Question 1

The situation in which one firm can produce the total output of the market at a lower cost than several firms is called a

Accepted Answer

A)  natural monopoly. 
B)  pure monopoly. 
C)  ruling monopoly. 
D)  cost monopoly. 
A)  natural monopoly. 
B)  pure monopoly. 
C)  ruling monopoly. 
D)  cost monopoly.

Question 2

If the inverse demand function for a monopoly's product is p = 100 - 2Q,then the firm's marginal revenue function is

Accepted Answer

A)  -2. 
B)  100 - 4Q. 
C)  200 - 4Q. 
D)  200 - 2Q. 
A)  -2. 
B)  100 - 4Q. 
C)  200 - 4Q. 
D)  200 - 2Q.

Question 3

Since a monopoly can set any price it wants,it always makes a profit.

Accepted Answer

A) True 
 B)False

Question 4

When would a profit-maximizing monopolist that operates with no government intervention choose to produce the competitive level of output?

Accepted Answer

A monopolist that faces a perf

Question 5

The existence of a deadweight loss associated with a monopoly can be seen because

Accepted Answer

A)  consumers are willing to pay more for the last unit of output than it costs to produce. 
B)  the cost of the last unit produced is more than consumers are willing to pay for it. 
C)  the producer surplus is larger than in a competitive market. 
D)  None of the above. 
A)  consumers are willing to pay more for the last unit of output than it costs to produce. 
B)  the cost of the last unit produced is more than consumers are willing to pay for it. 
C)  the producer surplus is larger than in a competitive market. 
D)  None of the above.

Question 6

If a firm is able to influence its price,

Accepted Answer

A)  it is a monopoly. 
B)  it has constant marginal revenue. 
C)  it sells its output at a constant price. 
D)  it faces a downward-sloping demand curve. 
A)  it is a monopoly. 
B)  it has constant marginal revenue. 
C)  it sells its output at a constant price. 
D)  it faces a downward-sloping demand curve.

Question 7

Consider a monopoly who posts an economic profit of $10,000,000.All else equal,this monopolist should expect

Accepted Answer

A)  entry into its market, prices to fall, profits to fall. 
B)  no entry into its market, prices to remain the same, profits to remain the same. 
C)  exit from its market, prices to rise, profits to rise. 
D)  entry into its market, the need to increase price, profits to remain the same. 
A)  entry into its market, prices to fall, profits to fall. 
B)  no entry into its market, prices to remain the same, profits to remain the same. 
C)  exit from its market, prices to rise, profits to rise. 
D)  entry into its market, the need to increase price, profits to remain the same.

Question 8

If the inverse demand curve a monopoly faces is p = 100 - 2Q,then profit maximization

Accepted Answer

A)  is achieved when 25 units are produced. 
B)  is achieved by setting price equal to 25. 
C)  is achieved only by shutting down in the short run. 
D)  cannot be determined solely from the information provided. 
A)  is achieved when 25 units are produced. 
B)  is achieved by setting price equal to 25. 
C)  is achieved only by shutting down in the short run. 
D)  cannot be determined solely from the information provided.

Question 9

In a recent court case,an expert witness defined a monopoly as a firm that can "raise price without reducing its total revenue." What does this imply about the elasticity of demand? Would this definition hold for a profit-maximizing monopoly? Explain.

Accepted Answer

If the firm raises price,the quantity so

Question 10

-Suppose a monopolist has TC = 40 + 10Q + Q2,and the demand curve it faces is p = 130 - 2Q.What is the monopolist's total cost (TC)at the profit-maximizing level of output?

Accepted Answer

A)  TC = 320 
B)  TC = 640 
C)  TC = 720 
D)  TC = 840 
A)  TC = 320 
B)  TC = 640 
C)  TC = 720 
D)  TC = 840

Question 11

As other firms enter a monopoly's market,the monopoly's market power

Accepted Answer

A)  is unaffected. 
B)  declines. 
C)  increases. 
D)  increases according to the Lerner Index but decreases according to the price/marginal cost ratio. 
A)  is unaffected. 
B)  declines. 
C)  increases. 
D)  increases according to the Lerner Index but decreases according to the price/marginal cost ratio.

Question 12

A monopolist that chooses price

Accepted Answer

A)  necessarily produces less than a monopolist that chooses quantity, hence the laws against price fixing. 
B)  produces the same amount as a monopolist that chooses quantity. 
C)  produces more than a monopolist that chooses quantity, thus the irony of laws against price fixing. 
D)  could produce more or less than a monopolist that chooses quantity since the demand curve is not specified. 
A)  necessarily produces less than a monopolist that chooses quantity, hence the laws against price fixing. 
B)  produces the same amount as a monopolist that chooses quantity. 
C)  produces more than a monopolist that chooses quantity, thus the irony of laws against price fixing. 
D)  could produce more or less than a monopolist that chooses quantity since the demand curve is not specified.

Question 13

A profit-maximizing monopolist

Accepted Answer

A)  is guaranteed to lose money because of a lack of competition. 
B)  is not guaranteed to make a positive profit. 
C)  is guaranteed to make a positive profit, hence the desire to be a monopolist. 
D)  is guaranteed to make a non-negative profit, otherwise government would step in to assist. 
A)  is guaranteed to lose money because of a lack of competition. 
B)  is not guaranteed to make a positive profit. 
C)  is guaranteed to make a positive profit, hence the desire to be a monopolist. 
D)  is guaranteed to make a non-negative profit, otherwise government would step in to assist.

Question 14

A monopoly always operates in the inelastic portion of its demand curve.

Accepted Answer

A) True 
 B)False

Question 15

When generic drugs enter the market after the patent for a brand name drug expires,the price of the brand name drug often increases.This is usually due to

Accepted Answer

A)  the demand curve for the brand name drug shifting in but becoming more inelastic. 
B)  the demand curve for the brand name drug not shifting, but the marginal cost of producing the good increases. 
C)  the demand curve for the brand name drug shifting in but becoming more elastic. 
D)  the demand curve for the brand name drug not shifting, but loyal customers are willing to pay a higher price for the brand name drug. 
A)  the demand curve for the brand name drug shifting in but becoming more inelastic. 
B)  the demand curve for the brand name drug not shifting, but the marginal cost of producing the good increases. 
C)  the demand curve for the brand name drug shifting in but becoming more elastic. 
D)  the demand curve for the brand name drug not shifting, but loyal customers are willing to pay a higher price for the brand name drug.

Question 16

-Suppose a monopolist has TC = 40 + 10Q + Q2,and the demand curve it faces is p = 130 - 2Q.What is the profit-maximizing price and output?

Accepted Answer

A)  P = 50; Q = 20 
B)  P = 110; Q = 40 
C)  P = 90; Q = 40 
D)  P = 90; Q = 20 
A)  P = 50; Q = 20 
B)  P = 110; Q = 40 
C)  P = 90; Q = 40 
D)  P = 90; Q = 20

Question 17

If a monopoly's Lerner Index exceeds 1,then

Accepted Answer

A)  it is earning maximum profit. 
B)  it has ultimate market power. 
C)  it must be pricing below marginal cost. 
D)  marginal revenue is negative. 
A)  it is earning maximum profit. 
B)  it has ultimate market power. 
C)  it must be pricing below marginal cost. 
D)  marginal revenue is negative.

Question 18

Marginal Revenue is

Accepted Answer

A)  the increase in total revenue from selling one more unit of output. 
B)  equal to P(1+1/ε). 
C)  equal to P when the price elasticity of demand is infinite. 
D)  All of the above. 
A)  the increase in total revenue from selling one more unit of output. 
B)  equal to P(1+1/ε). 
C)  equal to P when the price elasticity of demand is infinite. 
D)  All of the above.

Question 19

As the ratio of price to marginal cost decreases,the Lerner index

Accepted Answer

A)  stays the same. 
B)  increases. 
C)  decreases. 
D)  can increase or decrease depending upon the shape of the demand curve. 
A)  stays the same. 
B)  increases. 
C)  decreases. 
D)  can increase or decrease depending upon the shape of the demand curve.

Question 20

A justification for patents is that without patents consumer surplus would be

Accepted Answer

A)  larger than with the patent. 
B)  zero since the product would not be invented. 
C)  only slightly smaller than with the patent. 
D)  zero since the monopoly would be a revenue maximizer. 
A)  larger than with the patent. 
B)  zero since the product would not be invented. 
C)  only slightly smaller than with the patent. 
D)  zero since the monopoly would be a revenue maximizer.

The situation in which one firm can produce the total output of the market at a lower cost than several firms is called a

If the inverse demand function for a monopoly's product is p = 100 - 2Q,then the firm's marginal revenue function is

Since a monopoly can set any price it wants,it always makes a profit.

When would a profit-maximizing monopolist that operates with no government intervention choose to produce the competitive level of output?

The existence of a deadweight loss associated with a monopoly can be seen because

If a firm is able to influence its price,

Consider a monopoly who posts an economic profit of $10,000,000.All else equal,this monopolist should expect

If the inverse demand curve a monopoly faces is p = 100 - 2Q,then profit maximization

In a recent court case,an expert witness defined a monopoly as a firm that can "raise price without reducing its total revenue." What does this imply about the elasticity of demand? Would this definition hold for a profit-maximizing monopoly? Explain.

-Suppose a monopolist has TC = 40 + 10Q + Q²,and the demand curve it faces is p = 130 - 2Q.What is the monopolist's total cost (TC)at the profit-maximizing level of output?

As other firms enter a monopoly's market,the monopoly's market power

A monopolist that chooses price

A profit-maximizing monopolist

A monopoly always operates in the inelastic portion of its demand curve.

When generic drugs enter the market after the patent for a brand name drug expires,the price of the brand name drug often increases.This is usually due to

-Suppose a monopolist has TC = 40 + 10Q + Q²,and the demand curve it faces is p = 130 - 2Q.What is the profit-maximizing price and output?

If a monopoly's Lerner Index exceeds 1,then

Marginal Revenue is

As the ratio of price to marginal cost decreases,the Lerner index

A justification for patents is that without patents consumer surplus would be

Introduction

Supply and Demand

Applying the Supply-And-Demand Model

Consumer Choice

Applying Consumer Theory

Firms and Production

Costs

Competitive Firms and Markets

Applying the Competitive Model

General Equilibrium and Economic Welfare

Pricing and Advertising

Oligopoly and Monopolistic Competition

Game Theory

Factor Markets

Interest Rates, Investments, and Capital Markets

Uncertainty

Externalities, Open-Access, and Public Goods

Asymmetric Information

Contracts and Moral Hazards

Filters

Exam 11: Monopoly

The situation in which one firm can produce the total output of the market at a lower cost than several firms is called a

If the inverse demand function for a monopoly's product is p = 100 - 2Q,then the firm's marginal revenue function is

Since a monopoly can set any price it wants,it always makes a profit.

When would a profit-maximizing monopolist that operates with no government intervention choose to produce the competitive level of output?

The existence of a deadweight loss associated with a monopoly can be seen because

If a firm is able to influence its price,

Consider a monopoly who posts an economic profit of $10,000,000.All else equal,this monopolist should expect

If the inverse demand curve a monopoly faces is p = 100 - 2Q,then profit maximization

In a recent court case,an expert witness defined a monopoly as a firm that can "raise price without reducing its total revenue." What does this imply about the elasticity of demand? Would this definition hold for a profit-maximizing monopoly? Explain.

-Suppose a monopolist has TC = 40 + 10Q + Q2,and the demand curve it faces is p = 130 - 2Q.What is the monopolist's total cost (TC)at the profit-maximizing level of output?

As other firms enter a monopoly's market,the monopoly's market power

A monopolist that chooses price

A profit-maximizing monopolist

A monopoly always operates in the inelastic portion of its demand curve.

When generic drugs enter the market after the patent for a brand name drug expires,the price of the brand name drug often increases.This is usually due to

-Suppose a monopolist has TC = 40 + 10Q + Q2,and the demand curve it faces is p = 130 - 2Q.What is the profit-maximizing price and output?

If a monopoly's Lerner Index exceeds 1,then

Marginal Revenue is

As the ratio of price to marginal cost decreases,the Lerner index

A justification for patents is that without patents consumer surplus would be

Introduction

Supply and Demand

Applying the Supply-And-Demand Model

Consumer Choice

Applying Consumer Theory

Firms and Production

Costs

Competitive Firms and Markets

Applying the Competitive Model

General Equilibrium and Economic Welfare

Pricing and Advertising

Oligopoly and Monopolistic Competition

Game Theory

Factor Markets

Interest Rates, Investments, and Capital Markets

Uncertainty

Externalities, Open-Access, and Public Goods

Asymmetric Information

Contracts and Moral Hazards

Filters

-Suppose a monopolist has TC = 40 + 10Q + Q²,and the demand curve it faces is p = 130 - 2Q.What is the monopolist's total cost (TC)at the profit-maximizing level of output?

-Suppose a monopolist has TC = 40 + 10Q + Q²,and the demand curve it faces is p = 130 - 2Q.What is the profit-maximizing price and output?