Question 1

Producers in perfect competition receive a smaller producer surplus than a monopoly producer.

Accepted Answer

A) True 
 B)False

Question 2

Using a broad definition,a firm would have a monopoly if

Accepted Answer

A)  it produced a product that has substitutes. 
B)  it does not have to collude with any other producer to earn an economic profit. 
C)  there is no other firm selling a substitute for its product close enough that its economic profits are competed away in the long run. 
D)  it can make decisions regarding price and output without violating antitrust laws. 
A)  it produced a product that has substitutes. 
B)  it does not have to collude with any other producer to earn an economic profit. 
C)  there is no other firm selling a substitute for its product close enough that its economic profits are competed away in the long run. 
D)  it can make decisions regarding price and output without violating antitrust laws.

Question 3

Which of the following is a characteristic shared by a perfectly competitive firm and a monopoly?

Accepted Answer

A)  Each must lower its price to sell more output. 
B)  Each sets a price for its product that will maximise its revenue. 
C)  Each maximises profits by producing a quantity for which marginal revenue equals marginal cost. 
D)  Each maximises profits by producing a quantity for which price equals marginal cost. 
A)  Each must lower its price to sell more output. 
B)  Each sets a price for its product that will maximise its revenue. 
C)  Each maximises profits by producing a quantity for which marginal revenue equals marginal cost. 
D)  Each maximises profits by producing a quantity for which price equals marginal cost.

Question 4

To maximise profit a monopolist will produce where

Accepted Answer

A)  marginal revenue is equal to marginal cost. 
B)  demand for its product is unit-elastic. 
C)  revenue per unit is maximised. 
D)  average total cost is equal to average revenue. 
A)  marginal revenue is equal to marginal cost. 
B)  demand for its product is unit-elastic. 
C)  revenue per unit is maximised. 
D)  average total cost is equal to average revenue.

Question 5

Identify four reasons for high entry barriers.Briefly explain each reason.
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

1.Economies of scale.This occurs when a

Question 6

If a firm's average total cost is less than price where MR = MC,

Accepted Answer

A)  the firm should shut down. 
B)  the firm should raise its price. 
C)  the firm should continue to produce the output it is producing. 
D)  the firm should cut back on its output to lower its cost. 
A)  the firm should shut down. 
B)  the firm should raise its price. 
C)  the firm should continue to produce the output it is producing. 
D)  the firm should cut back on its output to lower its cost.

Question 7

'Being the only seller in the market,the monopolist can choose any price and quantity it desires.' Evaluate this statement: Is it true or false? Explain your answer.
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

The statement is false.The monopolist ca

Question 8

Relative to a perfectly competitive market,a monopoly results in

Accepted Answer

A)  a gain in producer surplus equal to the gain in consumer surplus. 
B)  a gain in producer surplus equal to the loss in consumer surplus. 
C)  a gain in producer surplus less than the loss in consumer surplus. 
D)  greater economic efficiency. 
A)  a gain in producer surplus equal to the gain in consumer surplus. 
B)  a gain in producer surplus equal to the loss in consumer surplus. 
C)  a gain in producer surplus less than the loss in consumer surplus. 
D)  greater economic efficiency.

Question 9

The market demand curve facing a monopolist is more elastic than the market demand curve facing a monopolistic competitor.

Accepted Answer

A) True 
 B)False

Question 10

Figure 8.4   Figure 8.4 shows the demand and cost curves for a monopolist.
-Refer to Figure 8.4.The profit-maximising/loss-minimising output level is -.

Accepted Answer

A)  600 units 
B)  800 units 
C)  940 units 
D)  1160 units 
A)  600 units 
B)  800 units 
C)  940 units 
D)  1160 units

Question 11

What does a monopoly face?

Accepted Answer

A)  A perfectly elastic demand curve 
B)  A perfectly inelastic demand curve 
C)  A horizontal demand curve 
D)  A downward-sloping demand curve 
A)  A perfectly elastic demand curve 
B)  A perfectly inelastic demand curve 
C)  A horizontal demand curve 
D)  A downward-sloping demand curve

Question 12

Figure 8.6   Figure 8.6 shows the cost and demand curves for a monopolist.
-Refer to Figure 8.6.What is the monopolist's total revenue?

Accepted Answer

A)  $1116 
B)  $1488 
C)  $1726.40 
D)  $1826 
A)  $1116 
B)  $1488 
C)  $1726.40 
D)  $1826

Question 13

Economic efficiency requires that a natural monopoly's price be set corresponding to the quantity where marginal revenue equals marginal cost.

Accepted Answer

A) True 
 B)False

Question 14

Figure 8.10  
-Refer to Figure 8.10.The area that represents producer surplus under a monopoly is -.

Accepted Answer

A)  the triangle 0P2E 
B)  the triangle 0P3H 
C)  the trapezium 0P1FH 
D)  the rectangle P1P3HF 
A)  the triangle 0P2E 
B)  the triangle 0P3H 
C)  the trapezium 0P1FH 
D)  the rectangle P1P3HF

Question 15

Table 8.2
 $$\begin{array} { | c | c | c | } 
\hline \text { Quantity per } & \text { Price per } & \text { Total Cost } \
\text { Day (cases) } & \text { Case } \
\hline 1 &\$16& \$ 7.00 \
\hline 2 & 15 & 9.50 \
\hline 3 & 14 & 11.00 \
\hline 4 & 13 & 12.00 \
\hline 5 & 12 & 14.50 \
\hline 6 & 11 & 17.50 \
\hline 7 & 10 & 21.00 \
\hline 8 & 9 & 25.00 \
\hline 9 & 8 & 30.00 \
\hline 10 & 7 & 35.50 \
\hline
\end{array}$$ The government of a small developing country has granted exclusive rights to Linden Enterprises for the production of plastic syringes. Table 8.2 shows the cost and demand data for this government-protected monopolist.
-Refer to Table 8.2.The amount of profit that the firm earns is -.

Accepted Answer

A)  $34.50 
B)  $42 
C)  $47 
D)  $49 
A)  $34.50 
B)  $42 
C)  $47 
D)  $49

Question 16

Which of the following statements applies to a monopolist but not to a perfectly competitive firm at their profit maximising outputs?

Accepted Answer

A)  Marginal revenue is less than price. 
B)  Marginal revenue equals marginal cost. 
C)  Price equals marginal cost. 
D)  Average revenue equals average cost. 
A)  Marginal revenue is less than price. 
B)  Marginal revenue equals marginal cost. 
C)  Price equals marginal cost. 
D)  Average revenue equals average cost.

Question 17

Peet's Coffee and Teas produces some flavourful varieties of Peet's brand coffee.Is Peet's a monopoly?

Accepted Answer

A)  Yes, there are no substitutes to Peet's coffee. 
B)  No, although Peet's coffee is a unique product, there are many different brands of coffee that are very close substitutes. 
C)  Yes, Peet's is the only supplier of Peet's coffee in a market where there are high barriers to entry. 
D)  No, Peet's is not a monopoly because there are many branches of Peet's. 
A)  Yes, there are no substitutes to Peet's coffee. 
B)  No, although Peet's coffee is a unique product, there are many different brands of coffee that are very close substitutes. 
C)  Yes, Peet's is the only supplier of Peet's coffee in a market where there are high barriers to entry. 
D)  No, Peet's is not a monopoly because there are many branches of Peet's.

Question 18

Which one of the following is not a possible barrier to entry high enough to keep competing firms out of a monopoly industry?

Accepted Answer

A)  The monopoly firm has control of a key resource necessary to produce a good. 
B)  There are important network externalities in supplying a good or service. 
C)  large economies of scale that result in a natural monopoly 
D)  a high concentration ratio 
A)  The monopoly firm has control of a key resource necessary to produce a good. 
B)  There are important network externalities in supplying a good or service. 
C)  large economies of scale that result in a natural monopoly 
D)  a high concentration ratio

Question 19

Figure 8.3   Figure 8.3 above shows the demand and cost curves facing a monopolist.
-Refer to Figure 8.3.Suppose the monopolist represented in the diagram above produces positive output.The profit/loss per unit is -.

Accepted Answer

A)  loss of $7 per unit 
B)  profit of $30 per unit 
C)  loss of $21 per unit 
D)  profit of $14 per unit 
A)  loss of $7 per unit 
B)  profit of $30 per unit 
C)  loss of $21 per unit 
D)  profit of $14 per unit

Question 20

If a theatre company expects $250 000 in ticket revenue from five performances and $288 000 in ticket revenue if it adds a sixth performance,the

Accepted Answer

A)  marginal revenue of the sixth performance is $48 000. 
B)  marginal revenue of the sixth performance is $38 000. 
C)  cost of staging the sixth performance is probably higher than the cost of staging the previous five. 
D)  company will be making a loss on the sixth performance because its ticket sales will be less than the average received from the previous five. 
A)  marginal revenue of the sixth performance is $48 000. 
B)  marginal revenue of the sixth performance is $38 000. 
C)  cost of staging the sixth performance is probably higher than the cost of staging the previous five. 
D)  company will be making a loss on the sixth performance because its ticket sales will be less than the average received from the previous five.

Producers in perfect competition receive a smaller producer surplus than a monopoly producer.

Using a broad definition,a firm would have a monopoly if

Which of the following is a characteristic shared by a perfectly competitive firm and a monopoly?

To maximise profit a monopolist will produce where

Identify four reasons for high entry barriers.Briefly explain each reason. __________________________________________________________________________________________________________________________________________________________________________________________

If a firm's average total cost is less than price where MR = MC,

Relative to a perfectly competitive market,a monopoly results in

The market demand curve facing a monopolist is more elastic than the market demand curve facing a monopolistic competitor.

Figure 8.4 Figure 8.4 shows the demand and cost curves for a monopolist. -Refer to Figure 8.4.The profit-maximising/loss-minimising output level is -.

What does a monopoly face?

Figure 8.6 Figure 8.6 shows the cost and demand curves for a monopolist. -Refer to Figure 8.6.What is the monopolist's total revenue?

Economic efficiency requires that a natural monopoly's price be set corresponding to the quantity where marginal revenue equals marginal cost.

Figure 8.10 -Refer to Figure 8.10.The area that represents producer surplus under a monopoly is -.

Which of the following statements applies to a monopolist but not to a perfectly competitive firm at their profit maximising outputs?

Peet's Coffee and Teas produces some flavourful varieties of Peet's brand coffee.Is Peet's a monopoly?

Which one of the following is not a possible barrier to entry high enough to keep competing firms out of a monopoly industry?

Figure 8.3 Figure 8.3 above shows the demand and cost curves facing a monopolist. -Refer to Figure 8.3.Suppose the monopolist represented in the diagram above produces positive output.The profit/loss per unit is -.

If a theatre company expects $250 000 in ticket revenue from five performances and $288 000 in ticket revenue if it adds a sixth performance,the

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency,government Price Setting and Taxes

Technology,production and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition and Oligopoly

The Markets for Labour and Other Factors of Production

Government Intervention in the Market

Social Policy and Inequality

Gdp: Measuring Total Production, income and Economic Growth

Unemployment and Inflation

Aggregate Demand and Aggregate Supply Analysis

Money,banks and the Reserve Bank of Australia

Monetary Policy

Fiscal Policy

Comparative Advantage and the Gains From International Trade

Macroeconomics in an Open Economy

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Exam 8: Monopoly Markets

Producers in perfect competition receive a smaller producer surplus than a monopoly producer.

Using a broad definition,a firm would have a monopoly if

Which of the following is a characteristic shared by a perfectly competitive firm and a monopoly?

To maximise profit a monopolist will produce where

Identify four reasons for high entry barriers.Briefly explain each reason. __________________________________________________________________________________________________________________________________________________________________________________________

If a firm's average total cost is less than price where MR = MC,

Relative to a perfectly competitive market,a monopoly results in

The market demand curve facing a monopolist is more elastic than the market demand curve facing a monopolistic competitor.

Figure 8.4 Figure 8.4 shows the demand and cost curves for a monopolist. -Refer to Figure 8.4.The profit-maximising/loss-minimising output level is -.

What does a monopoly face?

Figure 8.6 Figure 8.6 shows the cost and demand curves for a monopolist. -Refer to Figure 8.6.What is the monopolist's total revenue?

Economic efficiency requires that a natural monopoly's price be set corresponding to the quantity where marginal revenue equals marginal cost.

Figure 8.10 -Refer to Figure 8.10.The area that represents producer surplus under a monopoly is -.

Which of the following statements applies to a monopolist but not to a perfectly competitive firm at their profit maximising outputs?

Peet's Coffee and Teas produces some flavourful varieties of Peet's brand coffee.Is Peet's a monopoly?

Which one of the following is not a possible barrier to entry high enough to keep competing firms out of a monopoly industry?

Figure 8.3 Figure 8.3 above shows the demand and cost curves facing a monopolist. -Refer to Figure 8.3.Suppose the monopolist represented in the diagram above produces positive output.The profit/loss per unit is -.

If a theatre company expects $250 000 in ticket revenue from five performances and $288 000 in ticket revenue if it adds a sixth performance,the

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency,government Price Setting and Taxes

Technology,production and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition and Oligopoly

The Markets for Labour and Other Factors of Production

Government Intervention in the Market

Social Policy and Inequality

Gdp: Measuring Total Production, income and Economic Growth

Unemployment and Inflation

Aggregate Demand and Aggregate Supply Analysis

Money,banks and the Reserve Bank of Australia

Monetary Policy

Fiscal Policy

Comparative Advantage and the Gains From International Trade

Macroeconomics in an Open Economy

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