Question 1

Based on the table below what is the marginal revenue of the 28th unit of output?

Accepted Answer

A)  -$16.50 
B)  -$13.50 
C)  $13.50 
D)  $16.50 
A)  -$16.50 
B)  -$13.50 
C)  $13.50 
D)  $16.50

Question 2

In a perfectly competitive industry,the industry demand curve is ____,while in a monopolistic industry,the industry demand curve is:

Accepted Answer

A)  horizontal; downward sloping. 
B)  downward sloping; horizontal. 
C)  downward sloping; downward sloping. 
D)  horizontal; horizontal. 
A)  horizontal; downward sloping. 
B)  downward sloping; horizontal. 
C)  downward sloping; downward sloping. 
D)  horizontal; horizontal.

Question 3

A natural monopoly exists when one large firm can produce a product at a lower per unit cost than can smaller firms.

Accepted Answer

A) True 
 B)False

Question 4

Exhibit 13-4 The following diagram contains information on cost and revenue curves facing a regulated monopoly.   Refer to Exhibit 13-4.The socially efficient level of output would occur where:

Accepted Answer

A)  price equals average total cost at Q3. 
B)  price equals marginal cost at Q4. 
C)  price equals marginal revenue at Q1. 
D)  marginal revenue equals marginal cost at Q2. 
A)  price equals average total cost at Q3. 
B)  price equals marginal cost at Q4. 
C)  price equals marginal revenue at Q1. 
D)  marginal revenue equals marginal cost at Q2.

Question 5

Peak load pricing - which causes consumers to pay higher prices at certain times - leads to greater efficiency.

Accepted Answer

A) True 
 B)False

Question 6

Monopoly results in a welfare loss because:

Accepted Answer

A)  marginal revenue does not equal marginal cost. 
B)  the monopolist restricts output below the socially efficient level. 
C)  average variable cost is not minimized. 
D)  total cost is not minimized. 
A)  marginal revenue does not equal marginal cost. 
B)  the monopolist restricts output below the socially efficient level. 
C)  average variable cost is not minimized. 
D)  total cost is not minimized.

Question 7

A natural monopolist will voluntarily choose to produce at the point of allocative efficiency.

Accepted Answer

A) True 
 B)False

Question 8

If a profit-maximizing monopolist finds that marginal cost is increasing and exceeds marginal revenue,it should:

Accepted Answer

A)  increase output and decrease price. 
B)  increase price and decrease output. 
C)  decrease both price and output. 
D)  increase both price and output. 
A)  increase output and decrease price. 
B)  increase price and decrease output. 
C)  decrease both price and output. 
D)  increase both price and output.

Question 9

The patent system is intended to:

Accepted Answer

A)  prevent natural monopolies from unfairly exploiting their cost advantages. 
B)  reward innovators by granting them temporary monopolies. 
C)  spread information among firms as quickly and economically as possible. 
D)  give small businesses a competitive edge over larger businesses. 
A)  prevent natural monopolies from unfairly exploiting their cost advantages. 
B)  reward innovators by granting them temporary monopolies. 
C)  spread information among firms as quickly and economically as possible. 
D)  give small businesses a competitive edge over larger businesses.

Question 10

Which of the following is not potentially a barrier to entry into a product market?

Accepted Answer

A)  patent protection on the design of the product 
B)  the absence of economies of scale in the product market 
C)  government licensing of the product's producers 
D)  the control of a crucial input necessary to produce the product 
A)  patent protection on the design of the product 
B)  the absence of economies of scale in the product market 
C)  government licensing of the product's producers 
D)  the control of a crucial input necessary to produce the product

Question 11

A monopolist who is able to price discriminate by charging two different groups different prices:

Accepted Answer

A)  will set prices so that the demand curve for one group is inelastic at the price charged and the demand curve for the other group is elastic at the price charged. 
B)  will set prices so that both group's demand curves are elastic at the prices charged. 
C)  will set prices so that both group's demand curves are inelastic at the prices charged. 
D)  will set higher prices for the group whose demand curve is more elastic. 
A)  will set prices so that the demand curve for one group is inelastic at the price charged and the demand curve for the other group is elastic at the price charged. 
B)  will set prices so that both group's demand curves are elastic at the prices charged. 
C)  will set prices so that both group's demand curves are inelastic at the prices charged. 
D)  will set higher prices for the group whose demand curve is more elastic.

Question 12

When a monopolist is able to price-discriminate:

Accepted Answer

A)  its profits tend to increase and consumer surplus tends to fall. 
B)  both its profits and consumer surplus tend to increase. 
C)  both its profits and consumer surplus tend to decrease. 
D)  its profits tend to fall and consumer surplus tends to increase. 
A)  its profits tend to increase and consumer surplus tends to fall. 
B)  both its profits and consumer surplus tend to increase. 
C)  both its profits and consumer surplus tend to decrease. 
D)  its profits tend to fall and consumer surplus tends to increase.

Question 13

Exhibit 13-7   Refer to Exhibit 13-7.If customers are charged 4 cents during the peak period it is:

Accepted Answer

A)  efficient because the marginal benefit is equal to the marginal cost 
B)  inefficient because marginal cost is greater than the marginal benefit 
C)  cannot determine 
D)  none of the above 
A)  efficient because the marginal benefit is equal to the marginal cost 
B)  inefficient because marginal cost is greater than the marginal benefit 
C)  cannot determine 
D)  none of the above

Question 14

What is the maximum amount of profit that the firm below could generate?

Accepted Answer

A)  -$2,800 
B)  $2,400 
C)  $2,480 
D)  $2,880 
A)  -$2,800 
B)  $2,400 
C)  $2,480 
D)  $2,880

Question 15

Exhibit 13-1   Refer to Exhibit 13-1.The profit-maximizing firm's total revenue is indicated in the diagram as area:

Accepted Answer

A)  0CEQ1. 
B)  0BFQ2. 
C)  0ADQ1. 
D)  CADE. 
A)  0CEQ1. 
B)  0BFQ2. 
C)  0ADQ1. 
D)  CADE.

Question 16

If an unregulated monopolist operates in a market,then:

Accepted Answer

A)  customers will pay higher prices than if the market were competitive. 
B)  customers will purchase fewer units of output than if the market were competitive. 
C)  society will not be allocating its resources efficiently. 
D)  all of the above will occur. 
A)  customers will pay higher prices than if the market were competitive. 
B)  customers will purchase fewer units of output than if the market were competitive. 
C)  society will not be allocating its resources efficiently. 
D)  all of the above will occur.

Question 17

A profit-maximizing monopolist will never produce at an output level where:

Accepted Answer

A)  demand is elastic. 
B)  it suffers economic losses in the short run. 
C)  demand is inelastic. 
D)  marginal cost is less than average total cost. 
A)  demand is elastic. 
B)  it suffers economic losses in the short run. 
C)  demand is inelastic. 
D)  marginal cost is less than average total cost.

Question 18

Many people believe that a monopolist can set his own price which consumers have little recourse but to pay,and thereby reap enormous profits.Is this true?

Accepted Answer

A monopolist can set his own price for a

Question 19

Exhibit 13-5   Refer to Exhibit 13-5.What price would a monopolist charge when maximizing profits?

Accepted Answer

A)  P1 
B)  P2 
C)  P3 
D)  P4 
A)  P1 
B)  P2 
C)  P3 
D)  P4

Question 20

In order for a firm to be able to price discriminate it must not be a price taker,there must be different demand from different groups of consumers,and there must be an ability to prevent resale.

Accepted Answer

A) True 
 B)False

Exam 13: Monopoly and Antitrust

Based on the table below what is the marginal revenue of the 28th unit of output?

In a perfectly competitive industry,the industry demand curve is ____,while in a monopolistic industry,the industry demand curve is:

A natural monopoly exists when one large firm can produce a product at a lower per unit cost than can smaller firms.

Exhibit 13-4 The following diagram contains information on cost and revenue curves facing a regulated monopoly. Refer to Exhibit 13-4.The socially efficient level of output would occur where:

Peak load pricing - which causes consumers to pay higher prices at certain times - leads to greater efficiency.

Monopoly results in a welfare loss because:

A natural monopolist will voluntarily choose to produce at the point of allocative efficiency.

If a profit-maximizing monopolist finds that marginal cost is increasing and exceeds marginal revenue,it should:

The patent system is intended to:

Which of the following is not potentially a barrier to entry into a product market?

A monopolist who is able to price discriminate by charging two different groups different prices:

When a monopolist is able to price-discriminate:

Exhibit 13-7 Refer to Exhibit 13-7.If customers are charged 4 cents during the peak period it is:

What is the maximum amount of profit that the firm below could generate?

Exhibit 13-1 Refer to Exhibit 13-1.The profit-maximizing firm's total revenue is indicated in the diagram as area:

If an unregulated monopolist operates in a market,then:

A profit-maximizing monopolist will never produce at an output level where:

Many people believe that a monopolist can set his own price which consumers have little recourse but to pay,and thereby reap enormous profits.Is this true?

Exhibit 13-5 Refer to Exhibit 13-5.What price would a monopolist charge when maximizing profits?

In order for a firm to be able to price discriminate it must not be a price taker,there must be different demand from different groups of consumers,and there must be an ability to prevent resale.

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

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Based on the table below what is the marginal revenue of the 28^th unit of output?