Question 1

Which of the following statements correctly identifies a similarity between network effects and economies of scale?

Accepted Answer

A)  Both are related to the costs incurred by a firm. 
B)  Both act as barriers to entry in a market. 
C)  Both act as disincentives to monopolies. 
D)  Both are related to the number of consumers using a firm's product. 
A)  Both are related to the costs incurred by a firm. 
B)  Both act as barriers to entry in a market. 
C)  Both act as disincentives to monopolies. 
D)  Both are related to the number of consumers using a firm's product.

Question 2

The following table shows the quantities of a good sold by a monopolist at different prices.
  
-Refer to the table above.What is the marginal revenue of the monopolist when it sells 300 units of its product?

Accepted Answer

A)  $1 
B)  $2 
C)  $3 
D)  $4 
A)  $1 
B)  $2 
C)  $3 
D)  $4

Question 3

The following figure is a supply-demand diagram that characterizes the demand, marginal revenue, and cost curves for a profit-maximizing monopolist.
  
-Refer to the figure above.If the industry were perfectly competitive (marginal cost pricing)rather than a monopoly,social surplus would be ________.

Accepted Answer

A)  Areas A + B + C + D + E 
B)  Areas A + B + C + D 
C)  Areas A + B + C 
D)  Areas A + C 
A)  Areas A + B + C + D + E 
B)  Areas A + B + C + D 
C)  Areas A + B + C 
D)  Areas A + C

Question 4

At a certain level of production,the marginal revenue and the marginal cost of a monopolist are $8 and $6,respectively.Which of the following statements is true in this context?

Accepted Answer

A)  The monopolist should expand production. 
B)  The monopolist should contract production. 
C)  The profits of the monopolist are maximized. 
D)  The profits of the monopolist are minimized. 
A)  The monopolist should expand production. 
B)  The monopolist should contract production. 
C)  The profits of the monopolist are maximized. 
D)  The profits of the monopolist are minimized.

Question 5

Firm A is a monopoly because of network effects,whereas Firm B is a natural monopoly.Which of the following statements is likely to be true in this context?

Accepted Answer

A)  The average total costs of both firms decrease as they increase their output. 
B)  The value of the product that both firms produce increases with an increase in the number of buyers. 
C)  Firm A enjoys a monopoly status because its marginal cost decreases with increase in output, whereas Firm B enjoys a monopoly status because the value of its product increases as more consumers buy it. 
D)  Firm B enjoys a monopoly status because its average total cost decreases with increase in output, whereas Firm A enjoys a monopoly status because the value of its product increases as more consumers buy it. 
A)  The average total costs of both firms decrease as they increase their output. 
B)  The value of the product that both firms produce increases with an increase in the number of buyers. 
C)  Firm A enjoys a monopoly status because its marginal cost decreases with increase in output, whereas Firm B enjoys a monopoly status because the value of its product increases as more consumers buy it. 
D)  Firm B enjoys a monopoly status because its average total cost decreases with increase in output, whereas Firm A enjoys a monopoly status because the value of its product increases as more consumers buy it.

Question 6

Which of the following statements correctly identifies a similarity between monopoly and perfect competition?

Accepted Answer

A)  Entry is restricted in both market structures. 
B)  Price equals marginal cost in both market structures. 
C)  Production is expanded until marginal revenue equals marginal cost in both market structures. 
D)  Firms face an upward-sloping demand curve and a downward-sloping marginal revenue curve in both market structures. 
A)  Entry is restricted in both market structures. 
B)  Price equals marginal cost in both market structures. 
C)  Production is expanded until marginal revenue equals marginal cost in both market structures. 
D)  Firms face an upward-sloping demand curve and a downward-sloping marginal revenue curve in both market structures.

Question 7

The following figure shows the demand curve faced by a monopolist.
  
-Refer to the figure above.What is the quantity effect of a price increase from $3 to $5?

Accepted Answer

A)  $200 
B)  $600 
C)  $800 
D)  $1,000 
A)  $200 
B)  $600 
C)  $800 
D)  $1,000

Question 8

Which of the following market structures provides socially efficient outcomes?

Accepted Answer

A)  An oligopoly 
B)  A monopoly 
C)  Perfect competition 
D)  Monopolistic competition 
A)  An oligopoly 
B)  A monopoly 
C)  Perfect competition 
D)  Monopolistic competition

Question 9

Which of the following statements explains why monopolies weaken the functioning of the invisible hand?

Accepted Answer

A)  A monopoly is a price-taker. 
B)  The quantity produced by a monopoly is too low. 
C)  A monopolist faces an upward-sloping demand curve. 
D)  A monopolist sets the price of its good below marginal costs. 
A)  A monopoly is a price-taker. 
B)  The quantity produced by a monopoly is too low. 
C)  A monopolist faces an upward-sloping demand curve. 
D)  A monopolist sets the price of its good below marginal costs.

Question 10

A ________ is the privilege granted to an individual or company by the government that gives them the sole right to produce and sell a good.

Accepted Answer

A)  brand 
B)  patent 
C)  copyright 
D)  trademark 
A)  brand 
B)  patent 
C)  copyright 
D)  trademark

Question 11

If a monopolist owns or controls a key resource necessary for production,the ownership of the resource is a source of ________ market power.

Accepted Answer

A)  legal 
B)  natural 
C)  regulated 
D)  restricted 
A)  legal 
B)  natural 
C)  regulated 
D)  restricted

Question 12

The following table shows the different quantities sold by a monopolist at different prices.
   
a) Estimate the total revenue and marginal revenue of the monopolist at the different quantities.
b) If the monopolist faces a constant marginal cost of $2.29,what is the optimal output it should produce?

Accepted Answer

a)The total revenue and marginal revenue

Question 13

The following figure shows the market demand curve for penicillin, an antibiotic medicine. Initially, the market was supplied by perfectly competitive firms. Later, the government granted the exclusive right to produce and sell penicillin to one firm. The figure also shows the marginal revenue curve (MR) of the firm once it begins to operate as a monopoly. The marginal cost is constant at $3, irrespective of the market structure.
  
-Refer to the figure above.What is the deadweight loss when the market is perfectly competitive?

Accepted Answer

A)  $0 
B)  $30 
C)  $45 
D)  $90 
A)  $0 
B)  $30 
C)  $45 
D)  $90

Question 14

The following figure is a supply-demand diagram that characterizes the demand, marginal revenue, and cost curves for a profit-maximizing monopolist.
  
-Refer to the figure above.Under monopoly,social surplus is ________.

Accepted Answer

A)  Areas A + B + C + D + E 
B)  Areas A + B + C + D 
C)  Areas A + C 
D)  Areas A + B + C 
A)  Areas A + B + C + D + E 
B)  Areas A + B + C + D 
C)  Areas A + C 
D)  Areas A + B + C

Question 15

Several businesses and organizations in Hawaii,including hotels,practice what is called kama'aina pricing.Under this pricing strategy,customers with a valid Hawaii driver's license are charged the lowest price,customers with a valid military identification card are charged slightly higher prices,and all other customers are charged the highest price for the identical good or service.This is an example of ________.

Accepted Answer

A)  first-degree price discrimination 
B)  second-degree price discrimination 
C)  third-degree price discrimination 
D)  simple monopoly pricing 
A)  first-degree price discrimination 
B)  second-degree price discrimination 
C)  third-degree price discrimination 
D)  simple monopoly pricing

Question 16

The following figure shows the marginal revenue (MR) curve and the demand curve faced by a monopolist. The monopolist faces a constant marginal cost of $3.
  
-Refer to the figure above.What is the optimal quantity that the monopolist should produce?

Accepted Answer

A)  30 units 
B)  45 units 
C)  60 units 
D)  90 units 
A)  30 units 
B)  45 units 
C)  60 units 
D)  90 units

Question 17

The following table shows the quantities of a good sold by a monopolist at different prices.
  
-Refer to the table above.What is the total revenue of the monopolist when it charges a price of $9?

Accepted Answer

A)  $1,250 
B)  $1,350 
C)  $1,750 
D)  $2,250 
A)  $1,250 
B)  $1,350 
C)  $1,750 
D)  $2,250

Question 18

Compared to other market structures,monopolists ________.

Accepted Answer

A)  maximize social surplus 
B)  encourage the entry and exit of new firms 
C)  set price lower than marginal revenue 
D)  produce goods that do not have close substitutes 
A)  maximize social surplus 
B)  encourage the entry and exit of new firms 
C)  set price lower than marginal revenue 
D)  produce goods that do not have close substitutes

Question 19

Which of the following graphs correctly represents a natural monopoly market?

Accepted Answer

A)  Market 1 
B)  Market 2 
C)  Market 3 
D)  Both market 1 and market 3 
A)  Market 1 
B)  Market 2 
C)  Market 3 
D)  Both market 1 and market 3

Question 20

The total revenue curve of a monopolist is at its maximum when marginal ________.

Accepted Answer

A)  cost is zero 
B)  cost is positive 
C)  revenue is zero 
D)  revenue is positive 
A)  cost is zero 
B)  cost is positive 
C)  revenue is zero 
D)  revenue is positive

Which of the following statements correctly identifies a similarity between network effects and economies of scale?

The following table shows the quantities of a good sold by a monopolist at different prices. -Refer to the table above.What is the marginal revenue of the monopolist when it sells 300 units of its product?

The following figure is a supply-demand diagram that characterizes the demand, marginal revenue, and cost curves for a profit-maximizing monopolist. -Refer to the figure above.If the industry were perfectly competitive (marginal cost pricing)rather than a monopoly,social surplus would be ________.

At a certain level of production,the marginal revenue and the marginal cost of a monopolist are $8 and $6,respectively.Which of the following statements is true in this context?

Firm A is a monopoly because of network effects,whereas Firm B is a natural monopoly.Which of the following statements is likely to be true in this context?

Which of the following statements correctly identifies a similarity between monopoly and perfect competition?

The following figure shows the demand curve faced by a monopolist. -Refer to the figure above.What is the quantity effect of a price increase from $3 to $5?

Which of the following market structures provides socially efficient outcomes?

Which of the following statements explains why monopolies weaken the functioning of the invisible hand?

A ________ is the privilege granted to an individual or company by the government that gives them the sole right to produce and sell a good.

If a monopolist owns or controls a key resource necessary for production,the ownership of the resource is a source of ________ market power.

The following table shows the different quantities sold by a monopolist at different prices. a) Estimate the total revenue and marginal revenue of the monopolist at the different quantities. b) If the monopolist faces a constant marginal cost of $2.29,what is the optimal output it should produce?

The following figure is a supply-demand diagram that characterizes the demand, marginal revenue, and cost curves for a profit-maximizing monopolist. -Refer to the figure above.Under monopoly,social surplus is ________.

The following figure shows the marginal revenue (MR) curve and the demand curve faced by a monopolist. The monopolist faces a constant marginal cost of $3. -Refer to the figure above.What is the optimal quantity that the monopolist should produce?

The following table shows the quantities of a good sold by a monopolist at different prices. -Refer to the table above.What is the total revenue of the monopolist when it charges a price of $9?

Compared to other market structures,monopolists ________.

Which of the following graphs correctly represents a natural monopoly market?

The total revenue curve of a monopolist is at its maximum when marginal ________.

The Principles and Practice of Economics

Economic Methods and Economic Questions

Optimization: Doing the Best You Can

Demand, supply, and Equilibrium

Consumers and Incentives

Sellers and Incentives

Perfect Competition and the Invisible Hand

Trade

Externalities and Public Goods

The Government in the Economy: Taxation and Regulation

Markets for Factors of Production

Game Theory and Strategic Play

Oligopoly and Monopolistic Competition

Trade-Offs Involving Time and Risk

The Economics of Information

Auctions and Bargaining

Social Economics

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Exam 12: Monopoly

Which of the following statements correctly identifies a similarity between network effects and economies of scale?

The following table shows the quantities of a good sold by a monopolist at different prices. -Refer to the table above.What is the marginal revenue of the monopolist when it sells 300 units of its product?

The following figure is a supply-demand diagram that characterizes the demand, marginal revenue, and cost curves for a profit-maximizing monopolist. -Refer to the figure above.If the industry were perfectly competitive (marginal cost pricing)rather than a monopoly,social surplus would be ________.

At a certain level of production,the marginal revenue and the marginal cost of a monopolist are $8 and $6,respectively.Which of the following statements is true in this context?

Firm A is a monopoly because of network effects,whereas Firm B is a natural monopoly.Which of the following statements is likely to be true in this context?

Which of the following statements correctly identifies a similarity between monopoly and perfect competition?

The following figure shows the demand curve faced by a monopolist. -Refer to the figure above.What is the quantity effect of a price increase from $3 to $5?

Which of the following market structures provides socially efficient outcomes?

Which of the following statements explains why monopolies weaken the functioning of the invisible hand?

A ________ is the privilege granted to an individual or company by the government that gives them the sole right to produce and sell a good.

If a monopolist owns or controls a key resource necessary for production,the ownership of the resource is a source of ________ market power.

The following table shows the different quantities sold by a monopolist at different prices. a) Estimate the total revenue and marginal revenue of the monopolist at the different quantities. b) If the monopolist faces a constant marginal cost of $2.29,what is the optimal output it should produce?

The following figure is a supply-demand diagram that characterizes the demand, marginal revenue, and cost curves for a profit-maximizing monopolist. -Refer to the figure above.Under monopoly,social surplus is ________.

The following figure shows the marginal revenue (MR) curve and the demand curve faced by a monopolist. The monopolist faces a constant marginal cost of $3. -Refer to the figure above.What is the optimal quantity that the monopolist should produce?

The following table shows the quantities of a good sold by a monopolist at different prices. -Refer to the table above.What is the total revenue of the monopolist when it charges a price of $9?

Compared to other market structures,monopolists ________.

Which of the following graphs correctly represents a natural monopoly market?

The total revenue curve of a monopolist is at its maximum when marginal ________.

The Principles and Practice of Economics

Economic Methods and Economic Questions

Optimization: Doing the Best You Can

Demand, supply, and Equilibrium

Consumers and Incentives

Sellers and Incentives

Perfect Competition and the Invisible Hand

Trade

Externalities and Public Goods

The Government in the Economy: Taxation and Regulation

Markets for Factors of Production

Game Theory and Strategic Play

Oligopoly and Monopolistic Competition

Trade-Offs Involving Time and Risk

The Economics of Information

Auctions and Bargaining

Social Economics

Filters