Question 1

For the monopsonist,marginal expenditure is greater than the wage rate because the monopsonist

Accepted Answer

A)  pays a wage higher than that paid in a competitive market. 
B)  chooses the perfectly competitive quantity of labor. 
C)  must increase the wage to all units of labor to attract more units of labor. 
D)  must take the wage as given by the market. 
A)  pays a wage higher than that paid in a competitive market. 
B)  chooses the perfectly competitive quantity of labor. 
C)  must increase the wage to all units of labor to attract more units of labor. 
D)  must take the wage as given by the market.

Question 2

For a monopoly market,if the Lerner Index is 2,then

Accepted Answer

A)  the monopoly is maximizing its profit. 
B)  the price elasticity of demand is -2. 
C)  the price elasticity of demand is -0.5. 
D)  None of the above. 
A)  the monopoly is maximizing its profit. 
B)  the price elasticity of demand is -2. 
C)  the price elasticity of demand is -0.5. 
D)  None of the above.

Question 3

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 4

Explain Microsoft Windows' monopoly positions in terms of network externalities.

Accepted Answer

Microsoft marketed Windows really well a

Question 5

For the following, please answer "True" or "False" and explain why.
-The optimal patent length is equal to 20 years.

Accepted Answer

A) True 
 B)False

Question 6

Suppose a monopolist faces the constant price elasticity demand curve:
p = Qε
where ε  ε > -1,what is the price and quantity the monopolist will set?

Accepted Answer

a.The necessary condition is:
(1 + ε)Qε

Question 7

At an output level of 100,a monopolist faces MC = 15 and MR = 17.At output level q = 101,the monopolist faces MC = 16 and MR = 15.To maximize profits,the firm

Accepted Answer

A)  should produce 100 units. 
B)  should produce 101 units. 
C)  The firm cannot maximize profits. 
D)  The firm is not a monopoly. 
A)  should produce 100 units. 
B)  should produce 101 units. 
C)  The firm cannot maximize profits. 
D)  The firm is not a monopoly.

Question 8

A monopolist faces the (inverse)demand for its product: p = 50 - 2Q.The monopolist has a marginal cost of 10/unit and a fixed cost given by F.
a.Assume that F is sufficiently small such that the monopolist produces a strictly positive level of output.What is the profit-maximizing price and quantity?
b.Compute the maximum profit for the monopolist in terms of F.
c.For what values of F will the monopolists profit be negative?

Accepted Answer

a.The monopolist will choose p = MR (or

Question 9

If a firm takes the wage as given,then the supply curve of labor to that firm is

Accepted Answer

A)  horizontal. 
B)  vertical. 
C)  upward sloping. 
D)  downward sloping. 
A)  horizontal. 
B)  vertical. 
C)  upward sloping. 
D)  downward sloping.

Question 10

Empirical evidence from electric-power-producing firms suggests that

Accepted Answer

A)  all electric-power-producing firms are natural monopolies. 
B)  no electric-power-producing firms are natural monopolies. 
C)  the largest electric-power-producing firms are natural monopolies. 
D)  the smallest electric-power-producing firms are natural monopolies. 
A)  all electric-power-producing firms are natural monopolies. 
B)  no electric-power-producing firms are natural monopolies. 
C)  the largest electric-power-producing firms are natural monopolies. 
D)  the smallest electric-power-producing firms are natural monopolies.

Question 11

If a monopoly is operating on the demand curve where price elasticity is equal to -3,and MR equals 2,then price is equal to

Accepted Answer

A)  3. 
B)  2. 
C)  1. 
D)  0. 
A)  3. 
B)  2. 
C)  1. 
D)  0.

Question 12

The introduction of satellite television systems would cause the demand curve for cable television to be

Accepted Answer

A)  more elastic. 
B)  less elastic. 
C)  perfectly inelastic. 
D)  unchanged. 
A)  more elastic. 
B)  less elastic. 
C)  perfectly inelastic. 
D)  unchanged.

Question 13

A justification for patents is that without patents consumer surplus would be

Accepted Answer

A)  larger than with the patent. 
B)  zero since the product would not be invented. 
C)  only slightly smaller than with the patent. 
D)  zero since the monopoly would be a revenue maximizer. 
A)  larger than with the patent. 
B)  zero since the product would not be invented. 
C)  only slightly smaller than with the patent. 
D)  zero since the monopoly would be a revenue maximizer.

Question 14

The difference between the marginal expenditure and the wage is greater when the supply curve of labor is

Accepted Answer

A)  less elastic at the monopsony optimum. 
B)  more elastic at the monopsony optimum. 
C)  more elastic than the demand curve. 
D)  The difference does not depend on any elasticity. 
A)  less elastic at the monopsony optimum. 
B)  more elastic at the monopsony optimum. 
C)  more elastic than the demand curve. 
D)  The difference does not depend on any elasticity.

Question 15

-The above figure shows the demand and cost curves facing a monopoly.If a $100 per unit tax is charged,what is the incidence of the tax on consumers?

Accepted Answer

A)  100% 
B)  50% 
C)  25% 
D)  0% 
A)  100% 
B)  50% 
C)  25% 
D)  0%

Question 16

For the following, please answer "True" or "False" and explain why.
-Forcing a natural monopoly to charge P = MC will not work.

Accepted Answer

A) True 
 B)False

Question 17

Consider a town with a single movie theater,and that movie theater faces a downward sloping demand curve for its tickets.The movie theater has a fixed number of seats available for each show but the marginal cost of filling a seat is zero.Why might it be in the movie theater's interest to not to sell out every show even though the marginal cost of selling additional seats is virtually zero? (A graph will help your answer).

Accepted Answer

The firm may or may not choose to sell o

Question 18

Consider a monopolist with linear (inverse)demand p = a - bQ and constant average and marginal cost,c.Derive the monopolist's profit and the deadweight loss generated.Show that in such cases of linear demand and constant average and marginal cost,the deadweight loss is 50% of the monopolist's profits.

Accepted Answer

Profit = (a - bQ)Q - cQ
dProfi

Question 19

If the government desires to raise a certain amount of revenue by taxing a monopoly,an ad valorem tax will

Accepted Answer

A)  generate the same loss of consumer surplus as a specific tax. 
B)  generate a greater loss of consumer surplus than a specific tax. 
C)  generate a smaller loss of consumer surplus than a specific tax. 
D)  generate no loss of consumer surplus. 
A)  generate the same loss of consumer surplus as a specific tax. 
B)  generate a greater loss of consumer surplus than a specific tax. 
C)  generate a smaller loss of consumer surplus than a specific tax. 
D)  generate no loss of consumer surplus.

Question 20

Because the labor supply curve for a monopsonist is upward sloping,the monopsonist

Accepted Answer

A)  hires zero units of labor. 
B)  chooses the perfectly competitive quantity of labor. 
C)  must increase the wage to attract more units of labor. 
D)  must take the wage as given by the market. 
A)  hires zero units of labor. 
B)  chooses the perfectly competitive quantity of labor. 
C)  must increase the wage to attract more units of labor. 
D)  must take the wage as given by the market.

For the monopsonist,marginal expenditure is greater than the wage rate because the monopsonist

For a monopoly market,if the Lerner Index is 2,then

The more elastic the demand curve,a monopoly

Explain Microsoft Windows' monopoly positions in terms of network externalities.

For the following, please answer "True" or "False" and explain why. -The optimal patent length is equal to 20 years.

At an output level of 100,a monopolist faces MC = 15 and MR = 17.At output level q = 101,the monopolist faces MC = 16 and MR = 15.To maximize profits,the firm

If a firm takes the wage as given,then the supply curve of labor to that firm is

Empirical evidence from electric-power-producing firms suggests that

If a monopoly is operating on the demand curve where price elasticity is equal to -3,and MR equals 2,then price is equal to

The introduction of satellite television systems would cause the demand curve for cable television to be

A justification for patents is that without patents consumer surplus would be

The difference between the marginal expenditure and the wage is greater when the supply curve of labor is

-The above figure shows the demand and cost curves facing a monopoly.If a $100 per unit tax is charged,what is the incidence of the tax on consumers?

For the following, please answer "True" or "False" and explain why. -Forcing a natural monopoly to charge P = MC will not work.

If the government desires to raise a certain amount of revenue by taxing a monopoly,an ad valorem tax will

Because the labor supply curve for a monopsonist is upward sloping,the monopsonist

Introduction

Supply and Demand

A Consumers Constrained Choice

Demand

Consumer Welfare and Policy Analysis

Firms and Production

Costs

Competitive Firms and Markets

Properties and Applications of the Competitive Model

General Equilibrium and Economic Welfare

Pricing and Advertising

Game Theory

Oligopoly and Monopolistic Competition

Factor Markets

Uncertainty

Property Rights, externalities, rivalry, and Exclusion

Asymmetric Information

Contracts and Moral Hazards

Filters

Exam 11: Monopoly and Monopsony

For the monopsonist,marginal expenditure is greater than the wage rate because the monopsonist

For a monopoly market,if the Lerner Index is 2,then

The more elastic the demand curve,a monopoly

Explain Microsoft Windows' monopoly positions in terms of network externalities.

For the following, please answer "True" or "False" and explain why. -The optimal patent length is equal to 20 years.

At an output level of 100,a monopolist faces MC = 15 and MR = 17.At output level q = 101,the monopolist faces MC = 16 and MR = 15.To maximize profits,the firm

If a firm takes the wage as given,then the supply curve of labor to that firm is

Empirical evidence from electric-power-producing firms suggests that

If a monopoly is operating on the demand curve where price elasticity is equal to -3,and MR equals 2,then price is equal to

The introduction of satellite television systems would cause the demand curve for cable television to be

A justification for patents is that without patents consumer surplus would be

The difference between the marginal expenditure and the wage is greater when the supply curve of labor is

-The above figure shows the demand and cost curves facing a monopoly.If a $100 per unit tax is charged,what is the incidence of the tax on consumers?

For the following, please answer "True" or "False" and explain why. -Forcing a natural monopoly to charge P = MC will not work.

If the government desires to raise a certain amount of revenue by taxing a monopoly,an ad valorem tax will

Because the labor supply curve for a monopsonist is upward sloping,the monopsonist

Introduction

Supply and Demand

A Consumers Constrained Choice

Demand

Consumer Welfare and Policy Analysis

Firms and Production

Costs

Competitive Firms and Markets

Properties and Applications of the Competitive Model

General Equilibrium and Economic Welfare

Pricing and Advertising

Game Theory

Oligopoly and Monopolistic Competition

Factor Markets

Uncertainty

Property Rights, externalities, rivalry, and Exclusion

Asymmetric Information

Contracts and Moral Hazards

Filters