Question 1

A monopoly sets a market price that is higher than the marginal cost of production.This fact implies that a monopoly's allocation of resources is:

Accepted Answer

A) unfair. 
B) inefficient. 
C) discriminatory. 
D) excessive. 
A) unfair. 
B) inefficient. 
C) discriminatory. 
D) excessive. B

Question 2

The monopolist's demand curve is:

Accepted Answer

A) below the marginal revenue curve. 
B) identical to the marginal revenue curve. 
C) a downward-sloping market demand curve. 
D) a horizontal line at the market price. 
E) a U-shaped curve. 
A) below the marginal revenue curve. 
B) identical to the marginal revenue curve. 
C) a downward-sloping market demand curve. 
D) a horizontal line at the market price. 
E) a U-shaped curve. C

Question 3

Exhibit 8-1 Monopolist's demand curve
  
-At an output of 200 units,a monopolist with the demand curve shown in Exhibit 8-1 will charge:

Accepted Answer

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

Question 4

In a natural monopoly,the long-run average cost curve declines and therefore average cost is lower when there is only one seller.

Accepted Answer

A) True 
 B)False

Question 5

Economists:

Accepted Answer

A) mostly do not support price discrimination. 
B) wholeheartedly support price discrimination. 
C) are indifferent to the topic of price discrimination. 
D) do not understand why price discrimination occurs. 
E) are unsure whether to support price discrimination or not. 
A) mostly do not support price discrimination. 
B) wholeheartedly support price discrimination. 
C) are indifferent to the topic of price discrimination. 
D) do not understand why price discrimination occurs. 
E) are unsure whether to support price discrimination or not.

Question 6

A recent study has concluded that working adults have a price elasticity of demand of 1.72 for train services,while pensioners have a price elasticity of demand of 3.74.If price discrimination is possible,then the company providing the train service will:

Accepted Answer

A) charge a lower price to working adults than to pensioners. 
B) charge a lower price to pensioners than to working adults. 
C) earn higher profits by charging everyone the same price. 
D) lower prices for all customers because demand is elastic for both groups. 
A) charge a lower price to working adults than to pensioners. 
B) charge a lower price to pensioners than to working adults. 
C) earn higher profits by charging everyone the same price. 
D) lower prices for all customers because demand is elastic for both groups.

Question 7

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) 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) positive economic profit in the short run.

Question 8

Exhibit 8-1 Monopolist's demand curve
  
-In Exhibit 8-1,the marginal revenue curve corresponding to the monopolist's demand curve would be a straight line drawn between points:

Accepted Answer

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

Question 9

Monopoly is a market structure characterised by:

Accepted Answer

A) a couple of large sellers. 
B) a high quality product. 
C) hard entry into the market. 
D) many close substitutes. 
A) a couple of large sellers. 
B) a high quality product. 
C) hard entry into the market. 
D) many close substitutes.

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

Question 11

The effect of market structure on technological change is:

Accepted Answer

A) inconclusive. 
B) determined. 
C) positive. 
D) negative. 
A) inconclusive. 
B) determined. 
C) positive. 
D) negative.

Question 12

When Nobel Laureate Sir John Hicks made the statement that: 'The best of all monopoly profit is a quiet life',he meant:

Accepted Answer

A) that monopolists often have a very low profile. 
B) that earning monopoly profits allow people to retire early. 
C) that monopolists are free from competition and so are not forced to innovate to survive. 
D) that monopolists always earn economic profits. 
A) that monopolists often have a very low profile. 
B) that earning monopoly profits allow people to retire early. 
C) that monopolists are free from competition and so are not forced to innovate to survive. 
D) that monopolists always earn economic profits.

Question 13

The physical production of medicinal drugs is often only a very small fraction of the eventual price consumers pay.Which of the following may explain this?

Accepted Answer

A) Monopolists can charge whatever they want. 
B) The high price allows the company to recoup their substantial research and development costs. 
C) The company must have engaged in price discrimination. 
D) The company must have engaged in predatory pricing. 
A) Monopolists can charge whatever they want. 
B) The high price allows the company to recoup their substantial research and development costs. 
C) The company must have engaged in price discrimination. 
D) The company must have engaged in predatory pricing.

Question 14

In the long run,a monopoly:

Accepted Answer

A) will always earn economic profit. 
B) is always free from competition, either real or potential. 
C) will always be protected by the government to prevent competition. 
D) can change its plant size. 
A) will always earn economic profit. 
B) is always free from competition, either real or potential. 
C) will always be protected by the government to prevent competition. 
D) can change its plant size.

Question 15

Research on the role of monopolies in an economy shows:

Accepted Answer

A) that monopolies have only negative effects on the economy. 
B) that monopolies have only positive effects on the economy. 
C) mixed results. 
D) that monopolies do not ultimately contribute to technological change. 
A) that monopolies have only negative effects on the economy. 
B) that monopolies have only positive effects on the economy. 
C) mixed results. 
D) that monopolies do not ultimately contribute to technological change.

Question 16

Competition means:

Accepted Answer

A) that a society's wealth is maximised. 
B) that a society experiences a deadweight loss. 
C) high prices and less goods. 
D) that a society misallocates its resources. 
A) that a society's wealth is maximised. 
B) that a society experiences a deadweight loss. 
C) high prices and less goods. 
D) that a society misallocates its resources.

Question 17

A monopolist earns an economic profit only when:

Accepted Answer

A) average total cost equals price. 
B) marginal cost equals price. 
C) marginal revenue equals price. 
D) average total cost is less than price. 
A) average total cost equals price. 
B) marginal cost equals price. 
C) marginal revenue equals price. 
D) average total cost is less than price.

Question 18

Exhibit 8-3 Demand and cost curves for GeneTech, a monopolist with a patented vaccine
  
-In Exhibit 8-3,how much vaccine should GeneTech produce to maximise its profit?

Accepted Answer

A) 300 doses per hour. 
B) 400 doses per hour. 
C) Between 400 and 500 doses per hour. 
D) 500 doses per hour. 
A) 300 doses per hour. 
B) 400 doses per hour. 
C) Between 400 and 500 doses per hour. 
D) 500 doses per hour.

Question 19

Price is always greater than marginal revenue because:

Accepted Answer

A) the monopolist cannot charge a price below the demand curve. 
B) the reduction in revenue due to the higher price is subtracted from the increase in revenue from the extra unit produced. 
C) the reduction in revenue due to the lower price is subtracted from the increase in revenue from the extra unit produced. 
D) the increase in revenue due to the lower price is subtracted from the increase in revenue from the extra unit produced. 
A) the monopolist cannot charge a price below the demand curve. 
B) the reduction in revenue due to the higher price is subtracted from the increase in revenue from the extra unit produced. 
C) the reduction in revenue due to the lower price is subtracted from the increase in revenue from the extra unit produced. 
D) the increase in revenue due to the lower price is subtracted from the increase in revenue from the extra unit produced.

Question 20

Another way to say that marginal revenue is less than the price at a given level of output is that:

Accepted Answer

A) the marginal output curve lies below the demand curve. 
B) the marginal revenue curve lies above the demand curve. 
C) the marginal revenue curve is the same as the demand curve. 
D) the marginal revenue curve lies below the demand curve. 
A) the marginal output curve lies below the demand curve. 
B) the marginal revenue curve lies above the demand curve. 
C) the marginal revenue curve is the same as the demand curve. 
D) the marginal revenue curve lies below the demand curve.

A monopoly sets a market price that is higher than the marginal cost of production.This fact implies that a monopoly's allocation of resources is:

The monopolist's demand curve is:

Exhibit 8-1 Monopolist's demand curve -At an output of 200 units,a monopolist with the demand curve shown in Exhibit 8-1 will charge:

In a natural monopoly,the long-run average cost curve declines and therefore average cost is lower when there is only one seller.

Economists:

A recent study has concluded that working adults have a price elasticity of demand of 1.72 for train services,while pensioners have a price elasticity of demand of 3.74.If price discrimination is possible,then the company providing the train service will:

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

Exhibit 8-1 Monopolist's demand curve -In Exhibit 8-1,the marginal revenue curve corresponding to the monopolist's demand curve would be a straight line drawn between points:

Monopoly is a market structure characterised by:

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?

The effect of market structure on technological change is:

When Nobel Laureate Sir John Hicks made the statement that: 'The best of all monopoly profit is a quiet life',he meant:

The physical production of medicinal drugs is often only a very small fraction of the eventual price consumers pay.Which of the following may explain this?

In the long run,a monopoly:

Research on the role of monopolies in an economy shows:

Competition means:

A monopolist earns an economic profit only when:

Exhibit 8-3 Demand and cost curves for GeneTech, a monopolist with a patented vaccine -In Exhibit 8-3,how much vaccine should GeneTech produce to maximise its profit?

Price is always greater than marginal revenue because:

Another way to say that marginal revenue is less than the price at a given level of output is that:

Thinking like an economist

Production possibilities and opportunity cost

Market demand and supply

Markets in action

Elasticity of demand and supply

Production costs

Perfect competition

Monopolistic competition and oligopoly

Policy issues: resource taxes and climate change

Measuring the size of the economy

Business cycles and economic growth

Inflation and unemployment

A simple model of the macro economy

The monetary and financial system

Macroeconomic policy I: monetary policy

Macroeconomic policy II: fiscal policy

International trade and finance

Applying graphs to economics

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Exam 8: Monopoly

A monopoly sets a market price that is higher than the marginal cost of production.This fact implies that a monopoly's allocation of resources is:

The monopolist's demand curve is:

Exhibit 8-1 Monopolist's demand curve -At an output of 200 units,a monopolist with the demand curve shown in Exhibit 8-1 will charge:

In a natural monopoly,the long-run average cost curve declines and therefore average cost is lower when there is only one seller.

Economists:

A recent study has concluded that working adults have a price elasticity of demand of 1.72 for train services,while pensioners have a price elasticity of demand of 3.74.If price discrimination is possible,then the company providing the train service will:

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

Exhibit 8-1 Monopolist's demand curve -In Exhibit 8-1,the marginal revenue curve corresponding to the monopolist's demand curve would be a straight line drawn between points:

Monopoly is a market structure characterised by:

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?

The effect of market structure on technological change is:

When Nobel Laureate Sir John Hicks made the statement that: 'The best of all monopoly profit is a quiet life',he meant:

The physical production of medicinal drugs is often only a very small fraction of the eventual price consumers pay.Which of the following may explain this?

In the long run,a monopoly:

Research on the role of monopolies in an economy shows:

Competition means:

A monopolist earns an economic profit only when:

Exhibit 8-3 Demand and cost curves for GeneTech, a monopolist with a patented vaccine -In Exhibit 8-3,how much vaccine should GeneTech produce to maximise its profit?

Price is always greater than marginal revenue because:

Another way to say that marginal revenue is less than the price at a given level of output is that:

Thinking like an economist

Production possibilities and opportunity cost

Market demand and supply

Markets in action

Elasticity of demand and supply

Production costs

Perfect competition

Monopolistic competition and oligopoly

Policy issues: resource taxes and climate change

Measuring the size of the economy

Business cycles and economic growth

Inflation and unemployment

A simple model of the macro economy

The monetary and financial system

Macroeconomic policy I: monetary policy

Macroeconomic policy II: fiscal policy

International trade and finance

Applying graphs to economics

Filters