Question 1

Monopolies misallocate resources because:

Accepted Answer

A)  a monopoly means less output at lower price. 
B)  price is equal to the marginal cost. 
C)  the marginal benefit of the last unit produced is equal to the marginal cost of the last unit. 
D)  perfect competition means more output for less price. 
A)  a monopoly means less output at lower price. 
B)  price is equal to the marginal cost. 
C)  the marginal benefit of the last unit produced is equal to the marginal cost of the last unit. 
D)  perfect competition means more output for less price.

Question 2

A monopoly can result because of:

Accepted Answer

A)  an ownership of a vital resource with other firms. 
B)  a legal patent over a good shared with another large firm. 
C)  successful operations. 
D)  production of a unique good which no one else can replicate. 
A)  an ownership of a vital resource with other firms. 
B)  a legal patent over a good shared with another large firm. 
C)  successful operations. 
D)  production of a unique good which no one else can replicate.

Question 3

A monopolist can engage in price discrimination:

Accepted Answer

A)  if it faces a perfectly elastic demand curve. 
B)  if it is able to buy a good at a low price and resell it at a higher price. 
C)  if it is a price maker, can segment the market and prevent customers from reselling. 
D)  if it faces a perfectly inelastic demand curve. 
A)  if it faces a perfectly elastic demand curve. 
B)  if it is able to buy a good at a low price and resell it at a higher price. 
C)  if it is a price maker, can segment the market and prevent customers from reselling. 
D)  if it faces a perfectly inelastic demand curve.

Question 4

In the long run, a monopoly:

Accepted Answer

A)  will always earn economic profit. 
B)  is always free from competition, either real or potential. 
C)  will always be protected by the government to prevent competition. 
D)  can change its plant size. 
A)  will always earn economic profit. 
B)  is always free from competition, either real or potential. 
C)  will always be protected by the government to prevent competition. 
D)  can change its plant size.

Question 5

A common criticism of price discrimination is that it seems to:

Accepted Answer

A)  cost some people more for similar goods or services. 
B)  cost some people more for the exact same good or service. 
C)  decrease a monopolist's profits. 
D)  make monopoly unviable. 
A)  cost some people more for similar goods or services. 
B)  cost some people more for the exact same good or service. 
C)  decrease a monopolist's profits. 
D)  make monopoly unviable.

Question 6

A monopolist is always earning economic profits but a perfectly competitive firm is not.

Accepted Answer

A) True 
 B)False

Question 7

Narrbegin Exhibit 8.5 Demand and cost data for a monopolist
 $\begin{array}{|c|c|c|c|c|c|}
\hline \text { Price } & \text { Quantity } & \text { TR } & \text { MR } & \mathrm{TC} & \text { Profi } \
\hline \$ 10 & 1 & 10 & 10 & 4 & \
\hline 9 & 2 & & & 8 & \
\hline 8 & 3 & & & 12 & \
\hline 7 & 4 & & & 16 & \
\hline 6 & 5 & & & 20 & \
\hline 5 & 6 & & & 24 & \
\hline 4 & 7 & & & 28 & \
\hline 3 & 8 & & & 32 & \
\hline 2 & 9 & & & 36 & \
\hline 1 & 10 & & & 40 & \
\hline
\end{array}$ 
-Refer to Exhibit 8.5. The demand schedule and cost schedule for a monopolist are provided. Which output level maximises profit?

Accepted Answer

A)  2. 
B)  4. 
C)  5. 
D)  6. 
A)  2. 
B)  4. 
C)  5. 
D)  6.

Question 8

Suppose there is only one airline that travels from one island to another. Assume that business travellers have a low elasticity of demand for air travel. Holiday travellers on the other hand are flexible and are sensitive to price. Price discrimination can occur because:

Accepted Answer

A)  business travellers have to travel. 
B)  there is a monopoly. 
C)  of the difference between price elasticities. 
D)  there are no close substitutes. 
A)  business travellers have to travel. 
B)  there is a monopoly. 
C)  of the difference between price elasticities. 
D)  there are no close substitutes.

Question 9

At any point where a monopolist's marginal revenue is positive, the downward-sloping, straight-line demand curve is:

Accepted Answer

A)  perfectly elastic. 
B)  elastic. 
C)  unit elastic. 
D)  inelastic. 
A)  perfectly elastic. 
B)  elastic. 
C)  unit elastic. 
D)  inelastic.

Question 10

Perfect competition is considered more efficient than monopoly because, in perfect competition:

Accepted Answer

A)  P = MC, while in monopoly P  MC. 
C)  they sell a homogeneous product. 
D)  entry is prohibited. 
A)  P = MC, while in monopoly P  MC. 
C)  they sell a homogeneous product. 
D)  entry is prohibited.

Question 11

A monopoly sets a market price that is higher than the marginal cost of production. This fact implies that a monopoly's allocation of resources is:

Accepted Answer

A)  unfair. 
B)  inefficient. 
C)  discriminatory. 
D)  excessive. 
A)  unfair. 
B)  inefficient. 
C)  discriminatory. 
D)  excessive.

Question 12

There is only one hairdressing salon on campus. That means it is possibly a/an:

Accepted Answer

A)  oligopoly. 
B)  monopolistically competitive firm. 
C)  monopoly. 
D)  competitive firm. 
A)  oligopoly. 
B)  monopolistically competitive firm. 
C)  monopoly. 
D)  competitive firm.

Question 13

The case against monopoly is based on the following?

Accepted Answer

A)  Monopolies are successful producers. 
B)  Monopolies are efficient resource allocators. 
C)  Monopolies are very innovative. 
D)  Monopolies charge a higher price than would be under perfect competition. 
A)  Monopolies are successful producers. 
B)  Monopolies are efficient resource allocators. 
C)  Monopolies are very innovative. 
D)  Monopolies charge a higher price than would be under perfect competition.

Question 14

Suppose a monopolist's demand curve lies below its average variable cost curve. The firm will:

Accepted Answer

A)  stay in operation in the short run. 
B)  increase the price. 
C)  earn an economic profit in the long run. 
D)  shut down. 
A)  stay in operation in the short run. 
B)  increase the price. 
C)  earn an economic profit in the long run. 
D)  shut down.

Question 15

Under both perfect competition and a single priced monopoly case, a firm:

Accepted Answer

A)  is a price taker. 
B)  is a price maker. 
C)  will shut down in the short run if price falls short of average total cost. 
D)  sets marginal cost equal to marginal revenue. 
A)  is a price taker. 
B)  is a price maker. 
C)  will shut down in the short run if price falls short of average total cost. 
D)  sets marginal cost equal to marginal revenue.

Question 16

Arbitrage is the practice of:

Accepted Answer

A)  earning a profit by buying and reselling goods and services. 
B)  redistributing the profit from monopoly to consumers. 
C)  losing a profit by buying and reselling goods and services. 
D)  producing goods and services for reselling. 
A)  earning a profit by buying and reselling goods and services. 
B)  redistributing the profit from monopoly to consumers. 
C)  losing a profit by buying and reselling goods and services. 
D)  producing goods and services for reselling.

Question 17

Narrbegin Exhibit 8.3 Demand and cost curves for GeneTech, a monopolist with a patented vaccine   
-As shown in Exhibit 8.3, in order to maximise its profit, what price should GeneTech charge for its vaccine?

Accepted Answer

A)  $20 per dose. 
B)  $25 per dose. 
C)  $35 per dose 
D)  $50 per dose. 
A)  $20 per dose. 
B)  $25 per dose. 
C)  $35 per dose 
D)  $50 per dose.

Question 18

Price discrimination can benefit some consumers because:

Accepted Answer

A)  a uniform price may be above their willingness to pay. 
B)  they can resell that good at a higher price and earn some extra money. 
C)  it forces monopolists to earn lower profits. 
D)  it forces monopolists to operate on the elastic section of their demand curve. 
A)  a uniform price may be above their willingness to pay. 
B)  they can resell that good at a higher price and earn some extra money. 
C)  it forces monopolists to earn lower profits. 
D)  it forces monopolists to operate on the elastic section of their demand curve.

Question 19

What is the major difference between perfect competition and monopoly?

Accepted Answer

A)  The slope of the supply curve faced by the firm. 
B)  The slope of the demand curve faced by the industry. 
C)  The slope of the supply curve faced by the industry. 
D)  The slope of the demand curve faced by the firm in different market structure. 
A)  The slope of the supply curve faced by the firm. 
B)  The slope of the demand curve faced by the industry. 
C)  The slope of the supply curve faced by the industry. 
D)  The slope of the demand curve faced by the firm in different market structure.

Question 20

The monopolist's demand curve is:

Accepted Answer

A)  below the marginal revenue curve. 
B)  identical to the marginal revenue curve. 
C)  a downward-sloping market demand curve. 
D)  a horizontal line at the market price. 
A)  below the marginal revenue curve. 
B)  identical to the marginal revenue curve. 
C)  a downward-sloping market demand curve. 
D)  a horizontal line at the market price.

Monopolies misallocate resources because:

A monopoly can result because of:

A monopolist can engage in price discrimination:

In the long run, a monopoly:

A common criticism of price discrimination is that it seems to:

A monopolist is always earning economic profits but a perfectly competitive firm is not.

Narrbegin Exhibit 8.5 Demand and cost data for a monopolist Price Quantity TR MR Profi \ 10 1 10 10 4 9 2 8 8 3 12 7 4 16 6 5 20 5 6 24 4 7 28 3 8 32 2 9 36 1 10 40 -Refer to Exhibit 8.5. The demand schedule and cost schedule for a monopolist are provided. Which output level maximises profit?

Suppose there is only one airline that travels from one island to another. Assume that business travellers have a low elasticity of demand for air travel. Holiday travellers on the other hand are flexible and are sensitive to price. Price discrimination can occur because:

At any point where a monopolist's marginal revenue is positive, the downward-sloping, straight-line demand curve is:

Perfect competition is considered more efficient than monopoly because, in perfect competition:

A monopoly sets a market price that is higher than the marginal cost of production. This fact implies that a monopoly's allocation of resources is:

There is only one hairdressing salon on campus. That means it is possibly a/an:

The case against monopoly is based on the following?

Suppose a monopolist's demand curve lies below its average variable cost curve. The firm will:

Under both perfect competition and a single priced monopoly case, a firm:

Arbitrage is the practice of:

Narrbegin Exhibit 8.3 Demand and cost curves for GeneTech, a monopolist with a patented vaccine -As shown in Exhibit 8.3, in order to maximise its profit, what price should GeneTech charge for its vaccine?

Price discrimination can benefit some consumers because:

What is the major difference between perfect competition and monopoly?

The monopolist's demand curve is:

Thinking Like an Economist

Applying Graphs to Economics

Production Possibilities and Opportunity Cost

Market Demand and Supply

Markets in Action

Elasticity of Demand and Supply

Production Costs

Perfect Competition

Monopolistic Competition and Oligopoly

Policy Issues: Housing Affordability and Climate Change

Measuring the Size of the Economy

Business Cycles and Economic Growth

Inflation and Unemployment

A Simple Model of the Macro Economy

The Monetary and Financial System

Macroeconomic Policy I: Monetary Policy

Macroeconomic Policy II: Fiscal Policy

International Trade and Finance

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Exam 9: Monopoly

Monopolies misallocate resources because:

A monopoly can result because of:

A monopolist can engage in price discrimination:

In the long run, a monopoly:

A common criticism of price discrimination is that it seems to:

A monopolist is always earning economic profits but a perfectly competitive firm is not.

Narrbegin Exhibit 8.5 Demand and cost data for a monopolist Price Quantity TR MR Profi \ 10 1 10 10 4 9 2 8 8 3 12 7 4 16 6 5 20 5 6 24 4 7 28 3 8 32 2 9 36 1 10 40 -Refer to Exhibit 8.5. The demand schedule and cost schedule for a monopolist are provided. Which output level maximises profit?

Suppose there is only one airline that travels from one island to another. Assume that business travellers have a low elasticity of demand for air travel. Holiday travellers on the other hand are flexible and are sensitive to price. Price discrimination can occur because:

At any point where a monopolist's marginal revenue is positive, the downward-sloping, straight-line demand curve is:

Perfect competition is considered more efficient than monopoly because, in perfect competition:

A monopoly sets a market price that is higher than the marginal cost of production. This fact implies that a monopoly's allocation of resources is:

There is only one hairdressing salon on campus. That means it is possibly a/an:

The case against monopoly is based on the following?

Suppose a monopolist's demand curve lies below its average variable cost curve. The firm will:

Under both perfect competition and a single priced monopoly case, a firm:

Arbitrage is the practice of:

Narrbegin Exhibit 8.3 Demand and cost curves for GeneTech, a monopolist with a patented vaccine -As shown in Exhibit 8.3, in order to maximise its profit, what price should GeneTech charge for its vaccine?

Price discrimination can benefit some consumers because:

What is the major difference between perfect competition and monopoly?

The monopolist's demand curve is:

Thinking Like an Economist

Applying Graphs to Economics

Production Possibilities and Opportunity Cost

Market Demand and Supply

Markets in Action

Elasticity of Demand and Supply

Production Costs

Perfect Competition

Monopolistic Competition and Oligopoly

Policy Issues: Housing Affordability and Climate Change

Measuring the Size of the Economy

Business Cycles and Economic Growth

Inflation and Unemployment

A Simple Model of the Macro Economy

The Monetary and Financial System

Macroeconomic Policy I: Monetary Policy

Macroeconomic Policy II: Fiscal Policy

International Trade and Finance

Filters