Question 1

Unlike perfectly competitive firms,monopolists can control

Accepted Answer

A) how much of the good to produce 
B) what inputs to use in production 
C) its plant size 
D) the price charged per unit of output 
E) the quality of inputs used in production 
A) how much of the good to produce 
B) what inputs to use in production 
C) its plant size 
D) the price charged per unit of output 
E) the quality of inputs used in production

Question 2

As a price setter,a monopoly

Accepted Answer

A) can establish any price it wants for each output level 
B) can sell any output level it wants for each price 
C) is constrained by the market demand curve 
D) can use its pricing policy to shift the market demand curve 
E) faces an upward-sloping demand curve for its output 
A) can establish any price it wants for each output level 
B) can sell any output level it wants for each price 
C) is constrained by the market demand curve 
D) can use its pricing policy to shift the market demand curve 
E) faces an upward-sloping demand curve for its output

Question 3

-In Figure 10-31,if this monopolist increases its output from 100 to 150,its marginal revenue will be

Accepted Answer

A) $30. 
B) $45. 
C) $0. 
D) $15. 
A) $30. 
B) $45. 
C) $0. 
D) $15.

Question 4

A natural monopoly is created by

Accepted Answer

A) a patent 
B) nature 
C) substantial economies of scale 
D) government regulation 
E) control of scarce inputs 
A) a patent 
B) nature 
C) substantial economies of scale 
D) government regulation 
E) control of scarce inputs

Question 5

A patent

Accepted Answer

A) tends to discourage further innovation,since there are no other competitors to "push" the patentee 
B) prevents anyone else from buying the same discovery or product for twenty years 
C) grants exclusive rights over the protected firm for at least fifty years 
D) is an infringement against an exclusive business right 
E) prevents anyone else from selling the same discovery or product for twenty years 
A) tends to discourage further innovation,since there are no other competitors to "push" the patentee 
B) prevents anyone else from buying the same discovery or product for twenty years 
C) grants exclusive rights over the protected firm for at least fifty years 
D) is an infringement against an exclusive business right 
E) prevents anyone else from selling the same discovery or product for twenty years

Question 6

Monopolies may earn positive economic profits in

Accepted Answer

A) only the short run. 
B) the short run or the long run. 
C) only the long run. 
D) never. 
A) only the short run. 
B) the short run or the long run. 
C) only the long run. 
D) never.

Question 7

A single-price monopolist is

Accepted Answer

A) able to use price discrimination to increase profits 
B) protected from competition by patents and copyright laws 
C) one that charges the same price for all units of output 
D) illegal in the United States 
E) less efficient than a multi-price monopoly 
A) able to use price discrimination to increase profits 
B) protected from competition by patents and copyright laws 
C) one that charges the same price for all units of output 
D) illegal in the United States 
E) less efficient than a multi-price monopoly

Question 8

A single-price monopolist is producing 8,000 units of output.At that level,price equals $10,average total cost equals $12,and average variable cost equals $8.In addition,both marginal cost and marginal revenue equal $6.Which of the following statements is correct in the short run?

Accepted Answer

A) The firm is earning total revenues equal to $96,000. 
B) The firm could reduce its loss by shutting down. 
C) The firm has a loss per unit equal to $4. 
D) The firm is minimizing its economic loss at $16,000. 
E) The firm is earning an economic profit equal to $16,000. 
A) The firm is earning total revenues equal to $96,000. 
B) The firm could reduce its loss by shutting down. 
C) The firm has a loss per unit equal to $4. 
D) The firm is minimizing its economic loss at $16,000. 
E) The firm is earning an economic profit equal to $16,000.

Question 9

Brittany provides manicures at the only salon in town.Her marginal cost is constant at $5 per client,her fixed cost is $25 per day,and she is able to do 8 manicures per day.On a given day,half of her clients are willing to pay $15 for a manicure;half are willing to pay only $10.If she charges all of her clients $10,then her maximum daily profit equals

Accepted Answer

A) $80 
B) $15 
C) $40 
D) $55 
E) $50 
A) $80 
B) $15 
C) $40 
D) $55 
E) $50

Question 10

Consider a single-price monopolist that is in equilibrium at output level Q* and price P*.If the government imposes a new tax on the firm of $25 per unit of output,then

Accepted Answer

A) output and price will remain at Q* and P* 
B) output will fall and price will rise by $25 
C) output will fall and price will fall by less than $25 
D) output will rise and price will fall by $25 
E) output will fall and the price will rise by less than $25 
A) output and price will remain at Q* and P* 
B) output will fall and price will rise by $25 
C) output will fall and price will fall by less than $25 
D) output will rise and price will fall by $25 
E) output will fall and the price will rise by less than $25

Question 11

Rent-seeking activity

Accepted Answer

A) is any revenue associated with long-term leases 
B) is any costly action a firm undertakes to acquire or maintain monopoly power 
C) is an attempt to inflate costs and reduce tax liabilities 
D) occurs when a monopoly leases out some of its assets 
E) is any rational action a consumer undertakes in seeking the lowest rent 
A) is any revenue associated with long-term leases 
B) is any costly action a firm undertakes to acquire or maintain monopoly power 
C) is an attempt to inflate costs and reduce tax liabilities 
D) occurs when a monopoly leases out some of its assets 
E) is any rational action a consumer undertakes in seeking the lowest rent

Question 12

A monopolist will

Accepted Answer

A) never produce at an output level where marginal cost is positive 
B) always produce at an output level where marginal revenue is positive 
C) seek network externalities whenever switching costs are high 
D) always produce where marginal revenue exceeds price 
E) never produce where marginal revenue exceeds marginal cost 
A) never produce at an output level where marginal cost is positive 
B) always produce at an output level where marginal revenue is positive 
C) seek network externalities whenever switching costs are high 
D) always produce where marginal revenue exceeds price 
E) never produce where marginal revenue exceeds marginal cost

Question 13

Patents stimulate innovation by

Accepted Answer

A) providing incentives to incur research and development costs 
B) guaranteed profits for those who innovate 
C) prosecuting anyone who purchases the good protected by the patent 
D) providing tax breaks to investors 
E) increasing the interest rate on borrowed funds 
A) providing incentives to incur research and development costs 
B) guaranteed profits for those who innovate 
C) prosecuting anyone who purchases the good protected by the patent 
D) providing tax breaks to investors 
E) increasing the interest rate on borrowed funds

Question 14

-Figure 10-1 shows the demand schedule facing the only gas station in a small Midwestern town.The station does not price discriminate.Which of the following statements is correct?

Accepted Answer

A) The demand curve facing Friendly Stop has a constant price elasticity. 
B) If the station increases sales from 100 to 110 gallons,marginal revenue will equal $1.40. 
C) If the station increases sales from 100 to 110 gallons,marginal revenue will equal $14.00. 
D) Demand is price elastic throughout the demand schedule. 
E) The owner of the station would be unwilling to charge either $1.00 or $0.90 per gallon. 
A) The demand curve facing Friendly Stop has a constant price elasticity. 
B) If the station increases sales from 100 to 110 gallons,marginal revenue will equal $1.40. 
C) If the station increases sales from 100 to 110 gallons,marginal revenue will equal $14.00. 
D) Demand is price elastic throughout the demand schedule. 
E) The owner of the station would be unwilling to charge either $1.00 or $0.90 per gallon.

Question 15

-If the firm in Figure 10-21 were to shut down in the short run,it would have

Accepted Answer

A) an economic loss of zero,instead of economic losses of $25,000 by producing 
B) an economic loss of $18,750,instead of economic losses equal to $12,500 by producing 
C) an economic loss of zero,instead of economic profits of $6,250 
D) the same economic loss it would have if it continued to produce 
E) an economic loss of $43,750,instead of economic losses equal to $37,500 
A) an economic loss of zero,instead of economic losses of $25,000 by producing 
B) an economic loss of $18,750,instead of economic losses equal to $12,500 by producing 
C) an economic loss of zero,instead of economic profits of $6,250 
D) the same economic loss it would have if it continued to produce 
E) an economic loss of $43,750,instead of economic losses equal to $37,500

Question 16

Which of the following goods would be most likely to be produced by a monopoly?

Accepted Answer

A) Lotso-Sugar brand cereal 
B) Pepsi 
C) margarine 
D) electricity 
E) Ford automobiles 
A) Lotso-Sugar brand cereal 
B) Pepsi 
C) margarine 
D) electricity 
E) Ford automobiles

Question 17

If a non-discriminating monopolist decides to lower its price to sell one more unit of its product,then

Accepted Answer

A) total revenue rises by an amount equal to the price 
B) some revenue is lost to the extent that units previously sold at a higher price now sell for a lower price;however,the additional unit sold brings in new revenue 
C) marginal revenue increases when total revenue increases 
D) the net effect on total revenue is typically zero since the price must fall 
E) the net effect on total revenue is typically negative since the price must fall 
A) total revenue rises by an amount equal to the price 
B) some revenue is lost to the extent that units previously sold at a higher price now sell for a lower price;however,the additional unit sold brings in new revenue 
C) marginal revenue increases when total revenue increases 
D) the net effect on total revenue is typically zero since the price must fall 
E) the net effect on total revenue is typically negative since the price must fall

Question 18

-The monopoly represented in Figure 10-26 has constant marginal cost and no fixed costs.If the firm is a perfect price discriminator,it will produce

Accepted Answer

A) Q** units 
B) Q* units 
C) between 0 and Q* units 
D) between Q* and Q** units 
E) more than Q** units 
A) Q** units 
B) Q* units 
C) between 0 and Q* units 
D) between Q* and Q** units 
E) more than Q** units

Question 19

A market that will naturally end up with just one seller is a(n)

Accepted Answer

A) evolutionary monopoly. 
B) natural monopoly. 
C) competitive monopoly. 
D) entry barrier monopoly. 
A) evolutionary monopoly. 
B) natural monopoly. 
C) competitive monopoly. 
D) entry barrier monopoly.

Question 20

-Assuming no price discrimination,the firm depicted in Figure 10-22 will have total revenue equal to

Accepted Answer

A) $18,750 
B) $25,000 
C) $48,125 
D) $36,000 
E) $45,000 
A) $18,750 
B) $25,000 
C) $48,125 
D) $36,000 
E) $45,000

Unlike perfectly competitive firms,monopolists can control

As a price setter,a monopoly

-In Figure 10-31,if this monopolist increases its output from 100 to 150,its marginal revenue will be

A natural monopoly is created by

A patent

Monopolies may earn positive economic profits in

A single-price monopolist is

A single-price monopolist is producing 8,000 units of output.At that level,price equals $10,average total cost equals $12,and average variable cost equals $8.In addition,both marginal cost and marginal revenue equal $6.Which of the following statements is correct in the short run?

Consider a single-price monopolist that is in equilibrium at output level Q* and price P*.If the government imposes a new tax on the firm of $25 per unit of output,then

Rent-seeking activity

A monopolist will

Patents stimulate innovation by

-Figure 10-1 shows the demand schedule facing the only gas station in a small Midwestern town.The station does not price discriminate.Which of the following statements is correct?

-If the firm in Figure 10-21 were to shut down in the short run,it would have

Which of the following goods would be most likely to be produced by a monopoly?

If a non-discriminating monopolist decides to lower its price to sell one more unit of its product,then

-The monopoly represented in Figure 10-26 has constant marginal cost and no fixed costs.If the firm is a perfect price discriminator,it will produce

A market that will naturally end up with just one seller is a(n)

-Assuming no price discrimination,the firm depicted in Figure 10-22 will have total revenue equal to

What Is Economics

Scarcity, choice, and Economic Systems

Supply and Demand

Working With Supply and Demand

Elasticity

Consumer Choice

Production and Cost

How Firms Make Decisions: Profit Maximization

Perfect Competition

B:Perfect Competition

Monopolistic Competition and Oligopoly

Labor Markets

B: Labor Markets

Capital and Financial Markets

Economic Efficiency and the Competitive Ideal

Governments Role in Economic Efficiency

Comparative Advantage and the Gains From International Trade

Filters

Exam 11: Monopoly

Unlike perfectly competitive firms,monopolists can control

As a price setter,a monopoly

-In Figure 10-31,if this monopolist increases its output from 100 to 150,its marginal revenue will be

A natural monopoly is created by

A patent

Monopolies may earn positive economic profits in

A single-price monopolist is

A single-price monopolist is producing 8,000 units of output.At that level,price equals $10,average total cost equals $12,and average variable cost equals $8.In addition,both marginal cost and marginal revenue equal $6.Which of the following statements is correct in the short run?

Consider a single-price monopolist that is in equilibrium at output level Q* and price P*.If the government imposes a new tax on the firm of $25 per unit of output,then

Rent-seeking activity

A monopolist will

Patents stimulate innovation by

-Figure 10-1 shows the demand schedule facing the only gas station in a small Midwestern town.The station does not price discriminate.Which of the following statements is correct?

-If the firm in Figure 10-21 were to shut down in the short run,it would have

Which of the following goods would be most likely to be produced by a monopoly?

If a non-discriminating monopolist decides to lower its price to sell one more unit of its product,then

-The monopoly represented in Figure 10-26 has constant marginal cost and no fixed costs.If the firm is a perfect price discriminator,it will produce

A market that will naturally end up with just one seller is a(n)

-Assuming no price discrimination,the firm depicted in Figure 10-22 will have total revenue equal to

What Is Economics

Scarcity, choice, and Economic Systems

Supply and Demand

Working With Supply and Demand

Elasticity

Consumer Choice

Production and Cost

How Firms Make Decisions: Profit Maximization

Perfect Competition

B:Perfect Competition

Monopolistic Competition and Oligopoly

Labor Markets

B: Labor Markets

Capital and Financial Markets

Economic Efficiency and the Competitive Ideal

Governments Role in Economic Efficiency

Comparative Advantage and the Gains From International Trade

Filters