Question 1

If a monopolist is producing the quantity at which price equals marginal cost, it should

Accepted Answer

A)  continue to produce this amount if it wants to maximize profits. 
B)  reduce output if it wants to maximize profits. 
C)  reduce price and keep output unchanged if it wants to maximize profits. 
D)  increase output if it wants to maximize profits. 
A)  continue to produce this amount if it wants to maximize profits. 
B)  reduce output if it wants to maximize profits. 
C)  reduce price and keep output unchanged if it wants to maximize profits. 
D)  increase output if it wants to maximize profits.

Question 2

-In the above figure, if the firm is producing Q2 units at a price P2, it should

Accepted Answer

A)  increase output and decrease price. 
B)  decrease output and increase price. 
C)  not change output or price. 
D)  shut down. 
A)  increase output and decrease price. 
B)  decrease output and increase price. 
C)  not change output or price. 
D)  shut down.

Question 3

-In the above figure, the break-even output and price is

Accepted Answer

A)  $9 and 14. 
B)  $13 and 14. 
C)  $11 and 16. 
D)  $10 and 17. 
A)  $9 and 14. 
B)  $13 and 14. 
C)  $11 and 16. 
D)  $10 and 17.

Question 4

A monopolist is producing at an output level at which MR = $6 and MC = $9. 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 5

When it takes one firm in an industry to produce the quantity necessary to realize low unit costs, the industry

Accepted Answer

A)  experiences economies of scale. 
B)  has barriers to entry due to ownership of resources. 
C)  has no barrier to entry. 
D)  has a license granted by the government. 
A)  experiences economies of scale. 
B)  has barriers to entry due to ownership of resources. 
C)  has no barrier to entry. 
D)  has a license granted by the government.

Question 6

-The profit-maximizing quantity of the monopolist compared to the perfectly competitive industry in the above figure are, respectively

Accepted Answer

A)  Q1 and Q2. 
B)  Q1 and Q3. 
C)  Q1 and Q5. 
D)  Q2 and Q3. 
A)  Q1 and Q2. 
B)  Q1 and Q3. 
C)  Q1 and Q5. 
D)  Q2 and Q3.

Question 7

The monopolist will choose the price and output combination at which

Accepted Answer

A)  MC equals AR. 
B)  MC equals MR. 
C)  MC equals price. 
D)  MR equals AR. 
A)  MC equals AR. 
B)  MC equals MR. 
C)  MC equals price. 
D)  MR equals AR.

Question 8

Considering the spectrum of market structures and moving from pure competition to pure monopoly we can say that

Accepted Answer

A)  entry barriers get lower but exit gets more difficult. 
B)  entry becomes harder but exit becomes easier. 
C)  entry gets harder and the number of firms dwindles. 
D)  none of the above 
A)  entry barriers get lower but exit gets more difficult. 
B)  entry becomes harder but exit becomes easier. 
C)  entry gets harder and the number of firms dwindles. 
D)  none of the above

Question 9

If it is not possible for a pharmaceutical drug maker to sell its generic cholesterol reducing drug along with some name brand cholesterol reducing drugs, we have an example of

Accepted Answer

A)  monopoly due to ownership of key resources. 
B)  monopoly due to governmental entry restrictions. 
C)  monopoly due to economies of scale. 
D)  pure competition. 
A)  monopoly due to ownership of key resources. 
B)  monopoly due to governmental entry restrictions. 
C)  monopoly due to economies of scale. 
D)  pure competition.

Question 10

In principle, can a monopolist hold its monopoly power in the long run? Explain.

Accepted Answer

Yes. Monopoly power exists in the long r

Question 11

Monopolies that price discriminate do so because

Accepted Answer

A)  they are able to do so and no one else can. 
B)  they can increase their profits. 
C)  it keeps them out of trouble with the government. 
D)  it is more efficient. 
A)  they are able to do so and no one else can. 
B)  they can increase their profits. 
C)  it keeps them out of trouble with the government. 
D)  it is more efficient.

Question 12

For a monopolist that is maximizing profits,

Accepted Answer

A)  price exceeds marginal cost. 
B)  price equals marginal revenue. 
C)  price equals average total cost. 
D)  marginal revenue exceeds price. 
A)  price exceeds marginal cost. 
B)  price equals marginal revenue. 
C)  price equals average total cost. 
D)  marginal revenue exceeds price.

Question 13

-In the above figure, the total cost of producing the profit maximizing level of output is shown by rectangle

Accepted Answer

A)  0P1AQ1. 
B)  0P5EQ5. 
C)  0P4HQ4. 
D)  0P2BQ1. 
A)  0P1AQ1. 
B)  0P5EQ5. 
C)  0P4HQ4. 
D)  0P2BQ1.

Question 14

A monopolist finds the output (   ) rate that maximizes profit. It finds the price by

Accepted Answer

A)  taking the height of the marginal revenue curve at output rate Q   . 
B)  taking the height of the marginal cost curve at output rate Q   . 
C)  taking the height of the demand curve at output rate Q   . 
D)  setting price equal to marginal cost. 
A)  taking the height of the marginal revenue curve at output rate Q   . 
B)  taking the height of the marginal cost curve at output rate Q   . 
C)  taking the height of the demand curve at output rate Q   . 
D)  setting price equal to marginal cost.

Question 15

A monopolist would probably earn fewer profits if

Accepted Answer

A)  the importance of specialized capital equipment in its production techniques increased. 
B)  the time length of patents increased. 
C)  environmental regulations increased that required the purchase of special capital equipment. 
D)  tariffs on competing products were lowered. 
A)  the importance of specialized capital equipment in its production techniques increased. 
B)  the time length of patents increased. 
C)  environmental regulations increased that required the purchase of special capital equipment. 
D)  tariffs on competing products were lowered.

Question 16

If marginal cost is constant, what happens to a market if it alters from perfect competition to monopoly without any change in the position of the market demand curve or any variation in costs?

Accepted Answer

A)  Consumer surplus decreases, producer surplus increases and a deadweight loss is created. 
B)  Consumer surplus decreases, producer surplus decreases and a deadweight loss is created. 
C)  Consumer surplus increases, producer surplus decreases and a deadweight loss is created. 
D)  Consumer surplus increases, producer surplus increases and a deadweight loss is created.. 
A)  Consumer surplus decreases, producer surplus increases and a deadweight loss is created. 
B)  Consumer surplus decreases, producer surplus decreases and a deadweight loss is created. 
C)  Consumer surplus increases, producer surplus decreases and a deadweight loss is created. 
D)  Consumer surplus increases, producer surplus increases and a deadweight loss is created..

Question 17

If the price elasticity of demand for U.S. automobiles is higher in Europe than it is in the United States, and transport costs are zero, a price-discriminating monopolist would charge

Accepted Answer

A)  the same price for autos in the United States as in Europe. 
B)  a lower price for autos in the United States than in Europe. 
C)  a higher price for autos in the United States than in Europe. 
D)  a less profitable price for autos in the United States than in Europe. 
A)  the same price for autos in the United States as in Europe. 
B)  a lower price for autos in the United States than in Europe. 
C)  a higher price for autos in the United States than in Europe. 
D)  a less profitable price for autos in the United States than in Europe.

Question 18

For a firm to become a monopoly in an industry,

Accepted Answer

A)  barriers to entry must exist. 
B)  the firm must charge higher prices than its competitors. 
C)  the firm must produce a faulty product. 
D)  the firm will engage in unfair practices to drive all competitors out of the market. 
A)  barriers to entry must exist. 
B)  the firm must charge higher prices than its competitors. 
C)  the firm must produce a faulty product. 
D)  the firm will engage in unfair practices to drive all competitors out of the market.

Question 19

Establishing different prices for similar products to reflect differences in marginal cost in providing those goods to different groups of buyers is

Accepted Answer

A)  price discrimination. 
B)  cost-plus pricing. 
C)  price differentiation. 
D)  product differentiation. 
A)  price discrimination. 
B)  cost-plus pricing. 
C)  price differentiation. 
D)  product differentiation.

Question 20

The demand curve faced by the monopolist

Accepted Answer

A)  has a constant price elasticity. 
B)  is the industry demand curve. 
C)  is identical to the firm's MR curve. 
D)  is identical to the firm's TR curve. 
A)  has a constant price elasticity. 
B)  is the industry demand curve. 
C)  is identical to the firm's MR curve. 
D)  is identical to the firm's TR curve.

Exam 24: Monopoly

If a monopolist is producing the quantity at which price equals marginal cost, it should

-In the above figure, if the firm is producing Q2 units at a price P2, it should

-In the above figure, the break-even output and price is

A monopolist is producing at an output level at which MR = $6 and MC = $9. It could increase profits

When it takes one firm in an industry to produce the quantity necessary to realize low unit costs, the industry

-The profit-maximizing quantity of the monopolist compared to the perfectly competitive industry in the above figure are, respectively

The monopolist will choose the price and output combination at which

Considering the spectrum of market structures and moving from pure competition to pure monopoly we can say that

If it is not possible for a pharmaceutical drug maker to sell its generic cholesterol reducing drug along with some name brand cholesterol reducing drugs, we have an example of

In principle, can a monopolist hold its monopoly power in the long run? Explain.

Monopolies that price discriminate do so because

For a monopolist that is maximizing profits,

-In the above figure, the total cost of producing the profit maximizing level of output is shown by rectangle

A monopolist finds the output ( ) rate that maximizes profit. It finds the price by

A monopolist would probably earn fewer profits if

If marginal cost is constant, what happens to a market if it alters from perfect competition to monopoly without any change in the position of the market demand curve or any variation in costs?

If the price elasticity of demand for U.S. automobiles is higher in Europe than it is in the United States, and transport costs are zero, a price-discriminating monopolist would charge

For a firm to become a monopoly in an industry,

Establishing different prices for similar products to reflect differences in marginal cost in providing those goods to different groups of buyers is

The demand curve faced by the 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

Filters

-In the above figure, if the firm is producing Q₂ units at a price P₂, it should