Question 1

Firms that sell highly customized items such as motorcycles charge higher mark-ups than firms selling similar,but homogeneous products.An explanation for their market power is the

Accepted Answer

A)  bandwagon effect. 
B)  greater value effect. 
C)  snob effect. 
D)  behavioral effect. 
A)  bandwagon effect. 
B)  greater value effect. 
C)  snob effect. 
D)  behavioral effect.

Question 2

-Suppose a monopolist has TC = 40 + 10Q + Q2,and the demand curve it faces is p = 130 - 2Q.What is the maximum profit achieved by this monopoly?

Accepted Answer

A)  Profit = 1160 
B)  Profit = 1240 
C)  Profit = 1450 
D)  Profit = 1800 
A)  Profit = 1160 
B)  Profit = 1240 
C)  Profit = 1450 
D)  Profit = 1800

Question 3

At the current level of output,a firm's marginal cost equals 16 and marginal revenue equals 10.The firm

Accepted Answer

A)  is producing the profit-maximizing amount. 
B)  should produce more. 
C)  should produce less. 
D)  Not enough information. 
A)  is producing the profit-maximizing amount. 
B)  should produce more. 
C)  should produce less. 
D)  Not enough information.

Question 4

-The above figure shows the demand and cost curves facing a monopolist.The monopoly maximizes profit by setting price equal to

Accepted Answer

A)  $100. 
B)  $200. 
C)  $300. 
D)  $400. 
A)  $100. 
B)  $200. 
C)  $300. 
D)  $400.

Question 5

A monopolist faces the inverse demand curve P = 60 - Q.It has variable costs of Q2 so that its marginal costs are 2Q,and it has fixed costs of 30.The monopoly's profit-maximizing output is

Accepted Answer

A)  5. 
B)  10. 
C)  15. 
D)  20. 
A)  5. 
B)  10. 
C)  15. 
D)  20.

Question 6

A monopolist faces the inverse demand curve P = 60 - Q.It has variable costs of Q2 so that its marginal costs are 2Q,and it has fixed costs of 30.At its profit-maximizing output level,the monopoly's average cost is

Accepted Answer

A)  11. 
B)  13. 
C)  17. 
D)  21.5. 
A)  11. 
B)  13. 
C)  17. 
D)  21.5.

Question 7

A monopoly can be formed by a bandwagon effect.Which of the following products would most closely match the bandwagon effect?

Accepted Answer

A)  the Atlanta Braves baseball club 
B)  the Dell Computer 
C)  the Apple iPod 
D)  the Chevrolet Corvette 
A)  the Atlanta Braves baseball club 
B)  the Dell Computer 
C)  the Apple iPod 
D)  the Chevrolet Corvette

Question 8

Patents

Accepted Answer

A)  will create a profit incentive to do research. 
B)  might be welfare reducing if granted for too long a period. 
C)  serve as a barrier to entry. 
D)  All of the above. 
A)  will create a profit incentive to do research. 
B)  might be welfare reducing if granted for too long a period. 
C)  serve as a barrier to entry. 
D)  All of the above.

Question 9

-The above figure shows the demand and cost curves facing a monopoly.If a $100 per unit tax is charged,what is the incidence of the tax on consumers?

Accepted Answer

A)  100% 
B)  50% 
C)  25% 
D)  0% 
A)  100% 
B)  50% 
C)  25% 
D)  0%

Question 10

If the government regulates a natural monopoly by forcing the firm to set price equal to marginal cost,

Accepted Answer

A)  the firm will earn a negative economic profit. 
B)  the firm will earn zero economic profit. 
C)  the firm will earn a fair economic profit. 
D)  the firm will earn a positive and large economic profit. 
A)  the firm will earn a negative economic profit. 
B)  the firm will earn zero economic profit. 
C)  the firm will earn a fair economic profit. 
D)  the firm will earn a positive and large economic profit.

Question 11

The monopolist's marginal revenue curve

Accepted Answer

A)  doesn't exist. 
B)  lies below the demand curve. 
C)  is identical to the demand curve. 
D)  lies above the demand curve. 
A)  doesn't exist. 
B)  lies below the demand curve. 
C)  is identical to the demand curve. 
D)  lies above the demand curve.

Question 12

An alternative to patent protection might be

Accepted Answer

A)  dollar prizes for innovation. 
B)  an appeal to altruism. 
C)  granting of citizenship for innovation. 
D)  forcing innovators to cede their innovations. 
A)  dollar prizes for innovation. 
B)  an appeal to altruism. 
C)  granting of citizenship for innovation. 
D)  forcing innovators to cede their innovations.

Question 13

-The above figure shows the demand and cost curves facing a monopoly.If the firm is a profit maximizer,its Lerner Index will equal

Accepted Answer

A)  1. 
B)  1/3. 
C)  1.5. 
D)  3. 
A)  1. 
B)  1/3. 
C)  1.5. 
D)  3.

Question 14

-The above figure shows the demand and cost curves facing a monopoly.If a $100 per unit tax is charged,the loss in welfare resulting from the tax is

Accepted Answer

A)  $250. 
B)  $312.50. 
C)  $1,250. 
D)  $1,562.50. 
A)  $250. 
B)  $312.50. 
C)  $1,250. 
D)  $1,562.50.

Question 15

A monopoly's output decision depends only on the shape of its marginal cost curve.

Accepted Answer

A) True 
 B)False

Question 16

If the government desires to raise a certain amount of revenue by taxing a monopoly,an ad valorem tax will

Accepted Answer

A)  generate the same loss of consumer surplus as a specific tax. 
B)  generate a greater loss of consumer surplus than a specific tax. 
C)  generate a smaller loss of consumer surplus than a specific tax. 
D)  generate no loss of consumer surplus. 
A)  generate the same loss of consumer surplus as a specific tax. 
B)  generate a greater loss of consumer surplus than a specific tax. 
C)  generate a smaller loss of consumer surplus than a specific tax. 
D)  generate no loss of consumer surplus.

Question 17

Humana Hospital's price/marginal cost ratio of 2.3 is most likely to decline if

Accepted Answer

A)  the number of nearby hospitals increases. 
B)  the number of nearby hospitals decreases. 
C)  the demand curve for hospital services shifts rightward. 
D)  the demand curve for hospital services becomes steeper. 
A)  the number of nearby hospitals increases. 
B)  the number of nearby hospitals decreases. 
C)  the demand curve for hospital services shifts rightward. 
D)  the demand curve for hospital services becomes steeper.

Question 18

-The above figure shows the demand and marginal cost curves for a monopoly.Under monopoly,consumer surplus equals

Accepted Answer

A)  a + b. 
B)  a + b + c. 
C)  a + b + c + d + e + f. 
D)  None of the above. 
A)  a + b. 
B)  a + b + c. 
C)  a + b + c + d + e + f. 
D)  None of the above.

Question 19

If a monopoly's demand curve shifts to the right,the

Accepted Answer

A)  monopoly will charge a higher price. 
B)  monopoly will charge a lower price. 
C)  monopoly will sell more. 
D)  monopoly's decision cannot be determined. 
A)  monopoly will charge a higher price. 
B)  monopoly will charge a lower price. 
C)  monopoly will sell more. 
D)  monopoly's decision cannot be determined.

Question 20

-The above figure shows the demand and cost curves facing a monopoly.A $100 per unit tax would raise price by

Accepted Answer

A)  $100. 
B)  $50. 
C)  $25. 
D)  $0. 
A)  $100. 
B)  $50. 
C)  $25. 
D)  $0.

Firms that sell highly customized items such as motorcycles charge higher mark-ups than firms selling similar,but homogeneous products.An explanation for their market power is the

-Suppose a monopolist has TC = 40 + 10Q + Q²,and the demand curve it faces is p = 130 - 2Q.What is the maximum profit achieved by this monopoly?

At the current level of output,a firm's marginal cost equals 16 and marginal revenue equals 10.The firm

-The above figure shows the demand and cost curves facing a monopolist.The monopoly maximizes profit by setting price equal to

A monopolist faces the inverse demand curve P = 60 - Q.It has variable costs of Q² so that its marginal costs are 2Q,and it has fixed costs of 30.The monopoly's profit-maximizing output is

A monopolist faces the inverse demand curve P = 60 - Q.It has variable costs of Q² so that its marginal costs are 2Q,and it has fixed costs of 30.At its profit-maximizing output level,the monopoly's average cost is

A monopoly can be formed by a bandwagon effect.Which of the following products would most closely match the bandwagon effect?

Patents

-The above figure shows the demand and cost curves facing a monopoly.If a $100 per unit tax is charged,what is the incidence of the tax on consumers?

If the government regulates a natural monopoly by forcing the firm to set price equal to marginal cost,

The monopolist's marginal revenue curve

An alternative to patent protection might be

-The above figure shows the demand and cost curves facing a monopoly.If the firm is a profit maximizer,its Lerner Index will equal

-The above figure shows the demand and cost curves facing a monopoly.If a $100 per unit tax is charged,the loss in welfare resulting from the tax is

A monopoly's output decision depends only on the shape of its marginal cost curve.

If the government desires to raise a certain amount of revenue by taxing a monopoly,an ad valorem tax will

Humana Hospital's price/marginal cost ratio of 2.3 is most likely to decline if

-The above figure shows the demand and marginal cost curves for a monopoly.Under monopoly,consumer surplus equals

If a monopoly's demand curve shifts to the right,the

-The above figure shows the demand and cost curves facing a monopoly.A $100 per unit tax would raise price by

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

Firms that sell highly customized items such as motorcycles charge higher mark-ups than firms selling similar,but homogeneous products.An explanation for their market power is the

-Suppose a monopolist has TC = 40 + 10Q + Q2,and the demand curve it faces is p = 130 - 2Q.What is the maximum profit achieved by this monopoly?

At the current level of output,a firm's marginal cost equals 16 and marginal revenue equals 10.The firm

-The above figure shows the demand and cost curves facing a monopolist.The monopoly maximizes profit by setting price equal to

A monopolist faces the inverse demand curve P = 60 - Q.It has variable costs of Q2 so that its marginal costs are 2Q,and it has fixed costs of 30.The monopoly's profit-maximizing output is

A monopolist faces the inverse demand curve P = 60 - Q.It has variable costs of Q2 so that its marginal costs are 2Q,and it has fixed costs of 30.At its profit-maximizing output level,the monopoly's average cost is

A monopoly can be formed by a bandwagon effect.Which of the following products would most closely match the bandwagon effect?

Patents

-The above figure shows the demand and cost curves facing a monopoly.If a $100 per unit tax is charged,what is the incidence of the tax on consumers?

If the government regulates a natural monopoly by forcing the firm to set price equal to marginal cost,

The monopolist's marginal revenue curve

An alternative to patent protection might be

-The above figure shows the demand and cost curves facing a monopoly.If the firm is a profit maximizer,its Lerner Index will equal

-The above figure shows the demand and cost curves facing a monopoly.If a $100 per unit tax is charged,the loss in welfare resulting from the tax is

A monopoly's output decision depends only on the shape of its marginal cost curve.

If the government desires to raise a certain amount of revenue by taxing a monopoly,an ad valorem tax will

Humana Hospital's price/marginal cost ratio of 2.3 is most likely to decline if

-The above figure shows the demand and marginal cost curves for a monopoly.Under monopoly,consumer surplus equals

If a monopoly's demand curve shifts to the right,the

-The above figure shows the demand and cost curves facing a monopoly.A $100 per unit tax would raise price by

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 maximum profit achieved by this monopoly?

A monopolist faces the inverse demand curve P = 60 - Q.It has variable costs of Q² so that its marginal costs are 2Q,and it has fixed costs of 30.The monopoly's profit-maximizing output is

A monopolist faces the inverse demand curve P = 60 - Q.It has variable costs of Q² so that its marginal costs are 2Q,and it has fixed costs of 30.At its profit-maximizing output level,the monopoly's average cost is