Question 1

If the inverse demand curve a monopoly faces is p = 100 - 2Q,then profit maximization

Accepted Answer

A)  is achieved when 25 units are produced. 
B)  is achieved by setting price equal to 25. 
C)  is achieved only by shutting down in the short run. 
D)  cannot be determined solely from the information provided. 
A)  is achieved when 25 units are produced. 
B)  is achieved by setting price equal to 25. 
C)  is achieved only by shutting down in the short run. 
D)  cannot be determined solely from the information provided.

Question 2

If the demand for a monopoly's output shifts rightward,the change in quantity produced is not predictable because

Accepted Answer

A)  the monopoly is a profit maximizer. 
B)  the monopoly is a price taker. 
C)  the monopoly has no supply curve. 
D)  the monopoly's marginal cost curve might not be upward sloping. 
A)  the monopoly is a profit maximizer. 
B)  the monopoly is a price taker. 
C)  the monopoly has no supply curve. 
D)  the monopoly's marginal cost curve might not be upward sloping.

Question 3

Which of the following products benefits from network externalities?

Accepted Answer

A)  cable TV service 
B)  fashion clothing 
C)  all-electric cars 
D)  high-speed trains 
A)  cable TV service 
B)  fashion clothing 
C)  all-electric cars 
D)  high-speed trains

Question 4

An exclusive right to sell a new and useful product,process,substance,or design for a fixed period of time is called a

Accepted Answer

A)  patent. 
B)  barrier to entry. 
C)  monopoly. 
D)  research disincentive. 
A)  patent. 
B)  barrier to entry. 
C)  monopoly. 
D)  research disincentive.

Question 5

Market power guarantees profit.

Accepted Answer

A)  True, which is why firm's locate as far away from each other as possible. 
B)  False, market power guarantees price greater than marginal cost. 
C)  True, market power guarantees price greater than average cost. 
D)  False, market power guarantees price equal to average cost. 
A)  True, which is why firm's locate as far away from each other as possible. 
B)  False, market power guarantees price greater than marginal cost. 
C)  True, market power guarantees price greater than average cost. 
D)  False, market power guarantees price equal to average cost.

Question 6

If the inverse demand curve a monopoly faces is p = 100 - 2Q,and MC is constant at 16,then profit maximization

Accepted Answer

A)  is achieved when 21 units are produced. 
B)  is achieved by setting price equal to 21. 
C)  is achieved only by shutting down in the short run. 
D)  cannot be determined solely from the information provided. 
A)  is achieved when 21 units are produced. 
B)  is achieved by setting price equal to 21. 
C)  is achieved only by shutting down in the short run. 
D)  cannot be determined solely from the information provided.

Question 7

For network externalities to occur

Accepted Answer

A)  the government has to create new laws. 
B)  deadweight loss must be minimized. 
C)  there must be a critical mass of users. 
D)  there must be a positive benefit to society. 
A)  the government has to create new laws. 
B)  deadweight loss must be minimized. 
C)  there must be a critical mass of users. 
D)  there must be a positive benefit to society.

Question 8

The more elastic the demand curve,a monopoly

Accepted Answer

A)  will have a larger Lerner Index. 
B)  will face a lower marginal cost. 
C)  will earn more profit. 
D)  will lose more sales as it raises its price. 
A)  will have a larger Lerner Index. 
B)  will face a lower marginal cost. 
C)  will earn more profit. 
D)  will lose more sales as it raises its price.

Question 9

When a monopoly lowers its price to increase quantity

Accepted Answer

A)  it is not maximizing its profit. 
B)  it will increase its profit. 
C)  it will make less money on the units it would have originally sold. 
D)  the quantity produced drives down marginal revenue. 
A)  it is not maximizing its profit. 
B)  it will increase its profit. 
C)  it will make less money on the units it would have originally sold. 
D)  the quantity produced drives down marginal revenue.

Question 10

The monopoly maximizes profit by setting

Accepted Answer

A)  price equal to marginal cost. 
B)  price equal to marginal revenue. 
C)  marginal revenue equal to marginal cost. 
D)  marginal revenue equal to zero. 
A)  price equal to marginal cost. 
B)  price equal to marginal revenue. 
C)  marginal revenue equal to marginal cost. 
D)  marginal revenue equal to zero.

Question 11

-The above figure shows the demand and cost curves facing a monopoly.If a $100 per unit tax is charged,the loss in welfare resulting from the tax is

Accepted Answer

A)  $250. 
B)  $312.50. 
C)  $1,250. 
D)  $1,562.50. 
A)  $250. 
B)  $312.50. 
C)  $1,250. 
D)  $1,562.50.

Question 12

Which of the following is most likely the most beneficial form of monopoly advantage?

Accepted Answer

A)  better production methods 
B)  input hoarding 
C)  decreasing returns to scale 
D)  government protection 
A)  better production methods 
B)  input hoarding 
C)  decreasing returns to scale 
D)  government protection

Question 13

The monopolist's marginal revenue curve

Accepted Answer

A)  doesn't exist. 
B)  lies below the demand curve. 
C)  is identical to the demand curve. 
D)  lies above the demand curve. 
A)  doesn't exist. 
B)  lies below the demand curve. 
C)  is identical to the demand curve. 
D)  lies above the demand curve.

Question 14

Since there are no close substitutes for the monopoly's product,the monopoly can charge any price it wishes.

Accepted Answer

A) True 
 B)False

Question 15

If the inverse demand curve a monopoly faces is p = 100 - 2Q,and MC is constant at 16,then the firm's Lerner Index equals

Accepted Answer

A)  58/16. 
B)  16/42. 
C)  58/42. 
D)  42/58. 
A)  58/16. 
B)  16/42. 
C)  58/42. 
D)  42/58.

Question 16

A monopoly that is maximizing profits never operates in the ________ portion of the demand curve.

Accepted Answer

A)  unitary elastic 
B)  elastic 
C)  inelastic 
D)  horizontal 
A)  unitary elastic 
B)  elastic 
C)  inelastic 
D)  horizontal

Question 17

If a monopoly can produce a good at zero marginal cost,then its Lerner Index is

Accepted Answer

A)  zero. 
B)  one. 
C)  infinity. 
D)  undetermined. 
A)  zero. 
B)  one. 
C)  infinity. 
D)  undetermined.

Question 18

-The above figure shows the demand and cost curves facing a monopoly.A $100 per unit tax would raise price by

Accepted Answer

A)  $100. 
B)  $50. 
C)  $25. 
D)  $0. 
A)  $100. 
B)  $50. 
C)  $25. 
D)  $0.

Question 19

When would a profit-maximizing monopolist that operates with no government intervention choose to produce the competitive level of output?

Accepted Answer

A MONOPOLIST THAT FACES A PERF

Question 20

If a monopoly can advertise and as a result the demand curve will become more inelastic,the monopoly

Accepted Answer

A)  should always engage in the advertising. 
B)  should engage in the advertising until the demand curve becomes more elastic. 
C)  will earn higher gross profit if it advertises. 
D)  None of the above. 
A)  should always engage in the advertising. 
B)  should engage in the advertising until the demand curve becomes more elastic. 
C)  will earn higher gross profit if it advertises. 
D)  None of the above.

If the inverse demand curve a monopoly faces is p = 100 - 2Q,then profit maximization

If the demand for a monopoly's output shifts rightward,the change in quantity produced is not predictable because

Which of the following products benefits from network externalities?

An exclusive right to sell a new and useful product,process,substance,or design for a fixed period of time is called a

Market power guarantees profit.

If the inverse demand curve a monopoly faces is p = 100 - 2Q,and MC is constant at 16,then profit maximization

For network externalities to occur

The more elastic the demand curve,a monopoly

When a monopoly lowers its price to increase quantity

The monopoly maximizes profit by setting

-The above figure shows the demand and cost curves facing a monopoly.If a $100 per unit tax is charged,the loss in welfare resulting from the tax is

Which of the following is most likely the most beneficial form of monopoly advantage?

The monopolist's marginal revenue curve

Since there are no close substitutes for the monopoly's product,the monopoly can charge any price it wishes.

If the inverse demand curve a monopoly faces is p = 100 - 2Q,and MC is constant at 16,then the firm's Lerner Index equals

A monopoly that is maximizing profits never operates in the ________ portion of the demand curve.

If a monopoly can produce a good at zero marginal cost,then its Lerner Index is

-The above figure shows the demand and cost curves facing a monopoly.A $100 per unit tax would raise price by

When would a profit-maximizing monopolist that operates with no government intervention choose to produce the competitive level of output?

If a monopoly can advertise and as a result the demand curve will become more inelastic,the monopoly

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

If the inverse demand curve a monopoly faces is p = 100 - 2Q,then profit maximization

If the demand for a monopoly's output shifts rightward,the change in quantity produced is not predictable because

Which of the following products benefits from network externalities?

An exclusive right to sell a new and useful product,process,substance,or design for a fixed period of time is called a

Market power guarantees profit.

If the inverse demand curve a monopoly faces is p = 100 - 2Q,and MC is constant at 16,then profit maximization

For network externalities to occur

The more elastic the demand curve,a monopoly

When a monopoly lowers its price to increase quantity

The monopoly maximizes profit by setting

-The above figure shows the demand and cost curves facing a monopoly.If a $100 per unit tax is charged,the loss in welfare resulting from the tax is

Which of the following is most likely the most beneficial form of monopoly advantage?

The monopolist's marginal revenue curve

Since there are no close substitutes for the monopoly's product,the monopoly can charge any price it wishes.

If the inverse demand curve a monopoly faces is p = 100 - 2Q,and MC is constant at 16,then the firm's Lerner Index equals

A monopoly that is maximizing profits never operates in the ________ portion of the demand curve.

If a monopoly can produce a good at zero marginal cost,then its Lerner Index is

-The above figure shows the demand and cost curves facing a monopoly.A $100 per unit tax would raise price by

When would a profit-maximizing monopolist that operates with no government intervention choose to produce the competitive level of output?

If a monopoly can advertise and as a result the demand curve will become more inelastic,the monopoly

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