Question 1

The less elastic is the demand for a firm's product,the greater is that firm's market power.

Accepted Answer

A) True 
 B)False

Question 2

The average cost for a typical electric-power-production firm is AC = 100 - 10Q + Q2 where Q is measured in billion kilowatt hours per day.At the current regulated price,consumers demand 4 billion kilowatt hours per day.Is this market a natural monopoly? If demand increases to 10 billion kilowatt hours,is this market a natural monopoly? Explain.

Accepted Answer

The firm enjoys economies of scale up to

Question 3

-The above figure shows the demand and cost curves facing a monopolist.This profit-maximizing monopoly has a revenue equal to

Accepted Answer

A)  $1000. 
B)  $5200. 
C)  $7500. 
D)  $8000. 
A)  $1000. 
B)  $5200. 
C)  $7500. 
D)  $8000.

Question 4

The situation where one person's demand for a good depends on the consumption of the good by others is called a

Accepted Answer

A)  network externality. 
B)  network internality. 
C)  consumption externality. 
D)  production externality. 
A)  network externality. 
B)  network internality. 
C)  consumption externality. 
D)  production externality.

Question 5

A monopoly sets a price of $50 per unit for an item that has a marginal cost of $10.Assuming profit maximization,the implicit demand elasticity is

Accepted Answer

A)  -0.2. 
B)  -0.8. 
C)  -1.25. 
D)  -5.0. 
A)  -0.2. 
B)  -0.8. 
C)  -1.25. 
D)  -5.0.

Question 6

-The above figure shows the demand and cost curves facing a monopoly.At the profit-maximizing price,the elasticity of demand equals

Accepted Answer

A)  -1. 
B)  zero. 
C)  infinity. 
D)  -3. 
A)  -1. 
B)  zero. 
C)  infinity. 
D)  -3.

Question 7

Which of the following markets is closest to a monopoly?

Accepted Answer

A)  a firm with a 90% market share 
B)  the only gas station for 100 miles 
C)  cable television 
D)  garbage disposal 
A)  a firm with a 90% market share 
B)  the only gas station for 100 miles 
C)  cable television 
D)  garbage disposal

Question 8

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

Accepted Answer

A)  0.222 
B)  0.35 
C)  0.444 
D)  0.50 
A)  0.222 
B)  0.35 
C)  0.444 
D)  0.50

Question 9

If the inverse demand curve a monopoly faces is p = 100 - 2Q,and MC is constant at 16,then the deadweight loss from monopoly equals

Accepted Answer

A)  $21. 
B)  $441. 
C)  $882. 
D)  $1,764. 
A)  $21. 
B)  $441. 
C)  $882. 
D)  $1,764.

Question 10

If the government's goal is to generate a certain amount of tax revenue,a specific tax and an ad valorem tax on a monopoly have the same impact on social welfare.

Accepted Answer

A) True 
 B)False

Question 11

-The above figure shows the demand and cost curves facing a monopoly.In order to maximize its profit,the monopolist produces ________ less units than the competitive market level of output.

Accepted Answer

A)  15 
B)  25 
C)  50 
D)  75 
A)  15 
B)  25 
C)  50 
D)  75

Question 12

Suppose a patent is granted for a product that has the linear demand curve P = a - b Q.The constant marginal cost of producing this product is $50 per unit,a unit sells for $150,and consumers purchase 100 units of the good at that price.If the monopoly is maximizing profit,the deadweight loss is

Accepted Answer

A)  $5000. 
B)  $2500. 
C)  $7500. 
D)  $10000. 
A)  $5000. 
B)  $2500. 
C)  $7500. 
D)  $10000.

Question 13

A flour mill holding exclusive contracts to 95% of the wheat in a large geographic area may operate as a flour-producing monopoly locally because

Accepted Answer

A)  the mill has a very inelastic supply curve. 
B)  the mill is a natural monopoly. 
C)  the mill controls a key input. 
D)  the government will declare it a monopoly. 
A)  the mill has a very inelastic supply curve. 
B)  the mill is a natural monopoly. 
C)  the mill controls a key input. 
D)  the government will declare it a monopoly.

Question 14

Limited government licenses that create a monopoly do so because

Accepted Answer

A)  the license generates a marginal cost advantage. 
B)  the monopoly will become a natural monopoly. 
C)  a barrier to enter the market exists. 
D)  All of the above. 
A)  the license generates a marginal cost advantage. 
B)  the monopoly will become a natural monopoly. 
C)  a barrier to enter the market exists. 
D)  All of the above.

Question 15

If the monopoly's demand curve intersects the AVC curve at minimum AVC,the firm will shut down.

Accepted Answer

A) True 
 B)False

Question 16

An exclusive right to sell a new and useful product,process,substance,or design for a fixed period of time is called a

Accepted Answer

A)  patent. 
B)  barrier to entry. 
C)  monopoly. 
D)  research disincentive. 
A)  patent. 
B)  barrier to entry. 
C)  monopoly. 
D)  research disincentive.

Question 17

If the demand for a monopoly's output shifts rightward,the change in quantity produced is

Accepted Answer

A)  positive. 
B)  negative. 
C)  zero. 
D)  not predictable. 
A)  positive. 
B)  negative. 
C)  zero. 
D)  not predictable.

Question 18

If the government sets a specific tax and an ad valorem tax so that they raise the same amount of tax revenue,why does the ad valorem tax reduce output less than the specific tax?

Accepted Answer

While the per unit amount of the specifi

Question 19

If the inverse demand curve a monopoly faces is p = 100 - 2Q,and MC is constant at 16,then maximum profit

Accepted Answer

A)  equals $336. 
B)  equals $882. 
C)  equals $1,218. 
D)  cannot be determined solely from the information provided. 
A)  equals $336. 
B)  equals $882. 
C)  equals $1,218. 
D)  cannot be determined solely from the information provided.

Question 20

If the demand curve a monopolist faces is perfectly elastic,then the ratio of the firm's price to the marginal cost is

Accepted Answer

A)  0. 
B)  1. 
C)  2. 
D)  None of the above-the answer cannot be determined. 
A)  0. 
B)  1. 
C)  2. 
D)  None of the above-the answer cannot be determined.

The less elastic is the demand for a firm's product,the greater is that firm's market power.

-The above figure shows the demand and cost curves facing a monopolist.This profit-maximizing monopoly has a revenue equal to

The situation where one person's demand for a good depends on the consumption of the good by others is called a

A monopoly sets a price of $50 per unit for an item that has a marginal cost of $10.Assuming profit maximization,the implicit demand elasticity is

-The above figure shows the demand and cost curves facing a monopoly.At the profit-maximizing price,the elasticity of demand equals

Which of the following markets is closest to a monopoly?

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

If the inverse demand curve a monopoly faces is p = 100 - 2Q,and MC is constant at 16,then the deadweight loss from monopoly equals

If the government's goal is to generate a certain amount of tax revenue,a specific tax and an ad valorem tax on a monopoly have the same impact on social welfare.

-The above figure shows the demand and cost curves facing a monopoly.In order to maximize its profit,the monopolist produces ________ less units than the competitive market level of output.

Suppose a patent is granted for a product that has the linear demand curve P = a - b Q.The constant marginal cost of producing this product is $50 per unit,a unit sells for $150,and consumers purchase 100 units of the good at that price.If the monopoly is maximizing profit,the deadweight loss is

A flour mill holding exclusive contracts to 95% of the wheat in a large geographic area may operate as a flour-producing monopoly locally because

Limited government licenses that create a monopoly do so because

If the monopoly's demand curve intersects the AVC curve at minimum AVC,the firm will shut down.

An exclusive right to sell a new and useful product,process,substance,or design for a fixed period of time is called a

If the demand for a monopoly's output shifts rightward,the change in quantity produced is

If the government sets a specific tax and an ad valorem tax so that they raise the same amount of tax revenue,why does the ad valorem tax reduce output less than the specific tax?

If the inverse demand curve a monopoly faces is p = 100 - 2Q,and MC is constant at 16,then maximum profit

If the demand curve a monopolist faces is perfectly elastic,then the ratio of the firm's price to the marginal cost is

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 less elastic is the demand for a firm's product,the greater is that firm's market power.

-The above figure shows the demand and cost curves facing a monopolist.This profit-maximizing monopoly has a revenue equal to

The situation where one person's demand for a good depends on the consumption of the good by others is called a

A monopoly sets a price of $50 per unit for an item that has a marginal cost of $10.Assuming profit maximization,the implicit demand elasticity is

-The above figure shows the demand and cost curves facing a monopoly.At the profit-maximizing price,the elasticity of demand equals

Which of the following markets is closest to a monopoly?

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

If the inverse demand curve a monopoly faces is p = 100 - 2Q,and MC is constant at 16,then the deadweight loss from monopoly equals

If the government's goal is to generate a certain amount of tax revenue,a specific tax and an ad valorem tax on a monopoly have the same impact on social welfare.

-The above figure shows the demand and cost curves facing a monopoly.In order to maximize its profit,the monopolist produces ________ less units than the competitive market level of output.

Suppose a patent is granted for a product that has the linear demand curve P = a - b Q.The constant marginal cost of producing this product is $50 per unit,a unit sells for $150,and consumers purchase 100 units of the good at that price.If the monopoly is maximizing profit,the deadweight loss is

A flour mill holding exclusive contracts to 95% of the wheat in a large geographic area may operate as a flour-producing monopoly locally because

Limited government licenses that create a monopoly do so because

If the monopoly's demand curve intersects the AVC curve at minimum AVC,the firm will shut down.

An exclusive right to sell a new and useful product,process,substance,or design for a fixed period of time is called a

If the demand for a monopoly's output shifts rightward,the change in quantity produced is

If the government sets a specific tax and an ad valorem tax so that they raise the same amount of tax revenue,why does the ad valorem tax reduce output less than the specific tax?

If the inverse demand curve a monopoly faces is p = 100 - 2Q,and MC is constant at 16,then maximum profit

If the demand curve a monopolist faces is perfectly elastic,then the ratio of the firm's price to the marginal cost is

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 Lerner index of this profit-maximizing monopolist?