Question 1

The following table shows the units of output sold at different price levels by Gizmo's Inc.Table 11.1
  
-According to Table 11.1, Gizmo's cannot be:

Accepted Answer

A) a monopsonist. 
B) a monopoly. 
C) an oligopolistic firm. 
D) a perfectly competitive firm. 
E) a monopolistically competitive firm. 
A) a monopsonist. 
B) a monopoly. 
C) an oligopolistic firm. 
D) a perfectly competitive firm. 
E) a monopolistically competitive firm.

Question 2

The figure given below shows the cost and revenue curves of a monopolist.Figure 11.9
   D: Average revenue
MR: Marginal revenue
ATC: Average total cost
MC: Marginal cost
-If an industry experiences economies of scale in production, then entry into the market by other firms is easy.

Accepted Answer

A) True 
 B)False

Question 3

The following figures show the demand and cost curves of a perfectly competitive firm and a monopoly respectively.Figure 11.7
   D: Average Revenue
AC: Average cost
MC: Marginal cost
MR: Marginal cost
-Refer to Figure 11.7. If the perfectly competitive industry and the monopoly produces the same quantity, then:

Accepted Answer

A) there are 10 firms in the perfectly competitive industry. 
B) there are 800 firms in the perfectly competitive industry. 
C) there are 1,000 firms in the perfectly competitive industry. 
D) there are 2,000 firms in the perfectly competitive industry. 
E) there are 100 firms in the perfectly competitive industry. 
A) there are 10 firms in the perfectly competitive industry. 
B) there are 800 firms in the perfectly competitive industry. 
C) there are 1,000 firms in the perfectly competitive industry. 
D) there are 2,000 firms in the perfectly competitive industry. 
E) there are 100 firms in the perfectly competitive industry.

Question 4

The figure given below shows the cost and revenue curves of a monopolist.Figure 11.9
   D: Average revenue
MR: Marginal revenue
ATC: Average total cost
MC: Marginal cost
-If a monopolist is producing at a point at which marginal revenue is greater than marginal cost, it should decrease the level of production.

Accepted Answer

A) True 
 B)False

Question 5

The following figure shows the revenue curves of a monopolist:
Figure 11.6
   D: Average revenue
MR: Marginal revenue
-In Figure 11.6, assume that marginal costs are constant at $2,500 and fixed costs are zero. What price and output level would result from perfect competition?

Accepted Answer

A) P = $2,500, Q = 400 
B) P = $2,500, Q = 200 
C) P = $5,000, Q = 0 
D) P = $4,000, Q = 400 
E) P = $4,000, Q = 200 
A) P = $2,500, Q = 400 
B) P = $2,500, Q = 200 
C) P = $5,000, Q = 0 
D) P = $4,000, Q = 400 
E) P = $4,000, Q = 200

Question 6

The table given below shows the price, marginal revenue and marginal cost of a monopolist at different levels of the output. The firm does not incur a fixed cost of production.Table 11.4
  
-Refer to Table 11.4. Assuming that the monopolist is maximizing profits, the price the monopolist will charge is _____.

Accepted Answer

A) $13 
B) $14 
C) $12 
D) $16 
E) $15 
A) $13 
B) $14 
C) $12 
D) $16 
E) $15

Question 7

The figure given below shows the cost and revenue curves of a monopolist.Figure 11.9
   D: Average revenue
MR: Marginal revenue
ATC: Average total cost
MC: Marginal cost
-A monopoly is a market model in which just one firm sells a product with no close substitutes.

Accepted Answer

A) True 
 B)False

Question 8

The figure given below shows the cost and revenue curves of a monopolist.Figure 11.9
   D: Average revenue
MR: Marginal revenue
ATC: Average total cost
MC: Marginal cost
-Airlines can increase profits by charging higher fares to business customers because those customers have a more elastic demand for airline travel.

Accepted Answer

A) True 
 B)False

Question 9

The table given below shows the price, marginal revenue and marginal cost of a monopolist at different levels of the output. The firm does not incur a fixed cost of production.Table 11.4
  
-If the monopolist's price happens to be greater than the average-variable cost but less than the average total cost, in the short run the monopolist will:

Accepted Answer

A) be forced to shut down to minimize the cost. 
B) operate at a loss. 
C) operate at an economic profit. 
D) operate at a normal profit. 
E) go out of business. 
A) be forced to shut down to minimize the cost. 
B) operate at a loss. 
C) operate at an economic profit. 
D) operate at a normal profit. 
E) go out of business.

Question 10

The figures given below represent the revenue curves of a monopolist.Figure 11.2
   TR: Total revenue curve
AR: Average revenue curve
MR: Marginal revenue curve
-Refer to Figure 11.2. In order to maximize profits, what quantity should the monopolist produce?

Accepted Answer

A) B 
B) E 
C) Between B and E 
D) Impossible to determine because we are not given the cost curves. 
E) Impossible to determine because we are not given the demand curve. 
A) B 
B) E 
C) Between B and E 
D) Impossible to determine because we are not given the cost curves. 
E) Impossible to determine because we are not given the demand curve.

Question 11

The figure given below shows the cost and revenue curves of a monopolist.Figure 11.9
   D: Average revenue
MR: Marginal revenue
ATC: Average total cost
MC: Marginal cost
-A monopolist earns only normal profits in the long run.

Accepted Answer

A) True 
 B)False

Question 12

The figure given below shows the aggregate demand and supply curves of a perfectly competitive market.Figure 10.7
  
-When long-run average costs are declining for the entire range of demand, the firm is known as a(n):

Accepted Answer

A) local monopoly. 
B) regulated monopoly. 
C) monopolistically competitive firm. 
D) natural monopoly. 
E) oligopoly. 
A) local monopoly. 
B) regulated monopoly. 
C) monopolistically competitive firm. 
D) natural monopoly. 
E) oligopoly.

Question 13

The figure given below shows the aggregate demand and supply curves of a perfectly competitive market.Figure 10.7
  
-When Glaxo-Wellcome introduced AZT, an AIDS drug, it was able to enjoy high profits because:

Accepted Answer

A) the drug was highly recommended by doctors. 
B) of the quick response of rivals in introducing substitute drugs. 
C) of barriers to entry provided by patents. 
D) of its competitive price in the pharmaceutical industry. 
E) it experienced constant returns to scale in the long run. 
A) the drug was highly recommended by doctors. 
B) of the quick response of rivals in introducing substitute drugs. 
C) of barriers to entry provided by patents. 
D) of its competitive price in the pharmaceutical industry. 
E) it experienced constant returns to scale in the long run.

Question 14

The figure given below shows the demand curves of two classes of buyers, for tickets to a football match.Figure 11.4
   DS1U1B11S1U1B0: Demand curve of group 1
DS1U1B12S1U1B0: Demand curve of group 2
MRS1U1B11S1U1B0: Marginal revenue of group 1
MRS1U1B12S1U1B0: Marginal revenue of group 2
MC: Marginal cost
-Refer to Figure 11.4. What price must be charged from each group to maximize profits?

Accepted Answer

A) Both groups must be charged P1 . 
B) Both groups must be charged P2 . 
C) Group 1 must be charged P1 and group 2 must be charged P2. 
D) Group 1 must be charged P2 and group 2 must be charged P1. 
E) Both the groups must be charged a price that is equal to the marginal cost. 
A) Both groups must be charged P1 . 
B) Both groups must be charged P2 . 
C) Group 1 must be charged P1 and group 2 must be charged P2. 
D) Group 1 must be charged P2 and group 2 must be charged P1. 
E) Both the groups must be charged a price that is equal to the marginal cost.

Question 15

The figure given below shows the cost and revenue curves of a monopolist.Figure 11.9
   D: Average revenue
MR: Marginal revenue
ATC: Average total cost
MC: Marginal cost
-The marginal revenue curve of a monopolist coincides with its average revenue curve.

Accepted Answer

A) True 
 B)False

Question 16

The figure given below shows the cost and revenue curves of a monopolist.Figure 11.9
   D: Average revenue
MR: Marginal revenue
ATC: Average total cost
MC: Marginal cost
-If a monopolist is producing at that output where price equals average variable cost in the short run, then it is earning a negative profit.

Accepted Answer

A) True 
 B)False

Question 17

The figure given below shows the cost and revenue curves of a monopolist.Figure 11.9
   D: Average revenue
MR: Marginal revenue
ATC: Average total cost
MC: Marginal cost
-A regulated monopoly is a monopoly which can charge any arbitrary price for its product.

Accepted Answer

A) True 
 B)False

Question 18

The figures given below represent the revenue curves of a monopolist.Figure 11.2
   TR: Total revenue curve
AR: Average revenue curve
MR: Marginal revenue curve
-According to Figure 11.2, at point C:

Accepted Answer

A) price elasticity of demand is equal to infinity. 
B) price elasticity of supply is equal to 1. 
C) price elasticity of supply is greater than 1. 
D) price elasticity of demand is equal to 0. 
E) price elasticity of demand is equal to 1. 
A) price elasticity of demand is equal to infinity. 
B) price elasticity of supply is equal to 1. 
C) price elasticity of supply is greater than 1. 
D) price elasticity of demand is equal to 0. 
E) price elasticity of demand is equal to 1.

Question 19

The figure below shows the market equilibrium (point B) at the intersection of demand and supply curves under perfect competition.Figure 11.5
   D: Market demand curve
S: Market supply curve
-Assume that in Figure 11.5, the market is originally perfectly competitive but then becomes a monopoly. Compared with perfect competition, a monopoly would have:

Accepted Answer

A) a price lower than PPC. 
B) a quantity more than QPC. 
C) a greater consumer surplus. 
D) a deadweight loss. 
E) a lower producer surplus. 
A) a price lower than PPC. 
B) a quantity more than QPC. 
C) a greater consumer surplus. 
D) a deadweight loss. 
E) a lower producer surplus.

Question 20

The table given below shows the price charged by a firm and the marginal cost incurred by it for different levels of the output.Table 11.2
  
-What is the profit-maximizing level of output for the monopoly firm described in Table 11.2, if the firm is earning a positive economic profit?

Accepted Answer

A) 1 unit 
B) 2 units 
C) 3 units 
D) 5 units 
E) 6 units 
A) 1 unit 
B) 2 units 
C) 3 units 
D) 5 units 
E) 6 units

The following table shows the units of output sold at different price levels by Gizmo's Inc.Table 11.1 -According to Table 11.1, Gizmo's cannot be:

The figure given below shows the cost and revenue curves of a monopolist.Figure 11.9 D: Average revenue MR: Marginal revenue ATC: Average total cost MC: Marginal cost -If an industry experiences economies of scale in production, then entry into the market by other firms is easy.

The following figure shows the revenue curves of a monopolist: Figure 11.6 D: Average revenue MR: Marginal revenue -In Figure 11.6, assume that marginal costs are constant at $2,500 and fixed costs are zero. What price and output level would result from perfect competition?

The figure given below shows the cost and revenue curves of a monopolist.Figure 11.9 D: Average revenue MR: Marginal revenue ATC: Average total cost MC: Marginal cost -A monopoly is a market model in which just one firm sells a product with no close substitutes.

The figures given below represent the revenue curves of a monopolist.Figure 11.2 TR: Total revenue curve AR: Average revenue curve MR: Marginal revenue curve -Refer to Figure 11.2. In order to maximize profits, what quantity should the monopolist produce?

The figure given below shows the cost and revenue curves of a monopolist.Figure 11.9 D: Average revenue MR: Marginal revenue ATC: Average total cost MC: Marginal cost -A monopolist earns only normal profits in the long run.

The figure given below shows the aggregate demand and supply curves of a perfectly competitive market.Figure 10.7 -When long-run average costs are declining for the entire range of demand, the firm is known as a(n):

The figure given below shows the aggregate demand and supply curves of a perfectly competitive market.Figure 10.7 -When Glaxo-Wellcome introduced AZT, an AIDS drug, it was able to enjoy high profits because:

The figure given below shows the cost and revenue curves of a monopolist.Figure 11.9 D: Average revenue MR: Marginal revenue ATC: Average total cost MC: Marginal cost -The marginal revenue curve of a monopolist coincides with its average revenue curve.

The figure given below shows the cost and revenue curves of a monopolist.Figure 11.9 D: Average revenue MR: Marginal revenue ATC: Average total cost MC: Marginal cost -A regulated monopoly is a monopoly which can charge any arbitrary price for its product.

The figures given below represent the revenue curves of a monopolist.Figure 11.2 TR: Total revenue curve AR: Average revenue curve MR: Marginal revenue curve -According to Figure 11.2, at point C:

The table given below shows the price charged by a firm and the marginal cost incurred by it for different levels of the output.Table 11.2 -What is the profit-maximizing level of output for the monopoly firm described in Table 11.2, if the firm is earning a positive economic profit?

The Wealth of Nations: Ownership and Economic Freedom

Scarcity and Opportunity Costs

Markets and the Price System

The Aggregate Economy

Using Economics to Understand the World Around You

Elasticity: Demand and Supply

Demand: Consumer Choice

Supply: the Costs of Doing Business

Profit Maximization

Perfect Competition

Monopolistic Competition and Oligopoly

Markets and Government

Antitrust and Regulation

Resource Markets

The Labor Market

The Capital Market

The Land Market and Natural Resources

Current Issues: Income, Income Distribution, Poverty, and Government Policy

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

Filters

Exam 11: Monopoly

The following table shows the units of output sold at different price levels by Gizmo's Inc.Table 11.1 -According to Table 11.1, Gizmo's cannot be:

The figure given below shows the cost and revenue curves of a monopolist.Figure 11.9 D: Average revenue MR: Marginal revenue ATC: Average total cost MC: Marginal cost -If an industry experiences economies of scale in production, then entry into the market by other firms is easy.

The following figure shows the revenue curves of a monopolist: Figure 11.6 D: Average revenue MR: Marginal revenue -In Figure 11.6, assume that marginal costs are constant at $2,500 and fixed costs are zero. What price and output level would result from perfect competition?

The figure given below shows the cost and revenue curves of a monopolist.Figure 11.9 D: Average revenue MR: Marginal revenue ATC: Average total cost MC: Marginal cost -A monopoly is a market model in which just one firm sells a product with no close substitutes.

The figures given below represent the revenue curves of a monopolist.Figure 11.2 TR: Total revenue curve AR: Average revenue curve MR: Marginal revenue curve -Refer to Figure 11.2. In order to maximize profits, what quantity should the monopolist produce?

The figure given below shows the cost and revenue curves of a monopolist.Figure 11.9 D: Average revenue MR: Marginal revenue ATC: Average total cost MC: Marginal cost -A monopolist earns only normal profits in the long run.

The figure given below shows the aggregate demand and supply curves of a perfectly competitive market.Figure 10.7 -When long-run average costs are declining for the entire range of demand, the firm is known as a(n):

The figure given below shows the aggregate demand and supply curves of a perfectly competitive market.Figure 10.7 -When Glaxo-Wellcome introduced AZT, an AIDS drug, it was able to enjoy high profits because:

The figure given below shows the cost and revenue curves of a monopolist.Figure 11.9 D: Average revenue MR: Marginal revenue ATC: Average total cost MC: Marginal cost -The marginal revenue curve of a monopolist coincides with its average revenue curve.

The figure given below shows the cost and revenue curves of a monopolist.Figure 11.9 D: Average revenue MR: Marginal revenue ATC: Average total cost MC: Marginal cost -A regulated monopoly is a monopoly which can charge any arbitrary price for its product.

The figures given below represent the revenue curves of a monopolist.Figure 11.2 TR: Total revenue curve AR: Average revenue curve MR: Marginal revenue curve -According to Figure 11.2, at point C:

The table given below shows the price charged by a firm and the marginal cost incurred by it for different levels of the output.Table 11.2 -What is the profit-maximizing level of output for the monopoly firm described in Table 11.2, if the firm is earning a positive economic profit?

The Wealth of Nations: Ownership and Economic Freedom

Scarcity and Opportunity Costs

Markets and the Price System

The Aggregate Economy

Using Economics to Understand the World Around You

Elasticity: Demand and Supply

Demand: Consumer Choice

Supply: the Costs of Doing Business

Profit Maximization

Perfect Competition

Monopolistic Competition and Oligopoly

Markets and Government

Antitrust and Regulation

Resource Markets

The Labor Market

The Capital Market

The Land Market and Natural Resources

Current Issues: Income, Income Distribution, Poverty, and Government Policy

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

Filters