Question 1

The market structure of the U.S.soft drink industry is most likely:

Accepted Answer

A)  Perfectly competitive. 
B)  A monopoly. 
C)  Monopolistically competitive. 
D)  An oligopoly. 
A)  Perfectly competitive. 
B)  A monopoly. 
C)  Monopolistically competitive. 
D)  An oligopoly.

Question 2

Which of the following statements is true,assuming the same cost and demand conditions?

Accepted Answer

A)  A monopoly produces less output than a competitive firm. 
B)  A monopoly cannot earn an economic profit in the long run. 
C)  A monopoly charges a lower price than a competitive firm. 
D)  A monopoly maximizes profit where price equals marginal cost. 
A)  A monopoly produces less output than a competitive firm. 
B)  A monopoly cannot earn an economic profit in the long run. 
C)  A monopoly charges a lower price than a competitive firm. 
D)  A monopoly maximizes profit where price equals marginal cost.

Question 3

A NEWSWIRE article in the text is titled "OPEC Keeps Output Target on Hold Despite Weak Economy".When OPEC member nations work collectively to set their combined rate of output,they are attempting to duplicate ______ outcomes.

Accepted Answer

A)  Monopoly 
B)  Perfect competition 
C)  Monopolistic competition 
D)  Oligopoly 
A)  Monopoly 
B)  Perfect competition 
C)  Monopolistic competition 
D)  Oligopoly

Question 4

A monopolist has market power because it faces a downward-sloping demand curve.

Accepted Answer

A) True 
 B)False

Question 5

If the entire output of a market is produced by a single seller,the firm:

Accepted Answer

A)  Is a monopoly. 
B)  Is competitive. 
C)  Is an oligopolist. 
D)  Faces a perfectly vertical demand curve. 
A)  Is a monopoly. 
B)  Is competitive. 
C)  Is an oligopolist. 
D)  Faces a perfectly vertical demand curve.

Question 6

Which of the following is true for a monopoly?

Accepted Answer

A)  The intersection of total revenue and total cost establishes the profit-maximizing rate of output. 
B)  The demand curve indicates the highest price consumers are willing to pay for the rate of output. 
C)  Several different prices are compatible with the profit-maximizing rate of output. 
D)  The total revenue curve indicates the highest price consumers are willing to pay for the rate of output. 
A)  The intersection of total revenue and total cost establishes the profit-maximizing rate of output. 
B)  The demand curve indicates the highest price consumers are willing to pay for the rate of output. 
C)  Several different prices are compatible with the profit-maximizing rate of output. 
D)  The total revenue curve indicates the highest price consumers are willing to pay for the rate of output.

Question 7

Figure 7.3:  
-In Figure 7.3,if this industry is competitive,the profit-maximizing price is:

Accepted Answer

A)  $6. 
B)  $7. 
C)  $8. 
D)  $9. 
A)  $6. 
B)  $7. 
C)  $8. 
D)  $9.

Question 8

Market power exists if a firm can alter:

Accepted Answer

A)  Its costs of production. 
B)  The market price. 
C)  Its own supply curve. 
D)  The production function. 
A)  Its costs of production. 
B)  The market price. 
C)  Its own supply curve. 
D)  The production function.

Question 9

Suppose a monopoly pharmaceutical company produces a drug and sells 100 prescriptions for $25 each.In order to sell 101 prescriptions,the monopolist must lower the price to $24 per prescription.The marginal revenue of the 101st prescription is:

Accepted Answer

A)  -$76. 
B)  $24. 
C)  $25. 
D)  $2424. 
A)  -$76. 
B)  $24. 
C)  $25. 
D)  $2424.

Question 10

Even when a market appears to be a monopoly it can be contestable if there are many potential entrants.

Accepted Answer

A) True 
 B)False

Question 11

The demand curve for a monopolist's product is the same as the market demand curve for the product.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is an argument in support of market power?

Accepted Answer

A)  Marginal cost pricing. 
B)  Economies of scale. 
C)  Price fixing. 
D)  Predatory pricing. 
A)  Marginal cost pricing. 
B)  Economies of scale. 
C)  Price fixing. 
D)  Predatory pricing.

Question 13

Figure 7.3:  
-In Figure 7.3,at the profit maximizing level of output for a monopolist,marginal cost is:

Accepted Answer

A)  $6. 
B)  $7. 
C)  $8. 
D)  $9. 
A)  $6. 
B)  $7. 
C)  $8. 
D)  $9.

Question 14

Monopolies tend to inhibit technology and innovation by keeping competition out of the market.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is consistent with a monopoly industry?

Accepted Answer

A)  There are many firms. 
B)  Barriers to entry keep potential competitors out of the market. 
C)  There is pressure to reduce costs and improve product quality. 
D)  Zero economic profit in the long run. 
A)  There are many firms. 
B)  Barriers to entry keep potential competitors out of the market. 
C)  There is pressure to reduce costs and improve product quality. 
D)  Zero economic profit in the long run.

Question 16

The following table shows some costs and prices faced by an airplane manufacturer.
Table 7.1-Monopoly costs and revenue  
-In Table 7.1,the maximum profit that can be achieved is:

Accepted Answer

A)  $7 million per month. 
B)  $10 million per month. 
C)  $11 million per month. 
D)  $21 million per month. 
A)  $7 million per month. 
B)  $10 million per month. 
C)  $11 million per month. 
D)  $21 million per month.

Question 17

For a profit-maximizing monopolist,price exceeds marginal cost at all times.

Accepted Answer

A) True 
 B)False

Question 18

Why would a monopolist never set a price on a point in the inelastic portion of the demand curve?

Accepted Answer

A)  Marginal revenue would be negative and therefore well below the marginal cost curve. 
B)  The point where marginal revenue equals marginal cost would be below the shutdown point. 
C)  The demand curve would be below the average total cost curve. 
D)  The monopolist would be operating at a loss. 
A)  Marginal revenue would be negative and therefore well below the marginal cost curve. 
B)  The point where marginal revenue equals marginal cost would be below the shutdown point. 
C)  The demand curve would be below the average total cost curve. 
D)  The monopolist would be operating at a loss.

Question 19

A monopolist sets its price:

Accepted Answer

A)  Below the demand curve. 
B)  Without constraints since there is no competition. 
C)  At the rate of output where marginal revenue equals marginal cost. 
D)  At the minimum of the long-run average total cost curve. 
A)  Below the demand curve. 
B)  Without constraints since there is no competition. 
C)  At the rate of output where marginal revenue equals marginal cost. 
D)  At the minimum of the long-run average total cost curve.

Question 20

Which of the following firms is likely to have the greatest market power?

Accepted Answer

A)  A farmer who can sell as much lettuce as he can grow. 
B)  A single soft drink company serving a campus with no barriers to entry. 
C)  The sole producer of the latest computer microchip technology. 
D)  A regulated natural monopoly selling natural gas service. 
A)  A farmer who can sell as much lettuce as he can grow. 
B)  A single soft drink company serving a campus with no barriers to entry. 
C)  The sole producer of the latest computer microchip technology. 
D)  A regulated natural monopoly selling natural gas service.

The market structure of the U.S.soft drink industry is most likely:

Which of the following statements is true,assuming the same cost and demand conditions?

A NEWSWIRE article in the text is titled "OPEC Keeps Output Target on Hold Despite Weak Economy".When OPEC member nations work collectively to set their combined rate of output,they are attempting to duplicate ______ outcomes.

A monopolist has market power because it faces a downward-sloping demand curve.

If the entire output of a market is produced by a single seller,the firm:

Which of the following is true for a monopoly?

Figure 7.3: -In Figure 7.3,if this industry is competitive,the profit-maximizing price is:

Market power exists if a firm can alter:

Suppose a monopoly pharmaceutical company produces a drug and sells 100 prescriptions for $25 each.In order to sell 101 prescriptions,the monopolist must lower the price to $24 per prescription.The marginal revenue of the 101^st prescription is:

Even when a market appears to be a monopoly it can be contestable if there are many potential entrants.

The demand curve for a monopolist's product is the same as the market demand curve for the product.

Which of the following is an argument in support of market power?

Figure 7.3: -In Figure 7.3,at the profit maximizing level of output for a monopolist,marginal cost is:

Monopolies tend to inhibit technology and innovation by keeping competition out of the market.

Which of the following is consistent with a monopoly industry?

The following table shows some costs and prices faced by an airplane manufacturer. Table 7.1-Monopoly costs and revenue -In Table 7.1,the maximum profit that can be achieved is:

For a profit-maximizing monopolist,price exceeds marginal cost at all times.

Why would a monopolist never set a price on a point in the inelastic portion of the demand curve?

A monopolist sets its price:

Which of the following firms is likely to have the greatest market power?

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

The market structure of the U.S.soft drink industry is most likely:

Which of the following statements is true,assuming the same cost and demand conditions?

A NEWSWIRE article in the text is titled "OPEC Keeps Output Target on Hold Despite Weak Economy".When OPEC member nations work collectively to set their combined rate of output,they are attempting to duplicate ______ outcomes.

A monopolist has market power because it faces a downward-sloping demand curve.

If the entire output of a market is produced by a single seller,the firm:

Which of the following is true for a monopoly?

Figure 7.3: -In Figure 7.3,if this industry is competitive,the profit-maximizing price is:

Market power exists if a firm can alter:

Suppose a monopoly pharmaceutical company produces a drug and sells 100 prescriptions for $25 each.In order to sell 101 prescriptions,the monopolist must lower the price to $24 per prescription.The marginal revenue of the 101st prescription is:

Even when a market appears to be a monopoly it can be contestable if there are many potential entrants.

The demand curve for a monopolist's product is the same as the market demand curve for the product.

Which of the following is an argument in support of market power?

Figure 7.3: -In Figure 7.3,at the profit maximizing level of output for a monopolist,marginal cost is:

Monopolies tend to inhibit technology and innovation by keeping competition out of the market.

Which of the following is consistent with a monopoly industry?

The following table shows some costs and prices faced by an airplane manufacturer. Table 7.1-Monopoly costs and revenue -In Table 7.1,the maximum profit that can be achieved is:

For a profit-maximizing monopolist,price exceeds marginal cost at all times.

Why would a monopolist never set a price on a point in the inelastic portion of the demand curve?

A monopolist sets its price:

Which of the following firms is likely to have the greatest market power?

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 pharmaceutical company produces a drug and sells 100 prescriptions for $25 each.In order to sell 101 prescriptions,the monopolist must lower the price to $24 per prescription.The marginal revenue of the 101^st prescription is: