Question 1

In response to a rightward shift in the demand for a commodity,a monopoly firm that is producing at the profit-maximizing level of output will:

Accepted Answer

A) decrease price and output. 
B) decrease output and increase price. 
C) increase price but maintain the level of output. 
D) increase output and price. 
A) decrease price and output. 
B) decrease output and increase price. 
C) increase price but maintain the level of output. 
D) increase output and price.

Question 2

If a monopolist's marginal cost is zero,in order to maximize profit the monopolist will:

Accepted Answer

A) set a price where demand is unit elastic. 
B) produce where demand is elastic. 
C) expand output to the limit of its physical capacity. 
D) not impose an efficiency loss on the society,since P=MC. 
A) set a price where demand is unit elastic. 
B) produce where demand is elastic. 
C) expand output to the limit of its physical capacity. 
D) not impose an efficiency loss on the society,since P=MC.

Question 3

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 4

Assume that a firm faces a linear demand curve P = 170 - 4Q.Its cost function is given by C = 40 + 10Q.Show how the equilibrium output varies when the firm operates as a monopoly and as a perfectly competitive firm.

Accepted Answer

The monopolist's profit-maximizing outpu

Question 5

In the U.S. ,antitrust laws have been designed to _____.

Accepted Answer

A) increase producer surplus 
B) reduce market capitalization of firms 
C) restrict monopoly power 
D) promote profitability of American firms 
A) increase producer surplus 
B) reduce market capitalization of firms 
C) restrict monopoly power 
D) promote profitability of American firms

Question 6

The following table shows the total revenue and total cost for a monopolist at various levels of output.
 
Refer to Table 11-2.At an output of 9 units,the price elasticity of demand _____.

Accepted Answer

A) is more than one. 
B) is less than one. 
C) is equal to one. 
D) cannot be determined without more data. 
A) is more than one. 
B) is less than one. 
C) is equal to one. 
D) cannot be determined without more data.

Question 7

The following table shows the total revenue and total cost for a monopolist at various levels of output.
 
Refer to Table 11-2.The economic profit earned by the firm by producing the profit-maximizing level of output is _____.

Accepted Answer

A) $13 
B) $9 
C) $18 
D) $4 
A) $13 
B) $9 
C) $18 
D) $4

Question 8

A profit-maximizing monopolist will produce at a point on the _____ portion of the demand curve where _____.

Accepted Answer

A) elastic;average revenue is negative 
B) inelastic;marginal cost is falling 
C) inelastic;total revenue is increasing 
D) elastic;marginal revenue is positive 
A) elastic;average revenue is negative 
B) inelastic;marginal cost is falling 
C) inelastic;total revenue is increasing 
D) elastic;marginal revenue is positive

Question 9

For a monopoly firm to maximize profits,its price markup should:

Accepted Answer

A) be at its maximum possible point. 
B) equal the price elasticity of demand. 
C) equal the inverse of demand elasticity. 
D) equal marginal revenue. 
A) be at its maximum possible point. 
B) equal the price elasticity of demand. 
C) equal the inverse of demand elasticity. 
D) equal marginal revenue.

Question 10

The markup of price over marginal cost for a monopolist is _____.

Accepted Answer

A) independent of the price elasticity of demand 
B) inversely related to the price elasticity of demand 
C) the same as the price elasticity of demand 
D) the same as the price elasticity of supply 
A) independent of the price elasticity of demand 
B) inversely related to the price elasticity of demand 
C) the same as the price elasticity of demand 
D) the same as the price elasticity of supply

Question 11

Monopoly power does not guarantee positive profits because _____.

Accepted Answer

A) demand elasticity in monopoly markets is relatively low 
B) monopoly firms are price takers 
C) sales and profits of monopoly firms are restricted by the demand curve 
D) the monopolist's demand curve is the same as the marginal revenue curve 
A) demand elasticity in monopoly markets is relatively low 
B) monopoly firms are price takers 
C) sales and profits of monopoly firms are restricted by the demand curve 
D) the monopolist's demand curve is the same as the marginal revenue curve

Question 12

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 13

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.

Question 14

If marginal costs are zero,a monopolist will maximize profit by producing at the point where:

Accepted Answer

A) average revenue is zero. 
B) price is maximum. 
C) total revenue is maximum. 
D) marginal revenue is maximum. 
A) average revenue is zero. 
B) price is maximum. 
C) total revenue is maximum. 
D) marginal revenue is maximum.

Question 15

The following figure shows the marginal revenue [MR],demand,and average cost [AC] curves for a profit-maximizing monopolist in the long run.  
Refer to Figure 11-3.A profit-maximizing monopoly firm will produce output equal to _____.

Accepted Answer

A) OC 
B) OE 
C) OJ 
D) CJ 
A) OC 
B) OE 
C) OJ 
D) CJ

Question 16

A monopolist has the following short-run total cost,marginal cost,and demand functions:
Total Cost:   
 Marginal Cost:   
Demand:   
where P is the price per unit of output,and Q is the quantity of output.
a)What price and quantity combination maximizes the monopolist's total revenue?
b)What is the price range over which a price decrease would lead to an increase in the monopolist's total revenue?
c)What price will the profit-maximizing monopolist charge? What will profits equal?
d)What is the allocatively efficient price-quantity combination?

Accepted Answer

a)Total revenue is maximized when margin

Question 17

When comparing a monopoly firm and a competitive firm in the long run,which of the following statements is not correct?

Accepted Answer

A) A monopoly firm does not need to produce output at the lowest possible cost but a competitive firm must. 
B) A monopoly firm earns economic profit at its profit-maximizing level of output but a competitive firm does not. 
C) A monopoly firm operates at the minimum point on its average cost curve but a competitive firm does not. 
D) A monopoly firm will produce more than the efficient level of output but a competitive firm will always produce the efficient level of output. 
A) A monopoly firm does not need to produce output at the lowest possible cost but a competitive firm must. 
B) A monopoly firm earns economic profit at its profit-maximizing level of output but a competitive firm does not. 
C) A monopoly firm operates at the minimum point on its average cost curve but a competitive firm does not. 
D) A monopoly firm will produce more than the efficient level of output but a competitive firm will always produce the efficient level of output.

Question 18

Which of the following statements about the effects of monopoly is incorrect?

Accepted Answer

A) A monopoly restricts output to maximize profits. 
B) A monopoly raises price above the competitive level. 
C) A monopoly causes input prices to rise. 
D) A monopoly causes a redistribution of income. 
A) A monopoly restricts output to maximize profits. 
B) A monopoly raises price above the competitive level. 
C) A monopoly causes input prices to rise. 
D) A monopoly causes a redistribution of income.

Question 19

A firm that has monopoly power _____.

Accepted Answer

A) can profitably set price above marginal cost 
B) sells goods at higher prices due to economies of scale 
C) faces a horizontal demand curve 
D) produces easily substitutable goods 
A) can profitably set price above marginal cost 
B) sells goods at higher prices due to economies of scale 
C) faces a horizontal demand curve 
D) produces easily substitutable goods

Question 20

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

Accepted Answer

A) AFCO 
B) IHB 
C) AFGB 
D) AFHB 
A) AFCO 
B) IHB 
C) AFGB 
D) AFHB

In response to a rightward shift in the demand for a commodity,a monopoly firm that is producing at the profit-maximizing level of output will:

If a monopolist's marginal cost is zero,in order to maximize profit the monopolist will:

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

Assume that a firm faces a linear demand curve P = 170 - 4Q.Its cost function is given by C = 40 + 10Q.Show how the equilibrium output varies when the firm operates as a monopoly and as a perfectly competitive firm.

In the U.S. ,antitrust laws have been designed to _____.

The following table shows the total revenue and total cost for a monopolist at various levels of output. Refer to Table 11-2.At an output of 9 units,the price elasticity of demand _____.

The following table shows the total revenue and total cost for a monopolist at various levels of output. Refer to Table 11-2.The economic profit earned by the firm by producing the profit-maximizing level of output is _____.

A profit-maximizing monopolist will produce at a point on the _ portion of the demand curve where _.

For a monopoly firm to maximize profits,its price markup should:

The markup of price over marginal cost for a monopolist is _____.

Monopoly power does not guarantee positive profits because _____.

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

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

If marginal costs are zero,a monopolist will maximize profit by producing at the point where:

The following figure shows the marginal revenue [MR],demand,and average cost [AC] curves for a profit-maximizing monopolist in the long run. Refer to Figure 11-3.A profit-maximizing monopoly firm will produce output equal to _____.

When comparing a monopoly firm and a competitive firm in the long run,which of the following statements is not correct?

Which of the following statements about the effects of monopoly is incorrect?

A firm that has monopoly power _____.

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

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

In response to a rightward shift in the demand for a commodity,a monopoly firm that is producing at the profit-maximizing level of output will:

If a monopolist's marginal cost is zero,in order to maximize profit the monopolist will:

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

Assume that a firm faces a linear demand curve P = 170 - 4Q.Its cost function is given by C = 40 + 10Q.Show how the equilibrium output varies when the firm operates as a monopoly and as a perfectly competitive firm.

In the U.S. ,antitrust laws have been designed to _____.

The following table shows the total revenue and total cost for a monopolist at various levels of output. Refer to Table 11-2.At an output of 9 units,the price elasticity of demand _____.

The following table shows the total revenue and total cost for a monopolist at various levels of output. Refer to Table 11-2.The economic profit earned by the firm by producing the profit-maximizing level of output is _____.

A profit-maximizing monopolist will produce at a point on the _____ portion of the demand curve where _____.

For a monopoly firm to maximize profits,its price markup should:

The markup of price over marginal cost for a monopolist is _____.

Monopoly power does not guarantee positive profits because _____.

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

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

If marginal costs are zero,a monopolist will maximize profit by producing at the point where:

The following figure shows the marginal revenue [MR],demand,and average cost [AC] curves for a profit-maximizing monopolist in the long run. Refer to Figure 11-3.A profit-maximizing monopoly firm will produce output equal to _____.

When comparing a monopoly firm and a competitive firm in the long run,which of the following statements is not correct?

Which of the following statements about the effects of monopoly is incorrect?

A firm that has monopoly power _____.

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

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

A profit-maximizing monopolist will produce at a point on the _ portion of the demand curve where _.