Question 1

Exhibit 8-10 A monopolist
  
-In Exhibit 8-10,at the profit-maximizing or loss-minimizing output,the monopolist's total economic profit is:

Accepted Answer

A)  positive. 
B)  negative. 
C)  zero. 
D)  minimum. 
A)  positive. 
B)  negative. 
C)  zero. 
D)  minimum.

Question 2

A price-discriminating monopoly charges the lowest price to the group that:

Accepted Answer

A)  has the most elastic demand. 
B)  purchases the largest quantity. 
C)  engages in the most arbitrage. 
D)  is least responsive to price changes. 
A)  has the most elastic demand. 
B)  purchases the largest quantity. 
C)  engages in the most arbitrage. 
D)  is least responsive to price changes.

Question 3

To maximize its profits,a monopoly should produce the quantity where its marginal cost equals its:

Accepted Answer

A)  average total cost. 
B)  average variable cost. 
C)  demand. 
D)  marginal revenue. 
A)  average total cost. 
B)  average variable cost. 
C)  demand. 
D)  marginal revenue.

Question 4

Exhibit 8-8 Profit maximizing for a monopolist
  
-As shown in Exhibit 8-8,the profit-maximizing price for the monopolist is:

Accepted Answer

A)  OP₁. 
B)  OP₂. 
C)  OP₃. 
D)  OP₄. 
E)  OP₅. 
A)  OP₁. 
B)  OP₂. 
C)  OP₃. 
D)  OP₄. 
E)  OP₅.

Question 5

A monopolist earns an economic profit only when:

Accepted Answer

A)  average total cost equals than price. 
B)  marginal cost equals price. 
C)  marginal revenue equals price. 
D)  average total cost is less than price. 
A)  average total cost equals than price. 
B)  marginal cost equals price. 
C)  marginal revenue equals price. 
D)  average total cost is less than price.

Question 6

One of the necessary conditions for price discrimination to occur is that:

Accepted Answer

A)  buyers in different markets have different elasticities of demand. 
B)  the demand curve is upward sloping. 
C)  buyers must be allowed to resell the good at a higher price elsewhere. 
D)  all of the above are necessary for price discrimination to occur. 
A)  buyers in different markets have different elasticities of demand. 
B)  the demand curve is upward sloping. 
C)  buyers must be allowed to resell the good at a higher price elsewhere. 
D)  all of the above are necessary for price discrimination to occur.

Question 7

Suppose a monopolist charges a price corresponding to the intersection of the marginal cost and marginal revenue curves.If this price is between its average variable cost and average total cost curves,the firm will:

Accepted Answer

A)  earn an economic profit. 
B)  stay in operation in the short-run, but shut down in the long run if demand remains the same. 
C)  shut down. 
D)  none of the above. 
A)  earn an economic profit. 
B)  stay in operation in the short-run, but shut down in the long run if demand remains the same. 
C)  shut down. 
D)  none of the above.

Question 8

A monopolist that maximizes total revenue earns maximum economic profit.

Accepted Answer

A) True 
 B)False

Question 9

Costs in a natural monopoly are lower because there is only one producer.

Accepted Answer

A) True 
 B)False

Question 10

A natural monopoly is a market where:

Accepted Answer

A)  a single firm has control over a vital natural resource. 
B)  many smaller firms can produce the entire market output at the same per-unit cost as could one large firm. 
C)  a single large firm can produce the entire market output at a lower per-unit cost than a group of smaller firms. 
D)  many smaller firms can produce the entire market output at a lower per-unit cost than could one large firm. 
A)  a single firm has control over a vital natural resource. 
B)  many smaller firms can produce the entire market output at the same per-unit cost as could one large firm. 
C)  a single large firm can produce the entire market output at a lower per-unit cost than a group of smaller firms. 
D)  many smaller firms can produce the entire market output at a lower per-unit cost than could one large firm.

Question 11

An example of price discrimination is the price charged for:

Accepted Answer

A)  an economics textbook at a campus bookstore. 
B)  gasoline. 
C)  theater tickets that offer lower prices for children. 
D)  a postage stamp. 
A)  an economics textbook at a campus bookstore. 
B)  gasoline. 
C)  theater tickets that offer lower prices for children. 
D)  a postage stamp.

Question 12

An example of price discrimination is the price charged for:

Accepted Answer

A)  troll dolls. 
B)  college admission. 
C)  textbooks. 
D)  diamonds. 
A)  troll dolls. 
B)  college admission. 
C)  textbooks. 
D)  diamonds.

Question 13

For a monopoly,price always equals marginal revenue.

Accepted Answer

A) True 
 B)False

Question 14

Compared to a perfectly competitive firm with the same cost structure,a monopoly firm will charge a:

Accepted Answer

A)  higher price and sell more. 
B)  lower price and sell more. 
C)  higher price and sell less. 
D)  lower price and sell less. 
E)  similar price and sell the same. 
A)  higher price and sell more. 
B)  lower price and sell more. 
C)  higher price and sell less. 
D)  lower price and sell less. 
E)  similar price and sell the same.

Question 15

Which of the following statements accurately describes a difference between a firm that is a monopolist and one that is a competitive price taker?

Accepted Answer

A)  Marginal revenue and market price are equal for the competitive price taker but not for the monopolist. 
B)  The monopolist does not always produce the output that equates marginal cost and marginal revenue; the competitive price taker does. 
C)  The monopolist charges the highest price possible; the competitive price taker charges a price equal to its per-unit cost. 
D)  A monopolist can earn economic profit in the short run; a competitive price taker cannot. 
A)  Marginal revenue and market price are equal for the competitive price taker but not for the monopolist. 
B)  The monopolist does not always produce the output that equates marginal cost and marginal revenue; the competitive price taker does. 
C)  The monopolist charges the highest price possible; the competitive price taker charges a price equal to its per-unit cost. 
D)  A monopolist can earn economic profit in the short run; a competitive price taker cannot.

Question 16

A natural monopoly exists whenever economies of scale are very extensive.

Accepted Answer

A) True 
 B)False

Question 17

A monopoly will be maximizing profits if it is operating at the point where:

Accepted Answer

A)  price is at a maximum. 
B)  average cost is at a minimum. 
C)  average cost is at a maximum. 
D)  marginal cost is at a minimum. 
E)  marginal revenue = marginal cost. 
A)  price is at a maximum. 
B)  average cost is at a minimum. 
C)  average cost is at a maximum. 
D)  marginal cost is at a minimum. 
E)  marginal revenue = marginal cost.

Question 18

The monopolist,unlike the perfectly competitive firm,can continue to earn an economic profit in the long run because of:

Accepted Answer

A)  collusive agreements with competitors. 
B)  price leadership. 
C)  cartels. 
D)  a dominant firm. 
E)  extremely high barriers to entry. 
A)  collusive agreements with competitors. 
B)  price leadership. 
C)  cartels. 
D)  a dominant firm. 
E)  extremely high barriers to entry.

Question 19

Exhibit 8-9 A monopolist
  
-In Exhibit 8-9,the monopolist would charge which of the following prices to maximize profit or minimize its loss?

Accepted Answer

A)  $20. 
B)  $40. 
C)  $60. 
D)  $70. 
E)  $100. 
A)  $20. 
B)  $40. 
C)  $60. 
D)  $70. 
E)  $100.

Question 20

Which of the following statements best describe the price,output,and profit conditions of monopoly?

Accepted Answer

A)  Price will equal marginal cost at the profit-maximizing level of output and profits will be positive in the long-run. 
B)  Price will always equal average variable cost in the short-run and either profits or losses may result in the long run. 
C)  In the long-run, positive economic profit will be earned. 
D)  All of the above are true. 
A)  Price will equal marginal cost at the profit-maximizing level of output and profits will be positive in the long-run. 
B)  Price will always equal average variable cost in the short-run and either profits or losses may result in the long run. 
C)  In the long-run, positive economic profit will be earned. 
D)  All of the above are true.

Exam 8: Monopoly

Exhibit 8-10 A monopolist -In Exhibit 8-10,at the profit-maximizing or loss-minimizing output,the monopolist's total economic profit is:

A price-discriminating monopoly charges the lowest price to the group that:

To maximize its profits,a monopoly should produce the quantity where its marginal cost equals its:

Exhibit 8-8 Profit maximizing for a monopolist -As shown in Exhibit 8-8,the profit-maximizing price for the monopolist is:

A monopolist earns an economic profit only when:

One of the necessary conditions for price discrimination to occur is that:

Suppose a monopolist charges a price corresponding to the intersection of the marginal cost and marginal revenue curves.If this price is between its average variable cost and average total cost curves,the firm will:

A monopolist that maximizes total revenue earns maximum economic profit.

Costs in a natural monopoly are lower because there is only one producer.

A natural monopoly is a market where:

An example of price discrimination is the price charged for:

An example of price discrimination is the price charged for:

For a monopoly,price always equals marginal revenue.

Compared to a perfectly competitive firm with the same cost structure,a monopoly firm will charge a:

Which of the following statements accurately describes a difference between a firm that is a monopolist and one that is a competitive price taker?

A natural monopoly exists whenever economies of scale are very extensive.

A monopoly will be maximizing profits if it is operating at the point where:

The monopolist,unlike the perfectly competitive firm,can continue to earn an economic profit in the long run because of:

Exhibit 8-9 A monopolist -In Exhibit 8-9,the monopolist would charge which of the following prices to maximize profit or minimize its loss?

Which of the following statements best describe the price,output,and profit conditions of monopoly?

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

Filters