Question 1

Compared to a perfectly competitive industry, a monopoly produces a smaller output and charges a higher price.

Accepted Answer

A) True 
 B)False

Question 2

In the long run, profit-maximizing monopolists facing a downward-sloping demand curve

Accepted Answer

A) may earn profits greater than their opportunity costs of capital. 
B) do not produce every possible unit of output for which marginal utility is greater than or equal to marginal cost. 
C) may or may not have lower costs than perfectly competitive firms in the same industry. 
D) All of the above are correct. 
A) may earn profits greater than their opportunity costs of capital. 
B) do not produce every possible unit of output for which marginal utility is greater than or equal to marginal cost. 
C) may or may not have lower costs than perfectly competitive firms in the same industry. 
D) All of the above are correct.

Question 3

Price discrimination occurs only in monopolies.

Accepted Answer

A) True 
 B)False

Question 4

Price discrimination leads to higher prices for all consumers.

Accepted Answer

A) True 
 B)False

Question 5

Adam Smith believed that monopoly is the most efficient market structure.

Accepted Answer

A) True 
 B)False

Question 6

Pure monopoly

Accepted Answer

A) is defined as having only one supplier. 
B) has no close substitutes for its product. 
C) exists when entry and survival of potential competitors is extremely unlikely. 
D) All of the above are correct. 
A) is defined as having only one supplier. 
B) has no close substitutes for its product. 
C) exists when entry and survival of potential competitors is extremely unlikely. 
D) All of the above are correct.

Question 7

Figure 11-6
  
-The profit-maximizing monopolist in Figure 11-6 will sell its output at

Accepted Answer

A) P₁ . 
B) P₂. 
C) P₃. 
D) P₄. 
A) P₁ . 
B) P₂. 
C) P₃. 
D) P₄.

Question 8

Discrepancies in profitability tempt rivals to charge the more profitable consumers somewhat lower prices in order to lure them away from the firm that is "overcharging" them.This practice is referred to as

Accepted Answer

A) collusion. 
B) price dealing. 
C) skimming. 
D) market penetration. 
A) collusion. 
B) price dealing. 
C) skimming. 
D) market penetration.

Question 9

A pure monopoly is defined as having only one seller.

Accepted Answer

A) True 
 B)False

Question 10

Figure 11-3
  
-Using the graph in Figure 11-3, the profit-maximizing monopolist will charge a price

Accepted Answer

A) of more than $3. 
B) of $3. 
C) between $2 and $3. 
D) of $2. 
A) of more than $3. 
B) of $3. 
C) between $2 and $3. 
D) of $2.

Question 11

Compared to perfect competition, monopoly

Accepted Answer

A) provides less output. 
B) charges a higher price. 
C) results in higher cost (inefficient) production. 
D) All of the above are correct. 
A) provides less output. 
B) charges a higher price. 
C) results in higher cost (inefficient) production. 
D) All of the above are correct.

Question 12

It is not true in the long run of monopolies that

Accepted Answer

A) other firms seeking positive economic profit enter the market. 
B) they earn positive economic profit. 
C) they sell their output at a price greater than marginal cost. 
D) they benefit from barriers to entry. 
A) other firms seeking positive economic profit enter the market. 
B) they earn positive economic profit. 
C) they sell their output at a price greater than marginal cost. 
D) they benefit from barriers to entry.

Question 13

A profit-maximizing monopolist will stop production while MR is still greater than MC.

Accepted Answer

A) True 
 B)False

Question 14

The drug maker Pfizer enjoyed a monopoly of the antibiotic Lipitor because of patent rights.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following can serve as an entry barrier?

Accepted Answer

A) legal restrictions 
B) patents 
C) control of scarce resources or inputs 
D) All of the above are correct. 
A) legal restrictions 
B) patents 
C) control of scarce resources or inputs 
D) All of the above are correct.

Question 16

Firms that engage in price discrimination

Accepted Answer

A) will earn less profit than those that do not discriminate. 
B) will earn more profit than those that do not discriminate. 
C) are biased against certain buyers in the market. 
D) will always produce less output than firms that do not discriminate. 
A) will earn less profit than those that do not discriminate. 
B) will earn more profit than those that do not discriminate. 
C) are biased against certain buyers in the market. 
D) will always produce less output than firms that do not discriminate.

Question 17

A price-discriminating firm will always maximize profit by following the condition that

Accepted Answer

A) MR > MC. 
B) MR > P. 
C) MRa = MRb = MC. 
D) MR = ATC. 
A) MR > MC. 
B) MR > P. 
C) MRa = MRb = MC. 
D) MR = ATC.

Question 18

Being a monopolist in the market

Accepted Answer

A) guarantees a positive short-run profit. 
B) guarantees a positive long-run profit. 
C) does not contradict with the rule that profit is maximized where MR = MC. 
D) All of the above are correct. 
A) guarantees a positive short-run profit. 
B) guarantees a positive long-run profit. 
C) does not contradict with the rule that profit is maximized where MR = MC. 
D) All of the above are correct.

Question 19

In the long run, a profit-maximizing monopolist

Accepted Answer

A) earns zero economic profit. 
B) produces the same amount as a perfectly competitive industry. 
C) receives a higher price for his output than a perfectly competitive firm. 
D) produces at the output level that minimizes his long-run average total cost. 
A) earns zero economic profit. 
B) produces the same amount as a perfectly competitive industry. 
C) receives a higher price for his output than a perfectly competitive firm. 
D) produces at the output level that minimizes his long-run average total cost.

Question 20

Which of these contributes to the existence of monopoly power?

Accepted Answer

A) a continuously decreasing long-run average cost curve 
B) possession of a patent 
C) control over essential output 
D) All of the above are correct. 
A) a continuously decreasing long-run average cost curve 
B) possession of a patent 
C) control over essential output 
D) All of the above are correct.

Exam 11: Monopoly

Compared to a perfectly competitive industry, a monopoly produces a smaller output and charges a higher price.

In the long run, profit-maximizing monopolists facing a downward-sloping demand curve

Price discrimination occurs only in monopolies.

Price discrimination leads to higher prices for all consumers.

Adam Smith believed that monopoly is the most efficient market structure.

Pure monopoly

Figure 11-6 -The profit-maximizing monopolist in Figure 11-6 will sell its output at

Discrepancies in profitability tempt rivals to charge the more profitable consumers somewhat lower prices in order to lure them away from the firm that is "overcharging" them.This practice is referred to as

A pure monopoly is defined as having only one seller.

Figure 11-3 -Using the graph in Figure 11-3, the profit-maximizing monopolist will charge a price

Compared to perfect competition, monopoly

It is not true in the long run of monopolies that

A profit-maximizing monopolist will stop production while MR is still greater than MC.

The drug maker Pfizer enjoyed a monopoly of the antibiotic Lipitor because of patent rights.

Which of the following can serve as an entry barrier?

Firms that engage in price discrimination

A price-discriminating firm will always maximize profit by following the condition that

Being a monopolist in the market

In the long run, a profit-maximizing monopolist

Which of these contributes to the existence of monopoly power?

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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