Question 1

-The profit-maximizing price and quantity established by a perfectly competitive firm in the above figure are

Accepted Answer

A)  Q1 units of output and a price of P5. 
B)  Q3 units of output and a price of P3. 
C)  Q1 units of output and a price of P1. 
D)  Q4 units of output and a price of P4. 
A)  Q1 units of output and a price of P5. 
B)  Q3 units of output and a price of P3. 
C)  Q1 units of output and a price of P1. 
D)  Q4 units of output and a price of P4.

Question 2

In equilibrium, which of the following conditions is common to both unregulated monopoly and pure competition?

Accepted Answer

A)  P = MR 
B)  AR = ATC 
C)  MR = MC 
D)  MC = P 
A)  P = MR 
B)  AR = ATC 
C)  MR = MC 
D)  MC = P

Question 3

If there are no barriers to entry into an industry,

Accepted Answer

A)  short-run economic profits must be zero. 
B)  long-run economic profits must be zero. 
C)  both short-run and long-run economic profits must be zero. 
D)  short-run and long-run profits must still be positive. 
A)  short-run economic profits must be zero. 
B)  long-run economic profits must be zero. 
C)  both short-run and long-run economic profits must be zero. 
D)  short-run and long-run profits must still be positive.

Question 4

Which of the following is NOT a condition for price discrimination to exist?

Accepted Answer

A)  downward sloping demand curve faced by the firm 
B)  identification of buyers with differing elasticities 
C)  unpatented product or the service 
D)  ability to prevent the resale of the product or service 
A)  downward sloping demand curve faced by the firm 
B)  identification of buyers with differing elasticities 
C)  unpatented product or the service 
D)  ability to prevent the resale of the product or service

Question 5

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

Accepted Answer

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

Question 6

-Refer to the above figure. The long-run average cost curve and the long-run marginal cost curves represent

Accepted Answer

A)  the cost curves for a competitive firm. 
B)  the cost curves for a natural monopoly. 
C)  a situation where a firm has control over the raw materials. 
D)  a situation where a firm has a patent. 
A)  the cost curves for a competitive firm. 
B)  the cost curves for a natural monopoly. 
C)  a situation where a firm has control over the raw materials. 
D)  a situation where a firm has a patent.

Question 7

Price discrimination refers to

Accepted Answer

A)  selling a product at different prices according to the differences in marginal cost of providing it to different consumers. 
B)  selling a product at different prices, with the price difference being unrelated to differences in marginal cost. 
C)  charging the same prices to all consumers but selling them different quantities. 
D)  a deliberate effort on the part of a monopoly producer to confuse consumers. 
A)  selling a product at different prices according to the differences in marginal cost of providing it to different consumers. 
B)  selling a product at different prices, with the price difference being unrelated to differences in marginal cost. 
C)  charging the same prices to all consumers but selling them different quantities. 
D)  a deliberate effort on the part of a monopoly producer to confuse consumers.

Question 8

Which of the following conditions is true for a monopolist?

Accepted Answer

A)  MR < P 
B)  MR = P 
C)  MR = AFC 
D)  MR < AVC 
A)  MR < P 
B)  MR = P 
C)  MR = AFC 
D)  MR < AVC

Question 9

-Refer to the above figure. The profit-maximizing price and output for this monopolist are

Accepted Answer

A)  a price of   and output of   . 
B)  a price of   and output of   . 
C)  a price of   and output of   . 
D)  a price of   and output of   . 
A)  a price of   and output of   . 
B)  a price of   and output of   . 
C)  a price of   and output of   . 
D)  a price of   and output of   .

Question 10

In maximizing economic profit, the monopolist will

Accepted Answer

A)  choose the highest price that still permits some output sales. 
B)  equate marginal cost to minimum average total cost. 
C)  equate price to marginal cost. 
D)  equate marginal revenue to marginal cost. 
A)  choose the highest price that still permits some output sales. 
B)  equate marginal cost to minimum average total cost. 
C)  equate price to marginal cost. 
D)  equate marginal revenue to marginal cost.

Question 11

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

Accepted Answer

A)  the firm should increase output. 
B)  the firm should reduce output. 
C)  the firm is maximizing profits. 
D)  we do not know if the firm should increase or reduce without more information. 
A)  the firm should increase output. 
B)  the firm should reduce output. 
C)  the firm is maximizing profits. 
D)  we do not know if the firm should increase or reduce without more information.

Question 12

The price-output combination that maximizes profits for a monopolist occurs at the point where

Accepted Answer

A)  total revenues and total costs are equal. 
B)  the difference between total revenues and total costs is the greatest. 
C)  total revenues are the greatest. 
D)  the elasticity of demand equals one. 
A)  total revenues and total costs are equal. 
B)  the difference between total revenues and total costs is the greatest. 
C)  total revenues are the greatest. 
D)  the elasticity of demand equals one.

Question 13

-Refer to the above table. Given the demand and cost schedules, what are the maximum economic profits for this monopolist?

Accepted Answer

A)  $155 
B)  $143 
C)  $175 
D)  $164 
A)  $155 
B)  $143 
C)  $175 
D)  $164

Question 14

-Use the above figure. Total cost at the profit-maximizing output is closet to

Accepted Answer

A)  $6,600. 
B)  $9,600. 
C)  $4,800. 
D)  $8,000. 
A)  $6,600. 
B)  $9,600. 
C)  $4,800. 
D)  $8,000.

Question 15

Which of the following is a TRUE statement about a monopoly?

Accepted Answer

A)  A monopoly does not necessarily earn positive economic profits. 
B)  A monopoly must earn an above-normal profit to stay in business. 
C)  As long as there are barriers to entry, a monopoly can always find some price-output combination that generates positive economic profits. 
D)  As long as the demand curve slopes down, a monopoly can always find some price-output combination that generates positive economic profits. 
A)  A monopoly does not necessarily earn positive economic profits. 
B)  A monopoly must earn an above-normal profit to stay in business. 
C)  As long as there are barriers to entry, a monopoly can always find some price-output combination that generates positive economic profits. 
D)  As long as the demand curve slopes down, a monopoly can always find some price-output combination that generates positive economic profits.

Question 16

Which of the following is NOT a necessary condition for a firm to price discriminate?

Accepted Answer

A)  The firm must be able to separate markets. 
B)  Buyers in different markets must have different elasticities of demand. 
C)  Resale of the product must be preventable. 
D)  The firm must be a price-taker. 
A)  The firm must be able to separate markets. 
B)  Buyers in different markets must have different elasticities of demand. 
C)  Resale of the product must be preventable. 
D)  The firm must be a price-taker.

Question 17

To sell one more unit of a good, a monopolist must

Accepted Answer

A)  lower the price on the last unit only. 
B)  lower the price on all units. 
C)  raise the price only on the last unit sold. 
D)  raise the prices on all goods. 
A)  lower the price on the last unit only. 
B)  lower the price on all units. 
C)  raise the price only on the last unit sold. 
D)  raise the prices on all goods.

Question 18

-Refer to the above figure. The firm is currently producing at   . The firm should

Accepted Answer

A)  reduce production. 
B)  leave production as it is. 
C)  increase production. 
D)  shut down. 
A)  reduce production. 
B)  leave production as it is. 
C)  increase production. 
D)  shut down.

Question 19

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

Accepted Answer

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

Question 20

Which of the following is NOT a necessary condition for price discrimination?

Accepted Answer

A)  Preventing resale of the product 
B)  Downward sloping demand curve 
C)  Separating markets for the good 
D)  Having a constant marginal cost 
A)  Preventing resale of the product 
B)  Downward sloping demand curve 
C)  Separating markets for the good 
D)  Having a constant marginal cost

Exam 24: Monopoly

-The profit-maximizing price and quantity established by a perfectly competitive firm in the above figure are

In equilibrium, which of the following conditions is common to both unregulated monopoly and pure competition?

If there are no barriers to entry into an industry,

Which of the following is NOT a condition for price discrimination to exist?

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

-Refer to the above figure. The long-run average cost curve and the long-run marginal cost curves represent

Price discrimination refers to

Which of the following conditions is true for a monopolist?

-Refer to the above figure. The profit-maximizing price and output for this monopolist are

In maximizing economic profit, the monopolist will

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

The price-output combination that maximizes profits for a monopolist occurs at the point where

-Refer to the above table. Given the demand and cost schedules, what are the maximum economic profits for this monopolist?

-Use the above figure. Total cost at the profit-maximizing output is closet to

Which of the following is a TRUE statement about a monopoly?

Which of the following is NOT a necessary condition for a firm to price discriminate?

To sell one more unit of a good, a monopolist must

-Refer to the above figure. The firm is currently producing at . The firm should

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

Which of the following is NOT a necessary condition for price discrimination?

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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