Question 1

The transfer to monopoly of a portion of _______ is a(n) _______ issue.

Accepted Answer

A)  output; equity 
B)  consumer surplus; efficiency 
C)  consumer surplus; equity 
D)  economic profit; consumer surplus and efficiency 
A)  output; equity 
B)  consumer surplus; efficiency 
C)  consumer surplus; equity 
D)  economic profit; consumer surplus and efficiency

Question 2

The demand curve for a monopoly is:

Accepted Answer

A)  the MR curve above the AVC curve. 
B)  the MR curve above the horizontal axis. 
C)  the entire MR curve. 
D)  none of the above. 
A)  the MR curve above the AVC curve. 
B)  the MR curve above the horizontal axis. 
C)  the entire MR curve. 
D)  none of the above.

Question 3

In 1999, a judge declared that Microsoft was a monopolist.Assuming that it was maximizing its profits at its chosen level of output, we may conclude that if Microsoft was to increase its price its total revenue would have:

Accepted Answer

A)  risen 
B)  fallen 
C)  remained unchanged 
D)  insufficient information upon which to make a determination. 
A)  risen 
B)  fallen 
C)  remained unchanged 
D)  insufficient information upon which to make a determination.

Question 4

Monopoly will produce at the output level where MR = MC.

Accepted Answer

A) True 
 B)False

Question 5

Use the following to answer question(s): Computing Monopoly Profit
  
-(Exhibit: Computing Monopoly Profit) At point E, the price elasticity of demand is:

Accepted Answer

A)  equal to 1. 
B)  in the elastic range. 
C)  in the inelastic range, and if price falls, total revenue will increase. 
D)  in the inelastic range, and if price rises, so will total revenue. 
A)  equal to 1. 
B)  in the elastic range. 
C)  in the inelastic range, and if price falls, total revenue will increase. 
D)  in the inelastic range, and if price rises, so will total revenue.

Question 6

A sunk-cost monopoly is most likely to result if a single firm:

Accepted Answer

A)  is the only seller in a small town or community. 
B)  is investor owned, but granted the exclusive right by the government to operate in a market. 
C)  experiences long-run increasing economies of scale over a wide range of output. 
D)  has made extensive investments in advertising to establish brand-name recognition among consumers. 
A)  is the only seller in a small town or community. 
B)  is investor owned, but granted the exclusive right by the government to operate in a market. 
C)  experiences long-run increasing economies of scale over a wide range of output. 
D)  has made extensive investments in advertising to establish brand-name recognition among consumers.

Question 7

Because monopoly firms are price setters:

Accepted Answer

A)  they can only sell more by lower price. 
B)  they charge all the market will bear. 
C)  they sell more at higher prices than at lower prices. 
D)  they take the market-determined price as given and sell all they can at that price. 
A)  they can only sell more by lower price. 
B)  they charge all the market will bear. 
C)  they sell more at higher prices than at lower prices. 
D)  they take the market-determined price as given and sell all they can at that price.

Question 8

Monopoly firms take the market price as given.

Accepted Answer

A) True 
 B)False

Question 9

The profit-maximizing level of output for any firm is where MR = MC.

Accepted Answer

A) True 
 B)False

Question 10

In 1999, a judge declared that Microsoft was a monopolist.Assuming that it was maximizing its profits at its chosen level of output, we may conclude that the absolute value of the price elasticity of demand for its systems was:

Accepted Answer

A)  less than 1. 
B)  equal to 1. 
C)  greater than 1. 
D)  There is insufficient information upon which to make a determination. 
A)  less than 1. 
B)  equal to 1. 
C)  greater than 1. 
D)  There is insufficient information upon which to make a determination.

Question 11

According to the Case in Point on hockey teams, economic theory predicts that if a sports team consistently sells out its games, it will operate at a quantity where marginal revenue is:

Accepted Answer

A)  the highest possible. 
B)  positive. 
C)  negative. 
D)  equal to marginal cost and both are equal to zero. 
A)  the highest possible. 
B)  positive. 
C)  negative. 
D)  equal to marginal cost and both are equal to zero.

Question 12

Economic profits:

Accepted Answer

A)  will always exist for monopoly because of significant barriers to entry. 
B)  will not exist in the long run in perfect competition because of easy entry into the industry. 
C)  are determined by the vertical distance between price and average total cost. 
D)  are correctly describe in A and B. 
A)  will always exist for monopoly because of significant barriers to entry. 
B)  will not exist in the long run in perfect competition because of easy entry into the industry. 
C)  are determined by the vertical distance between price and average total cost. 
D)  are correctly describe in A and B.

Question 13

Suppose that a profit-maximizing monopoly firm experiences a substantial technological change that reduces its marginal and average total costs by $40.If in response to its reduction in cost, the firm changes its price in a profit-maximizing way, then we can predict that its total output will:

Accepted Answer

A)  rise. 
B)  fall. 
C)  remain unchanged. 
D)  It is not possible to make a determination from the information given. 
A)  rise. 
B)  fall. 
C)  remain unchanged. 
D)  It is not possible to make a determination from the information given.

Question 14

There is no equity problem with monopoly.

Accepted Answer

A) True 
 B)False

Question 15

A profit-maximizing monopoly will never produce in the inelastic portion of its demand curve.

Accepted Answer

A) True 
 B)False

Question 16

The Case in Point on hockey teams suggested that sports teams may view the marginal costs of putting more fans in the stadium seats at any given game as:

Accepted Answer

A)  zero. 
B)  rising over the relevant range. 
C)  falling over the relevant range. 
D)  sometimes rising and sometimes falling, depending on which rival team they are playing. 
A)  zero. 
B)  rising over the relevant range. 
C)  falling over the relevant range. 
D)  sometimes rising and sometimes falling, depending on which rival team they are playing.

Question 17

Which of the following is (are) true concerning monopoly?

Accepted Answer

A)  It is at the opposite end of the spectrum from a perfectly competitive firm. 
B)  A monopoly has no rivals. 
C)  A monopoly does not need to worry about other firms entering the industry. 
D)  All of the above are true. 
A)  It is at the opposite end of the spectrum from a perfectly competitive firm. 
B)  A monopoly has no rivals. 
C)  A monopoly does not need to worry about other firms entering the industry. 
D)  All of the above are true.

Question 18

The demand curve facing a price setter:

Accepted Answer

A)  is vertical. 
B)  is horizontal. 
C)  is upward sloping. 
D)  is downward sloping. 
A)  is vertical. 
B)  is horizontal. 
C)  is upward sloping. 
D)  is downward sloping.

Question 19

Suppose that you build a high-speed, magnetically powered transportation system from New York to Los Angeles.High fixed costs resulting from the enormous quantity of capital used in this system enable decreasing average cost for any conceivable level of demand.Your monopoly would result from:

Accepted Answer

A)  sunk costs. 
B)  location. 
C)  economies of scale. 
D)  government restrictions. 
A)  sunk costs. 
B)  location. 
C)  economies of scale. 
D)  government restrictions.

Question 20

The demand curve facing a monopolist is always:

Accepted Answer

A)  the same as the industry's demand curve. 
B)  perfectly elastic. 
C)  unit elastic. 
D)  perfectly inelastic. 
A)  the same as the industry's demand curve. 
B)  perfectly elastic. 
C)  unit elastic. 
D)  perfectly inelastic.

The transfer to monopoly of a portion of _ is a(n) _ issue.

The demand curve for a monopoly is:

In 1999, a judge declared that Microsoft was a monopolist.Assuming that it was maximizing its profits at its chosen level of output, we may conclude that if Microsoft was to increase its price its total revenue would have:

Monopoly will produce at the output level where MR = MC.

Use the following to answer question(s): Computing Monopoly Profit -(Exhibit: Computing Monopoly Profit) At point E, the price elasticity of demand is:

A sunk-cost monopoly is most likely to result if a single firm:

Because monopoly firms are price setters:

Monopoly firms take the market price as given.

The profit-maximizing level of output for any firm is where MR = MC.

In 1999, a judge declared that Microsoft was a monopolist.Assuming that it was maximizing its profits at its chosen level of output, we may conclude that the absolute value of the price elasticity of demand for its systems was:

According to the Case in Point on hockey teams, economic theory predicts that if a sports team consistently sells out its games, it will operate at a quantity where marginal revenue is:

Economic profits:

Suppose that a profit-maximizing monopoly firm experiences a substantial technological change that reduces its marginal and average total costs by $40.If in response to its reduction in cost, the firm changes its price in a profit-maximizing way, then we can predict that its total output will:

There is no equity problem with monopoly.

A profit-maximizing monopoly will never produce in the inelastic portion of its demand curve.

The Case in Point on hockey teams suggested that sports teams may view the marginal costs of putting more fans in the stadium seats at any given game as:

Which of the following is (are) true concerning monopoly?

The demand curve facing a price setter:

Suppose that you build a high-speed, magnetically powered transportation system from New York to Los Angeles.High fixed costs resulting from the enormous quantity of capital used in this system enable decreasing average cost for any conceivable level of demand.Your monopoly would result from:

The demand curve facing a monopolist is always:

Economics: The Study of Choice

Confronting Scarcity: Choices in Production

Demand and Supply

Applications of Supply and Demand

Elasticity: a Measure of Response

Markets, Maximizers, and Efficiency

The Analysis of Consumer Choice

Production and Cost

Competitive Markets for Goods and Services

The World of Imperfect Competition

Wages and Employment in Perfect Competition

Interest Rates and the Markets for Capital and Natural Resources

Imperfectly Competitive Markets for Factors of Production

Public Finance and Public Choice

Antitrust Policy and Business Regulation

International Trade

The Economics of the Environment

Inequality, Poverty, and Discrimination

Filters

Exam 10: Monopoly

The transfer to monopoly of a portion of _______ is a(n) _______ issue.

The demand curve for a monopoly is:

In 1999, a judge declared that Microsoft was a monopolist.Assuming that it was maximizing its profits at its chosen level of output, we may conclude that if Microsoft was to increase its price its total revenue would have:

Monopoly will produce at the output level where MR = MC.

Use the following to answer question(s): Computing Monopoly Profit -(Exhibit: Computing Monopoly Profit) At point E, the price elasticity of demand is:

A sunk-cost monopoly is most likely to result if a single firm:

Because monopoly firms are price setters:

Monopoly firms take the market price as given.

The profit-maximizing level of output for any firm is where MR = MC.

In 1999, a judge declared that Microsoft was a monopolist.Assuming that it was maximizing its profits at its chosen level of output, we may conclude that the absolute value of the price elasticity of demand for its systems was:

According to the Case in Point on hockey teams, economic theory predicts that if a sports team consistently sells out its games, it will operate at a quantity where marginal revenue is:

Economic profits:

Suppose that a profit-maximizing monopoly firm experiences a substantial technological change that reduces its marginal and average total costs by $40.If in response to its reduction in cost, the firm changes its price in a profit-maximizing way, then we can predict that its total output will:

There is no equity problem with monopoly.

A profit-maximizing monopoly will never produce in the inelastic portion of its demand curve.

The Case in Point on hockey teams suggested that sports teams may view the marginal costs of putting more fans in the stadium seats at any given game as:

Which of the following is (are) true concerning monopoly?

The demand curve facing a price setter:

Suppose that you build a high-speed, magnetically powered transportation system from New York to Los Angeles.High fixed costs resulting from the enormous quantity of capital used in this system enable decreasing average cost for any conceivable level of demand.Your monopoly would result from:

The demand curve facing a monopolist is always:

Economics: The Study of Choice

Confronting Scarcity: Choices in Production

Demand and Supply

Applications of Supply and Demand

Elasticity: a Measure of Response

Markets, Maximizers, and Efficiency

The Analysis of Consumer Choice

Production and Cost

Competitive Markets for Goods and Services

The World of Imperfect Competition

Wages and Employment in Perfect Competition

Interest Rates and the Markets for Capital and Natural Resources

Imperfectly Competitive Markets for Factors of Production

Public Finance and Public Choice

Antitrust Policy and Business Regulation

International Trade

The Economics of the Environment

Inequality, Poverty, and Discrimination

Filters

The transfer to monopoly of a portion of _ is a(n) _ issue.