal Reserve System

Money Creation

Policy Disputes Using the Self-Correcting Aggregate Demand and Supply Model

International Trade and Finance

Economies in Transition

Growth and the Less-Developed Countries

Filters

Although a monopoly can charge any price it wishes, it chooses: