Question 1

For a monopoly in long-run equilibrium,economic profits are likely to be:

Accepted Answer

A)  Greater than zero. 
B)  Zero. 
C)  Less than zero. 
D)  Predatory. 
A)  Greater than zero. 
B)  Zero. 
C)  Less than zero. 
D)  Predatory.

Question 2

Figure 7.2:  
-In Figure 7.2,at the profit maximizing level of output for a monopolist,marginal cost is:

Accepted Answer

A)  $9.00. 
B)  $10.00. 
C)  $10.50. 
D)  $11.00 
A)  $9.00. 
B)  $10.00. 
C)  $10.50. 
D)  $11.00

Question 3

Table 7.2-Monopoly costs and revenue  
-In Table 7.2,at the profit-maximizing rate of output,marginal revenue is:

Accepted Answer

A)  $20. 
B)  $40. 
C)  $60. 
D)  $80. 
A)  $20. 
B)  $40. 
C)  $60. 
D)  $80.

Question 4

Which of the following is likely to be a monopolist?

Accepted Answer

A)  A potato chip company that sells lots of chips and competes with other chip producers. 
B)  A farmer who specializes in growing organic fruits and vegetables. 
C)  The sole producer of a new medical device for people with limited mobility. 
D)  The chemical company in a small town that employs most of the town's workforce. 
A)  A potato chip company that sells lots of chips and competes with other chip producers. 
B)  A farmer who specializes in growing organic fruits and vegetables. 
C)  The sole producer of a new medical device for people with limited mobility. 
D)  The chemical company in a small town that employs most of the town's workforce.

Question 5

Monopoly may not be a problem in contestable markets if:

Accepted Answer

A)  The structure of a market is competitive. 
B)  Firms can exit from the market. 
C)  Antitrust regulations are enforced. 
D)  Potential competition exists. 
A)  The structure of a market is competitive. 
B)  Firms can exit from the market. 
C)  Antitrust regulations are enforced. 
D)  Potential competition exists.

Question 6

Suppose a market is dominated by three firms.This type of market is called:

Accepted Answer

A)  Perfect competition. 
B)  A monopoly. 
C)  Monopolistic competition. 
D)  An oligopoly. 
A)  Perfect competition. 
B)  A monopoly. 
C)  Monopolistic competition. 
D)  An oligopoly.

Question 7

Suppose a monopoly firm produces software and can sell 10 items per month at a price of $50 each.In order to increase sales by one item per month,the monopolist must lower the price of its software by $1 to $49.The marginal revenue of the 11th item is:

Accepted Answer

A)  $1. 
B)  $39. 
C)  $49. 
D)  $50. 
A)  $1. 
B)  $39. 
C)  $49. 
D)  $50.

Question 8

Why does a monopolist demand curve lie above the marginal revenue curve whereas in a competitive market the demand curve and marginal revenue curve are equal? Would it be possible that the marginal revenue curve and demand curve could ever be the same for a monopolist?

Accepted Answer

Since to the monopolist the individual d

Question 9

Figure 7.3:  
-In Figure 7.3,if this industry is competitive,the profit-maximizing level of output is:

Accepted Answer

A)  3 units. 
B)  4 units. 
C)  5 units. 
D)  6 units. 
A)  3 units. 
B)  4 units. 
C)  5 units. 
D)  6 units.

Question 10

In terms of pricing,which of the following is not true for a monopolist?

Accepted Answer

A)  In the long-run economic profit is impossible. 
B)  Marginal revenue is always less then the price charged. 
C)  If marginal revenue is greater then marginal cost increasing output will increase profits (decrease loss). 
D)  Maximum profit (minimum loss)occurs where marginal revenue equals marginal cost. 
A)  In the long-run economic profit is impossible. 
B)  Marginal revenue is always less then the price charged. 
C)  If marginal revenue is greater then marginal cost increasing output will increase profits (decrease loss). 
D)  Maximum profit (minimum loss)occurs where marginal revenue equals marginal cost.

Question 11

As noted in the text,which of the following protects the U.S.Postal Service as the provider of first-class mail?

Accepted Answer

A)  A government franchise. 
B)  A patent. 
C)  Marginal cost pricing. 
D)  Predatory pricing. 
A)  A government franchise. 
B)  A patent. 
C)  Marginal cost pricing. 
D)  Predatory pricing.

Question 12

For a monopolist,the demand curve facing the firm is:

Accepted Answer

A)  The same as for the perfectly competitive firm. 
B)  The same as the market demand curve. 
C)  Always below marginal revenue. 
D)  Perfectly elastic. 
A)  The same as for the perfectly competitive firm. 
B)  The same as the market demand curve. 
C)  Always below marginal revenue. 
D)  Perfectly elastic.

Question 13

For a monopolist,marginal revenue is:

Accepted Answer

A)  Equal to price,just as it is for a perfectly competitive firm. 
B)  Constant up to the rate of output that maximizes total revenues. 
C)  Always less than price,after the first unit. 
D)  The same as the demand curve. 
A)  Equal to price,just as it is for a perfectly competitive firm. 
B)  Constant up to the rate of output that maximizes total revenues. 
C)  Always less than price,after the first unit. 
D)  The same as the demand curve.

Question 14

In a competitive industry,barriers to entry prevent new suppliers from entering the market.

Accepted Answer

A) True 
 B)False

Question 15

If an increase in the size of a factory results in reductions in minimum average costs,this is known as:

Accepted Answer

A)  Marginal cost pricing. 
B)  Diminishing marginal returns. 
C)  Rising average total cost. 
D)  Economies of scale. 
A)  Marginal cost pricing. 
B)  Diminishing marginal returns. 
C)  Rising average total cost. 
D)  Economies of scale.

Question 16

Which of the following is true about market demand?

Accepted Answer

A)  It is typically horizontal or flat. 
B)  It is downward sloping. 
C)  It is inconsistent with the law of demand. 
D)  It represents the quantity of a good people are willing,but not necessarily able,to buy. 
A)  It is typically horizontal or flat. 
B)  It is downward sloping. 
C)  It is inconsistent with the law of demand. 
D)  It represents the quantity of a good people are willing,but not necessarily able,to buy.

Question 17

Which of the following is likely to be a monopolist?

Accepted Answer

A)  A small firm with a patent granting it the exclusive right to produce a drug. 
B)  A large firm,such as HP,that produces a substantial portion of the printer market. 
C)  Bell Helicopter which is one of the largest producers of helicopters in the world. 
D)  A major car manufacturer such as General Motors. 
A)  A small firm with a patent granting it the exclusive right to produce a drug. 
B)  A large firm,such as HP,that produces a substantial portion of the printer market. 
C)  Bell Helicopter which is one of the largest producers of helicopters in the world. 
D)  A major car manufacturer such as General Motors.

Question 18

Figure 7.1:   
-In Figure 7.1,if this industry is competitive,the profit-maximizing price is:

Accepted Answer

A)  $5.00. 
B)  $7.00. 
C)  $9.00. 
D) Between $6.00 and $7.00. 
A)  $5.00. 
B)  $7.00. 
C)  $9.00. 
D) Between $6.00 and $7.00.

Question 19

Which of the following might be used to protect a monopoly from competition?

Accepted Answer

A)  A horizontal demand curve. 
B)  Marginal revenue. 
C)  A patent. 
D)  A contestable market. 
A)  A horizontal demand curve. 
B)  Marginal revenue. 
C)  A patent. 
D)  A contestable market.

Question 20

Carla's Crop Dusting Service charges competitive prices even though it has no competition.This is most likely because:

Accepted Answer

A)  There are no economies of scale in the industry. 
B)  It operates in a contestable market. 
C)  It is a natural monopoly. 
D)  It exercises predatory pricing. 
A)  There are no economies of scale in the industry. 
B)  It operates in a contestable market. 
C)  It is a natural monopoly. 
D)  It exercises predatory pricing.

For a monopoly in long-run equilibrium,economic profits are likely to be:

Figure 7.2: -In Figure 7.2,at the profit maximizing level of output for a monopolist,marginal cost is:

Table 7.2-Monopoly costs and revenue -In Table 7.2,at the profit-maximizing rate of output,marginal revenue is:

Which of the following is likely to be a monopolist?

Monopoly may not be a problem in contestable markets if:

Suppose a market is dominated by three firms.This type of market is called:

Suppose a monopoly firm produces software and can sell 10 items per month at a price of $50 each.In order to increase sales by one item per month,the monopolist must lower the price of its software by $1 to $49.The marginal revenue of the 11^th item is:

Why does a monopolist demand curve lie above the marginal revenue curve whereas in a competitive market the demand curve and marginal revenue curve are equal? Would it be possible that the marginal revenue curve and demand curve could ever be the same for a monopolist?

Figure 7.3: -In Figure 7.3,if this industry is competitive,the profit-maximizing level of output is:

In terms of pricing,which of the following is not true for a monopolist?

As noted in the text,which of the following protects the U.S.Postal Service as the provider of first-class mail?

For a monopolist,the demand curve facing the firm is:

For a monopolist,marginal revenue is:

In a competitive industry,barriers to entry prevent new suppliers from entering the market.

If an increase in the size of a factory results in reductions in minimum average costs,this is known as:

Which of the following is true about market demand?

Which of the following is likely to be a monopolist?

Figure 7.1: -In Figure 7.1,if this industry is competitive,the profit-maximizing price is:

Which of the following might be used to protect a monopoly from competition?

Carla's Crop Dusting Service charges competitive prices even though it has no competition.This is most likely because:

The Challenge of Economics

The US Economy

Supply and Demand

Consumer Demand

Supply Decisions

Competition

The Labor Market

Government Intervention

The Business Cycle

Aggregate Supply and Demand

Fiscal Policy

Money and Banks

Monetary Policy

Economic Growth

Theory and Reality

International Trade

Filters

Exam 7: Monopoly

For a monopoly in long-run equilibrium,economic profits are likely to be:

Figure 7.2: -In Figure 7.2,at the profit maximizing level of output for a monopolist,marginal cost is:

Table 7.2-Monopoly costs and revenue -In Table 7.2,at the profit-maximizing rate of output,marginal revenue is:

Which of the following is likely to be a monopolist?

Monopoly may not be a problem in contestable markets if:

Suppose a market is dominated by three firms.This type of market is called:

Suppose a monopoly firm produces software and can sell 10 items per month at a price of $50 each.In order to increase sales by one item per month,the monopolist must lower the price of its software by $1 to $49.The marginal revenue of the 11th item is:

Why does a monopolist demand curve lie above the marginal revenue curve whereas in a competitive market the demand curve and marginal revenue curve are equal? Would it be possible that the marginal revenue curve and demand curve could ever be the same for a monopolist?

Figure 7.3: -In Figure 7.3,if this industry is competitive,the profit-maximizing level of output is:

In terms of pricing,which of the following is not true for a monopolist?

As noted in the text,which of the following protects the U.S.Postal Service as the provider of first-class mail?

For a monopolist,the demand curve facing the firm is:

For a monopolist,marginal revenue is:

In a competitive industry,barriers to entry prevent new suppliers from entering the market.

If an increase in the size of a factory results in reductions in minimum average costs,this is known as:

Which of the following is true about market demand?

Which of the following is likely to be a monopolist?

Figure 7.1: -In Figure 7.1,if this industry is competitive,the profit-maximizing price is:

Which of the following might be used to protect a monopoly from competition?

Carla's Crop Dusting Service charges competitive prices even though it has no competition.This is most likely because:

The Challenge of Economics

The US Economy

Supply and Demand

Consumer Demand

Supply Decisions

Competition

The Labor Market

Government Intervention

The Business Cycle

Aggregate Supply and Demand

Fiscal Policy

Money and Banks

Monetary Policy

Economic Growth

Theory and Reality

International Trade

Filters

Suppose a monopoly firm produces software and can sell 10 items per month at a price of $50 each.In order to increase sales by one item per month,the monopolist must lower the price of its software by $1 to $49.The marginal revenue of the 11^th item is: