Question 1

The monopolist's demand curve slopes downward because:

Accepted Answer

A) the good sold by a monopolist is easily substitutable. 
B) the monopolist is a price maker in the market. 
C) average revenue decreases with each unit sold. 
D) the marginal product of labor is diminishing. 
A) the good sold by a monopolist is easily substitutable. 
B) the monopolist is a price maker in the market. 
C) average revenue decreases with each unit sold. 
D) the marginal product of labor is diminishing. B

Question 2

An important difference between a monopoly and a competitive industry is that:

Accepted Answer

A) a monopoly earns zero profits while competitive firms earn positive economic profits in the long run. 
B) a profit-maximizing monopolist equates price and marginal cost while profit-maximizing firms in competitive industries equate marginal revenue and marginal cost. 
C) a monopoly is a price maker while a competitive industry faces a horizontal demand curve. 
D) a monopoly has a vertical supply curve while a competitive firm's marginal cost curve is the supply curve. 
A) a monopoly earns zero profits while competitive firms earn positive economic profits in the long run. 
B) a profit-maximizing monopolist equates price and marginal cost while profit-maximizing firms in competitive industries equate marginal revenue and marginal cost. 
C) a monopoly is a price maker while a competitive industry faces a horizontal demand curve. 
D) a monopoly has a vertical supply curve while a competitive firm's marginal cost curve is the supply curve. C

Question 3

The following figure shows the marginal cost [MC],average cost [AC],marginal revenue [MR],and demand curves for a profit-maximizing monopolist.
Figure 11-2  
-Refer to Figure 11-2.The profit earned by the monopolist is given by the area _____.

Accepted Answer

A) BHLM 
B) IDN 
C) AFLM 
D) AFHB 
A) BHLM 
B) IDN 
C) AFLM 
D) AFHB D

Question 4

Assume that Bost Incorporated sells game cartridges that can be used in a popular home video system.The company currently sells 300 cartridges per week and earns $500 in profit.The production manager calculates that the marginal cost of producing the next unit is $5,while marginal revenue from one additional unit is $10.Based on this information we would conclude that:

Accepted Answer

A) Bost should reduce their output to 295 cartridges to increase profit. 
B) Bost's profit would fall to $495 by increasing output by 1 unit. 
C) Bost's profit would rise to $505 by increasing output by 1 unit. 
D) Bost's profit-maximizing output is 300 cartridges. 
A) Bost should reduce their output to 295 cartridges to increase profit. 
B) Bost's profit would fall to $495 by increasing output by 1 unit. 
C) Bost's profit would rise to $505 by increasing output by 1 unit. 
D) Bost's profit-maximizing output is 300 cartridges.

Question 5

The following figure shows the marginal revenue [MR],demand,and average cost [AC] curves for a profit-maximizing monopolist in the long run.
Figure 11-3  
-Refer to Figure 11-3.The equilibrium price charged by a profit-maximizing monopoly firm is _____.

Accepted Answer

A) OA 
B) OB 
C) OI 
D) OC 
A) OA 
B) OB 
C) OI 
D) OC

Question 6

The larger the value of the Lerner index for a firm,_____.

Accepted Answer

A) the greater the difference between marginal cost and marginal revenue 
B) the smaller the difference between marginal cost and price 
C) the more price elastic the firm's demand curve 
D) the greater the firm's monopoly power 
A) the greater the difference between marginal cost and marginal revenue 
B) the smaller the difference between marginal cost and price 
C) the more price elastic the firm's demand curve 
D) the greater the firm's monopoly power

Question 7

If the monopolist is operating in the elastic portion of its demand curve,then an increase in price will:

Accepted Answer

A) increase total revenue. 
B) decrease total revenue. 
C) increase marginal revenue. 
D) leave total revenue unchanged. 
A) increase total revenue. 
B) decrease total revenue. 
C) increase marginal revenue. 
D) leave total revenue unchanged.

Question 8

The following figure shows the demand curve and the marginal revenue curve of a monopolist.On the horizontal axis,OG = GF.
Figure 11-5  
-Refer to Figure 11-5.Total revenue is equal to zero at point(s)_____.

Accepted Answer

A) E and F 
B) A 
C) A and F 
D) G 
A) E and F 
B) A 
C) A and F 
D) G

Question 9

Given the price [P],marginal cost [MC],and price elasticity of demand [η] for a monopolist,derive the condition for the profit-maximizing price.

Accepted Answer

A monopolist faces a downward-sloping de

Question 10

Prove that the linear demand curve, $Q = a - b P$ ,where $\alpha$ and $b$ are positive constants,is unit elastic at its mid-point.

Accepted Answer

@#IMG-DLM&
 The absolute value of the price elasti

Question 11

The following figure shows the downward-sloping demand curve [D] and marginal revenue [MR] curve and the upward-sloping marginal cost [MC] curve for a monopolist.
Figure 11-1  
-Refer to Figure 11-1.If the government wishes to regulate the monopoly firm by restricting the price at OC in the market,the demand curve will be equal to _____.

Accepted Answer

A) VD 
B) CIJ 
C) CFD 
D) FD 
A) VD 
B) CIJ 
C) CFD 
D) FD

Question 12

A monopoly firm will operate on the:

Accepted Answer

A) elastic portion of the demand curve where total revenue is maximum. 
B) elastic portion of the demand curve where marginal revenue is positive. 
C) inelastic portion of the demand curve where the profit earned per-unit is the highest. 
D) the inelastic portion of the demand curve where marginal revenue is increasing. 
A) elastic portion of the demand curve where total revenue is maximum. 
B) elastic portion of the demand curve where marginal revenue is positive. 
C) inelastic portion of the demand curve where the profit earned per-unit is the highest. 
D) the inelastic portion of the demand curve where marginal revenue is increasing.

Question 13

A deadweight loss arises in a monopoly market because _____ by the monopolist.

Accepted Answer

A) the marginal benefit [MB] is greater than marginal cost [MC],for the output that is not produced 
B) the MB is greater than the MC,for the output that is produced 
C) the MC is greater than MB,up to the profit-maximizing level of output produced 
D) the MB is greater than MC,for output that is not produced 
A) the marginal benefit [MB] is greater than marginal cost [MC],for the output that is not produced 
B) the MB is greater than the MC,for the output that is produced 
C) the MC is greater than MB,up to the profit-maximizing level of output produced 
D) the MB is greater than MC,for output that is not produced

Question 14

_____ would not be considered a barrier to entry in a market.

Accepted Answer

A) An absolute cost advantage 
B) A copyright 
C) A low Lerner index 
D) A high level of product differentiation 
A) An absolute cost advantage 
B) A copyright 
C) A low Lerner index 
D) A high level of product differentiation

Question 15

Which of the following is not necessarily true at the profit-maximizing quantity for a monopolist?

Accepted Answer

A) The marginal revenue is equal to the marginal cost of production. 
B) The slope of the marginal revenue curve equals the slope of the marginal cost curve. 
C) The difference between total revenue and total cost is maximized. 
D) The difference between price and average cost is maximized. 
A) The marginal revenue is equal to the marginal cost of production. 
B) The slope of the marginal revenue curve equals the slope of the marginal cost curve. 
C) The difference between total revenue and total cost is maximized. 
D) The difference between price and average cost is maximized.

Question 16

Which of the following is true of the demand curve that a monopolist faces?

Accepted Answer

A) It is perfectly elastic at the equilibrium price level. 
B) It is perfectly inelastic at the equilibrium output level. 
C) It shows how much the monopolist can sell given the output of the other firms. 
D) It is the same as the market demand curve. 
A) It is perfectly elastic at the equilibrium price level. 
B) It is perfectly inelastic at the equilibrium output level. 
C) It shows how much the monopolist can sell given the output of the other firms. 
D) It is the same as the market demand curve.

Question 17

When the marginal cost for a monopoly firm is constant,the average cost curve is _____.

Accepted Answer

A) U-shaped 
B) horizontal 
C) positively sloped 
D) non-linear 
A) U-shaped 
B) horizontal 
C) positively sloped 
D) non-linear

Question 18

The following figure shows the marginal revenue [MR],demand,and average cost [AC] curves for a profit-maximizing monopolist.
Figure 11-3  
-Refer to Figure 11-3.The loss in welfare in the market due to the monopoly firm is _____.

Accepted Answer

A) IFA 
B) FGH 
C) AFGB 
D) BGEO 
A) IFA 
B) FGH 
C) AFGB 
D) BGEO

Question 19

Which of the following does not constitute a barrier to entry into a market?

Accepted Answer

A) Homogenous product 
B) Economies of scale 
C) Control of a natural resource 
D) Natural monopoly 
A) Homogenous product 
B) Economies of scale 
C) Control of a natural resource 
D) Natural monopoly

Question 20

The following figure shows the demand curve and the marginal revenue curve of a monopolist.On the horizontal axis,OG = GF.
Figure 11-5  
-Refer to Figure 11-5.The absolute value of the slope of the marginal revenue curve equals:

Accepted Answer

A) twice the slope of the demand curve. 
B) one. 
C) half the slope of the demand curve. 
D) zero. 
A) twice the slope of the demand curve. 
B) one. 
C) half the slope of the demand curve. 
D) zero.

The monopolist's demand curve slopes downward because:

An important difference between a monopoly and a competitive industry is that:

The following figure shows the marginal cost [MC],average cost [AC],marginal revenue [MR],and demand curves for a profit-maximizing monopolist. Figure 11-2 -Refer to Figure 11-2.The profit earned by the monopolist is given by the area _____.

The following figure shows the marginal revenue [MR],demand,and average cost [AC] curves for a profit-maximizing monopolist in the long run. Figure 11-3 -Refer to Figure 11-3.The equilibrium price charged by a profit-maximizing monopoly firm is _____.

The larger the value of the Lerner index for a firm,_____.

If the monopolist is operating in the elastic portion of its demand curve,then an increase in price will:

The following figure shows the demand curve and the marginal revenue curve of a monopolist.On the horizontal axis,OG = GF. Figure 11-5 -Refer to Figure 11-5.Total revenue is equal to zero at point(s)_____.

Given the price [P],marginal cost [MC],and price elasticity of demand [η] for a monopolist,derive the condition for the profit-maximizing price.

Prove that the linear demand curve, $Q = a - b P$ ,where $\alpha$ and $b$ are positive constants,is unit elastic at its mid-point.

A monopoly firm will operate on the:

A deadweight loss arises in a monopoly market because _____ by the monopolist.

_____ would not be considered a barrier to entry in a market.

Which of the following is not necessarily true at the profit-maximizing quantity for a monopolist?

Which of the following is true of the demand curve that a monopolist faces?

When the marginal cost for a monopoly firm is constant,the average cost curve is _____.

The following figure shows the marginal revenue [MR],demand,and average cost [AC] curves for a profit-maximizing monopolist. Figure 11-3 -Refer to Figure 11-3.The loss in welfare in the market due to the monopoly firm is _____.

Which of the following does not constitute a barrier to entry into a market?

The following figure shows the demand curve and the marginal revenue curve of a monopolist.On the horizontal axis,OG = GF. Figure 11-5 -Refer to Figure 11-5.The absolute value of the slope of the marginal revenue curve equals:

An Introduction to Microeconomics

Supply and Demand

The Theory of Consumer Choice

Individual and Market Demand

Using Consumer Choice Theory

Exchange, Efficiency, and Prices

Production

The Cost of Production

Profit Maximization in Perfectly Competitive Markets

Using the Competitive Model

Product Pricing With Monopoly Power

Monopolistic Competition and Oligopoly

Game Theory and the Economics of Information

Using Noncompetitive Market Models

Employment and Pricing of Inputs

Wages, Rent, Interest, and Profit

Using Input Market Analysis

General Equilibrium Analysis and Economic Efficiency

Public Goods and Externalities

Filters

Exam 11: Monopoly

The monopolist's demand curve slopes downward because:

An important difference between a monopoly and a competitive industry is that:

The following figure shows the marginal cost [MC],average cost [AC],marginal revenue [MR],and demand curves for a profit-maximizing monopolist. Figure 11-2 -Refer to Figure 11-2.The profit earned by the monopolist is given by the area _____.

The following figure shows the marginal revenue [MR],demand,and average cost [AC] curves for a profit-maximizing monopolist in the long run. Figure 11-3 -Refer to Figure 11-3.The equilibrium price charged by a profit-maximizing monopoly firm is _____.

The larger the value of the Lerner index for a firm,_____.

If the monopolist is operating in the elastic portion of its demand curve,then an increase in price will:

The following figure shows the demand curve and the marginal revenue curve of a monopolist.On the horizontal axis,OG = GF. Figure 11-5 -Refer to Figure 11-5.Total revenue is equal to zero at point(s)_____.

Given the price [P],marginal cost [MC],and price elasticity of demand [η] for a monopolist,derive the condition for the profit-maximizing price.

Prove that the linear demand curve, Q=a−bPQ = a - b PQ=a−bP ,where α\alphaα and bbb are positive constants,is unit elastic at its mid-point.

A monopoly firm will operate on the:

A deadweight loss arises in a monopoly market because _____ by the monopolist.

_____ would not be considered a barrier to entry in a market.

Which of the following is not necessarily true at the profit-maximizing quantity for a monopolist?

Which of the following is true of the demand curve that a monopolist faces?

When the marginal cost for a monopoly firm is constant,the average cost curve is _____.

The following figure shows the marginal revenue [MR],demand,and average cost [AC] curves for a profit-maximizing monopolist. Figure 11-3 -Refer to Figure 11-3.The loss in welfare in the market due to the monopoly firm is _____.

Which of the following does not constitute a barrier to entry into a market?

The following figure shows the demand curve and the marginal revenue curve of a monopolist.On the horizontal axis,OG = GF. Figure 11-5 -Refer to Figure 11-5.The absolute value of the slope of the marginal revenue curve equals:

An Introduction to Microeconomics

Supply and Demand

The Theory of Consumer Choice

Individual and Market Demand

Using Consumer Choice Theory

Exchange, Efficiency, and Prices

Production

The Cost of Production

Profit Maximization in Perfectly Competitive Markets

Using the Competitive Model

Product Pricing With Monopoly Power

Monopolistic Competition and Oligopoly

Game Theory and the Economics of Information

Using Noncompetitive Market Models

Employment and Pricing of Inputs

Wages, Rent, Interest, and Profit

Using Input Market Analysis

General Equilibrium Analysis and Economic Efficiency

Public Goods and Externalities

Filters

Prove that the linear demand curve, $Q = a - b P$ ,where $\alpha$ and $b$ are positive constants,is unit elastic at its mid-point.