Question 1

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

Accepted Answer

A)  A. 
B)  B. 
C)  C. 
D)  D. 
E)  E. 
A)  A. 
B)  B. 
C)  C. 
D)  D. 
E)  E.

Question 2

A monopolist always selects a price on the elastic portion of its demand curve.

Accepted Answer

A) True 
 B)False

Question 3

Exhibit 8-7 Monopolist
  
-According to the information provided in Exhibit 8-7,if the Rudd Ice Company was a monopoly and is currently charging a price of $6,what would you advise Rudd to do?

Accepted Answer

A)  Stay where he is currently operating because he is charging the profit maximizing price. 
B)  Increase price and decrease output. 
C)  Decrease price and increase output. 
D)  Increase output and hold price constant. 
E)  Increase price and hold output constant. 
A)  Stay where he is currently operating because he is charging the profit maximizing price. 
B)  Increase price and decrease output. 
C)  Decrease price and increase output. 
D)  Increase output and hold price constant. 
E)  Increase price and hold output constant.

Question 4

Exhibit 8-8 Profit maximizing for a monopolist
  
-As shown in Exhibit 8-8,the monopolist's total cost is which of the following areas?

Accepted Answer

A)  P₁AEP₅. 
B)  P₂BDP₄. 
C)  P₃CDP₅. 
D)  P₄DEP₅. 
E)  P₃FQ₂O. 
A)  P₁AEP₅. 
B)  P₂BDP₄. 
C)  P₃CDP₅. 
D)  P₄DEP₅. 
E)  P₃FQ₂O.

Question 5

Under both perfect competition and monopoly,a firm:

Accepted Answer

A)  is a price taker. 
B)  is a price maker. 
C)  will shut down in the short-run if price falls short of average total cost. 
D)  always earns a pure economic profit. 
E)  sets marginal cost equal to marginal revenue. 
A)  is a price taker. 
B)  is a price maker. 
C)  will shut down in the short-run if price falls short of average total cost. 
D)  always earns a pure economic profit. 
E)  sets marginal cost equal to marginal revenue.

Question 6

A monopoly:

Accepted Answer

A)  faces the market demand curve which is downward sloping. 
B)  has a marginal revenue curve which slopes downward and lies below its demand curve. 
C)  will maximize profits by producing an output level where MR = MC. 
D)  all of the above. 
A)  faces the market demand curve which is downward sloping. 
B)  has a marginal revenue curve which slopes downward and lies below its demand curve. 
C)  will maximize profits by producing an output level where MR = MC. 
D)  all of the above.

Question 7

A monopolist can earn an economic profit only when:

Accepted Answer

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

Question 8

Suppose a monopolist's demand curve lies below its average variable cost curve.The firm will:

Accepted Answer

A)  stay in operation in the short-run. 
B)  earn an economic profit. 
C)  earn an economic profit in the long run. 
D)  shut down. 
A)  stay in operation in the short-run. 
B)  earn an economic profit. 
C)  earn an economic profit in the long run. 
D)  shut down.

Question 9

Exhibit 8-1 Monopolist's demand curve
  
-At an output of 100 units,marginal revenue for a monopolist with the demand curve shown in Exhibit 8-1 would be:

Accepted Answer

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

Question 10

What is the name of the monopolist having a declining long-run average cost throughout the market?

Accepted Answer

A)  Monopolistic competition. 
B)  Monopoly by legal barrier. 
C)  Natural monopoly. 
D)  Contrived monopoly. 
A)  Monopolistic competition. 
B)  Monopoly by legal barrier. 
C)  Natural monopoly. 
D)  Contrived monopoly.

Question 11

The demand curve any monopolist uses in making output decisions is:

Accepted Answer

A)  the same as the demand curve facing a perfectly competitive firm. 
B)  vertical, because there are no close substitutes for its product. 
C)  horizontal, because there are no close substitutes for its product. 
D)  the same as the market demand curve. 
E)  perfectly inelastic. 
A)  the same as the demand curve facing a perfectly competitive firm. 
B)  vertical, because there are no close substitutes for its product. 
C)  horizontal, because there are no close substitutes for its product. 
D)  the same as the market demand curve. 
E)  perfectly inelastic.

Question 12

A monopolist faces a downward-sloping demand curve because:

Accepted Answer

A)  the demand for its product is inelastic. 
B)  the industry demand curve is horizontal. 
C)  resource prices increase as the monopolist expands output. 
D)  the entire market demand curve is the monopolist's demand curve. 
A)  the demand for its product is inelastic. 
B)  the industry demand curve is horizontal. 
C)  resource prices increase as the monopolist expands output. 
D)  the entire market demand curve is the monopolist's demand curve.

Question 13

Which of the following is true under natural monopoly?

Accepted Answer

A)  The marginal cost curve will be above the average cost curve. 
B)  The monopolist will set price equal to marginal cost and will earn economic profits. 
C)  Economies of scale exist. 
D)  Output is produced under conditions of constant cost. 
A)  The marginal cost curve will be above the average cost curve. 
B)  The monopolist will set price equal to marginal cost and will earn economic profits. 
C)  Economies of scale exist. 
D)  Output is produced under conditions of constant cost.

Question 14

The act of buying a commodity in one market at a lower price and selling it in another market at a higher price is known as:

Accepted Answer

A)  buying long. 
B)  selling short. 
C)  a tariff. 
D)  arbitrage. 
A)  buying long. 
B)  selling short. 
C)  a tariff. 
D)  arbitrage.

Question 15

For a monopolist,marginal revenue is always:

Accepted Answer

A)  below market price. 
B)  equal to market price. 
C)  greater than market price. 
D)  equal to total revenue. 
E)  equal to total cost. 
A)  below market price. 
B)  equal to market price. 
C)  greater than market price. 
D)  equal to total revenue. 
E)  equal to total cost.

Question 16

When a monopoly price discriminates,it charges the highest price to the group of buyers with the least elastic demand.

Accepted Answer

A) True 
 B)False

Question 17

Using the rule that focuses on the marginal approach to maximizing profits,a monopolist charges a price where the:

Accepted Answer

A)  output sold is maximized. 
B)  ATC curve is minimized. 
C)  MR = MC. 
D)  MR = 0. 
A)  output sold is maximized. 
B)  ATC curve is minimized. 
C)  MR = MC. 
D)  MR = 0.

Question 18

A monopoly earns the most profit by charging a price where demand is inelastic.

Accepted Answer

A) True 
 B)False

Question 19

Exhibit 8-2 Demand and cost information for a monopoly
  
-Refer to Exhibit 8-2.Using the rule that focuses on the marginal approach to maximizing profits,the monopolist maximizes profit by choosing price equal to:

Accepted Answer

A)  $40. 
B)  $20. 
C)  $0. 
D)  $10. 
E)  $30. 
A)  $40. 
B)  $20. 
C)  $0. 
D)  $10. 
E)  $30.

Question 20

If the average total cost curve is always above the demand curve for a monopolist:

Accepted Answer

A)  the profits of the monopolist will be large. 
B)  the monopolist must be producing inefficiently. 
C)  the monopolist will suffer economic losses. 
D)  entry will occur, forcing the monopolist to reduce price and expand output. 
A)  the profits of the monopolist will be large. 
B)  the monopolist must be producing inefficiently. 
C)  the monopolist will suffer economic losses. 
D)  entry will occur, forcing the monopolist to reduce price and expand output.

Exam 8: Monopoly

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

A monopolist always selects a price on the elastic portion of its demand curve.

Exhibit 8-7 Monopolist -According to the information provided in Exhibit 8-7,if the Rudd Ice Company was a monopoly and is currently charging a price of $6,what would you advise Rudd to do?

Exhibit 8-8 Profit maximizing for a monopolist -As shown in Exhibit 8-8,the monopolist's total cost is which of the following areas?

Under both perfect competition and monopoly,a firm:

A monopoly:

A monopolist can earn an economic profit only when:

Suppose a monopolist's demand curve lies below its average variable cost curve.The firm will:

Exhibit 8-1 Monopolist's demand curve -At an output of 100 units,marginal revenue for a monopolist with the demand curve shown in Exhibit 8-1 would be:

What is the name of the monopolist having a declining long-run average cost throughout the market?

The demand curve any monopolist uses in making output decisions is:

A monopolist faces a downward-sloping demand curve because:

Which of the following is true under natural monopoly?

The act of buying a commodity in one market at a lower price and selling it in another market at a higher price is known as:

For a monopolist,marginal revenue is always:

When a monopoly price discriminates,it charges the highest price to the group of buyers with the least elastic demand.

Using the rule that focuses on the marginal approach to maximizing profits,a monopolist charges a price where the:

A monopoly earns the most profit by charging a price where demand is inelastic.

Exhibit 8-2 Demand and cost information for a monopoly -Refer to Exhibit 8-2.Using the rule that focuses on the marginal approach to maximizing profits,the monopolist maximizes profit by choosing price equal to:

If the average total cost curve is always above the demand curve for a monopolist:

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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