Question 1

Exhibit 8-6 Monopoly
  
-The maximum possible total monopoly profit in Exhibit 8-6 is:

Accepted Answer

A)  $60. 
B)  $36. 
C)  $24. 
D)  $18. 
E)  $12. 
A)  $60. 
B)  $36. 
C)  $24. 
D)  $18. 
E)  $12.

Question 2

When marginal revenue is zero for a monopolist facing a downward-sloping straight-line demand curve,the price elasticity of demand is:

Accepted Answer

A)  greater than 1. 
B)  equal to 1. 
C)  less than 2. 
D)  equal to 0. 
A)  greater than 1. 
B)  equal to 1. 
C)  less than 2. 
D)  equal to 0.

Question 3

Exhibit 8-3 Demand and cost curves for GeneTech, a monopolist with a patented vaccine
  
-In Exhibit 8-3,how much vaccine should GeneTech produce to maximize its profit?

Accepted Answer

A)  300 doses per hour. 
B)  400 doses per hour. 
C)  Between 400 and 500 doses per hour. 
D)  500 doses per hour. 
A)  300 doses per hour. 
B)  400 doses per hour. 
C)  Between 400 and 500 doses per hour. 
D)  500 doses per hour.

Question 4

The monopolist faces:

Accepted Answer

A)  a perfectly inelastic demand curve. 
B)  a perfectly elastic demand curve. 
C)  the entire market demand curve. 
D)  all of the above. 
A)  a perfectly inelastic demand curve. 
B)  a perfectly elastic demand curve. 
C)  the entire market demand curve. 
D)  all of the above.

Question 5

A monopolist always faces a demand curve that is:

Accepted Answer

A)  perfectly inelastic. 
B)  perfectly elastic. 
C)  unit elastic. 
D)  the same as the entire market demand curve. 
A)  perfectly inelastic. 
B)  perfectly elastic. 
C)  unit elastic. 
D)  the same as the entire market demand curve.

Question 6

Compared to a perfectly competitive firm,a monopolist:

Accepted Answer

A)  charges a higher price. 
B)  produces lower output. 
C)  fails to achieve an efficient allocation of resources. 
D)  all of the above. 
A)  charges a higher price. 
B)  produces lower output. 
C)  fails to achieve an efficient allocation of resources. 
D)  all of the above.

Question 7

Both a perfectly competitive firm and a monopolist:

Accepted Answer

A)  always earn an economic profit. 
B)  maximize profit by setting marginal cost equal to marginal revenue. 
C)  maximize profit by setting marginal cost equal to average total cost. 
D)  are price takers. 
A)  always earn an economic profit. 
B)  maximize profit by setting marginal cost equal to marginal revenue. 
C)  maximize profit by setting marginal cost equal to average total cost. 
D)  are price takers.

Question 8

A monopolist always earns an economic profit.

Accepted Answer

A) True 
 B)False

Question 9

Under what conditions might a monopoly lose money?

Accepted Answer

Any firm could incur

Question 10

At the point where the marginal revenue equals zero for a monopolist facing a straight-line demand curve,total revenue is:

Accepted Answer

A)  greater than 1. 
B)  maximum. 
C)  less than 1. 
D)  equal to zero. 
A)  greater than 1. 
B)  maximum. 
C)  less than 1. 
D)  equal to zero.

Question 11

Exhibit 8-6 Monopoly
  
-Exhibit 8-6 indicates that a monopolist maximizes profits at output equal to:

Accepted Answer

A)  0. 
B)  6. 
C)  8. 
D)  9. 
E)  10. 
A)  0. 
B)  6. 
C)  8. 
D)  9. 
E)  10.

Question 12

For a monopolist to practice effective price discrimination,one necessary condition is:

Accepted Answer

A)  identical price elasticity among groups of buyers. 
B)  differences in the price elasticity of demand among groups of buyers. 
C)  that the product is homogeneous market. 
D)  none of the above. 
A)  identical price elasticity among groups of buyers. 
B)  differences in the price elasticity of demand among groups of buyers. 
C)  that the product is homogeneous market. 
D)  none of the above.

Question 13

For a monopolist with a downward-sloping demand curve,

Accepted Answer

A)  the coefficient of price elasticity of demand is infinite. 
B)  the coefficient of price elasticity of demand is zero. 
C)  as price increases, marginal revenue decreases. 
D)  as price decreases, marginal revenue decreases. 
E)  when the price is equal to zero, marginal revenue is equal to zero. 
A)  the coefficient of price elasticity of demand is infinite. 
B)  the coefficient of price elasticity of demand is zero. 
C)  as price increases, marginal revenue decreases. 
D)  as price decreases, marginal revenue decreases. 
E)  when the price is equal to zero, marginal revenue is equal to zero.

Question 14

At the long-run equilibrium level of output,the monopolist's marginal cost will:

Accepted Answer

A)  exceed price. 
B)  equal price. 
C)  be less than price. 
D)  be less than marginal revenue. 
A)  exceed price. 
B)  equal price. 
C)  be less than price. 
D)  be less than marginal revenue.

Question 15

Exhibit 8-4 Demand and cost curves for a monopolist
  
-Although a monopoly can charge any price it wishes,it chooses:

Accepted Answer

A)  the highest price. 
B)  price equal to marginal cost. 
C)  the price that maximizes profit. 
D)  competitive prices. 
E)  a fair price. 
A)  the highest price. 
B)  price equal to marginal cost. 
C)  the price that maximizes profit. 
D)  competitive prices. 
E)  a fair price.

Question 16

Exhibit 8-7 Monopolist
  
-As shown in Exhibit 8-7,in the short run,the monopoly will:

Accepted Answer

A)  earn an hourly profit of $240. 
B)  earn an hourly profit of $80. 
C)  break even (i.e., earn zero economic profit). 
D)  suffer an hourly loss of $160. 
A)  earn an hourly profit of $240. 
B)  earn an hourly profit of $80. 
C)  break even (i.e., earn zero economic profit). 
D)  suffer an hourly loss of $160.

Question 17

For a monopolist to practice price discrimination,one necessary condition is that the product offered for sale must be:

Accepted Answer

A)  high quality. 
B)  expensive. 
C)  cheap. 
D)  impossible or difficult to resell. 
A)  high quality. 
B)  expensive. 
C)  cheap. 
D)  impossible or difficult to resell.

Question 18

The profit-maximizing output level for a monopolist is where the:

Accepted Answer

A)  price is maximized. 
B)  output sold is maximized. 
C)  ATC curve is minimized. 
D)  maximum efficiency is achieved. 
E)  MR = MC. 
A)  price is maximized. 
B)  output sold is maximized. 
C)  ATC curve is minimized. 
D)  maximum efficiency is achieved. 
E)  MR = MC.

Question 19

Assume a monopolist's marginal cost and marginal revenue curves intersect and the demand curve passes above its average total cost curve.The firm will:

Accepted Answer

A)  make an economic profit. 
B)  stay in operation in the short run, but shut down in the long run. 
C)  shut down in the short run. 
D)  lower the price. 
A)  make an economic profit. 
B)  stay in operation in the short run, but shut down in the long run. 
C)  shut down in the short run. 
D)  lower the price.

Question 20

Monopolies may earn economic losses in the long run.

Accepted Answer

A) True 
 B)False

Exam 8: Monopoly

Exhibit 8-6 Monopoly -The maximum possible total monopoly profit in Exhibit 8-6 is:

When marginal revenue is zero for a monopolist facing a downward-sloping straight-line demand curve,the price elasticity of demand is:

Exhibit 8-3 Demand and cost curves for GeneTech, a monopolist with a patented vaccine -In Exhibit 8-3,how much vaccine should GeneTech produce to maximize its profit?

The monopolist faces:

A monopolist always faces a demand curve that is:

Compared to a perfectly competitive firm,a monopolist:

Both a perfectly competitive firm and a monopolist:

A monopolist always earns an economic profit.

Under what conditions might a monopoly lose money?

At the point where the marginal revenue equals zero for a monopolist facing a straight-line demand curve,total revenue is:

Exhibit 8-6 Monopoly -Exhibit 8-6 indicates that a monopolist maximizes profits at output equal to:

For a monopolist to practice effective price discrimination,one necessary condition is:

For a monopolist with a downward-sloping demand curve,

At the long-run equilibrium level of output,the monopolist's marginal cost will:

Exhibit 8-4 Demand and cost curves for a monopolist -Although a monopoly can charge any price it wishes,it chooses:

Exhibit 8-7 Monopolist -As shown in Exhibit 8-7,in the short run,the monopoly will:

For a monopolist to practice price discrimination,one necessary condition is that the product offered for sale must be:

The profit-maximizing output level for a monopolist is where the:

Assume a monopolist's marginal cost and marginal revenue curves intersect and the demand curve passes above its average total cost curve.The firm will:

Monopolies may earn economic losses in the long run.

Introducing the Economic Way of Thinking

A: Appendix: Applying Graphs to Economics

Production Possibilities,Opportunity Cost,and Economic Growth

Part 1: Market Demand and Supply

Part 2: Market Demand and Supply

Markets in Action

Price Elasticity of Demand

Production Costs

Perfect Competition

Monopolistic Competition and Oligopoly

Labor Markets and Income Distribution

Gross Domestic Product

Business Cycles and Unemployment

Inflation

Aggregate Demand and Supply

A: Appendix: The Self-Correcting Aggregate Demand and Supply Model

Fiscal Policy

The Public Sector

Federal Deficits,Surpluses,and the National Debt

Money and the Federal Reserve System

Money Creation

Monetary Policy

A: Appendix: Policy Disputes Using the Self-Correcting Aggregate Demand and Supply Model

International Trade and Finance

Economies in Transition

Growth and the Less-Developed Countries

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