Question 1

The key element in preserving a monopoly is

Accepted Answer

A) government subsidy of critical enterprises. 
B) keeping potential rivals out of the market. 
C) guaranteeing availability of substitute products. 
D) increased advertising expenditure. 
A) government subsidy of critical enterprises. 
B) keeping potential rivals out of the market. 
C) guaranteeing availability of substitute products. 
D) increased advertising expenditure.

Question 2

The existence of a natural monopoly stems from the size of the firm relative to the total market demand for the product of that firm.

Accepted Answer

A) True 
 B)False

Question 3

How does the monopolist calculate profit per unit, and total profit?

Accepted Answer

A monopolist computes profit per unit by

Question 4

Figure 11-7
  
-For the firm in Figure 11-7, an unregulated monopolist, profit-maximizing output is below the long-run competitive level by how much?

Accepted Answer

A) 100 
B) 75 
C) 50 
D) 25 
A) 100 
B) 75 
C) 50 
D) 25

Question 5

Too much of society's scarce resources are used to produce goods in monopoly markets.

Accepted Answer

A) True 
 B)False

Question 6

At a given output level, a monopolist earns a profit only if the

Accepted Answer

A) slope of its TR curve exceeds the slope of his TC curve. 
B) height of its MR curve exceeds the height of his MC curve. 
C) height of its demand curve exceeds the height of his MR curve. 
D) height of its demand curve exceeds the height of his ATC curve. 
A) slope of its TR curve exceeds the slope of his TC curve. 
B) height of its MR curve exceeds the height of his MC curve. 
C) height of its demand curve exceeds the height of his MR curve. 
D) height of its demand curve exceeds the height of his ATC curve.

Question 7

Natural monopolies are of theoretical, but not practical interest.

Accepted Answer

A) True 
 B)False

Question 8

A monopoly firm always devotes some of its profits to research.

Accepted Answer

A) True 
 B)False

Question 9

The U.S.government

Accepted Answer

A) intervenes to prevent the monopolization of any market. 
B) forbids the creation of legal impediments to entry into any market. 
C) intervenes to prevent the monopolization of some markets and actively encourages the monopolization of others. 
D) encourages the permanent monopolization of all markets in which the monopolist has technical superiority over potential competitors. 
A) intervenes to prevent the monopolization of any market. 
B) forbids the creation of legal impediments to entry into any market. 
C) intervenes to prevent the monopolization of some markets and actively encourages the monopolization of others. 
D) encourages the permanent monopolization of all markets in which the monopolist has technical superiority over potential competitors.

Question 10

There exist only two causes of monopoly: barriers to entry and government restrictions.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is true for a profit-maximizing competitive firm in the long run but not a monopolist?

Accepted Answer

A) MC = MR 
B) MC = P 
C) AR = P 
D) Q > 0 
A) MC = MR 
B) MC = P 
C) AR = P 
D) Q > 0

Question 12

-In Table 11-2, marginal revenue at the profit-maximizing output is how much?

Accepted Answer

A) $5 
B) $7 
C) $8 
D) $110 
A) $5 
B) $7 
C) $8 
D) $110

Question 13

Figure 11-7
  
-The firm in Figure 11-7 is an unregulated monopolist; it will earn long-run profits of how much?

Accepted Answer

A) 500 
B) 400 
C) 300 
D) 200 
A) 500 
B) 400 
C) 300 
D) 200

Question 14

Suppose a monopolist can charge different prices to different customers, such as doctors charging different prices depending on whether the patient is insured.How will profits and marginal revenue of such a price-discriminating monopolist compare to profits and MR of an ordinary monopolist who must charge all patients the same fee?

Accepted Answer

The price-discriminating monopolist will

Question 15

It is possible that if a monopoly is broken up, the cost of production for that product could increase.

Accepted Answer

A) True 
 B)False

Question 16

Figure 11-6
  
-The industry described in Figure 11-6

Accepted Answer

A) is not a natural monopoly because no firm would produce in the long run unless the government intervened in the market. 
B) is not a natural monopoly because the average total cost curve is U-shaped. 
C) is a natural monopoly because the economic profit is positive for a monopolist if the government doesn't intervene. 
D) is a natural monopoly because price is less than average total cost at the output that would be produced by the industry under perfect competition. 
A) is not a natural monopoly because no firm would produce in the long run unless the government intervened in the market. 
B) is not a natural monopoly because the average total cost curve is U-shaped. 
C) is a natural monopoly because the economic profit is positive for a monopolist if the government doesn't intervene. 
D) is a natural monopoly because price is less than average total cost at the output that would be produced by the industry under perfect competition.

Question 17

Describe the types of entry barriers which can exist and their importance to the study of monopoly.

Accepted Answer

There are seven types of barriers discus

Question 18

Explain how each of the following industries practices price discrimination:
a.movie theaters
b.airlines
c.auto dealers
d.U.S.Postal Service

Accepted Answer

a.Movie theaters charge different prices

Question 19

A natural monopoly is characterized by the fact that its average costs increase rather than decrease when its output expands.

Accepted Answer

A) True 
 B)False

Question 20

Although monopoly has lower output than competition, the level of output is efficient.

Accepted Answer

A) True 
 B)False

Exam 11: Monopoly

The key element in preserving a monopoly is

The existence of a natural monopoly stems from the size of the firm relative to the total market demand for the product of that firm.

How does the monopolist calculate profit per unit, and total profit?

Figure 11-7 -For the firm in Figure 11-7, an unregulated monopolist, profit-maximizing output is below the long-run competitive level by how much?

Too much of society's scarce resources are used to produce goods in monopoly markets.

At a given output level, a monopolist earns a profit only if the

Natural monopolies are of theoretical, but not practical interest.

A monopoly firm always devotes some of its profits to research.

The U.S.government

There exist only two causes of monopoly: barriers to entry and government restrictions.

Which of the following is true for a profit-maximizing competitive firm in the long run but not a monopolist?

-In Table 11-2, marginal revenue at the profit-maximizing output is how much?

Figure 11-7 -The firm in Figure 11-7 is an unregulated monopolist; it will earn long-run profits of how much?

It is possible that if a monopoly is broken up, the cost of production for that product could increase.

Figure 11-6 -The industry described in Figure 11-6

Describe the types of entry barriers which can exist and their importance to the study of monopoly.

Explain how each of the following industries practices price discrimination: a.movie theaters b.airlines c.auto dealers d.U.S.Postal Service

A natural monopoly is characterized by the fact that its average costs increase rather than decrease when its output expands.

Although monopoly has lower output than competition, the level of output is efficient.

What Is Economics

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: an Initial Look

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: the Importance of Marginal Analysis

Securities: Business Finance and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

Between Competition and Monopoly

Limiting Market Power: Regulation and Antitrust

The Case for Free Markets: the Price System

The Shortcomings of Free Markets

Externalities, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

Is Useconomic Leadership Threatened

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation

Bringing in the Supply Side: Unemployment and Inflation

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

He Financial Crisis and the Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade-Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder

Exchange Rates and the Macroeconomy

Filters