Question 1

A monopolist would charge ____ prices and produce ____ output than would exist under perfect competition.

Accepted Answer

A)  higher; less. 
B)  lower; more. 
C)  higher; more. 
D)  the same; the same. 
A)  higher; less. 
B)  lower; more. 
C)  higher; more. 
D)  the same; the same.

Question 2

In perfect price discrimination,consumer surplus is zero because each consumer pays:

Accepted Answer

A)  the market price. 
B)  the cost price. 
C)  peak load price. 
D)  the reservation price 
A)  the market price. 
B)  the cost price. 
C)  peak load price. 
D)  the reservation price

Question 3

Exhibit 13-6   Refer to Exhibit 13-6.In single price monopoly,consumer surplus is area:

Accepted Answer

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

Question 4

Which of the following is true for a monopolist but not for a perfectly competitive firm?

Accepted Answer

A)  Marginal revenue is less than price. 
B)  Economic profits could be earned in the long run. 
C)  Profit maximization occurs at the output level where marginal revenue equals marginal cost. 
D)  (a) and (b) are true for a monopolist but not for a perfectly competitive firm. 
A)  Marginal revenue is less than price. 
B)  Economic profits could be earned in the long run. 
C)  Profit maximization occurs at the output level where marginal revenue equals marginal cost. 
D)  (a) and (b) are true for a monopolist but not for a perfectly competitive firm.

Question 5

If the demand curve facing a monopoly was 1 unit at $7,2 units at $6,3 units at $5,4 units at $4,and 5 units at $3,at the point along the curve where 3 units are being sold,the elasticity of demand:

Accepted Answer

A)  is greater than one. 
B)  is equal to one. 
C)  is less than one. 
D)  cannot be determined from the above information. 
A)  is greater than one. 
B)  is equal to one. 
C)  is less than one. 
D)  cannot be determined from the above information.

Question 6

Exhibit 13-6   Refer to Exhibit 13-6.In perfect competition,producer surplus is area:

Accepted Answer

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

Question 7

Exhibit 13-7   Refer to Exhibit 13-7.What price should be charged during the non-peak period to achieve efficiency?

Accepted Answer

A)  3 cents 
B)  4 cents 
C)  5 cents 
D)  0 cents 
A)  3 cents 
B)  4 cents 
C)  5 cents 
D)  0 cents

Question 8

Barriers that prevent the entry of new firms may arise because:

Accepted Answer

A)  economies of scale exist over a substantial range of industry demand. 
B)  marginal revenue is less than average total cost. 
C)  the government protects some firms from competition. 
D)  of both (a) and (c). 
A)  economies of scale exist over a substantial range of industry demand. 
B)  marginal revenue is less than average total cost. 
C)  the government protects some firms from competition. 
D)  of both (a) and (c).

Question 9

Average cost regulation of a natural monopoly:

Accepted Answer

A)  generates economic losses for the seller. 
B)  necessitates a subsidy payment to the firm. 
C)  creates incentives that tend to shift ATC curves in an upward direction. 
D)  imposes a price that is less than marginal cost. 
A)  generates economic losses for the seller. 
B)  necessitates a subsidy payment to the firm. 
C)  creates incentives that tend to shift ATC curves in an upward direction. 
D)  imposes a price that is less than marginal cost.

Question 10

A monopoly is inefficient because:

Accepted Answer

A)  consumers are forced to pay higher prices for products. 
B)  firms are able to earn economic profits. 
C)  the cost of increased production is less than the value that society places on it. 
D)  price exceeds marginal revenue. 
A)  consumers are forced to pay higher prices for products. 
B)  firms are able to earn economic profits. 
C)  the cost of increased production is less than the value that society places on it. 
D)  price exceeds marginal revenue.

Question 11

Say that a monopolist is currently operating on the inelastic region of its demand curve.To maximize its profits,it should:

Accepted Answer

A)  raise its prices. 
B)  lower its prices. 
C)  maintain its current price. 
D)  either raise or lower its prices, depending on how high its marginal cost curve is. 
A)  raise its prices. 
B)  lower its prices. 
C)  maintain its current price. 
D)  either raise or lower its prices, depending on how high its marginal cost curve is.

Question 12

Pure monopoly:

Accepted Answer

A)  is characterized by a single supplier. 
B)  is a market structure in which no close substitute products are available. 
C)  exists when entry and survival of potential competitors is extremely unlikely. 
D)  is characterized by all of the above. 
A)  is characterized by a single supplier. 
B)  is a market structure in which no close substitute products are available. 
C)  exists when entry and survival of potential competitors is extremely unlikely. 
D)  is characterized by all of the above.

Question 13

Average-cost pricing for a natural monopoly will:

Accepted Answer

A)  result in the socially efficient level of output. 
B)  result in a less than socially efficient level of output. 
C)  result in a greater than socially efficient level of output. 
D)  result in the firm suffering economic losses. 
A)  result in the socially efficient level of output. 
B)  result in a less than socially efficient level of output. 
C)  result in a greater than socially efficient level of output. 
D)  result in the firm suffering economic losses.

Question 14

A profit-maximizing monopolist,if producing at all,chooses a level of output where:

Accepted Answer

A)  total revenue is maximized. 
B)  total cost is minimized. 
C)  average total cost is minimized. 
D)  marginal revenue equals marginal cost. 
A)  total revenue is maximized. 
B)  total cost is minimized. 
C)  average total cost is minimized. 
D)  marginal revenue equals marginal cost.

Question 15

A price-discriminating monopolist will tend to charge a higher price to senior citizens if it believes that senior citizens:

Accepted Answer

A)  have a lower willingness to pay than other demanders. 
B)  have a greater willingness to pay than other demanders. 
C)  have very elastic demand curves. 
D)  have horizontal demand curves. 
A)  have a lower willingness to pay than other demanders. 
B)  have a greater willingness to pay than other demanders. 
C)  have very elastic demand curves. 
D)  have horizontal demand curves.

Question 16

For any monopolist with a positive marginal cost of production,its demand curve at its profit maximizing level:

Accepted Answer

A)  would be elastic. 
B)  would be unit elastic. 
C)  would be inelastic. 
D)  could be either elastic or inelastic. 
A)  would be elastic. 
B)  would be unit elastic. 
C)  would be inelastic. 
D)  could be either elastic or inelastic.

Question 17

Exhibit 13-5   Refer to Exhibit 13-5.What quantity of output would a profit-maximizing monopolist produce?

Accepted Answer

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

Question 18

Reservation price is:

Accepted Answer

A)  the maximum amount a customer would be willing to pay for a unit of output. 
B)  the minimum price at which a seller would be willing to supply the product. 
C)  always equal to the marginal cost. 
D)  the same as market price. 
A)  the maximum amount a customer would be willing to pay for a unit of output. 
B)  the minimum price at which a seller would be willing to supply the product. 
C)  always equal to the marginal cost. 
D)  the same as market price.

Question 19

Exhibit 13-4 The following diagram contains information on cost and revenue curves facing a regulated monopoly.   Refer to Exhibit 13-4.If the government is able to regulate the monopolist using average-cost pricing,what price and output combinations are expected to result?

Accepted Answer

A)  P5 and Q2 
B)  P2 and Q2 
C)  P4 and Q3 
D)  P6 and Q4 
A)  P5 and Q2 
B)  P2 and Q2 
C)  P4 and Q3 
D)  P6 and Q4

Question 20

The demand curve faced by a monopolist is the same as the marginal revenue curve.

Accepted Answer

A) True 
 B)False

Exam 13: Monopoly and Antitrust

A monopolist would charge ____ prices and produce ____ output than would exist under perfect competition.

In perfect price discrimination,consumer surplus is zero because each consumer pays:

Exhibit 13-6 Refer to Exhibit 13-6.In single price monopoly,consumer surplus is area:

Which of the following is true for a monopolist but not for a perfectly competitive firm?

If the demand curve facing a monopoly was 1 unit at $7,2 units at $6,3 units at $5,4 units at $4,and 5 units at $3,at the point along the curve where 3 units are being sold,the elasticity of demand:

Exhibit 13-6 Refer to Exhibit 13-6.In perfect competition,producer surplus is area:

Exhibit 13-7 Refer to Exhibit 13-7.What price should be charged during the non-peak period to achieve efficiency?

Barriers that prevent the entry of new firms may arise because:

Average cost regulation of a natural monopoly:

A monopoly is inefficient because:

Say that a monopolist is currently operating on the inelastic region of its demand curve.To maximize its profits,it should:

Pure monopoly:

Average-cost pricing for a natural monopoly will:

A profit-maximizing monopolist,if producing at all,chooses a level of output where:

A price-discriminating monopolist will tend to charge a higher price to senior citizens if it believes that senior citizens:

For any monopolist with a positive marginal cost of production,its demand curve at its profit maximizing level:

Exhibit 13-5 Refer to Exhibit 13-5.What quantity of output would a profit-maximizing monopolist produce?

Reservation price is:

Exhibit 13-4 The following diagram contains information on cost and revenue curves facing a regulated monopoly. Refer to Exhibit 13-4.If the government is able to regulate the monopolist using average-cost pricing,what price and output combinations are expected to result?

The demand curve faced by a monopolist is the same as the marginal revenue curve.

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

A monopolist would charge prices and produce output than would exist under perfect competition.