Question 1

The figure given below shows the aggregate demand and supply curves of a perfectly competitive market.Figure 10.7
  
-Which of the following refers to a natural monopoly?

Accepted Answer

A) A monopoly resulting from government control 
B) A monopoly resulting from economies of scale 
C) A monopoly resulting from output leadership 
D) A monopoly resulting from a large advertising budget 
E) A monopoly resulting from trade restrictions 
A) A monopoly resulting from government control 
B) A monopoly resulting from economies of scale 
C) A monopoly resulting from output leadership 
D) A monopoly resulting from a large advertising budget 
E) A monopoly resulting from trade restrictions

Question 2

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
-Why does an efficiency loss arise under monopoly rather than under perfect competition?

Accepted Answer

A) A monopolist charges a lower price for the product to gain market entry. 
B) A monopolist sells a lesser quantity at a higher price. 
C) There is a net increase in consumer surplus but a net decline in producer surplus. 
D) There is an increase in producer surplus, consumer surplus remaining unchanged. 
E) A monopolist sells a greater quantity than a perfect competitor. 
A) A monopolist charges a lower price for the product to gain market entry. 
B) A monopolist sells a lesser quantity at a higher price. 
C) There is a net increase in consumer surplus but a net decline in producer surplus. 
D) There is an increase in producer surplus, consumer surplus remaining unchanged. 
E) A monopolist sells a greater quantity than a perfect competitor.

Question 3

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
-If a monopolist is producing at a point at which marginal revenue is greater than marginal cost, then it should:

Accepted Answer

A) continue producing at the current level. 
B) raise its prices. 
C) lower its prices. 
D) increase the level of production. 
E) decrease the level of production. 
A) continue producing at the current level. 
B) raise its prices. 
C) lower its prices. 
D) increase the level of production. 
E) decrease the level of production.

Question 4

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
  
-Grocery store coupons, mail-in rebates, senior discounts, and in-state versus out-of-state tuition fees are all examples of:

Accepted Answer

A) government intervention. 
B) price neutrality. 
C) arbitrage pricing. 
D) price discrimination. 
E) illegal business practice. 
A) government intervention. 
B) price neutrality. 
C) arbitrage pricing. 
D) price discrimination. 
E) illegal business practice.

Question 5

The figure given below shows the aggregate demand and supply curves of a perfectly competitive market.Figure 10.7
  
-If a firm has a perfectly elastic demand curve, then:

Accepted Answer

A) it must be a monopoly firm. 
B) it can charge any price it desires. 
C) the firm has significant market power. 
D) the firm has no market power. 
E) the firm should shut down. 
A) it must be a monopoly firm. 
B) it can charge any price it desires. 
C) the firm has significant market power. 
D) the firm has no market power. 
E) the firm should shut down.

Question 6

The figure given below shows the aggregate demand and supply curves of a perfectly competitive market.Figure 10.7
  
-In many cities, the market for cab services is monopolized. This monopoly arises because:

Accepted Answer

A) of economies of scale. 
B) of government restrictions on the entry of new firms. 
C) there is a limited space on the streets for taxis. 
D) it protects the consumers from unscrupulous drivers. 
E) of high fixed costs of entering the business. 
A) of economies of scale. 
B) of government restrictions on the entry of new firms. 
C) there is a limited space on the streets for taxis. 
D) it protects the consumers from unscrupulous drivers. 
E) of high fixed costs of entering the business.

Question 7

The figure given below shows the aggregate demand and supply curves of a perfectly competitive market.Figure 10.7
  
-A firm, such as a public utility, which is the sole producer in a market in which the government determines prices and standards of service, is known as a(n):

Accepted Answer

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

Question 8

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
-In Figure 11.4, the demand curve D2:

Accepted Answer

A) has a price elasticity of demand greater than 1. 
B) is relatively less price elastic than D1. 
C) is the inverse of the demand curve D1. 
D) has a price elasticity of demand less than 1. 
E) represents the demand of the group that is more responsive to price changes. 
A) has a price elasticity of demand greater than 1. 
B) is relatively less price elastic than D1. 
C) is the inverse of the demand curve D1. 
D) has a price elasticity of demand less than 1. 
E) represents the demand of the group that is more responsive to price changes.

Question 9

The following table shows the marginal revenues earned by a price discriminating monopolist in two different markets.Table 11.5
  
-Movie theaters are able to offer discounts to senior citizens because:

Accepted Answer

A) the elderly deserve lower prices because of their contributions to society. 
B) senior citizens have the most inelastic demand. 
C) theaters can separate senior citizens from other customers, and it is easier to prevent resale. 
D) senior citizens cannot see the movie very well because of poor eyesight. 
E) senior citizens are frequent visitors to the movie theaters. 
A) the elderly deserve lower prices because of their contributions to society. 
B) senior citizens have the most inelastic demand. 
C) theaters can separate senior citizens from other customers, and it is easier to prevent resale. 
D) senior citizens cannot see the movie very well because of poor eyesight. 
E) senior citizens are frequent visitors to the movie theaters.

Question 10

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
  
-One of the popular myths about monopoly is that:

Accepted Answer

A) a monopolist is the single seller of a particular commodity. 
B) a monopolist can charge any price for his/her good. 
C) a monopolist is a price maker. 
D) a monopolist may earn positive profits even in the long run. 
E) a monopolist faces the market demand curve. 
A) a monopolist is the single seller of a particular commodity. 
B) a monopolist can charge any price for his/her good. 
C) a monopolist is a price maker. 
D) a monopolist may earn positive profits even in the long run. 
E) a monopolist faces the market demand curve.

Question 11

The table given below shows the prices charged and marginal cost incurred by a monopolist for different units of output.Table 11.3
  
-Suppose you inherit the only spring of mineral water in an area and want to maximize profits from this costless product. You would ask your customers to bring their containers with them and:

Accepted Answer

A) charge them the highest price possible to sell some output. 
B) charge them the lowest price possible to sell as much as you can. 
C) ask them how much they would like to pay and accept it. 
D) charge the price at which MR is zero. 
E) charge the price at which MR is maximum. 
A) charge them the highest price possible to sell some output. 
B) charge them the lowest price possible to sell as much as you can. 
C) ask them how much they would like to pay and accept it. 
D) charge the price at which MR is zero. 
E) charge the price at which MR is maximum.

Question 12

The figure given below shows the demand curve faced by a firm.Figure 11.1
  
-Refer to Figure 11.1 and calculate the marginal revenue at the third unit of output.

Accepted Answer

A) $10 
B) $12 
C) $4 
D) $6 
E) $8 
A) $10 
B) $12 
C) $4 
D) $6 
E) $8

Question 13

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
-In order to practice price discrimination successfully, a monopolist must ensure that there is no resale of the product.

Accepted Answer

A) True 
 B)False

Question 14

The figure given below shows the demand curve faced by a firm.Figure 11.1
  
-Refer to Figure 11.1 and calculate the loss of revenue incurred by the firm when it reduces the price of its product from $8 to $4.

Accepted Answer

A) $4 
B) $8 
C) $32 
D) $16 
E) $10 
A) $4 
B) $8 
C) $32 
D) $16 
E) $10

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
-A monopolist's supply curve cannot be derived directly from its marginal cost curve as in the case of a competitive firm.

Accepted Answer

A) True 
 B)False

Question 16

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
-Refer to Figure 11.5. Which of the following regions on the graph represents consumer surplus in a perfectly competitive market?

Accepted Answer

A) The area PPCBA 
B) The area 0BPPC 
C) The area 0BA 
D) Half of area PPCBA 
E) The area ABS 
A) The area PPCBA 
B) The area 0BPPC 
C) The area 0BA 
D) Half of area PPCBA 
E) The area ABS

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
-Under price discrimination, a monopolist equates the marginal cost with the average revenues in different markets.

Accepted Answer

A) True 
 B)False

Question 18

The following figure shows the revenue and cost curves of a monopolist.Figure 11.3
   D: Average Revenue
MR: Marginal Revenue
ATC: Average Total Cost
MC: marginal Cost
-Consider the monopolist described in the Figure 11.3. If the firm engages in profit-maximizing behavior, economic profit per unit of output will be:

Accepted Answer

A) 0. 
B) P2. 
C) P4 minus P2. 
D) P5 minus P4. 
E) P5 minus P1. 
A) 0. 
B) P2. 
C) P4 minus P2. 
D) P5 minus P4. 
E) P5 minus P1.

The figure given below shows the aggregate demand and supply curves of a perfectly competitive market.Figure 10.7 -Which of the following refers to a natural monopoly?

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 -Why does an efficiency loss arise under monopoly rather than under perfect competition?

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 -If a monopolist is producing at a point at which marginal revenue is greater than marginal cost, then it should:

The figure given below shows the aggregate demand and supply curves of a perfectly competitive market.Figure 10.7 -If a firm has a perfectly elastic demand curve, then:

The figure given below shows the aggregate demand and supply curves of a perfectly competitive market.Figure 10.7 -In many cities, the market for cab services is monopolized. This monopoly arises because:

The figure given below shows the aggregate demand and supply curves of a perfectly competitive market.Figure 10.7 -A firm, such as a public utility, which is the sole producer in a market in which the government determines prices and standards of service, is known as a(n):

The following table shows the marginal revenues earned by a price discriminating monopolist in two different markets.Table 11.5 -Movie theaters are able to offer discounts to senior citizens because:

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 -One of the popular myths about monopoly is that:

The figure given below shows the demand curve faced by a firm.Figure 11.1 -Refer to Figure 11.1 and calculate the marginal revenue at the third unit of output.

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 -In order to practice price discrimination successfully, a monopolist must ensure that there is no resale of the product.

The figure given below shows the demand curve faced by a firm.Figure 11.1 -Refer to Figure 11.1 and calculate the loss of revenue incurred by the firm when it reduces the price of its product from $8 to $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 -A monopolist's supply curve cannot be derived directly from its marginal cost curve as in the case of a competitive firm.

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 -Under price discrimination, a monopolist equates the marginal cost with the average revenues in different markets.

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

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Exam 11: Monopoly

The figure given below shows the aggregate demand and supply curves of a perfectly competitive market.Figure 10.7 -Which of the following refers to a natural monopoly?

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 -Why does an efficiency loss arise under monopoly rather than under perfect competition?

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 -If a monopolist is producing at a point at which marginal revenue is greater than marginal cost, then it should:

The figure given below shows the aggregate demand and supply curves of a perfectly competitive market.Figure 10.7 -If a firm has a perfectly elastic demand curve, then:

The figure given below shows the aggregate demand and supply curves of a perfectly competitive market.Figure 10.7 -In many cities, the market for cab services is monopolized. This monopoly arises because:

The figure given below shows the aggregate demand and supply curves of a perfectly competitive market.Figure 10.7 -A firm, such as a public utility, which is the sole producer in a market in which the government determines prices and standards of service, is known as a(n):

The figure given below shows the demand curves of two classes of buyers, for tickets to a football match.Figure 11.4 D1: Demand curve of group 1 D2: Demand curve of group 2 MR1: Marginal revenue of group 1 MR2: Marginal revenue of group 2 MC: Marginal cost -In Figure 11.4, the demand curve D2:

The following table shows the marginal revenues earned by a price discriminating monopolist in two different markets.Table 11.5 -Movie theaters are able to offer discounts to senior citizens because:

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 -One of the popular myths about monopoly is that:

The figure given below shows the demand curve faced by a firm.Figure 11.1 -Refer to Figure 11.1 and calculate the marginal revenue at the third unit of output.

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 -In order to practice price discrimination successfully, a monopolist must ensure that there is no resale of the product.

The figure given below shows the demand curve faced by a firm.Figure 11.1 -Refer to Figure 11.1 and calculate the loss of revenue incurred by the firm when it reduces the price of its product from $8 to $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 -A monopolist's supply curve cannot be derived directly from its marginal cost curve as in the case of a competitive firm.

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 -Under price discrimination, a monopolist equates the marginal cost with the average revenues in different markets.

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