Question 1

A price-discriminating monopolist will equate

Accepted Answer

A)  price and marginal cost in each market. 
B)  price and marginal revenue in each market. 
C)  marginal revenue and marginal cost in each market. 
D)  average revenue and marginal revenue in each market. 
A)  price and marginal cost in each market. 
B)  price and marginal revenue in each market. 
C)  marginal revenue and marginal cost in each market. 
D)  average revenue and marginal revenue in each market.

Question 2

Which of the following is TRUE?

Accepted Answer

A)  Monopoly results in a higher quantity of output being sold compared with perfect competition. 
B)  Price discrimination occurs when there are differences in prices that reflect differences in marginal cost. 
C)  Charging all customers the same price when costs vary can actually be a case of price discrimination. 
D)  Price discrimination guarantees that the monopolist will make a profit. 
A)  Monopoly results in a higher quantity of output being sold compared with perfect competition. 
B)  Price discrimination occurs when there are differences in prices that reflect differences in marginal cost. 
C)  Charging all customers the same price when costs vary can actually be a case of price discrimination. 
D)  Price discrimination guarantees that the monopolist will make a profit.

Question 3

If a monopolist lowers its price,

Accepted Answer

A)  it lowers the barriers to entry. 
B)  the quantity demanded increases. 
C)  the quantity demanded remains the same. 
D)  the quantity demanded decreases. 
A)  it lowers the barriers to entry. 
B)  the quantity demanded increases. 
C)  the quantity demanded remains the same. 
D)  the quantity demanded decreases.

Question 4

In a monopoly,

Accepted Answer

A)  the firm is large in an absolute sense. 
B)  the market is small in an absolute sense. 
C)  the firm and the industry are the same thing. 
D)  the monopolist determines how much each firm will produce. 
A)  the firm is large in an absolute sense. 
B)  the market is small in an absolute sense. 
C)  the firm and the industry are the same thing. 
D)  the monopolist determines how much each firm will produce.

Question 5

A monopolist is producing at an output level at which MR = $9 and MC = $8. It could increase profits

Accepted Answer

A)  by increasing both output and price. 
B)  by reducing output and by increasing price. 
C)  by reducing both output and price. 
D)  by increasing output and by reducing price. 
A)  by increasing both output and price. 
B)  by reducing output and by increasing price. 
C)  by reducing both output and price. 
D)  by increasing output and by reducing price.

Question 6

Which of the following is a characteristic of a monopoly market?

Accepted Answer

A)  many firms 
B)  one firm 
C)  easy entry 
D)  firm is a price taker 
A)  many firms 
B)  one firm 
C)  easy entry 
D)  firm is a price taker

Question 7

A firm can be the sole supplier of a good and is still not a monopolist if

Accepted Answer

A)  the firm is not large. 
B)  the good produced is not important to the economy. 
C)  the firm is not making excessive profits. 
D)  there are very close substitutes for the good. 
A)  the firm is not large. 
B)  the good produced is not important to the economy. 
C)  the firm is not making excessive profits. 
D)  there are very close substitutes for the good.

Question 8

The market structure where there is a single supplier of a good or service for which there is no close substitute is

Accepted Answer

A)  a price searcher. 
B)  a monopoly. 
C)  a tariff. 
D)  the most economically efficient market structure. 
A)  a price searcher. 
B)  a monopoly. 
C)  a tariff. 
D)  the most economically efficient market structure.

Question 9

Which of the following is not true about the demand curve faced by a monopolist?

Accepted Answer

A)  The demand curve is downward sloping. 
B)  The firm's demand curve is the same as the market demand curve. 
C)  The marginal revenue curve is below the market demand curve. 
D)  The demand curve is perfectly elastic. 
A)  The demand curve is downward sloping. 
B)  The firm's demand curve is the same as the market demand curve. 
C)  The marginal revenue curve is below the market demand curve. 
D)  The demand curve is perfectly elastic.

Question 10

A monopolist engages in price discrimination

Accepted Answer

A)  by charging a higher price to consumers whose demand is more inelastic. 
B)  by charging a lower price when marginal cost is higher. 
C)  by charging a lower price to consumers whose demand is more inelastic. 
D)  by charging the same price to all consumers. 
A)  by charging a higher price to consumers whose demand is more inelastic. 
B)  by charging a lower price when marginal cost is higher. 
C)  by charging a lower price to consumers whose demand is more inelastic. 
D)  by charging the same price to all consumers.

Question 11

What is true of the price elasticity of demand faced by a monopoly firm?

Accepted Answer

A)  Demand is inelastic. 
B)  Demand is more elastic at lower prices and more inelastic at higher prices. 
C)  Demand is perfectly elastic because the monopolist has no competition. 
D)  Demand becomes more elastic as the range of imperfect substitutes expands. 
A)  Demand is inelastic. 
B)  Demand is more elastic at lower prices and more inelastic at higher prices. 
C)  Demand is perfectly elastic because the monopolist has no competition. 
D)  Demand becomes more elastic as the range of imperfect substitutes expands.

Question 12

An important difference between a perfectly competitive firm and a monopolist is

Accepted Answer

A)  the size of the industry. 
B)  the primary objective of the firms. 
C)  a monopolist only produces in the long run, while a perfect competitor only produces in the short run. 
D)  the price it charges to sell additional units of a good. 
A)  the size of the industry. 
B)  the primary objective of the firms. 
C)  a monopolist only produces in the long run, while a perfect competitor only produces in the short run. 
D)  the price it charges to sell additional units of a good.

Question 13

-Given the data in the above table, what is the marginal revenue when the 14th unit is sold?

Accepted Answer

A)  $7.00 
B)  $5.00 
C)  $3.00 
D)  $1.00 
A)  $7.00 
B)  $5.00 
C)  $3.00 
D)  $1.00

Question 14

"The deadweight loss of a monopoly equals the monopoly firm's profits." Do you agree or disagree? Why?

Accepted Answer

Disagree. The deadweight loss from a mon

Question 15

The owner of a patented invention

Accepted Answer

A)  may or may not have a legal monopoly. 
B)  is guaranteed a profit since her idea cannot be copied. 
C)  will always have demand high enough and costs low enough to ensure a profit. 
D)  will only earn a profit if average total cost is less than price. 
A)  may or may not have a legal monopoly. 
B)  is guaranteed a profit since her idea cannot be copied. 
C)  will always have demand high enough and costs low enough to ensure a profit. 
D)  will only earn a profit if average total cost is less than price.

Question 16

To maximize profits, the monopolist should produce at which

Accepted Answer

A)  MR = MC. 
B)  MC intersects the demand curve. 
C)  total revenue is maximized. 
D)  total costs are minimized. 
A)  MR = MC. 
B)  MC intersects the demand curve. 
C)  total revenue is maximized. 
D)  total costs are minimized.

Question 17

-Refer to the above table. Given the demand and cost schedules, what is the profit-maximizing price for this monopolist?

Accepted Answer

A)  $13 
B)  $12 
C)  $11 
D)  $10 
A)  $13 
B)  $12 
C)  $11 
D)  $10

Question 18

Which of the following will make price discrimination difficult for a monopolist?

Accepted Answer

A)  The possibility of resale of the product 
B)  A constant marginal cost curve 
C)  An increasing marginal cost 
D)  A downward sloping demand curve 
A)  The possibility of resale of the product 
B)  A constant marginal cost curve 
C)  An increasing marginal cost 
D)  A downward sloping demand curve

Question 19

To be able to engage in profit-maximizing price searching, a monopoly firm must be able to

Accepted Answer

A)  prevent the entry of other firms into the market for its product. 
B)  induce the entry of other firms into the market for its product. 
C)  avoid earning negative economic profits in the short run. 
D)  always earn zero economic profits. 
A)  prevent the entry of other firms into the market for its product. 
B)  induce the entry of other firms into the market for its product. 
C)  avoid earning negative economic profits in the short run. 
D)  always earn zero economic profits.

Question 20

The use of a tariff provides monopoly protection since

Accepted Answer

A)  it allows more imports into the country. 
B)  it reduces competition from imports by raising the import price. 
C)  it reduces exporters' profits. 
D)  it expands tax credits. 
A)  it allows more imports into the country. 
B)  it reduces competition from imports by raising the import price. 
C)  it reduces exporters' profits. 
D)  it expands tax credits.

Exam 24: Monopoly

A price-discriminating monopolist will equate

Which of the following is TRUE?

If a monopolist lowers its price,

In a monopoly,

A monopolist is producing at an output level at which MR = $9 and MC = $8. It could increase profits

Which of the following is a characteristic of a monopoly market?

A firm can be the sole supplier of a good and is still not a monopolist if

The market structure where there is a single supplier of a good or service for which there is no close substitute is

Which of the following is not true about the demand curve faced by a monopolist?

A monopolist engages in price discrimination

What is true of the price elasticity of demand faced by a monopoly firm?

An important difference between a perfectly competitive firm and a monopolist is

-Given the data in the above table, what is the marginal revenue when the 14th unit is sold?

"The deadweight loss of a monopoly equals the monopoly firm's profits." Do you agree or disagree? Why?

The owner of a patented invention

To maximize profits, the monopolist should produce at which

-Refer to the above table. Given the demand and cost schedules, what is the profit-maximizing price for this monopolist?

Which of the following will make price discrimination difficult for a monopolist?

To be able to engage in profit-maximizing price searching, a monopoly firm must be able to

The use of a tariff provides monopoly protection since

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

Filters