Question 1

Monopolies exist for each of the following reasons, EXCEPT:

Accepted Answer

A) competitors are legally unable to challenge them. 
B) they have control over resources with very few good substitutes. 
C) it is sometimes inefficient to have competition in certain markets. 
D) it increases both producer and consumer surplus. 
A) competitors are legally unable to challenge them. 
B) they have control over resources with very few good substitutes. 
C) it is sometimes inefficient to have competition in certain markets. 
D) it increases both producer and consumer surplus.

Question 2

_____ allow exclusive use of an identifier, such as a brand name, and can be renewed indefinitely.

Accepted Answer

A) Patents 
B) Trademarks 
C) Copyrights 
D) Licenses 
A) Patents 
B) Trademarks 
C) Copyrights 
D) Licenses

Question 3

A group of firms in competitive market produced 20 units of a good when the market price was $2.They incurred no marginal cost.Eventually they realized the benefits they could get by teaming up and acting as a monopolist.The following figure shows the demand curve and marginal revenue curve for this profit maximizing monopolist.

-Refer to Figure .What is the consumer surplus under monopoly?

Accepted Answer

A) $96 
B) $48 
C) $36 
D) $72 
A) $96 
B) $48 
C) $36 
D) $72

Question 4

The following table shows the price and revenue for a monopolist at different levels of production.The monopolist incurs no marginal cost of production.

$$\begin{array} { | c | c | c | } 
\hline \text { Quantity } & \text { Price } & \text { Revenue } \
\hline 2 & 16 & 32 \
\hline 3 & 15 & 45 \
\hline 4 & 14.5 & 58 \
\hline 5 & 11.6 & 58 \
\hline 6 & 9.5 & 57 \
\hline 7 & 8 & 56\
\hline
\end{array}$$

-Refer to Table .Identify the profit maximizing production level for this monopolist.

Accepted Answer

A) 2 units 
B) 3 units 
C) 4 units 
D) 5 units 
A) 2 units 
B) 3 units 
C) 4 units 
D) 5 units

Question 5

The following figure depicts the demand, marginal revenue (MR), and marginal cost (MC) for a monopolist.
   
-Refer to Figure .Calculate the profit earned by the monopolist when the marginal cost of production is $15 per unit.

Accepted Answer

A) $20 
B) $35 
C) $25 
D) $45 
A) $20 
B) $35 
C) $25 
D) $45

Question 6

A monopolist can:

Accepted Answer

A) produce as much or as little as it wants without affecting price. 
B) decide the price that will be charged in the market. 
C) provide discounts below market price to attract more customers. 
D) price its products by considering the possible reactions of future competitors or firms that produce close substitutes for its output. 
A) produce as much or as little as it wants without affecting price. 
B) decide the price that will be charged in the market. 
C) provide discounts below market price to attract more customers. 
D) price its products by considering the possible reactions of future competitors or firms that produce close substitutes for its output.

Question 7

Historical evidence suggests that monopolization of particular industries had led to lower prices.In such cases the monopolists had reduced profit to increase welfare.

Accepted Answer

A) True 
 B)False

Question 8

The following figure depicts the demand, marginal revenue (MR), and marginal cost (MC) for a monopolist.
   
-Refer to Figure .What price will the monopolist charge when its marginal cost shifts from C to C'?

Accepted Answer

A) $20 
B) $16 
C) $15 
D) $9 
A) $20 
B) $16 
C) $15 
D) $9

Question 9

Which of the following is a possible explanation for the fall in prices after an industry is monopolized by combining a group of competitors?

Accepted Answer

A) A monopolist faces a downward sloping demand curve.Hence, output expansion leads to lower prices. 
B) A reduction in price increases producer surplus.Hence a monopolist may reduce the price of his product. 
C) A monopolist may reduce prices to make it difficult for other firms to compete. 
D) A monopolist can increase profits by reducing price when its cost of production declines due to increased size of the new firm.The fall in price is less than the decline in cost. 
A) A monopolist faces a downward sloping demand curve.Hence, output expansion leads to lower prices. 
B) A reduction in price increases producer surplus.Hence a monopolist may reduce the price of his product. 
C) A monopolist may reduce prices to make it difficult for other firms to compete. 
D) A monopolist can increase profits by reducing price when its cost of production declines due to increased size of the new firm.The fall in price is less than the decline in cost.

Monopolies exist for each of the following reasons, EXCEPT:

_____ allow exclusive use of an identifier, such as a brand name, and can be renewed indefinitely.

The following figure depicts the demand, marginal revenue (MR), and marginal cost (MC) for a monopolist. -Refer to Figure .Calculate the profit earned by the monopolist when the marginal cost of production is $15 per unit.

A monopolist can:

Historical evidence suggests that monopolization of particular industries had led to lower prices.In such cases the monopolists had reduced profit to increase welfare.

The following figure depicts the demand, marginal revenue (MR), and marginal cost (MC) for a monopolist. -Refer to Figure .What price will the monopolist charge when its marginal cost shifts from C to C'?

Which of the following is a possible explanation for the fall in prices after an industry is monopolized by combining a group of competitors?

Reasoning With Economics: Models and Information

Transactions and Institutions: the Building Blocks

Markets

Cost and Production

Extreme Markets I: Perfect Competition

Between the Extremes: Interaction and Strategy

Competition and Strategy

Beyond Markets; Property and Contracts

The Economics of Contracts

Risk and Information in Contracts

Organizations in Concept and Practice

Organizational Design

Vertical Relationships

Employment Relationships

Time, Risk and Options

Conflict, Negotiation and Group Choice

Filters

Exam 6: Extreme Markets II: Monopoly

Monopolies exist for each of the following reasons, EXCEPT:

_____ allow exclusive use of an identifier, such as a brand name, and can be renewed indefinitely.

The following figure depicts the demand, marginal revenue (MR), and marginal cost (MC) for a monopolist. -Refer to Figure .Calculate the profit earned by the monopolist when the marginal cost of production is $15 per unit.

A monopolist can:

Historical evidence suggests that monopolization of particular industries had led to lower prices.In such cases the monopolists had reduced profit to increase welfare.

The following figure depicts the demand, marginal revenue (MR), and marginal cost (MC) for a monopolist. -Refer to Figure .What price will the monopolist charge when its marginal cost shifts from C to C'?

Which of the following is a possible explanation for the fall in prices after an industry is monopolized by combining a group of competitors?

Reasoning With Economics: Models and Information

Transactions and Institutions: the Building Blocks

Markets

Cost and Production

Extreme Markets I: Perfect Competition

Between the Extremes: Interaction and Strategy

Competition and Strategy

Beyond Markets; Property and Contracts

The Economics of Contracts

Risk and Information in Contracts

Organizations in Concept and Practice

Organizational Design

Vertical Relationships

Employment Relationships

Time, Risk and Options

Conflict, Negotiation and Group Choice

Filters