Question 1

All of the following are barriers to entry in an industry EXCEPT

Accepted Answer

A)  a patent. 
B)  governmental restrictions. 
C)  low marginal tax rates. 
D)  economies of scale. 
A)  a patent. 
B)  governmental restrictions. 
C)  low marginal tax rates. 
D)  economies of scale.

Question 2

A barrier to entry is

Accepted Answer

A)  a term used to explain why monopolies always make economic profits. 
B)  a restriction on the profits that a monopoly can make. 
C)  the situation when the government produces a good instead of relying on private firms to produce the good. 
D)  a restriction on starting a business. 
A)  a term used to explain why monopolies always make economic profits. 
B)  a restriction on the profits that a monopoly can make. 
C)  the situation when the government produces a good instead of relying on private firms to produce the good. 
D)  a restriction on starting a business.

Question 3

If Japanese producers sell computer chips at a higher price in the United States than in Japan, and if there is no cost difference in producing or transporting the chips, the Japanese producers would be practicing

Accepted Answer

A)  cartel pricing. 
B)  price discrimination. 
C)  simple monopoly behavior. 
D)  price sampling. 
A)  cartel pricing. 
B)  price discrimination. 
C)  simple monopoly behavior. 
D)  price sampling.

Question 4

If a monopolist produces to a point at which marginal revenue is greater than marginal cost then

Accepted Answer

A)  profits are being maximized. 
B)  profits will always be negative. 
C)  the incremental cost of producing the last unit exceeds the incremental revenue. 
D)  the incremental cost of producing the last unit is less than the incremental revenue. 
A)  profits are being maximized. 
B)  profits will always be negative. 
C)  the incremental cost of producing the last unit exceeds the incremental revenue. 
D)  the incremental cost of producing the last unit is less than the incremental revenue.

Question 5

-Refer to the above figure. Total cost for this firm equals

Accepted Answer

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

Question 6

"A monopolist can charge whatever price it wants." Do you agree or disagree? Why?

Accepted Answer

Disagree. The monopolist is limited by t

Question 7

What does the demand curve facing a monopoly look like? Why?

Accepted Answer

The demand curve facing a monopoly is do

Question 8

A deadweight loss occurs in a

Accepted Answer

A)  monopoly. 
B)  perfectly competitive market. 
C)  market in which the market clearing price of a good equals the marginal cost of producing it. 
D)  market in which the market clearing price of a good is below the marginal cost of producing it. 
A)  monopoly. 
B)  perfectly competitive market. 
C)  market in which the market clearing price of a good equals the marginal cost of producing it. 
D)  market in which the market clearing price of a good is below the marginal cost of producing it.

Question 9

The portion of consumer surplus that would have existed in a perfectly competitive market but is unobtainable by anyone in society under a monopoly is known as

Accepted Answer

A)  monopoly profits. 
B)  an unattainable surplus. 
C)  a deadweight loss. 
D)  an external cost. 
A)  monopoly profits. 
B)  an unattainable surplus. 
C)  a deadweight loss. 
D)  an external cost.

Question 10

Successive downward movements along the demand curve for the product of a monopolist always generate successive

Accepted Answer

A)  increases in the monopolist's marginal revenue. 
B)  increases in the monopolist's average total costs. 
C)  decreases in the additional per-unit costs incurred by the monopolist. 
D)  decreases in the additional per-unit revenues earned by the monopolist. 
A)  increases in the monopolist's marginal revenue. 
B)  increases in the monopolist's average total costs. 
C)  decreases in the additional per-unit costs incurred by the monopolist. 
D)  decreases in the additional per-unit revenues earned by the monopolist.

Question 11

Price discrimination is

Accepted Answer

A)  refusing to sell a given product to some group of customers. 
B)  selling a given product at more than one price. 
C)  selling a given product at more than one price, with the price differences reflecting differences in marginal cost in providing the product to different groups of customers. 
D)  selling a given product at more than one price, with the price differences being unrelated to differences in cost. 
A)  refusing to sell a given product to some group of customers. 
B)  selling a given product at more than one price. 
C)  selling a given product at more than one price, with the price differences reflecting differences in marginal cost in providing the product to different groups of customers. 
D)  selling a given product at more than one price, with the price differences being unrelated to differences in cost.

Question 12

Which of the following is NOT a restriction the government imposes to keep potential entrants out of a market?

Accepted Answer

A)  Patents 
B)  Tariffs 
C)  Assistance with opening new firms 
D)  Copyrights 
A)  Patents 
B)  Tariffs 
C)  Assistance with opening new firms 
D)  Copyrights

Question 13

If a firm sells 10 units of output at $100 per unit and 11 units of output when price is reduced to $99, its marginal revenue for the last unit sold is

Accepted Answer

A)  $11. 
B)  $99. 
C)  $109. 
D)  $89. 
A)  $11. 
B)  $99. 
C)  $109. 
D)  $89.

Question 14

The monopolist faces a downward sloping demand curve, and maximizing profits requires the monopolist to

Accepted Answer

A)  accept the market price for its product. 
B)  will produce where the demand curve is inelastic. 
C)  search for the price consistent with producing to the point at which marginal revenue equals marginal cost. 
D)  search for the highest possible price consistent with maximizing its revenues, irrespective of its explicit and implicit opportunity costs. 
A)  accept the market price for its product. 
B)  will produce where the demand curve is inelastic. 
C)  search for the price consistent with producing to the point at which marginal revenue equals marginal cost. 
D)  search for the highest possible price consistent with maximizing its revenues, irrespective of its explicit and implicit opportunity costs.

Question 15

A privately owned monopoly will NEVER produce along a range of output for which

Accepted Answer

A)  the demand curve is elastic. 
B)  the demand curve is inelastic. 
C)  the price elasticity of demand is greater than 1. 
D)  the price elasticity of supply is greater than 1. 
A)  the demand curve is elastic. 
B)  the demand curve is inelastic. 
C)  the price elasticity of demand is greater than 1. 
D)  the price elasticity of supply is greater than 1.

Question 16

Which of the following statements is FALSE?

Accepted Answer

A)  Other things being equal, society's overall well-being is reduced when a perfectly competitive industry is monopolized. 
B)  When both a perfectly competitive industry and a monopolist face the same production costs and the same market demand curve,the monopolist offers a lower level of output for sale. 
C)  The profit-maximizing monopolist will always produce only along the inelastic portion of the demand curve, whereas equilibrium in a perfectly competitive industry always occurs along the elastic portion of the demand curve. 
D)  When both a perfectly competitive industry and a monopolist face the same production costs and the same market demand curve, the monopolist charges a higher price for its product than what would be charged in a perfectly competitive situation. 
A)  Other things being equal, society's overall well-being is reduced when a perfectly competitive industry is monopolized. 
B)  When both a perfectly competitive industry and a monopolist face the same production costs and the same market demand curve,the monopolist offers a lower level of output for sale. 
C)  The profit-maximizing monopolist will always produce only along the inelastic portion of the demand curve, whereas equilibrium in a perfectly competitive industry always occurs along the elastic portion of the demand curve. 
D)  When both a perfectly competitive industry and a monopolist face the same production costs and the same market demand curve, the monopolist charges a higher price for its product than what would be charged in a perfectly competitive situation.

Question 17

In a perfectly competitive market, if all firms face identical, constant marginal marginal cost curves, then consumer surplus is

Accepted Answer

A)  the area beneath the market demand curve and above the market clearing price. 
B)  the area above the market demand curve and above the market clearing price. 
C)  the total area beneath the market demand curve. 
D)  definitely zero. 
A)  the area beneath the market demand curve and above the market clearing price. 
B)  the area above the market demand curve and above the market clearing price. 
C)  the total area beneath the market demand curve. 
D)  definitely zero.

Question 18

-Refer to the above figure. Profits for this firm are

Accepted Answer

A)  zero. 
B)  negative. 
C)  positive. 
D)  undetermined without more information. 
A)  zero. 
B)  negative. 
C)  positive. 
D)  undetermined without more information.

Question 19

Which of the following is NOT necessary for price discrimination to occur?

Accepted Answer

A)  The firm must be able to separate the market into identifiable groups. 
B)  The firm must be selling a durable good. 
C)  The firm must have a downward sloping demand curve. 
D)  The firm has to be able to prevent resale of the product or service. 
A)  The firm must be able to separate the market into identifiable groups. 
B)  The firm must be selling a durable good. 
C)  The firm must have a downward sloping demand curve. 
D)  The firm has to be able to prevent resale of the product or service.

Question 20

The demand curve faced by a pure monopolist

Accepted Answer

A)  is the same as its marginal revenue curve. 
B)  is perfectly inelastic. 
C)  lies below the marginal revenue curve. 
D)  is the market demand curve. 
A)  is the same as its marginal revenue curve. 
B)  is perfectly inelastic. 
C)  lies below the marginal revenue curve. 
D)  is the market demand curve.

Exam 24: Monopoly

All of the following are barriers to entry in an industry EXCEPT

A barrier to entry is

If Japanese producers sell computer chips at a higher price in the United States than in Japan, and if there is no cost difference in producing or transporting the chips, the Japanese producers would be practicing

If a monopolist produces to a point at which marginal revenue is greater than marginal cost then

-Refer to the above figure. Total cost for this firm equals

"A monopolist can charge whatever price it wants." Do you agree or disagree? Why?

What does the demand curve facing a monopoly look like? Why?

A deadweight loss occurs in a

The portion of consumer surplus that would have existed in a perfectly competitive market but is unobtainable by anyone in society under a monopoly is known as

Successive downward movements along the demand curve for the product of a monopolist always generate successive

Price discrimination is

Which of the following is NOT a restriction the government imposes to keep potential entrants out of a market?

If a firm sells 10 units of output at $100 per unit and 11 units of output when price is reduced to $99, its marginal revenue for the last unit sold is

The monopolist faces a downward sloping demand curve, and maximizing profits requires the monopolist to

A privately owned monopoly will NEVER produce along a range of output for which

Which of the following statements is FALSE?

In a perfectly competitive market, if all firms face identical, constant marginal marginal cost curves, then consumer surplus is

-Refer to the above figure. Profits for this firm are

Which of the following is NOT necessary for price discrimination to occur?

The demand curve faced by a pure monopolist

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Measuring the Economys Performance

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money, Banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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