Question 1

Control of a scarce resource or input can serve as an entry barrier.

Accepted Answer

A) True 
 B)False

Question 2

A monopolist's total profit is shown by the difference between price and average cost per unit times the number of units sold.

Accepted Answer

A) True 
 B)False

Question 3

Monopoly firms may lead to higher costs than perfectly competitive firms.

Accepted Answer

A) True 
 B)False

Question 4

As the demand for a product falls, it is not uncommon for the industry to become a monopoly.This is most likely due to

Accepted Answer

A) an increase in the number of barriers. 
B) legal restrictions being imposed. 
C) the surviving firm operating on the declining part of its average cost curve. 
D) patent protection causing high prices. 
A) an increase in the number of barriers. 
B) legal restrictions being imposed. 
C) the surviving firm operating on the declining part of its average cost curve. 
D) patent protection causing high prices.

Question 5

At his profit-maximizing level of output, a monopolist's average total cost curve is tangent to his demand curve.The monopolist

Accepted Answer

A) is earning a negative economic profit. 
B) may or may not be earning a negative economic profit. 
C) is earning zero economic profit. 
D) is earning a positive economic profit. 
A) is earning a negative economic profit. 
B) may or may not be earning a negative economic profit. 
C) is earning zero economic profit. 
D) is earning a positive economic profit.

Question 6

Price discrimination

Accepted Answer

A) may lead to greater output. 
B) always leads to a reduction of output. 
C) leads to lower profits for the firm. 
D) causes firms to operate at a higher cost. 
A) may lead to greater output. 
B) always leads to a reduction of output. 
C) leads to lower profits for the firm. 
D) causes firms to operate at a higher cost.

Question 7

Figure 11-2
  
-In Figure 11-2, at what quantity would the monopolist maximize profit?

Accepted Answer

A) A 
B) B 
C) C 
D) D 
A) A 
B) B 
C) C 
D) D

Question 8

Define the following terms and explain their importance to the study of economics.
a.pure monopoly
b.barriers to entry
c.patent
d.natural monopoly
e.sunk costs

Accepted Answer

a.A pure monopoly is an industry in whic

Question 9

Since a monopolist firm will lose some customers when the price is increased, it will make every effort to keep the price as low as possible.

Accepted Answer

A) True 
 B)False

Question 10

In perfect competition P = MR, but in monopoly P > MR.Why? Substantiate this statement with an example.

Accepted Answer

In perfect competition the demand curve

Question 11

The marginal revenue curve for a monopolist

Accepted Answer

A) is identical to its demand curve. 
B) is always below its demand curve if the demand curve is downward sloping. 
C) is always below its demand curve if the demand curve is horizontal. 
D) typically crosses the average revenue curve. 
A) is identical to its demand curve. 
B) is always below its demand curve if the demand curve is downward sloping. 
C) is always below its demand curve if the demand curve is horizontal. 
D) typically crosses the average revenue curve.

Question 12

A monopolist maximizes profits by producing where which of the following occur?

Accepted Answer

A) MC = P 
B) AC = P 
C) MC = MR 
D) AC = AR 
A) MC = P 
B) AC = P 
C) MC = MR 
D) AC = AR

Question 13

The two basic reasons why a monopoly exists are barriers to entry and cost advantages.

Accepted Answer

A) True 
 B)False

Question 14

The marginal revenue curve for a monopolist is the same as its demand curve.

Accepted Answer

A) True 
 B)False

Question 15

In order for a natural monopoly to develop, it

Accepted Answer

A) is important that the firm be very large. 
B) is important that the firm prices its product below cost. 
C) is not the absolute size of the firm but its size relative to the total market demand that is important. 
D) must be in the presence of government intervention. 
A) is important that the firm be very large. 
B) is important that the firm prices its product below cost. 
C) is not the absolute size of the firm but its size relative to the total market demand that is important. 
D) must be in the presence of government intervention.

Question 16

A monopolist's demand curve implies that

Accepted Answer

A) the monopolist is a price taker. 
B) the monopolist is a price maker. 
C) it has nothing to do with the amount a monopolist can sell. 
D) it can be downward sloping or horizontal depending on the price. 
A) the monopolist is a price taker. 
B) the monopolist is a price maker. 
C) it has nothing to do with the amount a monopolist can sell. 
D) it can be downward sloping or horizontal depending on the price.

Question 17

"Intel Inside" accompanies virtually all IBM-compatible computers.Intel manufactures the Celeron and Pentium chips that are a key component of personal computers.Does Intel have a monopoly?

Accepted Answer

To be a monopoly, a firm must not only b

Question 18

A monopolist is a price maker.

Accepted Answer

A) True 
 B)False

Question 19

Table 11-1  
-Table 11-1 shows demand and total cost schedules for Monopoliteria.At the profit-maximizing output, what quantity is Monopoliteria producing?

Accepted Answer

A) 10 
B) 12 
C) 14 
D) 16 
A) 10 
B) 12 
C) 14 
D) 16

Question 20

To be a natural monopoly, a firm must

Accepted Answer

A) control an essential natural resource input. 
B) be very large. 
C) have a continuously falling average cost curve as output rises. 
D) have falling average costs over a substantial range of total market demand. 
A) control an essential natural resource input. 
B) be very large. 
C) have a continuously falling average cost curve as output rises. 
D) have falling average costs over a substantial range of total market demand.

Exam 11: Monopoly

Control of a scarce resource or input can serve as an entry barrier.

A monopolist's total profit is shown by the difference between price and average cost per unit times the number of units sold.

Monopoly firms may lead to higher costs than perfectly competitive firms.

As the demand for a product falls, it is not uncommon for the industry to become a monopoly.This is most likely due to

At his profit-maximizing level of output, a monopolist's average total cost curve is tangent to his demand curve.The monopolist

Price discrimination

Figure 11-2 -In Figure 11-2, at what quantity would the monopolist maximize profit?

Define the following terms and explain their importance to the study of economics. a.pure monopoly b.barriers to entry c.patent d.natural monopoly e.sunk costs

Since a monopolist firm will lose some customers when the price is increased, it will make every effort to keep the price as low as possible.

In perfect competition P = MR, but in monopoly P > MR.Why? Substantiate this statement with an example.

The marginal revenue curve for a monopolist

A monopolist maximizes profits by producing where which of the following occur?

The two basic reasons why a monopoly exists are barriers to entry and cost advantages.

The marginal revenue curve for a monopolist is the same as its demand curve.

In order for a natural monopoly to develop, it

A monopolist's demand curve implies that

"Intel Inside" accompanies virtually all IBM-compatible computers.Intel manufactures the Celeron and Pentium chips that are a key component of personal computers.Does Intel have a monopoly?

A monopolist is a price maker.

Table 11-1 -Table 11-1 shows demand and total cost schedules for Monopoliteria.At the profit-maximizing output, what quantity is Monopoliteria producing?

To be a natural monopoly, a firm must

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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