Question 1

The software industry has traits in common with monopoly markets.

Accepted Answer

A) True 
 B)False

Question 2

Figure 11-8
  
-Given the average cost curve shown in Figure 11-8 for dry cleaning, where Q₁ is the quantity demanded in a small town, and Q₂ for a larger town, you would expect dry cleaning to be a monopoly

Accepted Answer

A) in a small town, but not a large one. 
B) in both large and small towns. 
C) in a large town, but not a small one. 
D) only if the process is patented. 
A) in a small town, but not a large one. 
B) in both large and small towns. 
C) in a large town, but not a small one. 
D) only if the process is patented.

Question 3

Draw the demand, marginal revenue and marginal cost curve for a monopolist.Show the equilibrium price and quantity supplied and total profit.Show the equilibrium price and quantity supplied and total profit.

Accepted Answer

Refer to F

Question 4

The demand curve of the monopoly firm is always the

Accepted Answer

A) average revenue curve. 
B) marginal revenue curve. 
C) total revenue curve. 
D) marginal cost curve above average variable cost. 
A) average revenue curve. 
B) marginal revenue curve. 
C) total revenue curve. 
D) marginal cost curve above average variable cost.

Question 5

A profit-maximizing monopolist

Accepted Answer

A) is just as socially efficient as a perfectly competitive firm in allocating resources to production since she, too, seeks the largest return on his investment. 
B) produces an output level at which marginal utility exceeds marginal cost. 
C) produces more output than a perfectly competitive industry. 
D) always produces in the inelastic region of his demand curve. 
A) is just as socially efficient as a perfectly competitive firm in allocating resources to production since she, too, seeks the largest return on his investment. 
B) produces an output level at which marginal utility exceeds marginal cost. 
C) produces more output than a perfectly competitive industry. 
D) always produces in the inelastic region of his demand curve.

Question 6

-In Table 11-2, average cost at the profit-maximizing output is how much?

Accepted Answer

A) $5 
B) $8 
C) $10 
D) $11 
A) $5 
B) $8 
C) $10 
D) $11

Question 7

A monopolist can sell 10 wangdoodles if he charges $10 per wangdoodle and 11 wangdoodles if he charges $9.The MR from selling the 11th wangdoodle is

Accepted Answer

A) −$1. 
B) $1. 
C) $9. 
D) $99. 
A) −$1. 
B) $1. 
C) $9. 
D) $99.

Question 8

A monopolist in the radio industry has two radio-making plants.The marginal cost of radio production by Plant A is $4Q (where Q is the number of radios produced) and the marginal cost of radio production by Plant B is always $16.If the demand curve for radios is downward sloping, the monopolist will

Accepted Answer

A) never produce radios at Plant A. 
B) always produce four times as many radios at Plant B as at A. 
C) never produce more than four radios at Plant A. 
D) produce radios at Plant A only as a last resort. 
A) never produce radios at Plant A. 
B) always produce four times as many radios at Plant B as at A. 
C) never produce more than four radios at Plant A. 
D) produce radios at Plant A only as a last resort.

Question 9

Pure monopoly is able to exist because the firm's product is better than the substitutes that are available in the market.

Accepted Answer

A) True 
 B)False

Question 10

Many public utilities are permitted to operate as monopolies because they enjoy economies of large-scale production.

Accepted Answer

A) True 
 B)False

Question 11

Compared to perfect competition, monopoly in the long run

Accepted Answer

A) restricts output. 
B) charges a higher price. 
C) produces at less than minimum average cost. 
D) All of the above are correct. 
A) restricts output. 
B) charges a higher price. 
C) produces at less than minimum average cost. 
D) All of the above are correct.

Question 12

Figure 11-6
  
-The profit-maximizing monopolist in Figure 11-6 will produce ____ units of output.

Accepted Answer

A) Q₁ 
B) Q₂ 
C) Q₃ 
D) Q₄ 
A) Q₁ 
B) Q₂ 
C) Q₃ 
D) Q₄

Question 13

Is the monopolist supply decision more complicated than that of competitive supply?

Accepted Answer

A) Yes, because the monopolist can choose its price, and the perfect competitor cannot. 
B) No, because they are both price takers. 
C) No, because the market determines the quantity for the monopolist. 
D) No, because the market determines the price for both firms. 
A) Yes, because the monopolist can choose its price, and the perfect competitor cannot. 
B) No, because they are both price takers. 
C) No, because the market determines the quantity for the monopolist. 
D) No, because the market determines the price for both firms.

Question 14

Compared to a perfectly competitive firm, a monopolist

Accepted Answer

A) is less likely to advertise. 
B) will, according to Schumpeter, invest fewer resources in research and development. 
C) usually produces an inefficiently small level of output. 
D) is less likely to face government regulation. 
A) is less likely to advertise. 
B) will, according to Schumpeter, invest fewer resources in research and development. 
C) usually produces an inefficiently small level of output. 
D) is less likely to face government regulation.

Question 15

What is the equilibrium condition for price discriminating monopoly firm?
 Give some examples for price discrimination.

Accepted Answer

The equilibrium condition is:
MC = MRA =

Question 16

What is true for monopoly that is not true for perfect competition?

Accepted Answer

A) The industry demand curve is downward sloping. 
B) Profit is maximized where MR = MC. 
C) The firm and the industry are exactly the same entity. 
D) Positive economic profits may be earned in the short run. 
A) The industry demand curve is downward sloping. 
B) Profit is maximized where MR = MC. 
C) The firm and the industry are exactly the same entity. 
D) Positive economic profits may be earned in the short run.

Question 17

Figure 11-1
  
-The Red Cross is virtually the only operator of blood banks in the United States.In Figure 11-1 are the demand and supply curves facing the Red Cross blood bank.If it were to operate like a profit-maximizing business, how many units of blood would it sell?

Accepted Answer

A) OA 
B) OB 
C) OC 
D) OD 
A) OA 
B) OB 
C) OC 
D) OD

Question 18

An increase in fixed cost will, in the short run, alter the industry's output of

Accepted Answer

A) both a monopolist and a competitive industry. 
B) only a monopolist. 
C) only a competitive industry. 
D) neither a monopolist nor a competitive industry. 
A) both a monopolist and a competitive industry. 
B) only a monopolist. 
C) only a competitive industry. 
D) neither a monopolist nor a competitive industry.

Question 19

Because a monopolist must cut its price to increase its sales by one unit,

Accepted Answer

A) MR > P at every output level. 
B) MC > MR at every output level. 
C) P > MR at every output level. 
D) MC > P at every output level. 
A) MR > P at every output level. 
B) MC > MR at every output level. 
C) P > MR at every output level. 
D) MC > P at every output level.

Question 20

A monopolist's profit per unit is shown by the difference between price and average cost per unit.

Accepted Answer

A) True 
 B)False

Exam 11: Monopoly

The software industry has traits in common with monopoly markets.

Figure 11-8 -Given the average cost curve shown in Figure 11-8 for dry cleaning, where Q₁ is the quantity demanded in a small town, and Q₂ for a larger town, you would expect dry cleaning to be a monopoly

Draw the demand, marginal revenue and marginal cost curve for a monopolist.Show the equilibrium price and quantity supplied and total profit.Show the equilibrium price and quantity supplied and total profit.

The demand curve of the monopoly firm is always the

A profit-maximizing monopolist

-In Table 11-2, average cost at the profit-maximizing output is how much?

A monopolist can sell 10 wangdoodles if he charges $10 per wangdoodle and 11 wangdoodles if he charges $9.The MR from selling the 11th wangdoodle is

Pure monopoly is able to exist because the firm's product is better than the substitutes that are available in the market.

Many public utilities are permitted to operate as monopolies because they enjoy economies of large-scale production.

Compared to perfect competition, monopoly in the long run

Figure 11-6 -The profit-maximizing monopolist in Figure 11-6 will produce ____ units of output.

Is the monopolist supply decision more complicated than that of competitive supply?

Compared to a perfectly competitive firm, a monopolist

What is the equilibrium condition for price discriminating monopoly firm? Give some examples for price discrimination.

What is true for monopoly that is not true for perfect competition?

Figure 11-1 -The Red Cross is virtually the only operator of blood banks in the United States.In Figure 11-1 are the demand and supply curves facing the Red Cross blood bank.If it were to operate like a profit-maximizing business, how many units of blood would it sell?

An increase in fixed cost will, in the short run, alter the industry's output of

Because a monopolist must cut its price to increase its sales by one unit,

A monopolist's profit per unit is shown by the difference between price and average cost per unit.

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

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