Question 1

-Use the above figure. The profit-maximizing output will be

Accepted Answer

A)    . 
B)    . 
C)    . 
D)  None of the above are correct. 
A)    . 
B)    . 
C)    . 
D)  None of the above are correct.

Question 2

Compared to a monopolist, the demand curve for a perfectly competitive firm will be

Accepted Answer

A)  as elastic. 
B)  more elastic. 
C)  less elastic. 
D)  perfectly elastic. 
A)  as elastic. 
B)  more elastic. 
C)  less elastic. 
D)  perfectly elastic.

Question 3

"Unlike a monopoly, consumer surplus in a perfectly competitive market is zero." Do you agree or disagree? Why?

Accepted Answer

Disagree. As long as the market demand c

Question 4

Which of the following is NOT a barrier to entry that would allow a monopolist to keep potential competitors out of its market?

Accepted Answer

A)  Significant economies of scale exist. 
B)  The market price of the product is too high. 
C)  The firm has a patent on the good or control over some resource required for the production of the good. 
D)  The firm has government authorization to be a monopoly. 
A)  Significant economies of scale exist. 
B)  The market price of the product is too high. 
C)  The firm has a patent on the good or control over some resource required for the production of the good. 
D)  The firm has government authorization to be a monopoly.

Question 5

A patent on a product gives a firm

Accepted Answer

A)  protection from having the invention copied or stolen for a period of 20 years. 
B)  economies of scale in producing the product. 
C)  excessive profits in the long run. 
D)  the power to impose a tariff on a competing product. 
A)  protection from having the invention copied or stolen for a period of 20 years. 
B)  economies of scale in producing the product. 
C)  excessive profits in the long run. 
D)  the power to impose a tariff on a competing product.

Question 6

A monopolist wishing to increase its profit has just discovered that lowering its price and selling more output yielded the desired result. Profit increased. Based on this, we can conclude that the cost of the additional production is

Accepted Answer

A)  greater than the revenue from the additional production. 
B)  precisely equal to the revenue from the additional production. 
C)  less than the revenue from the additional production. 
D)  there is no way to answer this because you have not given us the marginal revenue and marginal cost data. 
A)  greater than the revenue from the additional production. 
B)  precisely equal to the revenue from the additional production. 
C)  less than the revenue from the additional production. 
D)  there is no way to answer this because you have not given us the marginal revenue and marginal cost data.

Question 7

Economies of scale can

Accepted Answer

A)  result in an increasing cost industry. 
B)  cause input prices to drop. 
C)  prevent the entry of new firms into a market. 
D)  reduce the rate of return which the firm may earn. 
A)  result in an increasing cost industry. 
B)  cause input prices to drop. 
C)  prevent the entry of new firms into a market. 
D)  reduce the rate of return which the firm may earn.

Question 8

A monopolist can earn economic profits in the long run because

Accepted Answer

A)  a monopoly is by definition large, and this gives it the ability to make large profits. 
B)  a monopoly makes the good or service better than anyone else. 
C)  barriers to entry prevent new firms from entering the industry. 
D)  monopolies can legally force people to buy their products and to pay more for them than they are worth. 
A)  a monopoly is by definition large, and this gives it the ability to make large profits. 
B)  a monopoly makes the good or service better than anyone else. 
C)  barriers to entry prevent new firms from entering the industry. 
D)  monopolies can legally force people to buy their products and to pay more for them than they are worth.

Question 9

-In the above figure, the monopolist's profit-maximizing output level is

Accepted Answer

A)  A. 
B)  B. 
C)  C. 
D)  D. 
A)  A. 
B)  B. 
C)  C. 
D)  D.

Question 10

-In the above figure, at the firm's profit maximizing output, total revenue is rectangle

Accepted Answer

A)  0P1AQ1. 
B)  0P3FQ3. 
C)  0P5EQ5. 
D)  0P2BQ1. 
A)  0P1AQ1. 
B)  0P3FQ3. 
C)  0P5EQ5. 
D)  0P2BQ1.

Question 11

Economic inefficiency exists when

Accepted Answer

A)  P = MR. 
B)  P = MC. 
C)  MR = MC. 
D)  P > MC. 
A)  P = MR. 
B)  P = MC. 
C)  MR = MC. 
D)  P > MC.

Question 12

To sell more units, a monopolist must

Accepted Answer

A)  merely produce more units. 
B)  advertise more. 
C)  produce the profit maximizing rate of production. 
D)  lower price. 
A)  merely produce more units. 
B)  advertise more. 
C)  produce the profit maximizing rate of production. 
D)  lower price.

Question 13

-For the monopoly in the above figure, if the firm is currently producing 700 units, which of the following is correct?

Accepted Answer

A)  It could earn higher profits if it produced more units each day. 
B)  It could earn higher profits if it produced fewer units each day. 
C)  It is maximizing its profits. 
D)  It is incurring a loss. 
A)  It could earn higher profits if it produced more units each day. 
B)  It could earn higher profits if it produced fewer units each day. 
C)  It is maximizing its profits. 
D)  It is incurring a loss.

Question 14

The demand curve for a monopolist is

Accepted Answer

A)  the industry demand curve. 
B)  the same as the demand curve for a perfectly competitive firm. 
C)  a perfectly inelastic demand curve. 
D)  a unitary elastic demand curve. 
A)  the industry demand curve. 
B)  the same as the demand curve for a perfectly competitive firm. 
C)  a perfectly inelastic demand curve. 
D)  a unitary elastic demand curve.

Question 15

Which of the following can be a barrier to entry, closing a market to new firms?

Accepted Answer

A)  An elastic industry demand curve 
B)  Control of a vital resource by one producer 
C)  Diseconomies of scale 
D)  Ease of obtaining capital financing 
A)  An elastic industry demand curve 
B)  Control of a vital resource by one producer 
C)  Diseconomies of scale 
D)  Ease of obtaining capital financing

Question 16

Deadweight loss is

Accepted Answer

A)  the amount of taxes that consumers and monopolists pay. 
B)  the loss of output when a perfectly competitive firm becomes a monopolist. 
C)  a loss of benefit to consumers in a monopoly that no one else in society can obtain. 
D)  the price that consumers pay for a product in excess of the average cost of producing it. 
A)  the amount of taxes that consumers and monopolists pay. 
B)  the loss of output when a perfectly competitive firm becomes a monopolist. 
C)  a loss of benefit to consumers in a monopoly that no one else in society can obtain. 
D)  the price that consumers pay for a product in excess of the average cost of producing it.

Question 17

What is a monopolist, and what is required for a monopolist to earn profits in the long run?

Accepted Answer

A monopolist is a single supplier of a g

Question 18

A monopolist

Accepted Answer

A)  can charge whatever price it wants because it is the only firm producing the good. 
B)  can usually keep price equal to marginal revenue by lowering the price on the last unit sold only. 
C)  faces a demand curve that is more elastic than the demand curve for the industry. 
D)  is constrained in its pricing decisions by the demand curve it faces. 
A)  can charge whatever price it wants because it is the only firm producing the good. 
B)  can usually keep price equal to marginal revenue by lowering the price on the last unit sold only. 
C)  faces a demand curve that is more elastic than the demand curve for the industry. 
D)  is constrained in its pricing decisions by the demand curve it faces.

Question 19

What is the main difference between the demand curves for the perfect competitor and the monopolist?

Accepted Answer

The perfect competitor faces a horizonta

Question 20

Price discrimination is the

Accepted Answer

A)  refusal by a firm to sell to all customers. 
B)  selling of a given product at more than one price when the price differences reflect cost differences. 
C)  pricing of a product so that not everyone can afford it. 
D)  selling of a given product at more than one price when the price difference is unrelated to cost differences. 
A)  refusal by a firm to sell to all customers. 
B)  selling of a given product at more than one price when the price differences reflect cost differences. 
C)  pricing of a product so that not everyone can afford it. 
D)  selling of a given product at more than one price when the price difference is unrelated to cost differences.

Exam 24: Monopoly

-Use the above figure. The profit-maximizing output will be

Compared to a monopolist, the demand curve for a perfectly competitive firm will be

"Unlike a monopoly, consumer surplus in a perfectly competitive market is zero." Do you agree or disagree? Why?

Which of the following is NOT a barrier to entry that would allow a monopolist to keep potential competitors out of its market?

A patent on a product gives a firm

A monopolist wishing to increase its profit has just discovered that lowering its price and selling more output yielded the desired result. Profit increased. Based on this, we can conclude that the cost of the additional production is

Economies of scale can

A monopolist can earn economic profits in the long run because

-In the above figure, the monopolist's profit-maximizing output level is

-In the above figure, at the firm's profit maximizing output, total revenue is rectangle

Economic inefficiency exists when

To sell more units, a monopolist must

-For the monopoly in the above figure, if the firm is currently producing 700 units, which of the following is correct?

The demand curve for a monopolist is

Which of the following can be a barrier to entry, closing a market to new firms?

Deadweight loss is

What is a monopolist, and what is required for a monopolist to earn profits in the long run?

A monopolist

What is the main difference between the demand curves for the perfect competitor and the monopolist?

Price discrimination is the

The Nature of Economics

Scarcity and the World of Trade-Offs

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Public Spending and Public Choice

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