Question 1

A monopolist produces at the minimum point of the average total cost curve in the long run.

Accepted Answer

A) True 
 B)False

Question 2

The ability of a firm to charge different customers different prices is called _____:

Accepted Answer

A) price ceiling. 
B) price discrimination. 
C) predatory pricing. 
D) price flooring. 
E) basing point pricing. 
A) price ceiling. 
B) price discrimination. 
C) predatory pricing. 
D) price flooring. 
E) basing point pricing.

Question 3

Under price discrimination,a monopolist equates the marginal cost with the average revenues in different markets.

Accepted Answer

A) True 
 B)False

Question 4

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
-According to Figure 10.7,which of the following statements is incorrect about the price P1?

Accepted Answer

A) The monopolist is maximizing profit at P1. 
B) In the long run,firms will leave the perfectly competitive industry and force the price upward. 
C) The monopolist is earning normal profit at P1. 
D) Both the firms maximize their profits at P1 . 
E) The perfectly competitive firm would produce 10 units of output at P1. 
A) The monopolist is maximizing profit at P1. 
B) In the long run,firms will leave the perfectly competitive industry and force the price upward. 
C) The monopolist is earning normal profit at P1. 
D) Both the firms maximize their profits at P1 . 
E) The perfectly competitive firm would produce 10 units of output at P1.

Question 5

The following table shows the units of the output sold at different price levels by Gizmo's Inc. Table 10.1
  
-According to Table 10.1,what is the marginal revenue of the third unit?

Accepted Answer

A) $42 
B) $32 
C) $18 
D) $14 
E) $10 
A) $42 
B) $32 
C) $18 
D) $14 
E) $10

Question 6

In many cities the market for cab services is monopolized.This monopoly arises because:

Accepted Answer

A) of economies of scale. 
B) of government restriction of entry. 
C) there is a limited space on the streets for taxis. 
D) it protects the consumers from unscrupulous drivers. 
E) of high fixed costs of entering the business. 
A) of economies of scale. 
B) of government restriction of entry. 
C) there is a limited space on the streets for taxis. 
D) it protects the consumers from unscrupulous drivers. 
E) of high fixed costs of entering the business.

Question 7

The figure given below shows the demand curve faced by a firm. Figure 10.1   Refer to Figure 10.1 and calculate the revenue gained by the firm when it reduces the price of its product from $8 to $4.

Accepted Answer

A) $4 
B) $8 
C) $32 
D) $16 
E) $10 
A) $4 
B) $8 
C) $32 
D) $16 
E) $10

Question 8

The following table shows the marginal revenues earned by a price discriminating monopolist from two different markets. Table 10.5
  
-Refer to Table 10.5.If marginal cost is $30 in both markets,what quantities will be supplied in each of the markets?

Accepted Answer

A) 4 units in market X; 1 unit in market Y 
B) 4 units in market X; 2 units in market Y 
C) 2 units in market X; 3 units in market Y 
D) 3 units in market X; 3 units in market Y 
E) 3 units in market X; nothing in market Y 
A) 4 units in market X; 1 unit in market Y 
B) 4 units in market X; 2 units in market Y 
C) 2 units in market X; 3 units in market Y 
D) 3 units in market X; 3 units in market Y 
E) 3 units in market X; nothing in market Y

Question 9

A monopolist's demand curve is less elastic than a perfect competitor's demand curve.

Accepted Answer

A) True 
 B)False

Question 10

Economies of scale,control over a scarce input,and patents are all examples of barriers to entry.

Accepted Answer

A) True 
 B)False

Question 11

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
-According to Figure 10.7,when the monopolist is maximizing profit:

Accepted Answer

A) its resources are not being used efficiently. 
B) its price is higher than that charged by the perfectly competitive firm. 
C) its price is equal to the price charged by the perfectly competitive firm. 
D) it is earning above-normal profit. 
E) it is actually incurring a loss. 
A) its resources are not being used efficiently. 
B) its price is higher than that charged by the perfectly competitive firm. 
C) its price is equal to the price charged by the perfectly competitive firm. 
D) it is earning above-normal profit. 
E) it is actually incurring a loss.

Question 12

For a monopolist with a linear demand curve,total revenue is maximum when:

Accepted Answer

A) marginal revenue is positive. 
B) marginal revenue is at its maximum. 
C) the price elasticity of demand is greater than unity. 
D) the price elasticity of demand is equal to unity. 
E) the marginal revenue is at its minimum. 
A) marginal revenue is positive. 
B) marginal revenue is at its maximum. 
C) the price elasticity of demand is greater than unity. 
D) the price elasticity of demand is equal to unity. 
E) the marginal revenue is at its minimum.

Question 13

Perfect competition provides one model in which there are many firms with no barriers to entry.If perfect competition as a model lies on one extreme,the model that lies on the opposite extreme is:

Accepted Answer

A) monopolistic competition. 
B) oligopoly. 
C) monopoly. 
D) imperfect competition. 
E) oligopolistic competition. 
A) monopolistic competition. 
B) oligopoly. 
C) monopoly. 
D) imperfect competition. 
E) oligopolistic competition.

Question 14

If a firm is able to collect the entire producer surplus,it is said to have practiced perfect price discrimination.

Accepted Answer

A) True 
 B)False

Question 15

If a firm has a perfectly elastic demand curve,then:

Accepted Answer

A) it must be a monopoly firm. 
B) it can charge any price it desires. 
C) the firm has significant market power. 
D) the firm has no market power. 
E) the firm should shut down. 
A) it must be a monopoly firm. 
B) it can charge any price it desires. 
C) the firm has significant market power. 
D) the firm has no market power. 
E) the firm should shut down.

Question 16

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 and calculate the total revenue earned by the monopolist at the profit maximizing level of output.

Accepted Answer

A) $60. 
B) $16. 
C) $52. 
D) $42. 
E) $30. 
A) $60. 
B) $16. 
C) $52. 
D) $42. 
E) $30.

Question 17

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
-Assume that in Figure 10.5,the market is originally perfectly competitive but then becomes a monopoly.Compared with perfect competition,a monopoly would have:

Accepted Answer

A) a price lower than PPC. 
B) a quantity more than QPC. 
C) a greater consumer surplus. 
D) a deadweight loss. 
E) a lower producer surplus. 
A) a price lower than PPC. 
B) a quantity more than QPC. 
C) a greater consumer surplus. 
D) a deadweight loss. 
E) a lower producer surplus.

Question 18

The following table shows the marginal revenues earned by a price discriminating monopolist from two different markets. Table 10.5
  
-Refer to Table 10.5.How would a price-discriminating monopolist allocate his or her product between market X and market Y if marginal cost is $40 in both markets?

Accepted Answer

A) 4 units in market X; 1 unit in market Y 
B) 3 units in market X; 2 units in market Y 
C) 2 units in market X; 3 units in market Y 
D) Nothing in market X; 5 units in market Y 
E) 5 units in market X; nothing in market Y 
A) 4 units in market X; 1 unit in market Y 
B) 3 units in market X; 2 units in market Y 
C) 2 units in market X; 3 units in market Y 
D) Nothing in market X; 5 units in market Y 
E) 5 units in market X; nothing in market Y

Question 19

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
 
- In Table 10.4,assume that total fixed costs are $20.What is the maximum profit the firm can earn at equilibrium?

Accepted Answer

A) $0 
B) $4 
C) $16 
D) $30 
E) $52 
A) $0 
B) $4 
C) $16 
D) $30 
E) $52

Question 20

If a monopolist is producing at a point at which marginal revenue is greater than marginal cost,it should:

Accepted Answer

A) continue producing at the current level. 
B) raise its prices. 
C) lower its prices. 
D) increase the level of production. 
E) decrease the level of production. 
A) continue producing at the current level. 
B) raise its prices. 
C) lower its prices. 
D) increase the level of production. 
E) decrease the level of production.

A monopolist produces at the minimum point of the average total cost curve in the long run.

The ability of a firm to charge different customers different prices is called _____:

Under price discrimination,a monopolist equates the marginal cost with the average revenues in different markets.

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 -According to Figure 10.7,which of the following statements is incorrect about the price P₁?

The following table shows the units of the output sold at different price levels by Gizmo's Inc. Table 10.1 -According to Table 10.1,what is the marginal revenue of the third unit?

In many cities the market for cab services is monopolized.This monopoly arises because:

The figure given below shows the demand curve faced by a firm. Figure 10.1 Refer to Figure 10.1 and calculate the revenue gained by the firm when it reduces the price of its product from $8 to $4.

The following table shows the marginal revenues earned by a price discriminating monopolist from two different markets. Table 10.5 -Refer to Table 10.5.If marginal cost is $30 in both markets,what quantities will be supplied in each of the markets?

A monopolist's demand curve is less elastic than a perfect competitor's demand curve.

Economies of scale,control over a scarce input,and patents are all examples of barriers to entry.

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 -According to Figure 10.7,when the monopolist is maximizing profit:

For a monopolist with a linear demand curve,total revenue is maximum when:

Perfect competition provides one model in which there are many firms with no barriers to entry.If perfect competition as a model lies on one extreme,the model that lies on the opposite extreme is:

If a firm is able to collect the entire producer surplus,it is said to have practiced perfect price discrimination.

If a firm has a perfectly elastic demand curve,then:

The following table shows the marginal revenues earned by a price discriminating monopolist from two different markets. Table 10.5 -Refer to Table 10.5.How would a price-discriminating monopolist allocate his or her product between market X and market Y if marginal cost is $40 in both markets?

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 - In Table 10.4,assume that total fixed costs are $20.What is the maximum profit the firm can earn at equilibrium?

If a monopolist is producing at a point at which marginal revenue is greater than marginal cost,it should:

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

Exam 10: Monopoly

A monopolist produces at the minimum point of the average total cost curve in the long run.

The ability of a firm to charge different customers different prices is called _____:

Under price discrimination,a monopolist equates the marginal cost with the average revenues in different markets.

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 -According to Figure 10.7,which of the following statements is incorrect about the price P1?

The following table shows the units of the output sold at different price levels by Gizmo's Inc. Table 10.1 -According to Table 10.1,what is the marginal revenue of the third unit?

In many cities the market for cab services is monopolized.This monopoly arises because:

The figure given below shows the demand curve faced by a firm. Figure 10.1 Refer to Figure 10.1 and calculate the revenue gained by the firm when it reduces the price of its product from $8 to $4.

The following table shows the marginal revenues earned by a price discriminating monopolist from two different markets. Table 10.5 -Refer to Table 10.5.If marginal cost is $30 in both markets,what quantities will be supplied in each of the markets?

A monopolist's demand curve is less elastic than a perfect competitor's demand curve.

Economies of scale,control over a scarce input,and patents are all examples of barriers to entry.

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 -According to Figure 10.7,when the monopolist is maximizing profit:

For a monopolist with a linear demand curve,total revenue is maximum when:

Perfect competition provides one model in which there are many firms with no barriers to entry.If perfect competition as a model lies on one extreme,the model that lies on the opposite extreme is:

If a firm is able to collect the entire producer surplus,it is said to have practiced perfect price discrimination.

If a firm has a perfectly elastic demand curve,then:

The following table shows the marginal revenues earned by a price discriminating monopolist from two different markets. Table 10.5 -Refer to Table 10.5.How would a price-discriminating monopolist allocate his or her product between market X and market Y if marginal cost is $40 in both markets?

If a monopolist is producing at a point at which marginal revenue is greater than marginal cost,it should:

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

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 -According to Figure 10.7,which of the following statements is incorrect about the price P₁?