Question 1

Which of the following firms operates in a natural monopoly?

Accepted Answer

A)  Telephone company. 
B)  Electric company. 
C)  Water company. 
D)  All of the above. 
A)  Telephone company. 
B)  Electric company. 
C)  Water company. 
D)  All of the above.

Question 2

At any point where a monopolist's marginal revenue is positive,the downward-sloping straight-line demand curve is:

Accepted Answer

A)  perfectly elastic. 
B)  elastic, but not perfectly elastic. 
C)  unit elastic. 
D)  inelastic. 
A)  perfectly elastic. 
B)  elastic, but not perfectly elastic. 
C)  unit elastic. 
D)  inelastic.

Question 3

Which of the following correctly describes price discrimination?

Accepted Answer

A)  Selling different products to different people for the same price. 
B)  Selling different products to identical people for different prices. 
C)  Selling the same product to different people for different prices. 
D)  Selling the same product to the same person for the same price. 
A)  Selling different products to different people for the same price. 
B)  Selling different products to identical people for different prices. 
C)  Selling the same product to different people for different prices. 
D)  Selling the same product to the same person for the same price.

Question 4

An industry is said to be a natural monopoly when:

Accepted Answer

A)  legal barriers limit entry into the market. 
B)  diseconomies of scale are present in the market. 
C)  the market demand for the product supplied by a firm is inelastic. 
D)  long-run average cost continues to decline as the quantity of output increases. 
A)  legal barriers limit entry into the market. 
B)  diseconomies of scale are present in the market. 
C)  the market demand for the product supplied by a firm is inelastic. 
D)  long-run average cost continues to decline as the quantity of output increases.

Question 5

A monopolist is a price searcher because it has the ability to select the price along its demand curve of its product.

Accepted Answer

A) True 
 B)False

Question 6

Exhibit 8-1 Monopolist's demand curve
  
-Which of the following points in Exhibit 8-1 would not lie on the marginal revenue curve corresponding to the monopolist's straight-line demand curve?

Accepted Answer

A)  A. 
B)  B. 
C)  C. 
D)  C and B. 
A)  A. 
B)  B. 
C)  C. 
D)  C and B.

Question 7

Exhibit 8-10 A monopolist
  
-In Exhibit 8-10,the profit-maximizing or loss-minimizing output for the monopolist is:

Accepted Answer

A)  100 units per day. 
B)  150 units per day. 
C)  200 units per day. 
D)  250 units per day. 
E)  300 units per day. 
A)  100 units per day. 
B)  150 units per day. 
C)  200 units per day. 
D)  250 units per day. 
E)  300 units per day.

Question 8

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 $10,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 increase 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 increase output. 
C)  Decrease price and increase output. 
D)  Increase output and hold price constant. 
E)  Increase price and hold output constant.

Question 9

A monopoly:

Accepted Answer

A)  can increase price and increase output at the same time. 
B)  can charge any price it wants and still sell all of its output. 
C)  can sell any output it produces provided it accepts the market price. 
D)  must lower price in order to increase output. 
E)  faces a perfectly elastic demand curve. 
A)  can increase price and increase output at the same time. 
B)  can charge any price it wants and still sell all of its output. 
C)  can sell any output it produces provided it accepts the market price. 
D)  must lower price in order to increase output. 
E)  faces a perfectly elastic demand curve.

Question 10

A monopolist will maximize profits by:

Accepted Answer

A)  setting his price as high as possible. 
B)  setting his price at the level that will maximize per-unit profit. 
C)  producing the output where marginal revenue equals marginal cost. 
D)  producing the output where price equals marginal cost. 
A)  setting his price as high as possible. 
B)  setting his price at the level that will maximize per-unit profit. 
C)  producing the output where marginal revenue equals marginal cost. 
D)  producing the output where price equals marginal cost.

Which of the following firms operates in a natural monopoly?

At any point where a monopolist's marginal revenue is positive,the downward-sloping straight-line demand curve is:

Which of the following correctly describes price discrimination?

An industry is said to be a natural monopoly when:

A monopolist is a price searcher because it has the ability to select the price along its demand curve of its product.

Exhibit 8-1 Monopolist's demand curve -Which of the following points in Exhibit 8-1 would not lie on the marginal revenue curve corresponding to the monopolist's straight-line demand curve?

Exhibit 8-10 A monopolist -In Exhibit 8-10,the profit-maximizing or loss-minimizing output for the monopolist is:

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 $10,what would you advise Rudd to do?

A monopoly:

A monopolist will maximize profits by:

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

Exam 8: Monopoly

Which of the following firms operates in a natural monopoly?

At any point where a monopolist's marginal revenue is positive,the downward-sloping straight-line demand curve is:

Which of the following correctly describes price discrimination?

An industry is said to be a natural monopoly when:

A monopolist is a price searcher because it has the ability to select the price along its demand curve of its product.

Exhibit 8-1 Monopolist's demand curve -Which of the following points in Exhibit 8-1 would not lie on the marginal revenue curve corresponding to the monopolist's straight-line demand curve?

Exhibit 8-10 A monopolist -In Exhibit 8-10,the profit-maximizing or loss-minimizing output for the monopolist is:

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 $10,what would you advise Rudd to do?

A monopoly:

A monopolist will maximize profits by:

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