Question 1

If a monopoly engages in first-degree price discrimination,________.

Accepted Answer

A)  social surplus is zero 
B)  producer surplus is zero 
C)  deadweight loss is zero 
D)  consumer surplus is positive 
A)  social surplus is zero 
B)  producer surplus is zero 
C)  deadweight loss is zero 
D)  consumer surplus is positive

Question 2

Scenario: Mr. Olivander has a monopoly on supplying magic wands. The table below shows the demand schedule for magic wands per day.
  
-Refer to the scenario above.Mr.Olivander used to sell two wands per day.Now he plans to cut back his sale to only one wand.The price effect of this plan is a ________,and the quantity effect of this plan is a ________ in his revenue.

Accepted Answer

A)  $25 decrease; $130 increase 
B)  $90 decrease; $65 increase 
C)  $25 increase; $65 decrease 
D)  $65 decrease; $90 increase 
A)  $25 decrease; $130 increase 
B)  $90 decrease; $65 increase 
C)  $25 increase; $65 decrease 
D)  $65 decrease; $90 increase

Question 3

Which of the following is an example of a good produced under perfect competition?

Accepted Answer

A)  Cars 
B)  Corn 
C)  Bottled water 
D)  Patented software 
A)  Cars 
B)  Corn 
C)  Bottled water 
D)  Patented software

Question 4

Which of the following statements is true?

Accepted Answer

A)  The basis for both first-degree and third-degree price discrimination is differences in buyers' willingness to pay for a good. 
B)  The basis for both first-degree and third-degree price discrimination is differences in sellers' willingness to accept payment for a good. 
C)  The basis for first-degree price discrimination is differences in buyers' willingness to pay, whereas the basis for third-degree price discrimination is differences in sellers' willingness to accept payment for a good. 
D)  The basis for first-degree price discrimination is differences in seller's willingness to accept payment for a good, whereas the basis for third-degree price discrimination is differences in buyers' willingness to pay for a good. 
A)  The basis for both first-degree and third-degree price discrimination is differences in buyers' willingness to pay for a good. 
B)  The basis for both first-degree and third-degree price discrimination is differences in sellers' willingness to accept payment for a good. 
C)  The basis for first-degree price discrimination is differences in buyers' willingness to pay, whereas the basis for third-degree price discrimination is differences in sellers' willingness to accept payment for a good. 
D)  The basis for first-degree price discrimination is differences in seller's willingness to accept payment for a good, whereas the basis for third-degree price discrimination is differences in buyers' willingness to pay for a good.

Question 5

A monopolist faces ________.

Accepted Answer

A)  the market demand curve 
B)  a horizontal demand curve at the market price 
C)  a vertical demand curve 
D)  several close substitutes for its product or service 
A)  the market demand curve 
B)  a horizontal demand curve at the market price 
C)  a vertical demand curve 
D)  several close substitutes for its product or service

Question 6

A fundamental feature of a monopolistic market is that the firm ________.

Accepted Answer

A)  can sell any quantity it desires at the current market price 
B)  can obtain any price for any quantity of output 
C)  faces a perfectly inelastic demand curve 
D)  faces the price and quantity trade-off dictated by market demand 
A)  can sell any quantity it desires at the current market price 
B)  can obtain any price for any quantity of output 
C)  faces a perfectly inelastic demand curve 
D)  faces the price and quantity trade-off dictated by market demand

Question 7

Scenario: Tobac Co. is a monopolist in cigarette market in Nicotiana Republic, where the U.S. dollar is used as the official currency. The firm faces the demand curve shown below. The firm has a constant marginal cost of $2.00 per pack and a fixed cost of $50 million.
  
-Refer to the scenario above.If Tobac Co.is forced by the government to charge the fair-return price,the firm's profit would be ________.

Accepted Answer

A)  -$50 million 
B)  negative but more than -$50 million 
C)  $0 
D)  positive but less than $300 million 
A)  -$50 million 
B)  negative but more than -$50 million 
C)  $0 
D)  positive but less than $300 million

Question 8

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,consumer surplus is ________.

Accepted Answer

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

Question 9

The figure below shows the cost and revenue curves of a firm in a monopoly market.
  
-Refer to the figure above.How much profit does this firm make?

Accepted Answer

A)  $20 
B)  $50 
C)  $70 
D)  $64 
A)  $20 
B)  $50 
C)  $70 
D)  $64

Question 10

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 $6?

Accepted Answer

A)  $1,550 
B)  $1,800 
C)  $2,150 
D)  $3,200 
A)  $1,550 
B)  $1,800 
C)  $2,150 
D)  $3,200

Question 11

The problem of superbugs,which are bacteria that resist all available forms of antibiotics,is becoming a serious challenge for doctors.Developing new antibiotics is very costly.Can a monopoly be good for the society in this regard?

Accepted Answer

A)  Yes, because innovation is more likely in a monopoly. 
B)  No, because the price of the antibiotic will increase in a monopoly. 
C)  No, because the firms in a competitive market invest more in research and development to remain competitive. 
D)  Yes, because there will be smaller deadweight loss in the market. 
A)  Yes, because innovation is more likely in a monopoly. 
B)  No, because the price of the antibiotic will increase in a monopoly. 
C)  No, because the firms in a competitive market invest more in research and development to remain competitive. 
D)  Yes, because there will be smaller deadweight loss in the market.

Question 12

Scenario: Tobac Co. is a monopolist in cigarette market in Nicotiana Republic where the U.S. dollar is used as its official currency. The firm faces the demand curve shown below. The firm has a constant marginal cost of $2.00 per pack. The fixed cost of the firm is $50 million. To answer the questions below, it is useful to know that the equation of the (inverse) demand curve is P = 8 - 0.04Q, where Q is the quantity demanded (in millions of packs) and P is the price per pack (in $). Also, you should draw in the marginal revenue curve.
  
-Refer to the scenario above.When Tobac Co.'s profit is maximized,the consumer surplus is ________ and the producer surplus is ________.

Accepted Answer

A)  $225 million; $75 million 
B)  $200 million; $100 million 
C)  $150 million; $150 million 
D)  $112.5 million; $225 million 
A)  $225 million; $75 million 
B)  $200 million; $100 million 
C)  $150 million; $150 million 
D)  $112.5 million; $225 million

Question 13

A market structure in which identical goods are produced by several different firms and sold at the market-determined price is referred to as ________.

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 14

Does a monopolist have a supply curve? Explain your answer.

Accepted Answer

A monopolist does not have a supply curv

Question 15

In which of the following market structures does a seller have NO market power?

Accepted Answer

A)  Monopoly 
B)  Oligopoly 
C)  Perfect competition 
D)  Monopolistic competition 
A)  Monopoly 
B)  Oligopoly 
C)  Perfect competition 
D)  Monopolistic competition

If a monopoly engages in first-degree price discrimination,________.

Which of the following is an example of a good produced under perfect competition?

Which of the following statements is true?

A monopolist faces ________.

A fundamental feature of a monopolistic market is that the firm ________.

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,consumer surplus is ________.

The figure below shows the cost and revenue curves of a firm in a monopoly market. -Refer to the figure above.How much profit does this firm make?

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 $6?

The problem of superbugs,which are bacteria that resist all available forms of antibiotics,is becoming a serious challenge for doctors.Developing new antibiotics is very costly.Can a monopoly be good for the society in this regard?

A market structure in which identical goods are produced by several different firms and sold at the market-determined price is referred to as ________.

Does a monopolist have a supply curve? Explain your answer.

In which of the following market structures does a seller have NO market power?

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

If a monopoly engages in first-degree price discrimination,________.

Which of the following is an example of a good produced under perfect competition?

Which of the following statements is true?

A monopolist faces ________.

A fundamental feature of a monopolistic market is that the firm ________.

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,consumer surplus is ________.

The figure below shows the cost and revenue curves of a firm in a monopoly market. -Refer to the figure above.How much profit does this firm make?

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 $6?

The problem of superbugs,which are bacteria that resist all available forms of antibiotics,is becoming a serious challenge for doctors.Developing new antibiotics is very costly.Can a monopoly be good for the society in this regard?

A market structure in which identical goods are produced by several different firms and sold at the market-determined price is referred to as ________.

Does a monopolist have a supply curve? Explain your answer.

In which of the following market structures does a seller have NO market power?

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