Question 1

Which of the following is an example of monopoly?

Accepted Answer

A) Shoe industry in the United States. 
B) Local utility industry in a small town. 
C) Newspaper industry in New York City. 
D) Bread industry in New York City. 
A) Shoe industry in the United States. 
B) Local utility industry in a small town. 
C) Newspaper industry in New York City. 
D) Bread industry in New York City.

Question 2

The primary difference between Monopolistic Competition and Perfect Competition is

Accepted Answer

A) the ease of entry and exit into the industry. 
B) the number of firms in the market. 
C) all of the statements associated with this question are correct. 
D) none of the statements associated with this question are correct. 
A) the ease of entry and exit into the industry. 
B) the number of firms in the market. 
C) all of the statements associated with this question are correct. 
D) none of the statements associated with this question are correct.

Question 3

Let the demand function for a product be Q = 50 - 5P.The inverse demand function of this demand function is:

Accepted Answer

A) Q = 25 + P 
B) P = 10 - 0.2Q 
C) P = 10 + 0.2Q 
D) P = 50 - 0.2Q 
A) Q = 25 + P 
B) P = 10 - 0.2Q 
C) P = 10 + 0.2Q 
D) P = 50 - 0.2Q

Question 4

"Monopolistic competition is literally a kind of competition.Hence, there is no deadweight loss in a monopolistically competitive market."

Accepted Answer

A) The statement is by definition correct but empirically incorrect. 
B) The statement is correct. 
C) The statement is incorrect. 
D) None of the statements associated with this question are correct. 
A) The statement is by definition correct but empirically incorrect. 
B) The statement is correct. 
C) The statement is incorrect. 
D) None of the statements associated with this question are correct.

Question 5

The source(s) of monopoly power for a monopoly may be:

Accepted Answer

A) economies of scale. 
B) economies of scope. 
C) patents. 
D) all of the statements associated with this question are correct. 
A) economies of scale. 
B) economies of scope. 
C) patents. 
D) all of the statements associated with this question are correct.

Question 6

You are the manager of a monopoly that faces a demand curve described by P = 85 - 5Q.Your costs are C = 20 + 5Q.The profit-maximizing output for your firm is

Accepted Answer

A) 6. 
B) 5. 
C) 7. 
D) 8. 
A) 6. 
B) 5. 
C) 7. 
D) 8.

Question 7

Which of the following is true about where a profit-maximizing monopoly will produce on a linear demand curve when it has positive marginal costs?

Accepted Answer

A) It will produce output on the inelastic portion of the demand curve. 
B) It will produce output where MR < 0. 
C) It will produce output where MR = 0. 
D) It will produce output on the elastic portion of the demand curve. 
A) It will produce output on the inelastic portion of the demand curve. 
B) It will produce output where MR < 0. 
C) It will produce output where MR = 0. 
D) It will produce output on the elastic portion of the demand curve.

Question 8

Eric provides cheese (H) and milk (M) to the market with the following total cost function C(H, M) = 10 + 0.4 H2 + 0.2M2.The price of cheese and milk in the market are $2 and $5 respectively.Assume that the cheese and milk markets are perfectly competitivWhat output of cheese maximizes profits?

Accepted Answer

A) 2. 
B) 2.5. 
C) 5. 
D) 10. 
A) 2. 
B) 2.5. 
C) 5. 
D) 10.

Question 9

A monopolist estimated that the own-price elasticity of demand for its product is -4.5 and its advertising elasticity of demand is 1.5.Assuming these elasticities are constant, what fraction of the firm's revenues should the firm "reinvest" in advertising to maximize profits?

Accepted Answer

To find the profit-maximizing advertisin

Question 10

You are a manager in a perfectly competitive market.The price in your market is $14.Your total cost curve is C(Q) = 10 + 4Q + 0.5 Q2.What price should you charge in the short-run?

Accepted Answer

A) $12. 
B) $14. 
C) $16. 
D) $18. 
A) $12. 
B) $14. 
C) $16. 
D) $18.

Question 11

Why does the government grant patents to investors? Why does the government give monopoly power to utility companies?

Accepted Answer

The rationale behind granting monopoly p

Question 12

In a monopoly where the marginal revenue and price are, respectively, given by $10 and $20, the price elasticity of demand is

Accepted Answer

A) -1. 
B) -2. 
C) -0.5. 
D) Cannot be determined based on the information in the question. 
A) -1. 
B) -2. 
C) -0.5. 
D) Cannot be determined based on the information in the question.

Question 13

Which of the following is true under monopolistic competition in the long run?

Accepted Answer

A) profits are always zero. 
B) P > MC. 
C) P = MR. 
D) all of the choices are true in monopolistic competition. 
A) profits are always zero. 
B) P > MC. 
C) P = MR. 
D) all of the choices are true in monopolistic competition.

Question 14

If a monopolist has an own-price demand elasticity of -.8, is it maximizing profits? Explain.

Accepted Answer

No.An inelastic demand implies negative

Question 15

You are the manager of a monopoly that faces an inverse demand curve described by P = 200 - 15Q.Your costs are C = 15 + 20Q.The profit-maximizing price is

Accepted Answer

A) $20. 
B) $110. 
C) $135. 
D) $290. 
A) $20. 
B) $110. 
C) $135. 
D) $290.

Question 16

Suppose the cost function for your firm is:

Accepted Answer

@#IMG-DLM& .
a.What is the average fixed cost of p

Question 17

Which of the following features is common to both perfectly competitive markets and monopolistically competitive markets?

Accepted Answer

A) Firms produce homogeneous goods. 
B) Prices are equal to marginal costs in the long-run. 
C) Long run profits are zero. 
D) Prices are above marginal costs in the long-run. 
A) Firms produce homogeneous goods. 
B) Prices are equal to marginal costs in the long-run. 
C) Long run profits are zero. 
D) Prices are above marginal costs in the long-run.

Question 18

You are the manager of a firm that produces output in two plants.The demand for your firm's product is P = 120 - 6Q, where Q = Q1 + Q2.The marginal cost associated with producing in the two plants are MC1 = 2Q1 and MC2 = 4Q2.How much output should be produced in plant 1 in order to maximize profits?

Accepted Answer

A) 3. 
B) 6. 
C) 9. 
D) 12. 
A) 3. 
B) 6. 
C) 9. 
D) 12.

Question 19

You are the manager of a firm that produces output in two plants.The demand for your firm's product is P = 120 - 6Q, where Q = Q1 + Q2.The marginal cost associated with producing in the two plants are MC1 = 2Q1 and MC2 = 4Q2.What price should be charged in order to maximize revenues?

Accepted Answer

A) 6. 
B) 2. 
C) 24. 
D) 60. 
A) 6. 
B) 2. 
C) 24. 
D) 60.

Question 20

Which of the following is true under monopoly?

Accepted Answer

A) Profits are always positive. 
B) P > MC. 
C) P = MR. 
D) All of the choices are true for monopoly. 
A) Profits are always positive. 
B) P > MC. 
C) P = MR. 
D) All of the choices are true for monopoly.

Which of the following is an example of monopoly?

The primary difference between Monopolistic Competition and Perfect Competition is

Let the demand function for a product be Q = 50 - 5P.The inverse demand function of this demand function is:

"Monopolistic competition is literally a kind of competition.Hence, there is no deadweight loss in a monopolistically competitive market."

The source(s) of monopoly power for a monopoly may be:

You are the manager of a monopoly that faces a demand curve described by P = 85 - 5Q.Your costs are C = 20 + 5Q.The profit-maximizing output for your firm is

Which of the following is true about where a profit-maximizing monopoly will produce on a linear demand curve when it has positive marginal costs?

Eric provides cheese (H) and milk (M) to the market with the following total cost function C(H, M) = 10 + 0.4 H² + 0.2M².The price of cheese and milk in the market are $2 and $5 respectively.Assume that the cheese and milk markets are perfectly competitivWhat output of cheese maximizes profits?

A monopolist estimated that the own-price elasticity of demand for its product is -4.5 and its advertising elasticity of demand is 1.5.Assuming these elasticities are constant, what fraction of the firm's revenues should the firm "reinvest" in advertising to maximize profits?

You are a manager in a perfectly competitive market.The price in your market is $14.Your total cost curve is C(Q) = 10 + 4Q + 0.5 Q².What price should you charge in the short-run?

Why does the government grant patents to investors? Why does the government give monopoly power to utility companies?

In a monopoly where the marginal revenue and price are, respectively, given by $10 and $20, the price elasticity of demand is

Which of the following is true under monopolistic competition in the long run?

If a monopolist has an own-price demand elasticity of -.8, is it maximizing profits? Explain.

You are the manager of a monopoly that faces an inverse demand curve described by P = 200 - 15Q.Your costs are C = 15 + 20Q.The profit-maximizing price is

Suppose the cost function for your firm is:

Which of the following features is common to both perfectly competitive markets and monopolistically competitive markets?

You are the manager of a firm that produces output in two plants.The demand for your firm's product is P = 120 - 6Q, where Q = Q₁ + Q₂.The marginal cost associated with producing in the two plants are MC₁ = 2Q₁ and MC₂ = 4Q₂.What price should be charged in order to maximize revenues?

Which of the following is true under monopoly?

The Fundamentals of Managerial Economics

Market Forces: Demand and Supply

Quantitative Demand Analysis

The Theory of Individual Behavior

The Production Process and Costs

The Organization of the Firm

The Nature of Industry

Basic Oligopoly Models

Game Theory: Inside Oligopoly

Pricing Strategies for Firms With Market Power

The Economics of Information

Advanced Topics in Business Strategy

A Managers Guide to Government in the Marketplace

Filters

Exam 8: Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets

Which of the following is an example of monopoly?

The primary difference between Monopolistic Competition and Perfect Competition is

Let the demand function for a product be Q = 50 - 5P.The inverse demand function of this demand function is:

"Monopolistic competition is literally a kind of competition.Hence, there is no deadweight loss in a monopolistically competitive market."

The source(s) of monopoly power for a monopoly may be:

You are the manager of a monopoly that faces a demand curve described by P = 85 - 5Q.Your costs are C = 20 + 5Q.The profit-maximizing output for your firm is

Which of the following is true about where a profit-maximizing monopoly will produce on a linear demand curve when it has positive marginal costs?

Eric provides cheese (H) and milk (M) to the market with the following total cost function C(H, M) = 10 + 0.4 H2 + 0.2M2.The price of cheese and milk in the market are $2 and $5 respectively.Assume that the cheese and milk markets are perfectly competitivWhat output of cheese maximizes profits?

A monopolist estimated that the own-price elasticity of demand for its product is -4.5 and its advertising elasticity of demand is 1.5.Assuming these elasticities are constant, what fraction of the firm's revenues should the firm "reinvest" in advertising to maximize profits?

You are a manager in a perfectly competitive market.The price in your market is $14.Your total cost curve is C(Q) = 10 + 4Q + 0.5 Q2.What price should you charge in the short-run?

Why does the government grant patents to investors? Why does the government give monopoly power to utility companies?

In a monopoly where the marginal revenue and price are, respectively, given by $10 and $20, the price elasticity of demand is

Which of the following is true under monopolistic competition in the long run?

If a monopolist has an own-price demand elasticity of -.8, is it maximizing profits? Explain.

You are the manager of a monopoly that faces an inverse demand curve described by P = 200 - 15Q.Your costs are C = 15 + 20Q.The profit-maximizing price is

Suppose the cost function for your firm is:

Which of the following features is common to both perfectly competitive markets and monopolistically competitive markets?

You are the manager of a firm that produces output in two plants.The demand for your firm's product is P = 120 - 6Q, where Q = Q1 + Q2.The marginal cost associated with producing in the two plants are MC1 = 2Q1 and MC2 = 4Q2.What price should be charged in order to maximize revenues?

Which of the following is true under monopoly?

The Fundamentals of Managerial Economics

Market Forces: Demand and Supply

Quantitative Demand Analysis

The Theory of Individual Behavior

The Production Process and Costs

The Organization of the Firm

The Nature of Industry

Basic Oligopoly Models

Game Theory: Inside Oligopoly

Pricing Strategies for Firms With Market Power

The Economics of Information

Advanced Topics in Business Strategy

A Managers Guide to Government in the Marketplace

Filters

Eric provides cheese (H) and milk (M) to the market with the following total cost function C(H, M) = 10 + 0.4 H² + 0.2M².The price of cheese and milk in the market are $2 and $5 respectively.Assume that the cheese and milk markets are perfectly competitivWhat output of cheese maximizes profits?

You are a manager in a perfectly competitive market.The price in your market is $14.Your total cost curve is C(Q) = 10 + 4Q + 0.5 Q².What price should you charge in the short-run?

You are the manager of a firm that produces output in two plants.The demand for your firm's product is P = 120 - 6Q, where Q = Q₁ + Q₂.The marginal cost associated with producing in the two plants are MC₁ = 2Q₁ and MC₂ = 4Q₂.What price should be charged in order to maximize revenues?