Question 1

A monopoly sells 10 units of output at $10. If the MR of the 11th unit is $4.50, then the price of the 11th unit is

Accepted Answer

A)  also $10. 
B)  $9.50. 
C)  greater than $10. 
D)  $7.25. 
A)  also $10. 
B)  $9.50. 
C)  greater than $10. 
D)  $7.25.

Question 2

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

Accepted Answer

A)  Subsidizing imported goods 
B)  Licensing of exclusive ownership of such a vital resources 
C)  Certificate of convenience 
D)  Compliance with government safety regulations 
A)  Subsidizing imported goods 
B)  Licensing of exclusive ownership of such a vital resources 
C)  Certificate of convenience 
D)  Compliance with government safety regulations

Question 3

A monopoly which arises from significant economies of scale is referred to as a

Accepted Answer

A)  monopolistic competitor. 
B)  strategic resource monopoly. 
C)  natural monopoly. 
D)  patent monopoly. 
A)  monopolistic competitor. 
B)  strategic resource monopoly. 
C)  natural monopoly. 
D)  patent monopoly.

Question 4

-According to the above figure, the profit-maximizing price for the monopolist is

Accepted Answer

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

Question 5

Legal or governmental restrictions that give monopolistic advantages to a firm include all of the following EXCEPT

Accepted Answer

A)  franchises. 
B)  environmental protection. 
C)  exclusive ownership of an unimportant resource. 
D)  patents. 
A)  franchises. 
B)  environmental protection. 
C)  exclusive ownership of an unimportant resource. 
D)  patents.

Question 6

A monopolist is maximizing profit at an output rate of 1,000 units per month. At this output rate, the price that its customers are willing and able to pay is $8 per unit, average total cost is $5 per unit, and marginal cost is $6 per unit. It may be concluded that at this monthly output rate, marginal revenue is

Accepted Answer

A)  $5 per unit, and the monopolist earns zero economic profits. 
B)  $6 per unit, and the monopolist earns economic profits of $2,000 per month. 
C)  $6 per unit, and the monopolist earns economic losses of $1,000 per month. 
D)  $6 per unit, and the monopolist earns economic profits of $3,000 per month. 
A)  $5 per unit, and the monopolist earns zero economic profits. 
B)  $6 per unit, and the monopolist earns economic profits of $2,000 per month. 
C)  $6 per unit, and the monopolist earns economic losses of $1,000 per month. 
D)  $6 per unit, and the monopolist earns economic profits of $3,000 per month.

Question 7

If a firm sells 5 units of output at $10 per unit and 6 units of output when price is reduced to $9, its marginal revenue from selling the sixth unit is

Accepted Answer

A)  $9. 
B)  $40. 
C)  $540. 
D)  $4. 
A)  $9. 
B)  $40. 
C)  $540. 
D)  $4.

Question 8

A monopolist is producing at an output level at which ATC = $5, P = $6, MC = $3, and MR = $4. We can conclude that

Accepted Answer

A)  economic profit could be increased by producing more. 
B)  economic profit could be increased by producing less. 
C)  economic profit cannot be increased. 
D)  the firm is earning $10 in economic profits. 
A)  economic profit could be increased by producing more. 
B)  economic profit could be increased by producing less. 
C)  economic profit cannot be increased. 
D)  the firm is earning $10 in economic profits.

Question 9

Drug companies protect their monopolies over various drugs they develop by utilizing

Accepted Answer

A)  patent protection. 
B)  low cost production. 
C)  diseconomies of scale. 
D)  zero economic profits in the long run. 
A)  patent protection. 
B)  low cost production. 
C)  diseconomies of scale. 
D)  zero economic profits in the long run.

Question 10

All of the following are considered a barrier to entry into a market EXCEPT

Accepted Answer

A)  government licenses. 
B)  persistent declining long-run average costs as output increases. 
C)  lowering tariffs. 
D)  governmental regulations of business conduct relating to workplace conditions. 
A)  government licenses. 
B)  persistent declining long-run average costs as output increases. 
C)  lowering tariffs. 
D)  governmental regulations of business conduct relating to workplace conditions.

Question 11

A monopolist will earn economic profits when

Accepted Answer

A)  AVC is a minimum. 
B)  ATC intersects the demand curve. 
C)  ATC lies above the demand curve. 
D)  ATC lies below the demand curve. 
A)  AVC is a minimum. 
B)  ATC intersects the demand curve. 
C)  ATC lies above the demand curve. 
D)  ATC lies below the demand curve.

Question 12

Which of the following statements concerning a monopolist is FALSE?

Accepted Answer

A)  A monopolist will produce at which MR = MC. 
B)  For a monopolist, marginal revenue is less than price. 
C)  A monopolist will charge the highest price at which any individual will purchase the product. 
D)  A monopolist will shut down if price is less than average variable cost. 
A)  A monopolist will produce at which MR = MC. 
B)  For a monopolist, marginal revenue is less than price. 
C)  A monopolist will charge the highest price at which any individual will purchase the product. 
D)  A monopolist will shut down if price is less than average variable cost.

Question 13

All of the following are true about a monopolist EXCEPT

Accepted Answer

A)  the demand curve for its product is perfectly elastic. 
B)  it produces a product with no close substitutes. 
C)  its demand curve is the same as the market demand for the industry. 
D)  it is a single seller of a good or service. 
A)  the demand curve for its product is perfectly elastic. 
B)  it produces a product with no close substitutes. 
C)  its demand curve is the same as the market demand for the industry. 
D)  it is a single seller of a good or service.

Question 14

Price discrimination occurs when a firm sells

Accepted Answer

A)  a given product at different prices at different points in time. 
B)  a given product at different prices to different ethnic groups. 
C)  a given product at different prices unrelated to differences in cost. 
D)  a given product at different prices when it is produced in different colors. 
A)  a given product at different prices at different points in time. 
B)  a given product at different prices to different ethnic groups. 
C)  a given product at different prices unrelated to differences in cost. 
D)  a given product at different prices when it is produced in different colors.

Question 15

If a government imposes high enough tariffs, one result will be that

Accepted Answer

A)  foreign producers will be able to sell more goods. 
B)  domestic producers will face no foreign competition. 
C)  consumers will benefit from lower prices. 
D)  markets will become more globalized. 
A)  foreign producers will be able to sell more goods. 
B)  domestic producers will face no foreign competition. 
C)  consumers will benefit from lower prices. 
D)  markets will become more globalized.

Question 16

A patent protects an inventor's creation from being copied or stolen for a period of

Accepted Answer

A)  10 years. 
B)  20 years. 
C)  30 years. 
D)  50 years. 
A)  10 years. 
B)  20 years. 
C)  30 years. 
D)  50 years.

Question 17

If a monopolist raises its price,

Accepted Answer

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

Question 18

-Given the data in the above table, what is the marginal revenue when the 13th 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 19

-Given the data in the above table, what is the marginal revenue when the 15th 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 20

Which of the following statements is TRUE about the relationship between a firm's demand curve under perfect competition and monopoly?

Accepted Answer

A)  Under perfect competition, the demand curve is perfectly elastic; under monopoly, the demand curve has elastic, unit-elastic and inelastic portions. 
B)  Under monopoly, the demand curve is perfectly elastic; under perfect competition, the demand curve has elastic, unit-elastic and inelastic portions. 
C)  The demand curves for a monopoly and perfect competition are always inelastic. 
D)  We can define a demand curve under perfect competition but not under monopoly. 
A)  Under perfect competition, the demand curve is perfectly elastic; under monopoly, the demand curve has elastic, unit-elastic and inelastic portions. 
B)  Under monopoly, the demand curve is perfectly elastic; under perfect competition, the demand curve has elastic, unit-elastic and inelastic portions. 
C)  The demand curves for a monopoly and perfect competition are always inelastic. 
D)  We can define a demand curve under perfect competition but not under monopoly.

Exam 24: Monopoly

A monopoly sells 10 units of output at $10. If the MR of the 11th unit is $4.50, then the price of the 11th unit is

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

A monopoly which arises from significant economies of scale is referred to as a

-According to the above figure, the profit-maximizing price for the monopolist is

Legal or governmental restrictions that give monopolistic advantages to a firm include all of the following EXCEPT

If a firm sells 5 units of output at $10 per unit and 6 units of output when price is reduced to $9, its marginal revenue from selling the sixth unit is

A monopolist is producing at an output level at which ATC = $5, P = $6, MC = $3, and MR = $4. We can conclude that

Drug companies protect their monopolies over various drugs they develop by utilizing

All of the following are considered a barrier to entry into a market EXCEPT

A monopolist will earn economic profits when

Which of the following statements concerning a monopolist is FALSE?

All of the following are true about a monopolist EXCEPT

Price discrimination occurs when a firm sells

If a government imposes high enough tariffs, one result will be that

A patent protects an inventor's creation from being copied or stolen for a period of

If a monopolist raises its price,

-Given the data in the above table, what is the marginal revenue when the 13th unit is sold?

-Given the data in the above table, what is the marginal revenue when the 15th unit is sold?

Which of the following statements is TRUE about the relationship between a firm's demand curve under perfect competition and monopoly?

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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