Question 1

If the demand for a firm's output is perfectly elastic,then the firm's Lerner Index equals

Accepted Answer

A) zero. 
B) one. 
C) infinity. 
D) one-half. 
A) zero. 
B) one. 
C) infinity. 
D) one-half.

Question 2

An exclusive right to sell a new and useful product,process,substance,or design for a fixed period of time is called a

Accepted Answer

A) patent. 
B) barrier to entry. 
C) monopoly. 
D) research disincentive. 
A) patent. 
B) barrier to entry. 
C) monopoly. 
D) research disincentive.

Question 3

For a monopoly market,if the Lerner Index is 2,then

Accepted Answer

A) the monopoly is maximizing its profit. 
B) the price elasticity of demand is -2. 
C) the price elasticity of demand is -0.5. 
D) None of the above. 
A) the monopoly is maximizing its profit. 
B) the price elasticity of demand is -2. 
C) the price elasticity of demand is -0.5. 
D) None of the above.

Question 4

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

Accepted Answer

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

Question 5

A monopoly sets a price of $50 per unit for an item that has a marginal cost of $10.Assuming profit maximization,the implicit demand elasticity is

Accepted Answer

A) -0.2. 
B) -0.8. 
C) -1.25. 
D) -5.0. 
A) -0.2. 
B) -0.8. 
C) -1.25. 
D) -5.0.

Question 6

If the government regulates the price a monopoly can charge,and the price ceiling is set below what the competitive market price would be,then

Accepted Answer

A) a shortage will exist. 
B) a surplus will exist. 
C) producer surplus is maximized. 
D) consumer surplus is maximized. 
A) a shortage will exist. 
B) a surplus will exist. 
C) producer surplus is maximized. 
D) consumer surplus is maximized.

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

Show that for a monopolist with a constant marginal cost and facing a linear demand curve,if a specific tax is imposed on the monopolist,the tax burden is shared equally between the monopolist and the consumers.

Accepted Answer

A monopolist facing demand p = a - bQ an

Question 9

If the inverse demand curve a monopoly faces is p = 100 - 2Q,and MC is constant at 16,then profit maximization

Accepted Answer

A) is achieved when 21 units are produced. 
B) is achieved by setting price equal to 21. 
C) is achieved only by shutting down in the short run. 
D) cannot be determined solely from the information provided. 
A) is achieved when 21 units are produced. 
B) is achieved by setting price equal to 21. 
C) is achieved only by shutting down in the short run. 
D) cannot be determined solely from the information provided.

Question 10

If a monopoly's Lerner Index exceeds 1,then

Accepted Answer

A) it is earning maximum profit. 
B) it has ultimate market power. 
C) it must be pricing below marginal cost. 
D) marginal revenue is negative. 
A) it is earning maximum profit. 
B) it has ultimate market power. 
C) it must be pricing below marginal cost. 
D) marginal revenue is negative.

Question 11

The steeper the labor supply curve,

Accepted Answer

A) the higher the wage the monopsonist pays. 
B) the lower the wage the monopsonist pays. 
C) the smaller the difference between the wage and the marginal expenditure on labor. 
D) the better off workers are. 
A) the higher the wage the monopsonist pays. 
B) the lower the wage the monopsonist pays. 
C) the smaller the difference between the wage and the marginal expenditure on labor. 
D) the better off workers are.

Question 12

If the inverse demand curve a monopoly faces is p = 100 - 2Q,and MC is constant at 16,then profit maximization is achieved when the monopoly sets price equal to

Accepted Answer

A) 16. 
B) 21. 
C) 25. 
D) 58. 
A) 16. 
B) 21. 
C) 25. 
D) 58.

Question 13

-The above figure shows the demand and cost curves facing a monopoly.A $100 per unit tax would raise price by

Accepted Answer

A) $100. 
B) $50. 
C) $25. 
D) $0. 
A) $100. 
B) $50. 
C) $25. 
D) $0.

Question 14

The introduction of satellite television systems would cause the Lerner Index for cable television to

Accepted Answer

A) become smaller. 
B) increase. 
C) change in accordance to the increase in market power of cable TV providers. 
D) be unchanged. 
A) become smaller. 
B) increase. 
C) change in accordance to the increase in market power of cable TV providers. 
D) be unchanged.

Question 15

Universities are able to act as monopsonists in the market for professors because

Accepted Answer

A) a university usually does not consider hiring faculty members from another institution. 
B) faculty members usually have to move to a different city when changing universities. 
C) students like all of their professors. 
D) senior faculty members are willing to move to a new university at any cost. 
A) a university usually does not consider hiring faculty members from another institution. 
B) faculty members usually have to move to a different city when changing universities. 
C) students like all of their professors. 
D) senior faculty members are willing to move to a new university at any cost.

Question 16

The less elastic is the demand for a firm's product,the greater is that firm's market power.

Accepted Answer

A) True 
 B)False

Question 17

Marginal Revenue is

Accepted Answer

A) the increase in total revenue from selling one more unit of output. 
B) equal to P(1 + 1/e). 
C) equal to P when the price elasticity of demand is infinite. 
D) All of the above. 
A) the increase in total revenue from selling one more unit of output. 
B) equal to P(1 + 1/e). 
C) equal to P when the price elasticity of demand is infinite. 
D) All of the above.

Question 18

As other firms enter a monopoly's market,the monopoly's market power

Accepted Answer

A) is unaffected. 
B) declines. 
C) increases. 
D) increases according to the Lerner Index but decreases according to the price/marginal cost ratio. 
A) is unaffected. 
B) declines. 
C) increases. 
D) increases according to the Lerner Index but decreases according to the price/marginal cost ratio.

Question 19

If the inverse demand function for a monopoly's product is p = 100 - 2Q,then the firm's marginal revenue function is

Accepted Answer

A) -2. 
B) 100 - 4Q. 
C) 200 - 4Q. 
D) 200 - 2Q. 
A) -2. 
B) 100 - 4Q. 
C) 200 - 4Q. 
D) 200 - 2Q.

Question 20

Suppose a monopolist faces the constant price elasticity demand curve:
p = Qε
where ε  ε > -1,what is the price and quantity the monopolist will set?

Accepted Answer

a.The necessary condition is: (1 + ε)Q^ε =

If the demand for a firm's output is perfectly elastic,then the firm's Lerner Index equals

An exclusive right to sell a new and useful product,process,substance,or design for a fixed period of time is called a

For a monopoly market,if the Lerner Index is 2,then

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

A monopoly sets a price of $50 per unit for an item that has a marginal cost of $10.Assuming profit maximization,the implicit demand elasticity is

If the government regulates the price a monopoly can charge,and the price ceiling is set below what the competitive market price would be,then

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

Show that for a monopolist with a constant marginal cost and facing a linear demand curve,if a specific tax is imposed on the monopolist,the tax burden is shared equally between the monopolist and the consumers.

If the inverse demand curve a monopoly faces is p = 100 - 2Q,and MC is constant at 16,then profit maximization

If a monopoly's Lerner Index exceeds 1,then

The steeper the labor supply curve,

If the inverse demand curve a monopoly faces is p = 100 - 2Q,and MC is constant at 16,then profit maximization is achieved when the monopoly sets price equal to

-The above figure shows the demand and cost curves facing a monopoly.A $100 per unit tax would raise price by

The introduction of satellite television systems would cause the Lerner Index for cable television to

Universities are able to act as monopsonists in the market for professors because

The less elastic is the demand for a firm's product,the greater is that firm's market power.

Marginal Revenue is

As other firms enter a monopoly's market,the monopoly's market power

If the inverse demand function for a monopoly's product is p = 100 - 2Q,then the firm's marginal revenue function is

Introduction

Supply and Demand

A Consumers Constrained Choice

Demand

Consumer Welfare and Policy Analysis

Firms and Production

Costs

Competitive Firms and Markets

Properties and Applications of the Competitive Model

General Equilibrium and Economic Welfare

Pricing and Advertising

Game Theory

Oligopoly and Monopolistic Competition

Factor Markets

Uncertainty

Property Rights, Externalities, Rivalry, and Exclusion

Asymmetric Information

Contracts and Moral Hazards

Filters

Exam 11: Monopoly and Monopsony

If the demand for a firm's output is perfectly elastic,then the firm's Lerner Index equals

An exclusive right to sell a new and useful product,process,substance,or design for a fixed period of time is called a

For a monopoly market,if the Lerner Index is 2,then

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

A monopoly sets a price of $50 per unit for an item that has a marginal cost of $10.Assuming profit maximization,the implicit demand elasticity is

If the government regulates the price a monopoly can charge,and the price ceiling is set below what the competitive market price would be,then

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

Show that for a monopolist with a constant marginal cost and facing a linear demand curve,if a specific tax is imposed on the monopolist,the tax burden is shared equally between the monopolist and the consumers.

If the inverse demand curve a monopoly faces is p = 100 - 2Q,and MC is constant at 16,then profit maximization

If a monopoly's Lerner Index exceeds 1,then

The steeper the labor supply curve,

If the inverse demand curve a monopoly faces is p = 100 - 2Q,and MC is constant at 16,then profit maximization is achieved when the monopoly sets price equal to

-The above figure shows the demand and cost curves facing a monopoly.A $100 per unit tax would raise price by

The introduction of satellite television systems would cause the Lerner Index for cable television to

Universities are able to act as monopsonists in the market for professors because

The less elastic is the demand for a firm's product,the greater is that firm's market power.

Marginal Revenue is

As other firms enter a monopoly's market,the monopoly's market power

If the inverse demand function for a monopoly's product is p = 100 - 2Q,then the firm's marginal revenue function is

Introduction

Supply and Demand

A Consumers Constrained Choice

Demand

Consumer Welfare and Policy Analysis

Firms and Production

Costs

Competitive Firms and Markets

Properties and Applications of the Competitive Model

General Equilibrium and Economic Welfare

Pricing and Advertising

Game Theory

Oligopoly and Monopolistic Competition

Factor Markets

Uncertainty

Property Rights, Externalities, Rivalry, and Exclusion

Asymmetric Information

Contracts and Moral Hazards

Filters