Question 1

A monopoly's economic profits are represented by

Accepted Answer

A) [price minus marginal cost] times number of units sold. 
B) [price minus average cost] times number of units sold. 
C) [marginal revenue minus price] times number of units sold. 
D) [marginal cost minus price] times number of units sold. 
A) [price minus marginal cost] times number of units sold. 
B) [price minus average cost] times number of units sold. 
C) [marginal revenue minus price] times number of units sold. 
D) [marginal cost minus price] times number of units sold. B

Question 2

For the practice of price discrimination to be successful,the monopoly must

Accepted Answer

A) face an imperfect resale market for its product. 
B) face similar demand curves for various markets. 
C) have similar costs among markets. 
D) have a downward sloping marginal cost curve. 
A) face an imperfect resale market for its product. 
B) face similar demand curves for various markets. 
C) have similar costs among markets. 
D) have a downward sloping marginal cost curve. A

Question 3

A profit-maximizing monopoly will produce that output for which

Accepted Answer

A) marginal revenue equals price. 
B) average cost is minimized. 
C) marginal cost is minimized. 
D) marginal cost equals marginal revenue. 
A) marginal revenue equals price. 
B) average cost is minimized. 
C) marginal cost is minimized. 
D) marginal cost equals marginal revenue. D

Question 4

All monopolies exist because of

Accepted Answer

A) firms' desire to maximize profits. 
B) failure of antitrust laws. 
C) barriers to entry. 
D) natural selection. 
A) firms' desire to maximize profits. 
B) failure of antitrust laws. 
C) barriers to entry. 
D) natural selection.

Question 5

A price-discriminating monopolist having identical costs in two markets should charge a higher price in that market

Accepted Answer

A) which has a higher demand. 
B) which has a more elastic demand. 
C) which has a less elastic demand. 
D) which has a higher marginal revenue. 
A) which has a higher demand. 
B) which has a more elastic demand. 
C) which has a less elastic demand. 
D) which has a higher marginal revenue.

Question 6

All of the following might explain a firm offering quantity discounts except:

Accepted Answer

A) lower costs of handling large orders. 
B) an inelastic demand for the good. 
C) monopoly power in this market. 
D) existence of some high and some low demand consumers. 
A) lower costs of handling large orders. 
B) an inelastic demand for the good. 
C) monopoly power in this market. 
D) existence of some high and some low demand consumers.

Question 7

Which might be a possible reason a cable television operator want to bundle channels together in packages ("tiers")?

Accepted Answer

A) delivering many channels to the consumer is not much more costly than delivering a few. 
B) simplifies the consumer's choice and perhaps lowers administrative costs. 
C) allows the firm to extract revenue from a consumer even if it does not know exactly which channels the consumer likes the most.. 
D) all of the above. 
A) delivering many channels to the consumer is not much more costly than delivering a few. 
B) simplifies the consumer's choice and perhaps lowers administrative costs. 
C) allows the firm to extract revenue from a consumer even if it does not know exactly which channels the consumer likes the most.. 
D) all of the above.

Question 8

From the point of view of economic efficiency,output in a monopolized market is

Accepted Answer

A) too high. 
B) perfect. 
C) too low. 
D) undesirable. 
A) too high. 
B) perfect. 
C) too low. 
D) undesirable.

Question 9

If the government requires a natural monopoly to price at marginal cost,

Accepted Answer

A) monopoly firms will earn zero economic profits because the price of the good equals the cost of producing that good. 
B) monopoly firms will operate at a loss because P < AC. 
C) more firms will be able to enter the market. 
D) producer surplus will increase because quantity supplied is greater. 
A) monopoly firms will earn zero economic profits because the price of the good equals the cost of producing that good. 
B) monopoly firms will operate at a loss because P < AC. 
C) more firms will be able to enter the market. 
D) producer surplus will increase because quantity supplied is greater.

Question 10

Which of the following is not a technical barrier to entry in a monopolized market?

Accepted Answer

A) A patent. 
B) Decreasing average cost. 
C) A low cost method of production known only by monopolist. 
D) Increasing returns to scale. 
A) A patent. 
B) Decreasing average cost. 
C) A low cost method of production known only by monopolist. 
D) Increasing returns to scale.

Question 11

Consider the same monopoly situation as in the previous question. The monopoly price is

Accepted Answer

A) 8 
B) 46 
C) 54 
D) 92 
A) 8 
B) 46 
C) 54 
D) 92

Question 12

Consider the same monopoly situation as in the previous question. The deadweight loss (compared to a single firm behaving as if it were perfectly competitive)is about

Accepted Answer

A) 667 
B) 333 
C) 1,000 
D) 1,333 
A) 667 
B) 333 
C) 1,000 
D) 1,333

Question 13

The "deadweight loss" from a monopoly refers to

Accepted Answer

A) the portion of a monopolist's profits that are above the competitive profit level. 
B) the increase in price due to the monopolization of a market. 
C) the inefficient use of factors of production by a monopoly. 
D) the loss of consumer surplus due to the monopolization of a market that is not transferred to another economic actor. 
A) the portion of a monopolist's profits that are above the competitive profit level. 
B) the increase in price due to the monopolization of a market. 
C) the inefficient use of factors of production by a monopoly. 
D) the loss of consumer surplus due to the monopolization of a market that is not transferred to another economic actor.

Question 14

A monopolist has total cost TC = .1Q2 - 2Q + 100 and marginal cost MC = .2Q - 2. Market demand is Q = 86 - P,implying that the firm's marginal revenue is MR = 86 - 2Q. Its profit-maximizing output is

Accepted Answer

A) 92 
B) 46 
C) 40 
D) 20 
A) 92 
B) 46 
C) 40 
D) 20

Question 15

Possible benefits of a monopoly include which of the following (choose all that apply)?

Accepted Answer

A) a savings of fixed costs because only one firm supplies quantity demanded. 
B) greater opportunities for research due to long-run positive economic profits. 
C) government regulation is more effective because the firm is "too big to fail." 
D) goods and services are provided at a lower price than under perfect competition because of a monopoly's decreasing average cost curve. 
A) a savings of fixed costs because only one firm supplies quantity demanded. 
B) greater opportunities for research due to long-run positive economic profits. 
C) government regulation is more effective because the firm is "too big to fail." 
D) goods and services are provided at a lower price than under perfect competition because of a monopoly's decreasing average cost curve.

Question 16

Consider the same monopoly situation as in the previous question. The deadweight loss associated with this monopoly is

Accepted Answer

A) 966 
B) 1,058 
C) 2,484 
D) 3,680 
A) 966 
B) 1,058 
C) 2,484 
D) 3,680

Question 17

Perfect price discrimination

Accepted Answer

A) is a common occurrence in situations with many buyers. 
B) occurs fairly often in situations with only a few buyers. 
C) is only observed in competitive markets. 
D) rarely occurs because firms do not have sufficient power to differentiate among specific buyers. 
A) is a common occurrence in situations with many buyers. 
B) occurs fairly often in situations with only a few buyers. 
C) is only observed in competitive markets. 
D) rarely occurs because firms do not have sufficient power to differentiate among specific buyers.

Question 18

Which of the following is not a legal barrier to entry in a monopolized market?

Accepted Answer

A) A patent. 
B) An exclusive franchise. 
C) Decreasing average cost. 
D) An exclusive license. 
A) A patent. 
B) An exclusive franchise. 
C) Decreasing average cost. 
D) An exclusive license.

Question 19

The supply curve for a monopoly is given by

Accepted Answer

A) the firm's marginal cost curve above the average variable cost curve. 
B) the one point on the demand curve that corresponds to the quantity for which price is equal to marginal cost. 
C) the entire demand curve above the point where price is equal to average cost. 
D) the monopolist does not have a well-defined supply curve. 
A) the firm's marginal cost curve above the average variable cost curve. 
B) the one point on the demand curve that corresponds to the quantity for which price is equal to marginal cost. 
C) the entire demand curve above the point where price is equal to average cost. 
D) the monopolist does not have a well-defined supply curve.

Question 20

Which is not an example of price discriminating by separating markets?

Accepted Answer

A) offering discounts for students with IDs. 
B) charging lower prices for airline tickets with a Saturday stay-over. 
C) selling 13 bagels (a "baker's dozen") for the price of 12. 
D) selling snowblowers at a discount in relatively warmer climates. 
A) offering discounts for students with IDs. 
B) charging lower prices for airline tickets with a Saturday stay-over. 
C) selling 13 bagels (a "baker's dozen") for the price of 12. 
D) selling snowblowers at a discount in relatively warmer climates.

A monopoly's economic profits are represented by

For the practice of price discrimination to be successful,the monopoly must

A profit-maximizing monopoly will produce that output for which

All monopolies exist because of

A price-discriminating monopolist having identical costs in two markets should charge a higher price in that market

All of the following might explain a firm offering quantity discounts except:

Which might be a possible reason a cable television operator want to bundle channels together in packages ("tiers")?

From the point of view of economic efficiency,output in a monopolized market is

If the government requires a natural monopoly to price at marginal cost,

Which of the following is not a technical barrier to entry in a monopolized market?

Consider the same monopoly situation as in the previous question. The monopoly price is

Consider the same monopoly situation as in the previous question. The deadweight loss (compared to a single firm behaving as if it were perfectly competitive)is about

The "deadweight loss" from a monopoly refers to

A monopolist has total cost TC = .1Q² - 2Q + 100 and marginal cost MC = .2Q - 2. Market demand is Q = 86 - P,implying that the firm's marginal revenue is MR = 86 - 2Q. Its profit-maximizing output is

Possible benefits of a monopoly include which of the following (choose all that apply)?

Consider the same monopoly situation as in the previous question. The deadweight loss associated with this monopoly is

Perfect price discrimination

Which of the following is not a legal barrier to entry in a monopolized market?

The supply curve for a monopoly is given by

Which is not an example of price discriminating by separating markets?

Economic Models

Utility and Choice

Demand Curves

Uncertainty

Game Theory

Production

Costs

Profit Maximization and Supply

Perfect Competition in a Single Market

General Equilibrium and Welfare

Imperfect Competition

Pricing in Input Markets

Capital and Time

Asymmetric Information

Externalities and Public Goods

Behavioral Economics

Filters

Exam 11: Monopoly

A monopoly's economic profits are represented by

For the practice of price discrimination to be successful,the monopoly must

A profit-maximizing monopoly will produce that output for which

All monopolies exist because of

A price-discriminating monopolist having identical costs in two markets should charge a higher price in that market

All of the following might explain a firm offering quantity discounts except:

Which might be a possible reason a cable television operator want to bundle channels together in packages ("tiers")?

From the point of view of economic efficiency,output in a monopolized market is

If the government requires a natural monopoly to price at marginal cost,

Which of the following is not a technical barrier to entry in a monopolized market?

Consider the same monopoly situation as in the previous question. The monopoly price is

Consider the same monopoly situation as in the previous question. The deadweight loss (compared to a single firm behaving as if it were perfectly competitive)is about

The "deadweight loss" from a monopoly refers to

A monopolist has total cost TC = .1Q2 - 2Q + 100 and marginal cost MC = .2Q - 2. Market demand is Q = 86 - P,implying that the firm's marginal revenue is MR = 86 - 2Q. Its profit-maximizing output is

Possible benefits of a monopoly include which of the following (choose all that apply)?

Consider the same monopoly situation as in the previous question. The deadweight loss associated with this monopoly is

Perfect price discrimination

Which of the following is not a legal barrier to entry in a monopolized market?

The supply curve for a monopoly is given by

Which is not an example of price discriminating by separating markets?

Economic Models

Utility and Choice

Demand Curves

Uncertainty

Game Theory

Production

Costs

Profit Maximization and Supply

Perfect Competition in a Single Market

General Equilibrium and Welfare

Imperfect Competition

Pricing in Input Markets

Capital and Time

Asymmetric Information

Externalities and Public Goods

Behavioral Economics

Filters

A monopolist has total cost TC = .1Q² - 2Q + 100 and marginal cost MC = .2Q - 2. Market demand is Q = 86 - P,implying that the firm's marginal revenue is MR = 86 - 2Q. Its profit-maximizing output is