Question 1

A monopoly's marginal revenue is the same as its price.

Accepted Answer

A) True 
 B)False

Question 2

A monopoly responds to an increase in marginal cost by _______ price and _______ output.

Accepted Answer

A)  increasing; decreasing 
B)  increasing; increasing 
C)  decreasing; increasing 
D)  decreasing; decreasing 
A)  increasing; decreasing 
B)  increasing; increasing 
C)  decreasing; increasing 
D)  decreasing; decreasing

Question 3

A monopoly:

Accepted Answer

A)  allocates resources in a socially optimal way. 
B)  produces less than it would if it adhered to the MC = P standard. 
C)  adheres to the MC = P standard. 
D)  encourages greater efficiency. 
A)  allocates resources in a socially optimal way. 
B)  produces less than it would if it adhered to the MC = P standard. 
C)  adheres to the MC = P standard. 
D)  encourages greater efficiency.

Question 4

Use the following to answer question(s): Demand, Elasticity, and Total Revenue
  
-(Exhibit: Demand, Elasticity, and Total Revenue) At point A on the demand curve in Panel (a), the price elasticity of demand is:

Accepted Answer

A)  greater than -1. 
B)  equal to -1. 
C)  less than -1. 
D)  none of the above. 
A)  greater than -1. 
B)  equal to -1. 
C)  less than -1. 
D)  none of the above.

Question 5

Explain in detail the relationships among total revenue, price, marginal revenue, and the concept of the price elasticity of demand.Include in your answer a graph of total revenue, demand, and marginal revenue and show the various elasticities along the demand curve (you may use a linear demand and marginal revenue curve).

Accepted Answer

Total revenue is the total amount of mon

Question 6

The XYZ Company is a profit-maximizing firm with a monopoly in the production of pennants.The firm sells its pennants for $10 each.We can conclude that the XYZ Company is producing a level of output at which:

Accepted Answer

A)  average total cost equals $10. 
B)  average total cost is greater than $10. 
C)  marginal revenue equals $10. 
D)  marginal cost equals marginal revenue. 
A)  average total cost equals $10. 
B)  average total cost is greater than $10. 
C)  marginal revenue equals $10. 
D)  marginal cost equals marginal revenue.

Question 7

A monopoly is a market structure characterized by:

Accepted Answer

A)  a single buyer and several sellers. 
B)  a product with many close substitutes. 
C)  a large number of small firms. 
D)  barriers to entry and exit. 
A)  a single buyer and several sellers. 
B)  a product with many close substitutes. 
C)  a large number of small firms. 
D)  barriers to entry and exit.

Question 8

A monopoly is a market that usually consists of a single firm, but, in some cases, may have up to four firms and still be considered a monopoly.

Accepted Answer

A) True 
 B)False

Question 9

A firm that faces a downward-sloping demand curve:

Accepted Answer

A)  is a perfectly competitive firm. 
B)  is a price taker. 
C)  has some monopoly power. 
D)  cannot sell more at lower prices. 
A)  is a perfectly competitive firm. 
B)  is a price taker. 
C)  has some monopoly power. 
D)  cannot sell more at lower prices.

Question 10

Which of the following is true?

Accepted Answer

A)  Instead of applying the marginal decision rule, monopoly firms just set the price as high as possible. 
B)  If demand is downward sloping, P = MR. 
C)  If demand is downward sloping, P = ATC. 
D)  If demand is downward sloping, P > MR. 
A)  Instead of applying the marginal decision rule, monopoly firms just set the price as high as possible. 
B)  If demand is downward sloping, P = MR. 
C)  If demand is downward sloping, P = ATC. 
D)  If demand is downward sloping, P > MR.

Question 11

A monopoly is a market characterized by:

Accepted Answer

A)  a single seller. 
B)  a product with many close substitutes. 
C)  a large number of small firms. 
D)  a small number of large firms. 
A)  a single seller. 
B)  a product with many close substitutes. 
C)  a large number of small firms. 
D)  a small number of large firms.

Question 12

A monopoly can be temporary because of:

Accepted Answer

A)  high barriers to entry. 
B)  privileges granted by the government. 
C)  economies of scale. 
D)  technological change. 
A)  high barriers to entry. 
B)  privileges granted by the government. 
C)  economies of scale. 
D)  technological change.

Question 13

Use the following to answer question(s): Monopoly Model
  
-(Exhibit: Monopoly Model) When the firm is in equilibrium, its total cost is the area of rectangle:

Accepted Answer

A)  0PDJ. 
B)  0IHJ. 
C)  IPDH. 
D)  0SBJ. 
A)  0PDJ. 
B)  0IHJ. 
C)  IPDH. 
D)  0SBJ.

Question 14

Use the following to answer question(s): Demand, Elasticity, and Total Revenue
  
-(Exhibit: Demand, Elasticity, and Total Revenue) Panels (a) and (b) show that:

Accepted Answer

A)  when a demand curve is downward sloping, P < MR. 
B)  a firm will never maximize profits by producing a quantity where the demand curve is in the inelastic range. 
C)  when TR is at a maximum, marginal revenue is negative. 
D)  all of the above are true. 
A)  when a demand curve is downward sloping, P < MR. 
B)  a firm will never maximize profits by producing a quantity where the demand curve is in the inelastic range. 
C)  when TR is at a maximum, marginal revenue is negative. 
D)  all of the above are true.

Question 15

Use the following to answer question(s): A Profit-Maximizing Monopoly Firm
  
-(Exhibit: A Profit-Maximizing Monopoly Firm) This profit-maximizing monopoly firm's price per unit is:

Accepted Answer

A)  $20. 
B)  $26. 
C)  $29. 
D)  $35. 
A)  $20. 
B)  $26. 
C)  $29. 
D)  $35.

Question 16

The United States bans most efforts to create a monopoly when:

Accepted Answer

A)  the potential monopoly is a natural monopoly. 
B)  two firms combine and become twice as large as each of the remaining 200-300 firms. 
C)  efforts to form a monopoly "unfairly" drive out competitors. 
D)  output exceeds the efficient level. 
A)  the potential monopoly is a natural monopoly. 
B)  two firms combine and become twice as large as each of the remaining 200-300 firms. 
C)  efforts to form a monopoly "unfairly" drive out competitors. 
D)  output exceeds the efficient level.

Question 17

Suppose that a monopolist increases production from 10 units to 11 units.If the market price declines from $30 per unit to $29 per unit, marginal revenue for the eleventh unit is:

Accepted Answer

A)  $1. 
B)  $9. 
C)  $19. 
D)  $29. 
A)  $1. 
B)  $9. 
C)  $19. 
D)  $29.

Question 18

If regulation of a monopoly results in a price equal to marginal cost, but price is below average total cost:

Accepted Answer

A)  the firm can still make an economic profit. 
B)  the firm will earn only a zero economic profit. 
C)  efficiency in allocation will be less. 
D)  the firm will require subsidization or it will go out of business. 
A)  the firm can still make an economic profit. 
B)  the firm will earn only a zero economic profit. 
C)  efficiency in allocation will be less. 
D)  the firm will require subsidization or it will go out of business.

Question 19

MR > P in monopoly because demand is downward sloping.

Accepted Answer

A) True 
 B)False

Question 20

In perfect competition, price will _______ marginal cost.In monopoly, price will _______ marginal cost.

Accepted Answer

A)  exceed; equal 
B)  equal; exceed 
C)  equal; be less than 
D)  be less than; exceed 
A)  exceed; equal 
B)  equal; exceed 
C)  equal; be less than 
D)  be less than; exceed

A monopoly's marginal revenue is the same as its price.

A monopoly responds to an increase in marginal cost by _ price and _ output.

A monopoly:

Use the following to answer question(s): Demand, Elasticity, and Total Revenue -(Exhibit: Demand, Elasticity, and Total Revenue) At point A on the demand curve in Panel (a), the price elasticity of demand is:

The XYZ Company is a profit-maximizing firm with a monopoly in the production of pennants.The firm sells its pennants for $10 each.We can conclude that the XYZ Company is producing a level of output at which:

A monopoly is a market structure characterized by:

A monopoly is a market that usually consists of a single firm, but, in some cases, may have up to four firms and still be considered a monopoly.

A firm that faces a downward-sloping demand curve:

Which of the following is true?

A monopoly is a market characterized by:

A monopoly can be temporary because of:

Use the following to answer question(s): Monopoly Model -(Exhibit: Monopoly Model) When the firm is in equilibrium, its total cost is the area of rectangle:

Use the following to answer question(s): Demand, Elasticity, and Total Revenue -(Exhibit: Demand, Elasticity, and Total Revenue) Panels (a) and (b) show that:

Use the following to answer question(s): A Profit-Maximizing Monopoly Firm -(Exhibit: A Profit-Maximizing Monopoly Firm) This profit-maximizing monopoly firm's price per unit is:

The United States bans most efforts to create a monopoly when:

Suppose that a monopolist increases production from 10 units to 11 units.If the market price declines from $30 per unit to $29 per unit, marginal revenue for the eleventh unit is:

If regulation of a monopoly results in a price equal to marginal cost, but price is below average total cost:

MR > P in monopoly because demand is downward sloping.

In perfect competition, price will _ marginal cost.In monopoly, price will _ marginal cost.

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

A monopoly's marginal revenue is the same as its price.

A monopoly responds to an increase in marginal cost by _______ price and _______ output.

A monopoly:

Use the following to answer question(s): Demand, Elasticity, and Total Revenue -(Exhibit: Demand, Elasticity, and Total Revenue) At point A on the demand curve in Panel (a), the price elasticity of demand is:

The XYZ Company is a profit-maximizing firm with a monopoly in the production of pennants.The firm sells its pennants for $10 each.We can conclude that the XYZ Company is producing a level of output at which:

A monopoly is a market structure characterized by:

A monopoly is a market that usually consists of a single firm, but, in some cases, may have up to four firms and still be considered a monopoly.

A firm that faces a downward-sloping demand curve:

Which of the following is true?

A monopoly is a market characterized by:

A monopoly can be temporary because of:

Use the following to answer question(s): Monopoly Model -(Exhibit: Monopoly Model) When the firm is in equilibrium, its total cost is the area of rectangle:

Use the following to answer question(s): Demand, Elasticity, and Total Revenue -(Exhibit: Demand, Elasticity, and Total Revenue) Panels (a) and (b) show that:

Use the following to answer question(s): A Profit-Maximizing Monopoly Firm -(Exhibit: A Profit-Maximizing Monopoly Firm) This profit-maximizing monopoly firm's price per unit is:

The United States bans most efforts to create a monopoly when:

Suppose that a monopolist increases production from 10 units to 11 units.If the market price declines from $30 per unit to $29 per unit, marginal revenue for the eleventh unit is:

If regulation of a monopoly results in a price equal to marginal cost, but price is below average total cost:

MR > P in monopoly because demand is downward sloping.

In perfect competition, price will _______ marginal cost.In monopoly, price will _______ marginal cost.

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

A monopoly responds to an increase in marginal cost by _ price and _ output.

In perfect competition, price will _ marginal cost.In monopoly, price will _ marginal cost.