Question 1

-The above figure shows the demand and marginal cost curves for a monopoly.Under monopoly,consumer surplus equals

Accepted Answer

A)  a + b. 
B)  a + b + c. 
C)  a + b + c + d + e + f. 
D)  None of the above. 
A)  a + b. 
B)  a + b + c. 
C)  a + b + c + d + e + f. 
D)  None of the above.

Question 2

In the early 1900s,U.S.Steel acted as a dominant firm with over sixty percent (60%)of the market.Many,including the Supreme Court in 1920,viewed U.S.Steel as a "good" monopolist since competitive fringe firms prospered under this arrangement.Graph the market for steel as it might have existed at this time showing that being a member of the competitive fringe can be profitable.Assume a linear market demand and linear MC and AC that slope upward.

Accepted Answer

@#IMG-DLM& See the above figure.The competitive fr

Question 3

A monopolist faces the inverse demand curve P = 60 - Q.It has variable costs of Q2 so that its marginal costs are 2Q,and it has fixed costs of 30.The monopoly's profit maximizing output is

Accepted Answer

A)  5. 
B)  10. 
C)  15. 
D)  20. 
A)  5. 
B)  10. 
C)  15. 
D)  20.

Question 4

One difference between a monopoly and a competitive firm is that

Accepted Answer

A)  a monopoly is a price taker. 
B)  a monopoly maximizes profit by setting marginal revenue equal to marginal cost. 
C)  a monopoly faces a downward sloping demand curve. 
D)  None of the above. 
A)  a monopoly is a price taker. 
B)  a monopoly maximizes profit by setting marginal revenue equal to marginal cost. 
C)  a monopoly faces a downward sloping demand curve. 
D)  None of the above.

Question 5

A monopolist faces the inverse demand curve P = 60 - Q.It has variable costs of Q2 so that its marginal costs are 2Q,and it has fixed costs of 30.At its profit maximizing output level,the monopoly's average cost is

Accepted Answer

A)  11. 
B)  13. 
C)  17. 
D)  21.5. 
A)  11. 
B)  13. 
C)  17. 
D)  21.5.

Question 6

The situation in which a person places greater value on a good as fewer and fewer people possess it is called the

Accepted Answer

A)  Bandwagon Effect. 
B)  Greater Value Effect. 
C)  Snob Effect. 
D)  Behavioral Effect. 
A)  Bandwagon Effect. 
B)  Greater Value Effect. 
C)  Snob Effect. 
D)  Behavioral Effect.

Question 7

Suppose a monopolist's demand curve is P = 60 - Q,and its cost function is C = 10Q + 50 so its marginal cost is 10.If a governmental agency wished to set the price that maximized social welfare,that price would be

Accepted Answer

A)  $10.00. 
B)  $11.02. 
C)  $14.57. 
D)  $35.00. 
A)  $10.00. 
B)  $11.02. 
C)  $14.57. 
D)  $35.00.

Question 8

The longer a patent lasts,

Accepted Answer

A)  the greater the potential economic profits available to an innovator. 
B)  the lower the deadweight loss. 
C)  the lower the average costs of production. 
D)  the less innovation there will be. 
A)  the greater the potential economic profits available to an innovator. 
B)  the lower the deadweight loss. 
C)  the lower the average costs of production. 
D)  the less innovation there will be.

Question 9

If the government imposes a specific tax on a monopoly,the consumer's tax incidence

Accepted Answer

A)  can exceed 100%. 
B)  will always be between 0-100%. 
C)  may be negative. 
D)  will be the same as when the tax is imposed on a perfectly competitive firm. 
A)  can exceed 100%. 
B)  will always be between 0-100%. 
C)  may be negative. 
D)  will be the same as when the tax is imposed on a perfectly competitive firm.

Question 10

The situation where one person's demand for a good depends on the consumption of the good by others is called a

Accepted Answer

A)  network externality. 
B)  network internality. 
C)  consumption externality. 
D)  production externality. 
A)  network externality. 
B)  network internality. 
C)  consumption externality. 
D)  production externality.

Question 11

If the inverse demand function for a monopoly's product is p = 100 - 2Q,then the firm's marginal revenue function is

Accepted Answer

A)  -2. 
B)  100 - 4Q. 
C)  200 - 4Q. 
D)  200 - 2Q. 
A)  -2. 
B)  100 - 4Q. 
C)  200 - 4Q. 
D)  200 - 2Q.

Question 12

If a firm is a profit maximizer and faces positive marginal costs,

Accepted Answer

A)  there is a natural limit to the size of the firm, where MR = 0. 
B)  there is no natural limit to the size of the firm; it can be as large as it wants to be. 
C)  there is a natural limit to the size of the firm, where MR > 0. 
D)  there is no natural limit to the size of the firm, hence the need for government regulation. 
A)  there is a natural limit to the size of the firm, where MR = 0. 
B)  there is no natural limit to the size of the firm; it can be as large as it wants to be. 
C)  there is a natural limit to the size of the firm, where MR > 0. 
D)  there is no natural limit to the size of the firm, hence the need for government regulation.

Question 13

Which of the following total cost functions suggests the presence of a natural monopoly?

Accepted Answer

A)  TC = 2Q 
B)  TC = 100 + 2Q 
C)  TC = 100 + 2Q2 
D)  All of the above. 
A)  TC = 2Q 
B)  TC = 100 + 2Q 
C)  TC = 100 + 2Q2 
D)  All of the above.

Question 14

Since a monopoly can set any price it wants,it always makes a profit.

Accepted Answer

A) True 
 B)False

Question 15

A monopoly incurs a marginal cost of $1 for each unit produced.If the price elasticity of demand equals -2.0,the monopoly maximizes profit by charging a price of

Accepted Answer

A)  $1.00. 
B)  $1.50. 
C)  $2.00. 
D)  $3.00. 
A)  $1.00. 
B)  $1.50. 
C)  $2.00. 
D)  $3.00.

Question 16

The situation in which one firm can produce the total output of the market at lower cost than several firms is called a

Accepted Answer

A)  natural monopoly. 
B)  pure monopoly. 
C)  ruling monopoly. 
D)  cost monopoly. 
A)  natural monopoly. 
B)  pure monopoly. 
C)  ruling monopoly. 
D)  cost monopoly.

Question 17

-The above figure shows the demand and cost curves facing a monopoly.The monopoly maximizes profit by selling

Accepted Answer

A)  0 units. 
B)  25 units. 
C)  50 units. 
D)  75 units. 
A)  0 units. 
B)  25 units. 
C)  50 units. 
D)  75 units.

Question 18

The two-period dynamic monopoly model is more useful than the static monopoly model in analyzing monopoly behavior when

Accepted Answer

A)  the product produced requires a bandwagon effect. 
B)  the product produced generates a positive network externality. 
C)  the monopoly initially uses a lower introductory price. 
D)  All of the above situations. 
A)  the product produced requires a bandwagon effect. 
B)  the product produced generates a positive network externality. 
C)  the monopoly initially uses a lower introductory price. 
D)  All of the above situations.

Question 19

-The above figure shows the demand and cost curves facing a monopoly.At the profit-maximizing price,the elasticity of demand equals

Accepted Answer

A)  -1. 
B)  zero. 
C)  infinity. 
D)  -3. 
A)  -1. 
B)  zero. 
C)  infinity. 
D)  -3.

Question 20

Optimal price regulation sets price equal to

Accepted Answer

A)  marginal cost. 
B)  average variable cost. 
C)  average cost. 
D)  minimum average cost. 
A)  marginal cost. 
B)  average variable cost. 
C)  average cost. 
D)  minimum average cost.

-The above figure shows the demand and marginal cost curves for a monopoly.Under monopoly,consumer surplus equals

A monopolist faces the inverse demand curve P = 60 - Q.It has variable costs of Q² so that its marginal costs are 2Q,and it has fixed costs of 30.The monopoly's profit maximizing output is

One difference between a monopoly and a competitive firm is that

A monopolist faces the inverse demand curve P = 60 - Q.It has variable costs of Q² so that its marginal costs are 2Q,and it has fixed costs of 30.At its profit maximizing output level,the monopoly's average cost is

The situation in which a person places greater value on a good as fewer and fewer people possess it is called the

Suppose a monopolist's demand curve is P = 60 - Q,and its cost function is C = 10Q + 50 so its marginal cost is 10.If a governmental agency wished to set the price that maximized social welfare,that price would be

The longer a patent lasts,

If the government imposes a specific tax on a monopoly,the consumer's tax incidence

The situation where one person's demand for a good depends on the consumption of the good by others is called a

If the inverse demand function for a monopoly's product is p = 100 - 2Q,then the firm's marginal revenue function is

If a firm is a profit maximizer and faces positive marginal costs,

Which of the following total cost functions suggests the presence of a natural monopoly?

Since a monopoly can set any price it wants,it always makes a profit.

A monopoly incurs a marginal cost of $1 for each unit produced.If the price elasticity of demand equals -2.0,the monopoly maximizes profit by charging a price of

The situation in which one firm can produce the total output of the market at lower cost than several firms is called a

-The above figure shows the demand and cost curves facing a monopoly.The monopoly maximizes profit by selling

The two-period dynamic monopoly model is more useful than the static monopoly model in analyzing monopoly behavior when

-The above figure shows the demand and cost curves facing a monopoly.At the profit-maximizing price,the elasticity of demand equals

Optimal price regulation sets price equal to

Introduction

Supply and Demand

Applying the Supply and Demand Model

Consumer Choice

Applying Consumer Theory

Firms and Production

Costs

Competitive Firms and Markets

Applying the Competitive Model

General Equilibrium and Economic Welfare

Pricing and Advertising

Oligopoly and Monopolistic Competition

Game Theory

Factor Markets

Interest Rates, Investments, and Capital Markets

Uncertainty

Externalities, Open-Access, and Public Goods

Asymmetric Information

Contracts and Moral Hazards

Filters

Exam 11: Monopoly

-The above figure shows the demand and marginal cost curves for a monopoly.Under monopoly,consumer surplus equals

A monopolist faces the inverse demand curve P = 60 - Q.It has variable costs of Q2 so that its marginal costs are 2Q,and it has fixed costs of 30.The monopoly's profit maximizing output is

One difference between a monopoly and a competitive firm is that

A monopolist faces the inverse demand curve P = 60 - Q.It has variable costs of Q2 so that its marginal costs are 2Q,and it has fixed costs of 30.At its profit maximizing output level,the monopoly's average cost is

The situation in which a person places greater value on a good as fewer and fewer people possess it is called the

Suppose a monopolist's demand curve is P = 60 - Q,and its cost function is C = 10Q + 50 so its marginal cost is 10.If a governmental agency wished to set the price that maximized social welfare,that price would be

The longer a patent lasts,

If the government imposes a specific tax on a monopoly,the consumer's tax incidence

The situation where one person's demand for a good depends on the consumption of the good by others is called a

If the inverse demand function for a monopoly's product is p = 100 - 2Q,then the firm's marginal revenue function is

If a firm is a profit maximizer and faces positive marginal costs,

Which of the following total cost functions suggests the presence of a natural monopoly?

Since a monopoly can set any price it wants,it always makes a profit.

A monopoly incurs a marginal cost of $1 for each unit produced.If the price elasticity of demand equals -2.0,the monopoly maximizes profit by charging a price of

The situation in which one firm can produce the total output of the market at lower cost than several firms is called a

-The above figure shows the demand and cost curves facing a monopoly.The monopoly maximizes profit by selling

The two-period dynamic monopoly model is more useful than the static monopoly model in analyzing monopoly behavior when

-The above figure shows the demand and cost curves facing a monopoly.At the profit-maximizing price,the elasticity of demand equals

Optimal price regulation sets price equal to

Introduction

Supply and Demand

Applying the Supply and Demand Model

Consumer Choice

Applying Consumer Theory

Firms and Production

Costs

Competitive Firms and Markets

Applying the Competitive Model

General Equilibrium and Economic Welfare

Pricing and Advertising

Oligopoly and Monopolistic Competition

Game Theory

Factor Markets

Interest Rates, Investments, and Capital Markets

Uncertainty

Externalities, Open-Access, and Public Goods

Asymmetric Information

Contracts and Moral Hazards

Filters

A monopolist faces the inverse demand curve P = 60 - Q.It has variable costs of Q² so that its marginal costs are 2Q,and it has fixed costs of 30.The monopoly's profit maximizing output is

A monopolist faces the inverse demand curve P = 60 - Q.It has variable costs of Q² so that its marginal costs are 2Q,and it has fixed costs of 30.At its profit maximizing output level,the monopoly's average cost is