Question 1

The fact that a monopoly has to take the shapes of marginal cost AND marginal revenue into account when making decisions is reflected in the fact that

Accepted Answer

A)  monopolies don't have a supply curve. 
B)  monopolies don't have a demand curve. 
C)  monopolies have the same supply curve as perfectly competitive firms. 
D)  monopolies maximize profit. 
A)  monopolies don't have a supply curve. 
B)  monopolies don't have a demand curve. 
C)  monopolies have the same supply curve as perfectly competitive firms. 
D)  monopolies maximize profit.

Question 2

Which of the following statements is TRUE?

Accepted Answer

A)  A monopoly cannot set price and quantity such that the point lies above the demand curve. 
B)  A monopoly can charge whatever it wants. 
C)  Profit maximization occurs by setting price first. 
D)  Both A and B. 
A)  A monopoly cannot set price and quantity such that the point lies above the demand curve. 
B)  A monopoly can charge whatever it wants. 
C)  Profit maximization occurs by setting price first. 
D)  Both A and B.

Question 3

Government actions that create monopolies

Accepted Answer

A)  spur product innovation by the monopoly. 
B)  create deadweight loss. 
C)  result in lower average costs of production. 
D)  ensure that firms price at marginal cost. 
A)  spur product innovation by the monopoly. 
B)  create deadweight loss. 
C)  result in lower average costs of production. 
D)  ensure that firms price at marginal cost.

Question 4

If the inverse demand curve a monopoly faces is p = 100 - 2Q,and MC is constant at 16,then the deadweight loss from monopoly equals

Accepted Answer

A)  $21. 
B)  $441. 
C)  $882. 
D)  $1,764. 
A)  $21. 
B)  $441. 
C)  $882. 
D)  $1,764.

Question 5

If a firm uses introductory pricing,it is likely ________ short run profit and ________ long run profit.

Accepted Answer

A)  minimizing; maximizing 
B)  maximizing; maximizing 
C)  maximizing; reducing 
D)  reducing; maximizing 
A)  minimizing; maximizing 
B)  maximizing; maximizing 
C)  maximizing; reducing 
D)  reducing; maximizing

Question 6

Suppose a monopolist has TC = 100 + 10Q +   ,and the demand curve it faces is p = 90 - 2Q.What will be the price,quantity,and profit for this firm?

Accepted Answer

First,determine MR = 90 - 4Q.Second,MC =

Question 7

The Lerner Index is

Accepted Answer

A)  the ratio of the difference between price and marginal cost to price. 
B)  equal to (Price - M
C) /Price 
C)  a measure of market power. 
D)  All of the above. 
A)  the ratio of the difference between price and marginal cost to price. 
B)  equal to (Price - M
C) /Price 
C)  a measure of market power. 
D)  All of the above.

Question 8

A monopoly advertises

Accepted Answer

A)  to raise its profit. 
B)  to decrease costs. 
C)  dissuade entry by other firms. 
D)  reduce deadweight loss. 
A)  to raise its profit. 
B)  to decrease costs. 
C)  dissuade entry by other firms. 
D)  reduce deadweight loss.

Question 9

Privatization of a state-owned monopoly can

Accepted Answer

A)  allow governments to capture future producer surplus. 
B)  allow governments to be more efficient. 
C)  reduce bribery of government officials. 
D)  increases chances of reelection for politicians. 
A)  allow governments to capture future producer surplus. 
B)  allow governments to be more efficient. 
C)  reduce bribery of government officials. 
D)  increases chances of reelection for politicians.

Question 10

Which of the following could create a cost advantage for a monopoly?

Accepted Answer

A)  better technology 
B)  lower friction due to better organization 
C)  standardization 
D)  All of the above. 
A)  better technology 
B)  lower friction due to better organization 
C)  standardization 
D)  All of the above.

Question 11

One difference between a monopoly and a competitive firm is that

Accepted Answer

A)  a monopoly is a price taker. 
B)  a monopoly maximizes profit by setting marginal revenue equal to marginal cost. 
C)  a monopoly faces a downward sloping demand curve. 
D)  None of the above. 
A)  a monopoly is a price taker. 
B)  a monopoly maximizes profit by setting marginal revenue equal to marginal cost. 
C)  a monopoly faces a downward sloping demand curve. 
D)  None of the above.

Question 12

The monopoly can shift the demand for its product rightward by

Accepted Answer

A)  accommodating entry. 
B)  advertising new uses for its product. 
C)  moving along the learning curve. 
D)  All of the above. 
A)  accommodating entry. 
B)  advertising new uses for its product. 
C)  moving along the learning curve. 
D)  All of the above.

Question 13

If the demand for a firm's output is perfectly elastic,then the firm's Lerner Index equals

Accepted Answer

A)  zero. 
B)  one. 
C)  infinity. 
D)  one-half. 
A)  zero. 
B)  one. 
C)  infinity. 
D)  one-half.

Question 14

A monopoly can be formed by a bandwagon effect.Which of the following products would most closely match the bandwagon effect?

Accepted Answer

A)  the Atlanta Braves baseball club 
B)  the Dell Computer 
C)  the Apple iPod 
D)  the Chevrolet Corvette 
A)  the Atlanta Braves baseball club 
B)  the Dell Computer 
C)  the Apple iPod 
D)  the Chevrolet Corvette

Question 15

A market failure occurs

Accepted Answer

A)  when price equals marginal cost. 
B)  when there is a non-optimal allocation that leads to an inefficient market. 
C)  when deadweight loss is minimized. 
D)  when a firm shuts down. 
A)  when price equals marginal cost. 
B)  when there is a non-optimal allocation that leads to an inefficient market. 
C)  when deadweight loss is minimized. 
D)  when a firm shuts down.

Question 16

Since a monopoly can set any price it wants,it always makes a profit?

Accepted Answer

A) True 
 B)False

Question 17

If the demand for a monopoly's output shifts rightward,the change in quantity produced is

Accepted Answer

A)  positive. 
B)  negative. 
C)  zero. 
D)  not predictable. 
A)  positive. 
B)  negative. 
C)  zero. 
D)  not predictable.

Question 18

The situation in which a person places greater value on a good as fewer and fewer people possess it is called

Accepted Answer

A)  Bandwagon Effect. 
B)  Greater Value Effect. 
C)  Snob Effect. 
D)  Behavioral Effect. 
A)  Bandwagon Effect. 
B)  Greater Value Effect. 
C)  Snob Effect. 
D)  Behavioral Effect.

Question 19

-The above figure shows the demand and marginal cost curves for a monopoly.The deadweight loss of this monopoly equals

Accepted Answer

A)  h. 
B)  c. 
C)  c + f. 
D)  c + d + e + f. 
A)  h. 
B)  c. 
C)  c + f. 
D)  c + d + e + f.

Question 20

For there to be positive network externalities

Accepted Answer

A)  there must be a direct size effect. 
B)  there must be an indirect size effect. 
C)  introductory prices are required. 
D)  None of the above. 
A)  there must be a direct size effect. 
B)  there must be an indirect size effect. 
C)  introductory prices are required. 
D)  None of the above.

The fact that a monopoly has to take the shapes of marginal cost AND marginal revenue into account when making decisions is reflected in the fact that

Which of the following statements is TRUE?

Government actions that create monopolies

If the inverse demand curve a monopoly faces is p = 100 - 2Q,and MC is constant at 16,then the deadweight loss from monopoly equals

If a firm uses introductory pricing,it is likely short run profit and long run profit.

Suppose a monopolist has TC = 100 + 10Q + ,and the demand curve it faces is p = 90 - 2Q.What will be the price,quantity,and profit for this firm?

The Lerner Index is

A monopoly advertises

Privatization of a state-owned monopoly can

Which of the following could create a cost advantage for a monopoly?

One difference between a monopoly and a competitive firm is that

The monopoly can shift the demand for its product rightward by

If the demand for a firm's output is perfectly elastic,then the firm's Lerner Index equals

A monopoly can be formed by a bandwagon effect.Which of the following products would most closely match the bandwagon effect?

A market failure occurs

Since a monopoly can set any price it wants,it always makes a profit?

If the demand for a monopoly's output shifts rightward,the change in quantity produced is

The situation in which a person places greater value on a good as fewer and fewer people possess it is called

-The above figure shows the demand and marginal cost curves for a monopoly.The deadweight loss of this monopoly equals

For there to be positive network externalities

Introduction

Supply and Demand

Empirical Methods for Demand Analysis

Consumer Choice

Production

Costs

Firm Organization and Market Structure

Competitive Firms and Markets

Pricing With Market Power

Oligopoly and Monopolistic Competition

Game Theory and Business Strategy

Strategies Over Time

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Government and Business

Global Business

Filters

Exam 9: Monopoly

The fact that a monopoly has to take the shapes of marginal cost AND marginal revenue into account when making decisions is reflected in the fact that

Which of the following statements is TRUE?

Government actions that create monopolies

If the inverse demand curve a monopoly faces is p = 100 - 2Q,and MC is constant at 16,then the deadweight loss from monopoly equals

If a firm uses introductory pricing,it is likely ________ short run profit and ________ long run profit.

Suppose a monopolist has TC = 100 + 10Q + ,and the demand curve it faces is p = 90 - 2Q.What will be the price,quantity,and profit for this firm?

The Lerner Index is

A monopoly advertises

Privatization of a state-owned monopoly can

Which of the following could create a cost advantage for a monopoly?

One difference between a monopoly and a competitive firm is that

The monopoly can shift the demand for its product rightward by

If the demand for a firm's output is perfectly elastic,then the firm's Lerner Index equals

A monopoly can be formed by a bandwagon effect.Which of the following products would most closely match the bandwagon effect?

A market failure occurs

Since a monopoly can set any price it wants,it always makes a profit?

If the demand for a monopoly's output shifts rightward,the change in quantity produced is

The situation in which a person places greater value on a good as fewer and fewer people possess it is called

-The above figure shows the demand and marginal cost curves for a monopoly.The deadweight loss of this monopoly equals

For there to be positive network externalities

Introduction

Supply and Demand

Empirical Methods for Demand Analysis

Consumer Choice

Production

Costs

Firm Organization and Market Structure

Competitive Firms and Markets

Pricing With Market Power

Oligopoly and Monopolistic Competition

Game Theory and Business Strategy

Strategies Over Time

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Government and Business

Global Business

Filters

If a firm uses introductory pricing,it is likely short run profit and long run profit.