Question 1

Monopolists are criticised because they are inefficient.What is meant by this statement?

Accepted Answer

A) Monopolists charge too high a price. 
B) Monopolists don't innovate enough to control pollution. 
C) Monopolists produce a large quantity of waste. 
D) Monopolists usually don't produce at the minimum of the ATC. 
E) Monopolists could use their resources better elsewhere. 
A) Monopolists charge too high a price. 
B) Monopolists don't innovate enough to control pollution. 
C) Monopolists produce a large quantity of waste. 
D) Monopolists usually don't produce at the minimum of the ATC. 
E) Monopolists could use their resources better elsewhere.

Question 2

The most effective barrier/s to protect a monopoly from competition is/are:

Accepted Answer

A) legal barriers or government ownership. 
B) excessive advertising by the monopoly. 
C) higher wages paid to the monopoly's workers. 
D) the high quality product offered by a monopoly. 
A) legal barriers or government ownership. 
B) excessive advertising by the monopoly. 
C) higher wages paid to the monopoly's workers. 
D) the high quality product offered by a monopoly.

Question 3

Economies of scale means that competition is unsustainable because:

Accepted Answer

A) competition results in lower quantity and lower price. 
B) as firms become larger, the inefficiency grows. 
C) one large scale firm can produce at lower cost than several firms. 
D) it is easier to control one firm than many firms. 
A) competition results in lower quantity and lower price. 
B) as firms become larger, the inefficiency grows. 
C) one large scale firm can produce at lower cost than several firms. 
D) it is easier to control one firm than many firms.

Question 4

For a monopolist to practise price discrimination,one necessary condition is that the product offered for sale must be:

Accepted Answer

A) high quality. 
B) expensive. 
C) cheap. 
D) impossible or difficult to resell. 
A) high quality. 
B) expensive. 
C) cheap. 
D) impossible or difficult to resell.

Question 5

A monopoly can result because of:

Accepted Answer

A) an ownership of a vital resource with other firms. 
B) a legal patent over a good shared with another large firm. 
C) successful operations. 
D) production of unique good. 
A) an ownership of a vital resource with other firms. 
B) a legal patent over a good shared with another large firm. 
C) successful operations. 
D) production of unique good.

Question 6

Firms employ price discrimination because:

Accepted Answer

A) they want to give discounts whenever they can. 
B) it prevents predatory pricing. 
C) it increases profits. 
D) they dislike arbitrage. 
A) they want to give discounts whenever they can. 
B) it prevents predatory pricing. 
C) it increases profits. 
D) they dislike arbitrage.

Question 7

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

Accepted Answer

A) stay in operation in the short run. 
B) increase the price. 
C) earn an economic profit in the long run. 
D) shut down. 
E) increase production. 
A) stay in operation in the short run. 
B) increase the price. 
C) earn an economic profit in the long run. 
D) shut down. 
E) increase production.

Question 8

Which barrier to entry results in the creation of a natural monopoly?

Accepted Answer

A) Legal barriers like government franchises. 
B) Economies of scale. 
C) Ownership of a vital resource. 
D) Patents and copyrights. 
A) Legal barriers like government franchises. 
B) Economies of scale. 
C) Ownership of a vital resource. 
D) Patents and copyrights.

Question 9

There is only one petrol station within hundreds of miles.The owner finds that when she charges $3 a litre,she sells 99 litres a day,and when she charges $2.95 a litre,she sells 100 litres a day.The marginal revenue of the 100th litre of petrol is:

Accepted Answer

A) -$5. 
B) -$2. 
C) $0. 
D) $3. 
E) $6. 
A) -$5. 
B) -$2. 
C) $0. 
D) $3. 
E) $6.

Question 10

The argument that supports monopolies' role in an economy is that:

Accepted Answer

A) they distribute income from firms to consumers. 
B) they save valuable resources by producing less output than in perfect competition. 
C) they charge a price in excess of the marginal cost. 
D) they can use their profits to invest in research and development, increasing technological change. 
E) there are no arguments that support monopolies. 
A) they distribute income from firms to consumers. 
B) they save valuable resources by producing less output than in perfect competition. 
C) they charge a price in excess of the marginal cost. 
D) they can use their profits to invest in research and development, increasing technological change. 
E) there are no arguments that support monopolies.

Question 11

Bus services often offer lower prices for students and pensioners because:

Accepted Answer

A) they have a more inelastic demand for bus services. 
B) its the right thing to do morally. 
C) they have a higher elasticity for bus services than the adult working population. 
D) they have a higher willingness to pay. 
A) they have a more inelastic demand for bus services. 
B) its the right thing to do morally. 
C) they have a higher elasticity for bus services than the adult working population. 
D) they have a higher willingness to pay.

Question 12

The monopolist:

Accepted Answer

A) sometimes charges different customers different prices regardless of the cost of supplying the good. 
B) always charges each buyer the same price. 
C) charges different customers different prices regardless of the cost of supplying the good. 
D) never charges each buyer the same price. 
A) sometimes charges different customers different prices regardless of the cost of supplying the good. 
B) always charges each buyer the same price. 
C) charges different customers different prices regardless of the cost of supplying the good. 
D) never charges each buyer the same price.

Question 13

Price discrimination can benefit some consumers because:

Accepted Answer

A) a uniform price may be above their willingness to pay. 
B) they can resell that good at a higher price and earn some extra money. 
C) it forces monopolists to earn lower profits. 
D) it forces monopolists to operate on the elastic section of their demand curve. 
A) a uniform price may be above their willingness to pay. 
B) they can resell that good at a higher price and earn some extra money. 
C) it forces monopolists to earn lower profits. 
D) it forces monopolists to operate on the elastic section of their demand curve.

Question 14

Exhibit 8-4 Demand and cost curves for a monopolist
  
-As shown in Exhibit 8-4,in order to maximise its profit (or minimise 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 15

A casino is often protected by license because:

Accepted Answer

A) it is helping gamblers to access the services. 
B) it allows the casino to enjoy the monopolistic pricing. 
C) it creates a stream of revenue to the government. 
D) it invites more casinos to open. 
A) it is helping gamblers to access the services. 
B) it allows the casino to enjoy the monopolistic pricing. 
C) it creates a stream of revenue to the government. 
D) it invites more casinos to open.

Question 16

There is only one hairdressing salon on campus.That means it is possibly a/an:

Accepted Answer

A) oligopoly. 
B) monopolistically competitive firm. 
C) monopoly. 
D) competitive firm. 
A) oligopoly. 
B) monopolistically competitive firm. 
C) monopoly. 
D) competitive firm.

Question 17

The monopolist can choose:

Accepted Answer

A) any price for its product. 
B) the demand curve. 
C) price and quantity to produce. 
D) price or quantity to produce. 
A) any price for its product. 
B) the demand curve. 
C) price and quantity to produce. 
D) price or quantity to produce.

Question 18

If a big firm is needed to produce at low cost,then natural monopoly can occur.

Accepted Answer

A) True 
 B)False

Question 19

Exhibit 8-7
  
-According to Exhibit 8-7,if this market has many competing firms,then price and output will be:

Accepted Answer

A) P0 and Q1. 
B) P1 and Q1. 
C) P0 and Q2. 
D) P2 and Q1. 
E) P2 and Q2. 
A) P0 and Q1. 
B) P1 and Q1. 
C) P0 and Q2. 
D) P2 and Q1. 
E) P2 and Q2.

Question 20

Which of the following is true for the monopolist?

Accepted Answer

A) Marginal revenue is equal to the price charged. 
B) Economic profit is always zero in the long run. 
C) Profit-maximising occurs when marginal revenue is greater than the marginal cost. 
D) Loss-maximising occurs when marginal revenue is equal to the marginal cost. 
A) Marginal revenue is equal to the price charged. 
B) Economic profit is always zero in the long run. 
C) Profit-maximising occurs when marginal revenue is greater than the marginal cost. 
D) Loss-maximising occurs when marginal revenue is equal to the marginal cost.

Monopolists are criticised because they are inefficient.What is meant by this statement?

The most effective barrier/s to protect a monopoly from competition is/are:

Economies of scale means that competition is unsustainable because:

For a monopolist to practise price discrimination,one necessary condition is that the product offered for sale must be:

A monopoly can result because of:

Firms employ price discrimination because:

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

Which barrier to entry results in the creation of a natural monopoly?

There is only one petrol station within hundreds of miles.The owner finds that when she charges $3 a litre,she sells 99 litres a day,and when she charges $2.95 a litre,she sells 100 litres a day.The marginal revenue of the 100th litre of petrol is:

The argument that supports monopolies' role in an economy is that:

Bus services often offer lower prices for students and pensioners because:

The monopolist:

Price discrimination can benefit some consumers because:

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

A casino is often protected by license because:

There is only one hairdressing salon on campus.That means it is possibly a/an:

The monopolist can choose:

If a big firm is needed to produce at low cost,then natural monopoly can occur.

Exhibit 8-7 -According to Exhibit 8-7,if this market has many competing firms,then price and output will be:

Which of the following is true for the monopolist?

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

Monopolists are criticised because they are inefficient.What is meant by this statement?

The most effective barrier/s to protect a monopoly from competition is/are:

Economies of scale means that competition is unsustainable because:

For a monopolist to practise price discrimination,one necessary condition is that the product offered for sale must be:

A monopoly can result because of:

Firms employ price discrimination because:

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

Which barrier to entry results in the creation of a natural monopoly?

There is only one petrol station within hundreds of miles.The owner finds that when she charges $3 a litre,she sells 99 litres a day,and when she charges $2.95 a litre,she sells 100 litres a day.The marginal revenue of the 100th litre of petrol is:

The argument that supports monopolies' role in an economy is that:

Bus services often offer lower prices for students and pensioners because:

The monopolist:

Price discrimination can benefit some consumers because:

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

A casino is often protected by license because:

There is only one hairdressing salon on campus.That means it is possibly a/an:

The monopolist can choose:

If a big firm is needed to produce at low cost,then natural monopoly can occur.

Exhibit 8-7 -According to Exhibit 8-7,if this market has many competing firms,then price and output will be:

Which of the following is true for the monopolist?

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