Question 1

If the demand for a monopoly's output shifts rightward,the change in quantity produced is not predictable because

Accepted Answer

A)  the monopoly is a profit maximizer. 
B)  the monopoly is a price taker. 
C)  the monopoly has no supply curve. 
D)  the monopoly's marginal cost curve might not be upward sloping. 
A)  the monopoly is a profit maximizer. 
B)  the monopoly is a price taker. 
C)  the monopoly has no supply curve. 
D)  the monopoly's marginal cost curve might not be upward sloping.

Question 2

If the inverse demand curve a monopoly faces is p = 100 - 2Q,MC is constant at 16,and the government imposes an $8 per unit specific tax on the monopoly,the deadweight loss due to both the monopoly and the tax is

Accepted Answer

A)  $529. 
B)  $1332. 
C)  $1764. 
D)  $441. 
A)  $529. 
B)  $1332. 
C)  $1764. 
D)  $441.

Question 3

Humana Hospital's price/marginal cost ratio of 2.3 is most likely to decline if

Accepted Answer

A)  the number of nearby hospitals increases. 
B)  the number of nearby hospitals decreases. 
C)  the demand curve for hospital services shifts rightward. 
D)  the demand curve for hospital services becomes steeper. 
A)  the number of nearby hospitals increases. 
B)  the number of nearby hospitals decreases. 
C)  the demand curve for hospital services shifts rightward. 
D)  the demand curve for hospital services becomes steeper.

Question 4

At an output level of 100,a monopolist faces MC = 15 and MR = 17.At output level q = 101,the monopolist's MC = 16 and MR = 15.To maximize profits,the firm

Accepted Answer

A)  should produce 100 units. 
B)  should produce 101 units. 
C)  cannot maximize profits. 
D)  is not a monopoly. 
A)  should produce 100 units. 
B)  should produce 101 units. 
C)  cannot maximize profits. 
D)  is not a monopoly.

Question 5

A profit-maximizing monopolist will never operate in the portion of the demand curve with price elasticity equal to

Accepted Answer

A)  -3. 
B)  -1. 
C)  -1/3. 
D)  Any of the above-the price elasticity does not matter. 
A)  -3. 
B)  -1. 
C)  -1/3. 
D)  Any of the above-the price elasticity does not matter.

Question 6

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.If a governmental agency imposes an $8 per unit specific tax on output,the deadweight loss from both the monopoly and the tax is

Accepted Answer

A)  $37.50. 
B)  $73.00 
C)  $526.50. 
D)  $562.50. 
A)  $37.50. 
B)  $73.00 
C)  $526.50. 
D)  $562.50.

Question 7

A dominant firm's residual demand curve is

Accepted Answer

A)  the horizontal difference between the market demand curve and the supply curve of the fringe firms. 
B)  the vertical difference between the market demand curve and the supply curve of the fringe firms. 
C)  the demand curve left for the fringe firms after the dominant firm has determined an output level. 
D)  None of the above. 
A)  the horizontal difference between the market demand curve and the supply curve of the fringe firms. 
B)  the vertical difference between the market demand curve and the supply curve of the fringe firms. 
C)  the demand curve left for the fringe firms after the dominant firm has determined an output level. 
D)  None of the above.

Question 8

If the government desires to raise a certain amount of revenue by taxing a monopoly,an ad valorem tax will

Accepted Answer

A)  generate the same loss of consumer surplus as a specific tax. 
B)  generate a greater loss of consumer surplus than a specific tax. 
C)  generate a smaller loss of consumer surplus than a specific tax. 
D)  generate no loss of consumer surplus. 
A)  generate the same loss of consumer surplus as a specific tax. 
B)  generate a greater loss of consumer surplus than a specific tax. 
C)  generate a smaller loss of consumer surplus than a specific tax. 
D)  generate no loss of consumer surplus.

Question 9

A monopoly always operates in the inelastic portion of its demand curve.

Accepted Answer

A) True 
 B)False

Question 10

Suppose a patent is granted for a product that has the linear demand curve P = a - b Q.The constant marginal cost of producing this product is $50 per unit,a unit sells for $150,and consumers purchase 100 units of the good at that price.If the monopoly is maximizing profit,b equals

Accepted Answer

A)  1. 
B)  1.5. 
C)  2. 
D)  2.5. 
A)  1. 
B)  1.5. 
C)  2. 
D)  2.5.

Question 11

If the demand for a monopoly's output shifts rightward,the change in quantity produced is

Accepted Answer

A)  positive. 
B)  negative. 
C)  zero. 
D)  not predictable. 
A)  positive. 
B)  negative. 
C)  zero. 
D)  not predictable.

Question 12

Suppose that market demand for a good is Q = 480 - 2p.The marginal cost is MC = 2Q.Calculate the deadweight loss resulting from a monopoly in this market.

Accepted Answer

First,solve for the competitive equilibr

Question 13

Limited government licenses that create a monopoly do so because

Accepted Answer

A)  the license generates a marginal cost advantage. 
B)  the monopoly will become a natural monopoly. 
C)  a barrier to enter the market exists. 
D)  All of the above. 
A)  the license generates a marginal cost advantage. 
B)  the monopoly will become a natural monopoly. 
C)  a barrier to enter the market exists. 
D)  All of the above.

Question 14

The Lerner Index is

Accepted Answer

A)  the ratio of the difference between price and marginal cost to price. 
B)  equal to (Price - M
C) /Price. 
C)  a measure of market power. 
D)  All of the above. 
A)  the ratio of the difference between price and marginal cost to price. 
B)  equal to (Price - M
C) /Price. 
C)  a measure of market power. 
D)  All of the above.

Question 15

If the monopoly's demand curve intersects the AVC curve at minimum AVC,the firm will shut down.

Accepted Answer

A) True 
 B)False

Question 16

At the current level of output,a firm's marginal cost equals 16 and marginal revenue equals 10.The firm

Accepted Answer

A)  is producing the profit-maximizing amount. 
B)  should produce more. 
C)  should produce less. 
D)  Not enough information. 
A)  is producing the profit-maximizing amount. 
B)  should produce more. 
C)  should produce less. 
D)  Not enough information.

Question 17

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 price is

Accepted Answer

A)  55. 
B)  50. 
C)  45. 
D)  40. 
A)  55. 
B)  50. 
C)  45. 
D)  40.

Question 18

In general,the quantity that maximizes revenue for the monopolist

Accepted Answer

A)  is greater than the quantity that maximizes profit. 
B)  is less than the quantity that maximizes profit. 
C)  is the same as the quantity that maximizes profit. 
D)  is illegal according to anti-trust statutes. 
A)  is greater than the quantity that maximizes profit. 
B)  is less than the quantity that maximizes profit. 
C)  is the same as the quantity that maximizes profit. 
D)  is illegal according to anti-trust statutes.

Question 19

When would a profit-maximizing monopolist that operates with no government intervention choose to produce the competitive level of output?

Accepted Answer

A monopolist that faces a perf

Question 20

The introduction of satellite television systems would cause the demand curve for cable television to be

Accepted Answer

A)  more elastic. 
B)  less elastic. 
C)  perfectly inelastic. 
D)  unchanged. 
A)  more elastic. 
B)  less elastic. 
C)  perfectly inelastic. 
D)  unchanged.

If the demand for a monopoly's output shifts rightward,the change in quantity produced is not predictable because

If the inverse demand curve a monopoly faces is p = 100 - 2Q,MC is constant at 16,and the government imposes an $8 per unit specific tax on the monopoly,the deadweight loss due to both the monopoly and the tax is

Humana Hospital's price/marginal cost ratio of 2.3 is most likely to decline if

At an output level of 100,a monopolist faces MC = 15 and MR = 17.At output level q = 101,the monopolist's MC = 16 and MR = 15.To maximize profits,the firm

A profit-maximizing monopolist will never operate in the portion of the demand curve with price elasticity equal to

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.If a governmental agency imposes an $8 per unit specific tax on output,the deadweight loss from both the monopoly and the tax is

A dominant firm's residual demand curve is

If the government desires to raise a certain amount of revenue by taxing a monopoly,an ad valorem tax will

A monopoly always operates in the inelastic portion of its demand curve.

Suppose a patent is granted for a product that has the linear demand curve P = a - b Q.The constant marginal cost of producing this product is $50 per unit,a unit sells for $150,and consumers purchase 100 units of the good at that price.If the monopoly is maximizing profit,b equals

If the demand for a monopoly's output shifts rightward,the change in quantity produced is

Suppose that market demand for a good is Q = 480 - 2p.The marginal cost is MC = 2Q.Calculate the deadweight loss resulting from a monopoly in this market.

Limited government licenses that create a monopoly do so because

The Lerner Index is

If the monopoly's demand curve intersects the AVC curve at minimum AVC,the firm will shut down.

At the current level of output,a firm's marginal cost equals 16 and marginal revenue equals 10.The firm

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 price is

In general,the quantity that maximizes revenue for the monopolist

When would a profit-maximizing monopolist that operates with no government intervention choose to produce the competitive level of output?

The introduction of satellite television systems would cause the demand curve for cable television to be

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

If the demand for a monopoly's output shifts rightward,the change in quantity produced is not predictable because

If the inverse demand curve a monopoly faces is p = 100 - 2Q,MC is constant at 16,and the government imposes an $8 per unit specific tax on the monopoly,the deadweight loss due to both the monopoly and the tax is

Humana Hospital's price/marginal cost ratio of 2.3 is most likely to decline if

At an output level of 100,a monopolist faces MC = 15 and MR = 17.At output level q = 101,the monopolist's MC = 16 and MR = 15.To maximize profits,the firm

A profit-maximizing monopolist will never operate in the portion of the demand curve with price elasticity equal to

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.If a governmental agency imposes an $8 per unit specific tax on output,the deadweight loss from both the monopoly and the tax is

A dominant firm's residual demand curve is

If the government desires to raise a certain amount of revenue by taxing a monopoly,an ad valorem tax will

A monopoly always operates in the inelastic portion of its demand curve.

Suppose a patent is granted for a product that has the linear demand curve P = a - b Q.The constant marginal cost of producing this product is $50 per unit,a unit sells for $150,and consumers purchase 100 units of the good at that price.If the monopoly is maximizing profit,b equals

If the demand for a monopoly's output shifts rightward,the change in quantity produced is

Suppose that market demand for a good is Q = 480 - 2p.The marginal cost is MC = 2Q.Calculate the deadweight loss resulting from a monopoly in this market.

Limited government licenses that create a monopoly do so because

The Lerner Index is

If the monopoly's demand curve intersects the AVC curve at minimum AVC,the firm will shut down.

At the current level of output,a firm's marginal cost equals 16 and marginal revenue equals 10.The firm

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 price is

In general,the quantity that maximizes revenue for the monopolist

When would a profit-maximizing monopolist that operates with no government intervention choose to produce the competitive level of output?

The introduction of satellite television systems would cause the demand curve for cable television to be

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.If a governmental agency imposes an $8 per unit specific tax on output,the deadweight loss from both the monopoly and the tax 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.The monopoly's profit maximizing price is