Question 1

One of the popular myths about monopoly is that:

Accepted Answer

A) a monopolist is the single seller of a particular commodity. 
B) a monopolist can charge any price for his/her good. 
C) a monopolist is a price maker. 
D) a monopolist may earn positive profits even in the long run. 
E) a monopolist faces the market demand curve. 
A) a monopolist is the single seller of a particular commodity. 
B) a monopolist can charge any price for his/her good. 
C) a monopolist is a price maker. 
D) a monopolist may earn positive profits even in the long run. 
E) a monopolist faces the market demand curve.

Question 2

A local monopoly is a firm that:

Accepted Answer

A) is the sole supplier of a good without substitutes in a specific geographic area. 
B) is one of the suppliers of a good in a specific geographic area. 
C) supplies to the consumers within only one country. 
D) produces to meet the requirement of only one consumer. 
E) supplies its product to customers only in one city. 
A) is the sole supplier of a good without substitutes in a specific geographic area. 
B) is one of the suppliers of a good in a specific geographic area. 
C) supplies to the consumers within only one country. 
D) produces to meet the requirement of only one consumer. 
E) supplies its product to customers only in one city.

Question 3

The figure given below shows the cost and revenue curves of a monopolist. Figure 10.9   D: Average revenue
MR: Marginal revenue
ATC: Average total cost
MC: Marginal cost
-Refer to Figure 10.9.Suppose that the market is perfectly competitive.The consumer surplus would be represented by the area _____.

Accepted Answer

A) JNM 
B) 0JNV 
C) HMQ 
D) 0HQX 
E) JHQN 
A) JNM 
B) 0JNV 
C) HMQ 
D) 0HQX 
E) JHQN

Question 4

Perfect price discrimination occurs when:

Accepted Answer

A) each customer is charged the maximum price that each is willing and able to pay. 
B) two classes of customers are charged different prices as they have different elasticities of demand. 
C) senior citizens are offered restaurant discounts. 
D) the firm sets MR < MC for each class of customers. 
E) the firm charges same price to different customers so that it is equal to the equilibrium price. 
A) each customer is charged the maximum price that each is willing and able to pay. 
B) two classes of customers are charged different prices as they have different elasticities of demand. 
C) senior citizens are offered restaurant discounts. 
D) the firm sets MR < MC for each class of customers. 
E) the firm charges same price to different customers so that it is equal to the equilibrium price.

Question 5

Airlines can increase profits by charging higher fares to business customers because those customers have a more elastic demand for airline travel.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following refers to a natural monopoly?

Accepted Answer

A) A monopoly resulting from government control. 
B) A monopoly resulting from economies of scale. 
C) A monopoly resulting from output leadership. 
D) A monopoly resulting from a large advertising budget. 
E) A monopoly resulting from trade restrictions. 
A) A monopoly resulting from government control. 
B) A monopoly resulting from economies of scale. 
C) A monopoly resulting from output leadership. 
D) A monopoly resulting from a large advertising budget. 
E) A monopoly resulting from trade restrictions.

Question 7

The figure below shows the market equilibrium (point B) at the intersection of demand and supply curves under perfect competition. Figure 10.5   
D: Market demand curve
S: Market supply curve
-Refer to Figure 10.5.Which of the following regions on the graph represents consumer surplus in a perfectly competitive market?

Accepted Answer

A) The area PPCBA 
B) The area 0BPPC 
C) The area 0BA 
D) Half of area PPCBA 
E) The area ABS 
A) The area PPCBA 
B) The area 0BPPC 
C) The area 0BA 
D) Half of area PPCBA 
E) The area ABS

Question 8

The figure below shows the market equilibrium (point B) at the intersection of demand and supply curves under perfect competition. Figure 10.5   
D: Market demand curve
S: Market supply curve
-Refer to Figure 10.5.Assume that the curve labeled S represents the monopolist's marginal-cost curve and the curve labeled D represents the monopolist's demand curve.Which of the following will represent the consumer surplus?

Accepted Answer

A) The area PPCBA 
B) The area 0BPPC 
C) The area 0BA 
D) An area that is less than PPCBA 
E) The area ABS 
A) The area PPCBA 
B) The area 0BPPC 
C) The area 0BA 
D) An area that is less than PPCBA 
E) The area ABS

Question 9

Which of the following is true under monopoly?

Accepted Answer

A) Price is equal to marginal revenue 
B) Price is equal to marginal cost 
C) Price is less than marginal revenue 
D) Price is less than marginal cost 
E) Price is greater than marginal revenue 
A) Price is equal to marginal revenue 
B) Price is equal to marginal cost 
C) Price is less than marginal revenue 
D) Price is less than marginal cost 
E) Price is greater than marginal revenue

Question 10

A monopoly firm never incurs a loss as it is the sole supplier of the good in the market.

Accepted Answer

A) True 
 B)False

Question 11

The perfectly competitive market structure results in economic efficiency because:

Accepted Answer

A) price is equal to marginal revenue in the short run. 
B) firms are producing at the minimum point of the average-total-cost curve in the short run. 
C) a normal profit is being earned in the long run. 
D) a normal profit is being earned in the short run. 
E) in the long run,price is equal to marginal cost and minimum average-total-cost. 
A) price is equal to marginal revenue in the short run. 
B) firms are producing at the minimum point of the average-total-cost curve in the short run. 
C) a normal profit is being earned in the long run. 
D) a normal profit is being earned in the short run. 
E) in the long run,price is equal to marginal cost and minimum average-total-cost.

Question 12

The table given below shows the price,marginal revenue and marginal cost of a monopolist at different levels of the output.The firm does not incur a fixed cost of production. Table 10.4
 
- Refer to Table 10.4.Assuming that the monopolist is maximizing profits,the price the monopolist will charge is _____.

Accepted Answer

A) $13. 
B) $14. 
C) $12. 
D) $16. 
E) $15. 
A) $13. 
B) $14. 
C) $12. 
D) $16. 
E) $15.

Question 13

If a monopolist is producing the output level at which price equals average total cost in the short run,then the firm is earning a normal profit.

Accepted Answer

A) True 
 B)False

Question 14

Why does a efficiency loss arise under monopoly rather than under perfect competition?

Accepted Answer

A) A monopolist charges a lower price for the product to gain market entry. 
B) A monopolist sells a lesser quantity at a higher price. 
C) There is a net increase in consumer surplus but a net decline in producer surplus. 
D) There is an increase in producer surplus,consumer surplus remaining unchanged. 
E) A monopolist sells a greater quantity than a perfect competitor. 
A) A monopolist charges a lower price for the product to gain market entry. 
B) A monopolist sells a lesser quantity at a higher price. 
C) There is a net increase in consumer surplus but a net decline in producer surplus. 
D) There is an increase in producer surplus,consumer surplus remaining unchanged. 
E) A monopolist sells a greater quantity than a perfect competitor.

Question 15

The following figures show the demand and cost curves of a perfectly competitive and a monopoly firm respectively. Figure 10.7   
D: Average Revenue
AC: Average cost
MC: Marginal cost
MR: Marginal cost
-Calculate the deadweight loss in Figure 10.7,if the perfectly competitive industry is monopolized after it had been producing an output of 10,000 units?

Accepted Answer

A) The area P2ACP1 
B) The area ABC 
C) The area P2ABP1 
D) The distance AB 
E) There is no deadweight loss 
A) The area P2ACP1 
B) The area ABC 
C) The area P2ABP1 
D) The distance AB 
E) There is no deadweight loss

Question 16

Compared with a perfectly competitive market with similar cost conditions,a monopolist will have:

Accepted Answer

A) a higher output and lower price. 
B) a lower output and lower price. 
C) a higher output and a lower price. 
D) a lower output and a higher price. 
E) equal output and a higher price. 
A) a higher output and lower price. 
B) a lower output and lower price. 
C) a higher output and a lower price. 
D) a lower output and a higher price. 
E) equal output and a higher price.

Question 17

The following table shows the units of the output sold at different price levels by Gizmo's Inc. Table 10.1
  
-Refer to Table 10.1.At what level of output is total revenue maximized?

Accepted Answer

A) 3 
B) 4 
C) 5 
D) 6 
E) 7 
A) 3 
B) 4 
C) 5 
D) 6 
E) 7

Question 18

The table given below shows the prices charged and marginal cost incurred by a monopolist for different units of the output. Table 10.3
 
- What is the profit-maximizing output level for the monopoly firm described in Table 10.3,if the firm is earning a positive economic profit?

Accepted Answer

A) 1 unit 
B) 3 units 
C) 5 units 
D) 8 units 
E) 9 units 
A) 1 unit 
B) 3 units 
C) 5 units 
D) 8 units 
E) 9 units

Question 19

If a monopolist is producing at the profit-maximizing level of output what price will it charge?

Accepted Answer

A) The price given by the marginal-revenue curve at that level of output. 
B) The price given by the marginal-cost curve at that level of output. 
C) The price given by the average-cost curve at that level of output. 
D) The price given by the average-revenue curve at that level of output. 
E) The price given by the total revenue curve at that level of output. 
A) The price given by the marginal-revenue curve at that level of output. 
B) The price given by the marginal-cost curve at that level of output. 
C) The price given by the average-cost curve at that level of output. 
D) The price given by the average-revenue curve at that level of output. 
E) The price given by the total revenue curve at that level of output.

Question 20

A clothing store can sell two shirts for $20 each or three shirts for $18 each.At a quantity of three shirts sold,marginal revenue is _____.

Accepted Answer

A) $18 
B) $14 
C) $54 
D) $20 
E) $44 
A) $18 
B) $14 
C) $54 
D) $20 
E) $44

One of the popular myths about monopoly is that:

A local monopoly is a firm that:

The figure given below shows the cost and revenue curves of a monopolist. Figure 10.9 D: Average revenue MR: Marginal revenue ATC: Average total cost MC: Marginal cost -Refer to Figure 10.9.Suppose that the market is perfectly competitive.The consumer surplus would be represented by the area _____.

Perfect price discrimination occurs when:

Airlines can increase profits by charging higher fares to business customers because those customers have a more elastic demand for airline travel.

Which of the following refers to a natural monopoly?

Which of the following is true under monopoly?

A monopoly firm never incurs a loss as it is the sole supplier of the good in the market.

The perfectly competitive market structure results in economic efficiency because:

If a monopolist is producing the output level at which price equals average total cost in the short run,then the firm is earning a normal profit.

Why does a efficiency loss arise under monopoly rather than under perfect competition?

Compared with a perfectly competitive market with similar cost conditions,a monopolist will have:

The following table shows the units of the output sold at different price levels by Gizmo's Inc. Table 10.1 -Refer to Table 10.1.At what level of output is total revenue maximized?

The table given below shows the prices charged and marginal cost incurred by a monopolist for different units of the output. Table 10.3 - What is the profit-maximizing output level for the monopoly firm described in Table 10.3,if the firm is earning a positive economic profit?

If a monopolist is producing at the profit-maximizing level of output what price will it charge?

A clothing store can sell two shirts for $20 each or three shirts for $18 each.At a quantity of three shirts sold,marginal revenue is _____.

Economics: The World Around You

Choice, opportunity Costs, and Specialization

Markets, Demand and Supply, and the Price System

The Market System and the Private and Public Sector

Elasticity: Demand and Supply

Consumer Choice

Supply: The Costs of Doing Business

Profit Maximization

Perfect Competition

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Market Failures, Government Failures, and Rent Seeking

Resource Markets

The Labor Market

Capital Markets

The Land Market and Natural Resources

Aging, Social Security and Health Care

Income Distribution,Poverty and Government Policy

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

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Exam 10: Monopoly

One of the popular myths about monopoly is that:

A local monopoly is a firm that:

The figure given below shows the cost and revenue curves of a monopolist. Figure 10.9 D: Average revenue MR: Marginal revenue ATC: Average total cost MC: Marginal cost -Refer to Figure 10.9.Suppose that the market is perfectly competitive.The consumer surplus would be represented by the area _____.

Perfect price discrimination occurs when:

Airlines can increase profits by charging higher fares to business customers because those customers have a more elastic demand for airline travel.

Which of the following refers to a natural monopoly?

Which of the following is true under monopoly?

A monopoly firm never incurs a loss as it is the sole supplier of the good in the market.

The perfectly competitive market structure results in economic efficiency because:

If a monopolist is producing the output level at which price equals average total cost in the short run,then the firm is earning a normal profit.

Why does a efficiency loss arise under monopoly rather than under perfect competition?

Compared with a perfectly competitive market with similar cost conditions,a monopolist will have:

The following table shows the units of the output sold at different price levels by Gizmo's Inc. Table 10.1 -Refer to Table 10.1.At what level of output is total revenue maximized?

The table given below shows the prices charged and marginal cost incurred by a monopolist for different units of the output. Table 10.3 - What is the profit-maximizing output level for the monopoly firm described in Table 10.3,if the firm is earning a positive economic profit?

If a monopolist is producing at the profit-maximizing level of output what price will it charge?

A clothing store can sell two shirts for $20 each or three shirts for $18 each.At a quantity of three shirts sold,marginal revenue is _____.

Economics: The World Around You

Choice, opportunity Costs, and Specialization

Markets, Demand and Supply, and the Price System

The Market System and the Private and Public Sector

Elasticity: Demand and Supply

Consumer Choice

Supply: The Costs of Doing Business

Profit Maximization

Perfect Competition

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Market Failures, Government Failures, and Rent Seeking

Resource Markets

The Labor Market

Capital Markets

The Land Market and Natural Resources

Aging, Social Security and Health Care

Income Distribution,Poverty and Government Policy

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

Filters