Question 1

For the same demand and cost conditions,which of the following is true?

Accepted Answer

A) Consumer surplus and producer surplus are both lesser in a monopoly market compared to perfect competition. 
B) Consumer surplus is lesser but producer surplus is greater in a monopoly market compared to perfect competition. 
C) Consumer surplus is greater and producer surplus is lesser in a monopoly market compared to perfect competition. 
D) Consumer surplus and producer surplus are both greater in perfect competition than in a monopoly. 
A) Consumer surplus and producer surplus are both lesser in a monopoly market compared to perfect competition. 
B) Consumer surplus is lesser but producer surplus is greater in a monopoly market compared to perfect competition. 
C) Consumer surplus is greater and producer surplus is lesser in a monopoly market compared to perfect competition. 
D) Consumer surplus and producer surplus are both greater in perfect competition than in a monopoly.

Question 2

For the same demand and cost conditions,how do price and output of a monopoly compare to those for a competitive firm and why is the deadweight loss of a monopoly a loss of welfare?

Accepted Answer

The figure shows the market demand curve

Question 3

A price ceiling imposed by the government in a monopoly market can:

Accepted Answer

A) lead to a decrease in output. 
B) increase the deadweight loss from a monopoly. 
C) raise prices and lower output. 
D) lead to a decline in product quality. 
A) lead to a decrease in output. 
B) increase the deadweight loss from a monopoly. 
C) raise prices and lower output. 
D) lead to a decline in product quality.

Question 4

The deadweight loss of a monopoly arises from:

Accepted Answer

A) the loss of consumer surplus being greater than the gain in producer surplus. 
B) the transfer of producer surplus to consumers. 
C) the loss in producer surplus being greater than the gain in consumer surplus. 
D) the combined loss of consumer and producer surplus. 
A) the loss of consumer surplus being greater than the gain in producer surplus. 
B) the transfer of producer surplus to consumers. 
C) the loss in producer surplus being greater than the gain in consumer surplus. 
D) the combined loss of consumer and producer surplus.

Question 5

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.  
Refer to Figure 11-1.An unregulated monopolist will sell _____ units of output at a price of_____ to maximize profit.

Accepted Answer

A) OJ and OW 
B) OK and OC 
C) OJ and OB 
D) OL and OZ 
A) OJ and OW 
B) OK and OC 
C) OJ and OB 
D) OL and OZ

Question 6

For a monopoly firm,marginal revenue is negative when:

Accepted Answer

A) the demand curve is upward-sloping. 
B) demand is elastic. 
C) demand is inelastic. 
D) demand is unit elastic. 
A) the demand curve is upward-sloping. 
B) demand is elastic. 
C) demand is inelastic. 
D) demand is unit elastic.

Question 7

The following figure shows the marginal cost [MC],average cost [AC],marginal revenue [MR],and demand curves for a profit-maximizing monopolist.  
Refer to Figure 11-2.The equilibrium price in the monopoly market is _____.

Accepted Answer

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

Question 8

Assume that a monopoly firm's price is $4,marginal cost is $3 and the absolute value of price elasticity of demand is 4.Based on this information we can conclude that the firm:

Accepted Answer

A) is maximizing profit. 
B) should increase output. 
C) should reduce output. 
D) should increase price but keep output constant. 
A) is maximizing profit. 
B) should increase output. 
C) should reduce output. 
D) should increase price but keep output constant.

Question 9

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 10

Use the following table to answer the question : Table 11-1 : shows the quantity demanded of a good at various prices for a monopoly firm.
 
-Refer to Table 11-1.What is the marginal revenue when 3 units are sold?

Accepted Answer

A) $20 
B) $30 
C) $50 
D) $70 
A) $20 
B) $30 
C) $50 
D) $70

Question 11

Prove that the linear demand curve,   where    and   
are positive constants,is unit elastic at its mid-point.

Accepted Answer

@#IMG-DLM&_TB1826_00 
The absolute value of the pr

Question 12

A monopolist will never operate on the lower half of the demand curve because for this range of output:

Accepted Answer

A) average revenue is negative. 
B) marginal cost exceeds marginal revenue. 
C) total revenue can be increased further. 
D) marginal revenue is positive. 
A) average revenue is negative. 
B) marginal cost exceeds marginal revenue. 
C) total revenue can be increased further. 
D) marginal revenue is positive.

Question 13

Use the following figure to answer the question : Figure 11-5 : shows the demand curve and the marginal revenue curve of a monopolist.On the horizontal axis,OG = GF.  
-Refer to Figure 11-5.Total revenue is highest at point _____ on the demand curve.

Accepted Answer

A) E 
B) F 
C) A 
D) B 
A) E 
B) F 
C) A 
D) B

Question 14

The following table shows the quantity demanded of a good at various prices for a monopoly firm.
 
Refer to Table 11-1.If the marginal cost of producing each unit is $30,what is the firm's profit-maximizing level of output?

Accepted Answer

A) 3 
B) 4 
C) 5 
D) 7 
A) 3 
B) 4 
C) 5 
D) 7

Question 15

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 16

Monopoly power possessed by any one firm is _____.

Accepted Answer

A) higher,the greater the number of firms 
B) reduced,as the elasticity of supply by rival firms as a group decreases 
C) reduced,as the elasticity of demand increases 
D) higher,the higher the number of buyers 
A) higher,the greater the number of firms 
B) reduced,as the elasticity of supply by rival firms as a group decreases 
C) reduced,as the elasticity of demand increases 
D) higher,the higher the number of buyers

Question 17

The use of antitrust statutes by the United States Federal Trade Commission and the Antitrust Division of the U.S.Department of Justice has declined over the years.Which of the following statements is the correct reason for this decrease in antitrust enforcement?

Accepted Answer

A) The increase in the number of firms over the years has reduced monopoly power in most markets. 
B) The prosecution of monopoly firms leads to a decrease in total surplus. 
C) The dynamic view of monopoly is increasingly being used in the policymaking arena. 
D) With the spread of globalization,it is difficult to prosecute companies that operate from many different countries. 
A) The increase in the number of firms over the years has reduced monopoly power in most markets. 
B) The prosecution of monopoly firms leads to a decrease in total surplus. 
C) The dynamic view of monopoly is increasingly being used in the policymaking arena. 
D) With the spread of globalization,it is difficult to prosecute companies that operate from many different countries.

Question 18

A profit-maximizing monopolist will maximize both total revenue and economic profit at the same price when _____,given that there are no fixed costs.

Accepted Answer

A) the marginal cost curve is upward-sloping 
B) demand is perfectly inelastic 
C) marginal cost is zero 
D) marginal revenue is an increasing function of quantity produced 
A) the marginal cost curve is upward-sloping 
B) demand is perfectly inelastic 
C) marginal cost is zero 
D) marginal revenue is an increasing function of quantity produced

Question 19

The marginal revenue curve of a monopolist lies below the demand curve because:

Accepted Answer

A) the demand curve is unit elastic. 
B) the monopolist must lower price on all units sold in order to sell additional units. 
C) the monopolist is a price taker. 
D) the marginal revenue curve coincides with the average revenue curve. 
A) the demand curve is unit elastic. 
B) the monopolist must lower price on all units sold in order to sell additional units. 
C) the monopolist is a price taker. 
D) the marginal revenue curve coincides with the average revenue curve.

Question 20

The U.S.Postal Service [USPS] has a legal monopoly over first-class mail in the U.S.However,it has been running losses over the recent years.
a)Is this fact consistent with the fact that USPS operates with significant monopoly power?
b)What are the factors that could possibly be leading to USPS' losses?

Accepted Answer

a)A monopoly can also run a loss because

For the same demand and cost conditions,which of the following is true?

For the same demand and cost conditions,how do price and output of a monopoly compare to those for a competitive firm and why is the deadweight loss of a monopoly a loss of welfare?

A price ceiling imposed by the government in a monopoly market can:

The deadweight loss of a monopoly arises from:

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. Refer to Figure 11-1.An unregulated monopolist will sell _ units of output at a price of_ to maximize profit.

For a monopoly firm,marginal revenue is negative when:

The following figure shows the marginal cost [MC],average cost [AC],marginal revenue [MR],and demand curves for a profit-maximizing monopolist. Refer to Figure 11-2.The equilibrium price in the monopoly market is _____.

Assume that a monopoly firm's price is $4,marginal cost is $3 and the absolute value of price elasticity of demand is 4.Based on this information we can conclude that the firm:

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

Use the following table to answer the question : Table 11-1 : shows the quantity demanded of a good at various prices for a monopoly firm. -Refer to Table 11-1.What is the marginal revenue when 3 units are sold?

Prove that the linear demand curve, where and are positive constants,is unit elastic at its mid-point.

A monopolist will never operate on the lower half of the demand curve because for this range of output:

Use the following figure to answer the question : Figure 11-5 : shows the demand curve and the marginal revenue curve of a monopolist.On the horizontal axis,OG = GF. -Refer to Figure 11-5.Total revenue is highest at point _____ on the demand curve.

The following table shows the quantity demanded of a good at various prices for a monopoly firm. Refer to Table 11-1.If the marginal cost of producing each unit is $30,what is the firm's profit-maximizing level of output?

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

Monopoly power possessed by any one firm is _____.

The use of antitrust statutes by the United States Federal Trade Commission and the Antitrust Division of the U.S.Department of Justice has declined over the years.Which of the following statements is the correct reason for this decrease in antitrust enforcement?

A profit-maximizing monopolist will maximize both total revenue and economic profit at the same price when _____,given that there are no fixed costs.

The marginal revenue curve of a monopolist lies below the demand curve because:

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

For the same demand and cost conditions,which of the following is true?

For the same demand and cost conditions,how do price and output of a monopoly compare to those for a competitive firm and why is the deadweight loss of a monopoly a loss of welfare?

A price ceiling imposed by the government in a monopoly market can:

The deadweight loss of a monopoly arises from:

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. Refer to Figure 11-1.An unregulated monopolist will sell _____ units of output at a price of_____ to maximize profit.

For a monopoly firm,marginal revenue is negative when:

The following figure shows the marginal cost [MC],average cost [AC],marginal revenue [MR],and demand curves for a profit-maximizing monopolist. Refer to Figure 11-2.The equilibrium price in the monopoly market is _____.

Assume that a monopoly firm's price is $4,marginal cost is $3 and the absolute value of price elasticity of demand is 4.Based on this information we can conclude that the firm:

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

Use the following table to answer the question : Table 11-1 : shows the quantity demanded of a good at various prices for a monopoly firm. -Refer to Table 11-1.What is the marginal revenue when 3 units are sold?

Prove that the linear demand curve, where and are positive constants,is unit elastic at its mid-point.

A monopolist will never operate on the lower half of the demand curve because for this range of output:

Use the following figure to answer the question : Figure 11-5 : shows the demand curve and the marginal revenue curve of a monopolist.On the horizontal axis,OG = GF. -Refer to Figure 11-5.Total revenue is highest at point _____ on the demand curve.

The following table shows the quantity demanded of a good at various prices for a monopoly firm. Refer to Table 11-1.If the marginal cost of producing each unit is $30,what is the firm's profit-maximizing level of output?

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

Monopoly power possessed by any one firm is _____.

The use of antitrust statutes by the United States Federal Trade Commission and the Antitrust Division of the U.S.Department of Justice has declined over the years.Which of the following statements is the correct reason for this decrease in antitrust enforcement?

A profit-maximizing monopolist will maximize both total revenue and economic profit at the same price when _____,given that there are no fixed costs.

The marginal revenue curve of a monopolist lies below the demand curve because:

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

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. Refer to Figure 11-1.An unregulated monopolist will sell _ units of output at a price of_ to maximize profit.