Question 1

Exhibit 13-1   Refer to Exhibit 13-1.The profit-maximizing firm will produce at what level of output?

Accepted Answer

A)  0Q1 
B)  0Q2 
C)  0Q3 
D)  None of the above. 
A)  0Q1 
B)  0Q2 
C)  0Q3 
D)  None of the above.

Question 2

Which of the following is true of monopoly but not true of perfect competition?

Accepted Answer

A)  Firms can potentially earn economic profits in the short run. 
B)  Total revenue is the product of price times the quantity sold. 
C)  Firms can potentially earn economic profits in the long run. 
D)  A profit-maximizing firm will shut down if price falls below the average variable cost. 
A)  Firms can potentially earn economic profits in the short run. 
B)  Total revenue is the product of price times the quantity sold. 
C)  Firms can potentially earn economic profits in the long run. 
D)  A profit-maximizing firm will shut down if price falls below the average variable cost.

Question 3

Which of the following is not a source of monopoly?

Accepted Answer

A)  technologies that allow each of many small firms to produce at the same per-unit costs as one large firm 
B)  patents 
C)  control of crucial inputs 
D)  government licensing requirements 
A)  technologies that allow each of many small firms to produce at the same per-unit costs as one large firm 
B)  patents 
C)  control of crucial inputs 
D)  government licensing requirements

Question 4

Exhibit 13-5   Refer to Exhibit 13-5.Identify the area of the welfare loss due to monopoly pricing and output practices.

Accepted Answer

A)  ADB 
B)  DCB 
C)  ACB 
D)  DAP1P4 
A)  ADB 
B)  DCB 
C)  ACB 
D)  DAP1P4

Question 5

Exhibit 13-2   Refer to Exhibit 13-2.The profit-maximizing firm will produce at what level of output?

Accepted Answer

A)  0Q1 
B)  0Q2 
C)  0Q3 
D)  zero units 
A)  0Q1 
B)  0Q2 
C)  0Q3 
D)  zero units

Question 6

The consumer surplus lost because monopolists restrict the production of output represents a welfare loss because:

Accepted Answer

A)  it is transferred to producers in the form of profit. 
B)  consumers pay a higher price than they would in a more competitive market. 
C)  society is not using its scarce resources in the best way possible. 
D)  of both a. and b., but not c. 
A)  it is transferred to producers in the form of profit. 
B)  consumers pay a higher price than they would in a more competitive market. 
C)  society is not using its scarce resources in the best way possible. 
D)  of both a. and b., but not c.

Question 7

If the average total cost curve is always above the demand curve of a monopolist:

Accepted Answer

A)  that monopolist will suffer economic losses. 
B)  entry will occur, forcing the monopolist to reduce price and expand output. 
C)  the monopolist will earn an economic profit. 
D)  the monopolist must be producing inefficiently. 
A)  that monopolist will suffer economic losses. 
B)  entry will occur, forcing the monopolist to reduce price and expand output. 
C)  the monopolist will earn an economic profit. 
D)  the monopolist must be producing inefficiently.

Question 8

In both perfect competition and monopoly,a firm:

Accepted Answer

A)  maximizes profit by equating marginal revenue to marginal cost. 
B)  will shut down in the short run if price is less than average variable cost. 
C)  will always earn a zero economic profit. 
D)  will be characterized by both (a) and (b). 
A)  maximizes profit by equating marginal revenue to marginal cost. 
B)  will shut down in the short run if price is less than average variable cost. 
C)  will always earn a zero economic profit. 
D)  will be characterized by both (a) and (b).

Question 9

A welfare loss occurs when a monopolist chooses not to produce units of output that are of greater marginal value to consumers than the marginal cost of producing them.

Accepted Answer

A) True 
 B)False

Question 10

Does peak load pricing lead to greater efficiency? Explain.

Accepted Answer

Peak load pricing leads to greater effic

Question 11

In the short run,a monopolist:

Accepted Answer

A)  always suffers an economic loss. 
B)  always earns an economic profit. 
C)  always earns a normal rate of return. 
D)  may make an economic loss, an economic profit, or zero economic profits. 
A)  always suffers an economic loss. 
B)  always earns an economic profit. 
C)  always earns a normal rate of return. 
D)  may make an economic loss, an economic profit, or zero economic profits.

Question 12

A natural monopoly exists if:

Accepted Answer

A)  several former competitors merge to become the only producer in the industry. 
B)  average cost of production is lowest when only one firm produces the entire industry output. 
C)  one firm controls the supply of an essential input used by the industry. 
D)  a firm has a patent or copyright. 
A)  several former competitors merge to become the only producer in the industry. 
B)  average cost of production is lowest when only one firm produces the entire industry output. 
C)  one firm controls the supply of an essential input used by the industry. 
D)  a firm has a patent or copyright.

Question 13

A monopolist restricts output and charges a higher price relative to what would occur if a market were perfectly competitive.

Accepted Answer

A) True 
 B)False

Question 14

When a monopolist practices price discrimination,consumer surplus tends to increase.

Accepted Answer

A) True 
 B)False

Question 15

Based on the table below what is the marginal revenue of the 14th unit of output?

Accepted Answer

A)  $0.25 
B)  $46.00 
C)  $46.50 
D)  $49.75 
A)  $0.25 
B)  $46.00 
C)  $46.50 
D)  $49.75

Question 16

Exhibit 13-6   Refer to Exhibit 13-6.In perfect competition,deadweight loss is area:

Accepted Answer

A)  a 
B)  a + b + c 
C)  a + b + c + d + e 
D)  zero 
A)  a 
B)  a + b + c 
C)  a + b + c + d + e 
D)  zero

Question 17

Which of the following is likely in a monopolized market?

Accepted Answer

A)  a price that exceeds marginal cost 
B)  a price that exceeds marginal revenue 
C)  a welfare loss due to the restriction of output 
D)  all of the above 
A)  a price that exceeds marginal cost 
B)  a price that exceeds marginal revenue 
C)  a welfare loss due to the restriction of output 
D)  all of the above

Question 18

What portion of the demand curve will profit-maximizing monopolists choose to operate on: the inelastic portion or elastic portion? Why?

Accepted Answer

When demand is inelastic,quantity demand

Question 19

For a profit-maximizing monopolist,the price of a product is:

Accepted Answer

A)  always equal to marginal revenue. 
B)  always greater than marginal revenue. 
C)  always less than marginal revenue. 
D)  always equal to the average total cost of production. 
A)  always equal to marginal revenue. 
B)  always greater than marginal revenue. 
C)  always less than marginal revenue. 
D)  always equal to the average total cost of production.

Question 20

Which of the following is not true?

Accepted Answer

A)  The monopolist, like the perfect competitor, will maximize profits at that output where MR = MC. 
B)  The monopolist, unlike the perfect competitor, will not maximize profits at that output where P = MC. 
C)  If a monopoly is earning economic profits, they will not be eliminated by entry into the industry. 
D)  A monopolist produces an output where the value to society from the last unit produced is greater than its marginal cost. 
A)  The monopolist, like the perfect competitor, will maximize profits at that output where MR = MC. 
B)  The monopolist, unlike the perfect competitor, will not maximize profits at that output where P = MC. 
C)  If a monopoly is earning economic profits, they will not be eliminated by entry into the industry. 
D)  A monopolist produces an output where the value to society from the last unit produced is greater than its marginal cost.

Exam 13: Monopoly and Antitrust

Exhibit 13-1 Refer to Exhibit 13-1.The profit-maximizing firm will produce at what level of output?

Which of the following is true of monopoly but not true of perfect competition?

Which of the following is not a source of monopoly?

Exhibit 13-5 Refer to Exhibit 13-5.Identify the area of the welfare loss due to monopoly pricing and output practices.

Exhibit 13-2 Refer to Exhibit 13-2.The profit-maximizing firm will produce at what level of output?

The consumer surplus lost because monopolists restrict the production of output represents a welfare loss because:

If the average total cost curve is always above the demand curve of a monopolist:

In both perfect competition and monopoly,a firm:

A welfare loss occurs when a monopolist chooses not to produce units of output that are of greater marginal value to consumers than the marginal cost of producing them.

Does peak load pricing lead to greater efficiency? Explain.

In the short run,a monopolist:

A natural monopoly exists if:

A monopolist restricts output and charges a higher price relative to what would occur if a market were perfectly competitive.

When a monopolist practices price discrimination,consumer surplus tends to increase.

Based on the table below what is the marginal revenue of the 14th unit of output?

Exhibit 13-6 Refer to Exhibit 13-6.In perfect competition,deadweight loss is area:

Which of the following is likely in a monopolized market?

What portion of the demand curve will profit-maximizing monopolists choose to operate on: the inelastic portion or elastic portion? Why?

For a profit-maximizing monopolist,the price of a product is:

Which of the following is not true?

The Role and Method of Economics

Economics: Eight Powerful Ideas

Scarcity, Trade-Offs, and Production Possibilities

Demand, Supply, and Market Equilibrium

Markets in Motion and Price Controls

Elasticities

Market Efficiency and Welfare

Market Failure

Public Finance and Public Choice

Consumer Choice Theory

The Firm: Production and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition and Product Differentiation

Oligopoly and Strategic Behavior

The Markets for Labor, Capital, and Land

Income, Poverty, and Health Care

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Measuring Economic Performance

Economic Growth in the Global Economy

Financial Markets, Saving, and Investment

Aggregate Demand and Aggregate Supply

The Aggregate Expenditure Model

Monetary Institutions

The Federal Reserve System and Monetary Policy

Issues in Macroeconomic Theory and Policy

International Trade

International Finance

Filters

Based on the table below what is the marginal revenue of the 14^th unit of output?