Question 1

Exhibit 8-8  Profit maximizing for a monopolist   As shown in Exhibit 8-8, the monopolist's profit maximizing price-quantity point is:

Accepted Answer

A)  A. 
B)  B. 
C)  C. 
D)  D. 
E)  E. 
A)  A. 
B)  B. 
C)  C. 
D)  D. 
E)  E.

Question 2

Exhibit 8-2  Demand and cost information for a monopoly   The marginal revenue of the second unit of output in Exhibit 8-2 is:

Accepted Answer

A)  10. 
B)  20. 
C)  30. 
D)  40. 
E)  60. 
A)  10. 
B)  20. 
C)  30. 
D)  40. 
E)  60.

Question 3

The act of buying a commodity in one market at a lower price and selling it in another market at a higher price is known as:

Accepted Answer

A)  buying long. 
B)  selling short. 
C)  a tariff. 
D)  arbitrage. 
A)  buying long. 
B)  selling short. 
C)  a tariff. 
D)  arbitrage.

Question 4

Using the rule that focuses on the marginal approach to maximizing profits, a monopolist charges a price where the:

Accepted Answer

A)  output sold is maximized. 
B)  ATC curve is minimized. 
C)  MR = MC. 
D)  MR = 0. 
A)  output sold is maximized. 
B)  ATC curve is minimized. 
C)  MR = MC. 
D)  MR = 0.

Question 5

Exhibit 8-5  Demand and cost data for a monopolist   Refer to Exhibit 8-5. 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)  5. 
E)  7. 
A)  2. 
B)  6. 
C)  4. 
D)  5. 
E)  7.

Question 6

Exhibit 8-7  Monopolist   According to the information provided in Exhibit 8-7, if the Rudd Ice Company was a monopoly and is currently charging a price of $10, what would you advise Rudd to do?

Accepted Answer

A)  Stay where he is currently operating because he is charging the profit-maximizing price. 
B)  Increase price and increase output. 
C)  Decrease price and increase output. 
D)  Increase output and hold price constant. 
E)  Increase price and hold output constant. 
A)  Stay where he is currently operating because he is charging the profit-maximizing price. 
B)  Increase price and increase output. 
C)  Decrease price and increase output. 
D)  Increase output and hold price constant. 
E)  Increase price and hold output constant.

Question 7

A price-discriminating monopoly charges the lowest price to the group that:

Accepted Answer

A)  has the most elastic demand. 
B)  purchases the largest quantity. 
C)  engages in the most arbitrage. 
D)  is least responsive to price changes. 
A)  has the most elastic demand. 
B)  purchases the largest quantity. 
C)  engages in the most arbitrage. 
D)  is least responsive to price changes.

Question 8

Which of the following is true for a pure monopolist?

Accepted Answer

A)  The firm has a perfectly elastic demand curve. 
B)  The firm will always earn an economic profit. 
C)  The demand curve is above the marginal revenue curve. 
D)  None of the above is true. 
A)  The firm has a perfectly elastic demand curve. 
B)  The firm will always earn an economic profit. 
C)  The demand curve is above the marginal revenue curve. 
D)  None of the above is true.

Question 9

The monopolist, unlike the perfectly competitive firm, can continue to earn an economic profit in the long run because of:

Accepted Answer

A)  collusive agreements with competitors. 
B)  price leadership. 
C)  cartels. 
D)  a dominant firm. 
E)  extremely high barriers to entry. 
A)  collusive agreements with competitors. 
B)  price leadership. 
C)  cartels. 
D)  a dominant firm. 
E)  extremely high barriers to entry.

Question 10

Exhibit 8-5  Demand and cost data for a monopolist   By calculating the data provided in Exhibit 8-5, how much is the profit if the firm decides to produce 7 units?

Accepted Answer

A)  0. 
B)  24. 
C)  16. 
D)  12. 
E)  6. 
A)  0. 
B)  24. 
C)  16. 
D)  12. 
E)  6.

Question 11

For a monopolist to practice effective price discrimination, one necessary condition is:

Accepted Answer

A)  identical price elasticity among groups of buyers. 
B)  differences in the price elasticity of demand among groups of buyers. 
C)  that the product is homogeneous market. 
D)  none of the above. 
A)  identical price elasticity among groups of buyers. 
B)  differences in the price elasticity of demand among groups of buyers. 
C)  that the product is homogeneous market. 
D)  none of the above.

Question 12

In contrast to a perfectly competitive firm, a monopolist earns:

Accepted Answer

A)  negative economic profit in the long run. 
B)  zero economic profit in the long run. 
C)  positive economic profit in the long run. 
D)  earns positive economic profit in the short run. 
A)  negative economic profit in the long run. 
B)  zero economic profit in the long run. 
C)  positive economic profit in the long run. 
D)  earns positive economic profit in the short run.

Question 13

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 14

Which of the following is true for a monopolist?

Accepted Answer

A)  The firm has a perfectly elastic demand curve. 
B)  The firm has a perfectly inelastic demand curve. 
C)  The straight-line demand curve is above the marginal revenue curve. 
D)  The marginal revenue curve is above the demand curve. 
E)  All of the above. 
A)  The firm has a perfectly elastic demand curve. 
B)  The firm has a perfectly inelastic demand curve. 
C)  The straight-line demand curve is above the marginal revenue curve. 
D)  The marginal revenue curve is above the demand curve. 
E)  All of the above.

Question 15

Which of the following statements best describe 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 earned. 
D)  All of the above are true. 
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 earned. 
D)  All of the above are true.

Question 16

An example of price discrimination is the price charged for:

Accepted Answer

A)  a postage stamp. 
B)  theater tickets that offer lower prices for children. 
C)  an economics textbook at a campus bookstore. 
D)  Any of the above. 
A)  a postage stamp. 
B)  theater tickets that offer lower prices for children. 
C)  an economics textbook at a campus bookstore. 
D)  Any of the above.

Question 17

A monopolist always earns an economic profit.

Accepted Answer

A) True 
 B)False

Question 18

A monopolist will earn economic profits as long as his price exceeds:

Accepted Answer

A)  marginal revenue. 
B)  average fixed cost. 
C)  average variable cost. 
D)  average total cost. 
A)  marginal revenue. 
B)  average fixed cost. 
C)  average variable cost. 
D)  average total cost.

Question 19

Exhibit 8-10  A monopolist   In Exhibit 8-10, the profit-maximizing or loss-minimizing output for the monopolist is:

Accepted Answer

A)  100 units per day. 
B)  150 units per day. 
C)  200 units per day. 
D)  250 units per day. 
E)  300 units per day. 
A)  100 units per day. 
B)  150 units per day. 
C)  200 units per day. 
D)  250 units per day. 
E)  300 units per day.

Question 20

A perfectly competitive firm is a price taker, but a monopoly is a price maker.

Accepted Answer

A) True 
 B)False

Exam 8: Monopoly

Exhibit 8-8 Profit maximizing for a monopolist As shown in Exhibit 8-8, the monopolist's profit maximizing price-quantity point is:

Exhibit 8-2 Demand and cost information for a monopoly The marginal revenue of the second unit of output in Exhibit 8-2 is:

The act of buying a commodity in one market at a lower price and selling it in another market at a higher price is known as:

Using the rule that focuses on the marginal approach to maximizing profits, a monopolist charges a price where the:

Exhibit 8-5 Demand and cost data for a monopolist Refer to Exhibit 8-5. The demand schedule and cost schedule for a monopolist are provided. Which output level maximizes profit?

Exhibit 8-7 Monopolist According to the information provided in Exhibit 8-7, if the Rudd Ice Company was a monopoly and is currently charging a price of $10, what would you advise Rudd to do?

A price-discriminating monopoly charges the lowest price to the group that:

Which of the following is true for a pure monopolist?

The monopolist, unlike the perfectly competitive firm, can continue to earn an economic profit in the long run because of:

Exhibit 8-5 Demand and cost data for a monopolist By calculating the data provided in Exhibit 8-5, how much is the profit if the firm decides to produce 7 units?

For a monopolist to practice effective price discrimination, one necessary condition is:

In contrast to a perfectly competitive firm, a monopolist earns:

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

Which of the following is true for a monopolist?

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

An example of price discrimination is the price charged for:

A monopolist always earns an economic profit.

A monopolist will earn economic profits as long as his price exceeds:

Exhibit 8-10 A monopolist In Exhibit 8-10, the profit-maximizing or loss-minimizing output for the monopolist is:

A perfectly competitive firm is a price taker, but a monopoly is a price maker.

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