Question 1

If a firm charges $100 and consumers buy 10 units,the total revenue is:

Accepted Answer

A) $0 
B) $100. 
C) $1000. 
D) not determinable from information provided. 
A) $0 
B) $100. 
C) $1000. 
D) not determinable from information provided.

Question 2

Under monopoly,the consumers:

Accepted Answer

A) can influence the price. 
B) have a choice of many producers. 
C) have a choice to buy a product or to do without it. 
D) have an option to get a variety of products from several suppliers. 
A) can influence the price. 
B) have a choice of many producers. 
C) have a choice to buy a product or to do without it. 
D) have an option to get a variety of products from several suppliers.

Question 3

The efficient allocation of resources is based on the fact that:

Accepted Answer

A) firms devote the amount of resources to their good that consumers demand. B) P > MC. C) P < MC. D) economies of scale must exist. E) monopolists can cater for the entire market. A) firms devote the amount of resources to their good that consumers demand. B) P > MC. C) P < MC. D) economies of scale must exist. E) monopolists can cater for the entire market.

Question 4

Under both perfect competition and monopoly,a firm:

Accepted Answer

A) is a price taker. 
B) is a price maker. 
C) will shut down in the short run if price falls short of average total cost. 
D) always earns a pure economic profit. 
E) sets marginal cost equal to marginal revenue. 
A) is a price taker. 
B) is a price maker. 
C) will shut down in the short run if price falls short of average total cost. 
D) always earns a pure economic profit. 
E) sets marginal cost equal to marginal revenue.

Question 5

Monopolies exist because of:

Accepted Answer

A) diseconomies of scale. 
B) lack of legal protection. 
C) barriers to entry. 
D) public ownership of resources. 
A) diseconomies of scale. 
B) lack of legal protection. 
C) barriers to entry. 
D) public ownership of resources.

Question 6

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 7

Suppose there is only one airline that travels from one island to another.Assume that business travellers have a low elasticity of demand for the air travel.Holiday travellers on the other hand are flexible and are sensitive to price.Price discrimination can occur because:

Accepted Answer

A) business travellers have to travel. 
B) there is a monopoly. 
C) of the difference between price elasticities. 
D) there are no close substitutes. 
A) business travellers have to travel. 
B) there is a monopoly. 
C) of the difference between price elasticities. 
D) there are no close substitutes.

Question 8

When marginal revenue is zero for a monopolist facing a downward-sloping straight-line demand curve,the price elasticity of demand is:

Accepted Answer

A) greater than 1. 
B) equal to 1. 
C) less than 2. 
D) equal to zero. 
A) greater than 1. 
B) equal to 1. 
C) less than 2. 
D) equal to zero.

Question 9

At the level of output where the marginal cost and marginal revenue curves intersect,a monopolist's demand curve passes above its average total cost curve.The firm will:

Accepted Answer

A) be able to make a positive economic profit. 
B) stay in operation in the short run, but then shut down. 
C) shut down in the short run. 
D) increase its price. 
A) be able to make a positive economic profit. 
B) stay in operation in the short run, but then shut down. 
C) shut down in the short run. 
D) increase its price.

Question 10

Exhibit 8-6 Monopolist
  
-According to the information provided in Exhibit 8-6,if the Rudd Ice Company is 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-maximising 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-maximising 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 11

The condition/s required for a monopolist to engage in price discrimination is/are:

Accepted Answer

A) that buyers are not able to resell the good. 
B) when it cannot identify specific groups of consumers with different elasticities. 
C) that the demand curve must be perfectly elastic. 
D) for potential competitors to threaten entry into the market. 
A) that buyers are not able to resell the good. 
B) when it cannot identify specific groups of consumers with different elasticities. 
C) that the demand curve must be perfectly elastic. 
D) for potential competitors to threaten entry into the market.

Question 12

An industry in which total costs are kept to a minimum because only one firm serves the whole market is called a:

Accepted Answer

A) natural monopoly. 
B) competitive monopoly. 
C) patent monopoly. 
D) limit monopoly. 
A) natural monopoly. 
B) competitive monopoly. 
C) patent monopoly. 
D) limit monopoly.

Question 13

Predatory pricing can occur in a monopoly market because:

Accepted Answer

A) the firm has no potential competitors to stop it doing so. 
B) the firm wishes to discourage potential entrants. 
C) the government has a tax incentive to let it happen. 
D) the monopolist is trying to maximise short-term profits. 
E) predatory pricing can never happen in a monopoly market. 
A) the firm has no potential competitors to stop it doing so. 
B) the firm wishes to discourage potential entrants. 
C) the government has a tax incentive to let it happen. 
D) the monopolist is trying to maximise short-term profits. 
E) predatory pricing can never happen in a monopoly market.

Question 14

Marginal revenue can be:

Accepted Answer

A) never negative. 
B) always positive. 
C) only zero. 
D) zero, positive or negative. 
A) never negative. 
B) always positive. 
C) only zero. 
D) zero, positive or negative.

Question 15

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 maximises profit?

Accepted Answer

A) 2. 
B) 4. 
C) 5. 
D) 6. 
E) 7. 
A) 2. 
B) 4. 
C) 5. 
D) 6. 
E) 7.

Question 16

Electricity and water are usually supplied to households by one supplier because:

Accepted Answer

A) government can collect more taxes from a monopoly firm. 
B) the single supplier can provide electricity and water at lower cost than two or more firms. 
C) long-run average total cost increases over the entire range of output. 
D) it is a monopoly protected by the ownership of vital resources. 
A) government can collect more taxes from a monopoly firm. 
B) the single supplier can provide electricity and water at lower cost than two or more firms. 
C) long-run average total cost increases over the entire range of output. 
D) it is a monopoly protected by the ownership of vital resources.

Question 17

Exhibit 8-7
  
-According to Exhibit 8-7,if a firm buys all the other firms in this market and becomes a monopolist,we would expect:

Accepted Answer

A) a more efficient allocation of resources, as P = MC now. 
B) the price to fall and output to rise to (P1, Q2). 
C) the price to fall and output to decline to (P0, Q2). 
D) the price to rise and output to fall to (P0, Q1). 
A) a more efficient allocation of resources, as P = MC now. 
B) the price to fall and output to rise to (P1, Q2). 
C) the price to fall and output to decline to (P0, Q2). 
D) the price to rise and output to fall to (P0, Q1).

Question 18

The monopoly can emerge naturally because:

Accepted Answer

A) as a firm becomes larger, the cost of production grows. 
B) of the relationship between average cost and the scale of an operation. 
C) new firms have excess capacity. 
D) firms are not interested in entering the monopoly industry. 
A) as a firm becomes larger, the cost of production grows. 
B) of the relationship between average cost and the scale of an operation. 
C) new firms have excess capacity. 
D) firms are not interested in entering the monopoly industry.

Question 19

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

Accepted Answer

A) perfectly elastic. 
B) elastic, but not perfectly elastic. 
C) unit elastic. 
D) inelastic. 
A) perfectly elastic. 
B) elastic, but not perfectly elastic. 
C) unit elastic. 
D) inelastic.

Question 20

A monopoly market is characterised by many sellers of a product which has few,if any,suitable substitutes.

Accepted Answer

A) True 
 B)False

If a firm charges $100 and consumers buy 10 units,the total revenue is:

Under monopoly,the consumers:

The efficient allocation of resources is based on the fact that:

Under both perfect competition and monopoly,a firm:

Monopolies exist because of:

Which of the following is true about a monopoly?

Suppose there is only one airline that travels from one island to another.Assume that business travellers have a low elasticity of demand for the air travel.Holiday travellers on the other hand are flexible and are sensitive to price.Price discrimination can occur because:

When marginal revenue is zero for a monopolist facing a downward-sloping straight-line demand curve,the price elasticity of demand is:

At the level of output where the marginal cost and marginal revenue curves intersect,a monopolist's demand curve passes above its average total cost curve.The firm will:

Exhibit 8-6 Monopolist -According to the information provided in Exhibit 8-6,if the Rudd Ice Company is a monopoly and is currently charging a price of $10,what would you advise Rudd to do?

The condition/s required for a monopolist to engage in price discrimination is/are:

An industry in which total costs are kept to a minimum because only one firm serves the whole market is called a:

Predatory pricing can occur in a monopoly market because:

Marginal revenue can be:

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 maximises profit?

Electricity and water are usually supplied to households by one supplier because:

Exhibit 8-7 -According to Exhibit 8-7,if a firm buys all the other firms in this market and becomes a monopolist,we would expect:

The monopoly can emerge naturally because:

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

A monopoly market is characterised by many sellers of a product which has few,if any,suitable substitutes.

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

If a firm charges $100 and consumers buy 10 units,the total revenue is:

Under monopoly,the consumers:

The efficient allocation of resources is based on the fact that:

Under both perfect competition and monopoly,a firm:

Monopolies exist because of:

Which of the following is true about a monopoly?

Suppose there is only one airline that travels from one island to another.Assume that business travellers have a low elasticity of demand for the air travel.Holiday travellers on the other hand are flexible and are sensitive to price.Price discrimination can occur because:

When marginal revenue is zero for a monopolist facing a downward-sloping straight-line demand curve,the price elasticity of demand is:

At the level of output where the marginal cost and marginal revenue curves intersect,a monopolist's demand curve passes above its average total cost curve.The firm will:

Exhibit 8-6 Monopolist -According to the information provided in Exhibit 8-6,if the Rudd Ice Company is a monopoly and is currently charging a price of $10,what would you advise Rudd to do?

The condition/s required for a monopolist to engage in price discrimination is/are:

An industry in which total costs are kept to a minimum because only one firm serves the whole market is called a:

Predatory pricing can occur in a monopoly market because:

Marginal revenue can be:

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 maximises profit?

Electricity and water are usually supplied to households by one supplier because:

Exhibit 8-7 -According to Exhibit 8-7,if a firm buys all the other firms in this market and becomes a monopolist,we would expect:

The monopoly can emerge naturally because:

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

A monopoly market is characterised by many sellers of a product which has few,if any,suitable substitutes.

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