Question 1

A monopolist currently sells 18 units of a good.If marginal revenue on the last unit sold is $117,then the price of the good must be less than $117.

Accepted Answer

A) True 
 B)False

Question 2

Assume a hypothetical case where an industry begins as perfectly competitive and then becomes a monopoly.Which of the following statements comparing the conditions in the industry under both market structures is true?

Accepted Answer

A)  A monopoly will produce more and charge a higher price than would a perfectly competitive industry producing the same good. 
B)  A monopoly will produce more and advertise more than would a perfectly competitive industry producing the same good. 
C)  A monopoly will produce less and charge a higher price than would a perfectly competitive industry producing the same good. 
D)  A monopoly will produce less and charge a lower price than would a perfectly competitive industry producing the same good. 
A)  A monopoly will produce more and charge a higher price than would a perfectly competitive industry producing the same good. 
B)  A monopoly will produce more and advertise more than would a perfectly competitive industry producing the same good. 
C)  A monopoly will produce less and charge a higher price than would a perfectly competitive industry producing the same good. 
D)  A monopoly will produce less and charge a lower price than would a perfectly competitive industry producing the same good.

Question 3

a.What is the defining characteristic of a natural monopoly?
b.Should the government break up a natural monopoly into two or more firms to make the industry more competitive?
c.Suppose the government wants to ensure that some of the benefits of declining average total cost are passed on to consumers.To achieve this goal,it requires that the natural monopoly set its price equal to marginal cost.Is this a feasible goal? Explain.
d.What is an alternative to marginal cost pricing that ensures that consumers reap some of the benefits of declining average total cost?

Accepted Answer

a.The defining characteristic is the pre

Question 4

Table 8-3
   Julie plans to start a pet-sitting service. She surveyed her neighbourhood to determine the demand for this service. Assume that each person surveyed demands only one hour of pet sitting services per period. Table 8-3 above shows a portion of her survey results.
-Refer to Table 8-3.If Julie charges $10 per hour,how many hours of pet-sitting services will be purchased and by whom?

Accepted Answer

A)  2 hours (1 hour by Cara and 1 hour by Dawn) 
B)  1 hour by Cara only 
C)  1 hour by Dawn only 
D)  3 hours (1 hour each by Arun, Bernice and Cara) 
A)  2 hours (1 hour by Cara and 1 hour by Dawn) 
B)  1 hour by Cara only 
C)  1 hour by Dawn only 
D)  3 hours (1 hour each by Arun, Bernice and Cara)

Question 5

'Being the only seller in the market,the monopolist can choose any price and quantity it desires.' Evaluate this statement: Is it true or false? Explain your answer.

Accepted Answer

A) True 
 B)False

Question 6

Figure 8-2   Figure 8-2 above shows the demand and cost curves facing a monopolist.
-Refer to Figure 8-2.If the firm's average total cost curve is ATC2,the firm will

Accepted Answer

A)  suffer a loss. 
B)  break even. 
C)  make a profit. 
D)  face competition. 
A)  suffer a loss. 
B)  break even. 
C)  make a profit. 
D)  face competition.

Question 7

To maximise profit a monopolist will produce where

Accepted Answer

A)  marginal revenue is equal to marginal cost. 
B)  demand for its product is unit-elastic. 
C)  revenue per unit is maximised. 
D)  average total cost is equal to average revenue. 
A)  marginal revenue is equal to marginal cost. 
B)  demand for its product is unit-elastic. 
C)  revenue per unit is maximised. 
D)  average total cost is equal to average revenue.

Question 8

Which of the following is a characteristic shared by a perfectly competitive firm and a monopoly?

Accepted Answer

A)  Each must lower its price to sell more output. 
B)  Each sets a price for its product that will maximise its revenue. 
C)  Each maximises profits by producing a quantity for which marginal revenue equals marginal cost. 
D)  Each maximises profits by producing a quantity for which price equals marginal cost. 
A)  Each must lower its price to sell more output. 
B)  Each sets a price for its product that will maximise its revenue. 
C)  Each maximises profits by producing a quantity for which marginal revenue equals marginal cost. 
D)  Each maximises profits by producing a quantity for which price equals marginal cost.

Question 9

Some economists argue that Microsoft became a monopoly in the market for computer software by developing MS-DOS,an operating system used for the first IBM personal computers.The more people who used MS-DOS-based programs,the greater the usefulness of using a computer with an MS-DOS operating system became.The explanation for Microsoft's monopoly is

Accepted Answer

A)  the development of new technology that other firms could not copy. 
B)  control of a key resource which, in this case, is the MS-DOS operating system. 
C)  network externalities. 
D)  patents Microsoft obtained when it developed the MS-DOS operating system. 
A)  the development of new technology that other firms could not copy. 
B)  control of a key resource which, in this case, is the MS-DOS operating system. 
C)  network externalities. 
D)  patents Microsoft obtained when it developed the MS-DOS operating system.

Question 10

The term 'early adopters' refers to

Accepted Answer

A)  firms that are the first to implement a new technology that is used to produce new goods or services. 
B)  book clubs that are first to recommend best-selling books to their members. 
C)  consumers who respond quickly to fads, seasonal changes, etc. 
D)  consumers who are willing to pay high prices to be among the first to own new products. 
A)  firms that are the first to implement a new technology that is used to produce new goods or services. 
B)  book clubs that are first to recommend best-selling books to their members. 
C)  consumers who respond quickly to fads, seasonal changes, etc. 
D)  consumers who are willing to pay high prices to be among the first to own new products.

Question 11

If a monopolist's marginal revenue is $35 per unit and its marginal cost is $25,then to maximise profit

Accepted Answer

A)  the firm should increase output. 
B)  the firm should decrease output. 
C)  the firm should continue to produce the output it is producing. 
D)  Not enough information is given to say what the firm should do to maximise profit. 
A)  the firm should increase output. 
B)  the firm should decrease output. 
C)  the firm should continue to produce the output it is producing. 
D)  Not enough information is given to say what the firm should do to maximise profit.

Question 12

What is the difference between a monopoly's marginal revenue curve and a perfect competitor's marginal revenue curve?

Accepted Answer

A monopoly's marginal revenue curve lies

Question 13

Which of the following statements is true?

Accepted Answer

A)  If a tax is imposed on a product sold by a monopolist, the monopolist will maximise its profits by producing where marginal revenue equals marginal cost. 
B)  A monopolist will always charge the highest possible price. 
C)  If a tax is imposed on a product sold by a monopolist, the monopolist can increase its price to pass along the entire tax to consumers. 
D)  Because a monopolist faces no competition, the demand for its product is perfectly inelastic. 
A)  If a tax is imposed on a product sold by a monopolist, the monopolist will maximise its profits by producing where marginal revenue equals marginal cost. 
B)  A monopolist will always charge the highest possible price. 
C)  If a tax is imposed on a product sold by a monopolist, the monopolist can increase its price to pass along the entire tax to consumers. 
D)  Because a monopolist faces no competition, the demand for its product is perfectly inelastic.

Question 14

A patent

Accepted Answer

A)  grants the creator of a book, film or piece of music the exclusive right to use the creation for 20 years. 
B)  grants the creator of a book, film or piece of music the exclusive right to use the creation during the creator's lifetime. 
C)  gives a firm the exclusive right to a new product for 20 years from the date the product is invented. 
D)  gives the firm the exclusive right to a new product during the product inventor's lifetime. 
A)  grants the creator of a book, film or piece of music the exclusive right to use the creation for 20 years. 
B)  grants the creator of a book, film or piece of music the exclusive right to use the creation during the creator's lifetime. 
C)  gives a firm the exclusive right to a new product for 20 years from the date the product is invented. 
D)  gives the firm the exclusive right to a new product during the product inventor's lifetime.

Question 15

A narrow definition of monopoly is that a firm is a monopoly if it can ignore

Accepted Answer

A)  government antitrust laws. 
B)  the pricing decisions of its suppliers. 
C)  the pricing decisions of firms that produce complementary products. 
D)  the actions of all other firms. 
A)  government antitrust laws. 
B)  the pricing decisions of its suppliers. 
C)  the pricing decisions of firms that produce complementary products. 
D)  the actions of all other firms.

Question 16

Which of the following is true for a monopolist?

Accepted Answer

A)  Being the only seller in the market, the monopolist faces a perfectly inelastic demand curve. 
B)  Being the only seller in the market, the monopolist faces a perfectly elastic demand curve. 
C)  Being the only seller in the market, the monopolist faces the market demand curve. 
D)  Being the only seller in the market, the monopolist faces a downward-sloping demand curve that lies below the marginal revenue curve. 
A)  Being the only seller in the market, the monopolist faces a perfectly inelastic demand curve. 
B)  Being the only seller in the market, the monopolist faces a perfectly elastic demand curve. 
C)  Being the only seller in the market, the monopolist faces the market demand curve. 
D)  Being the only seller in the market, the monopolist faces a downward-sloping demand curve that lies below the marginal revenue curve.

Question 17

Which of the following statements is consistent with the views of Joseph Schumpeter?

Accepted Answer

A)  Research and development by competitive firms is responsible for most technological changes. 
B)  An economy benefits from firms having market power because these firms are more likely to be able to commit funds for research and development. 
C)  Enforcement of antitrust laws is necessary to promote competition among firms. 
D)  A lack of competition discourages firms from developing new technologies. 
A)  Research and development by competitive firms is responsible for most technological changes. 
B)  An economy benefits from firms having market power because these firms are more likely to be able to commit funds for research and development. 
C)  Enforcement of antitrust laws is necessary to promote competition among firms. 
D)  A lack of competition discourages firms from developing new technologies.

Question 18

Figure 8-13   Figure 8-13 shows the market demand and cost curves facing a natural monopoly.
-Refer to Figure 8-13.If the regulators of the natural monopoly allow the owners of the firm to break even on their investment,the firm will produce an output of ________ and charge a price of ________.

Accepted Answer

A)  Q1 units; P4 
B)  Q1 units; P1 
C)  Q5 units; P3 
D)  Q3 units; P3 
A)  Q1 units; P4 
B)  Q1 units; P1 
C)  Q5 units; P3 
D)  Q3 units; P3

Question 19

Assume a hypothetical case where an industry begins as perfectly competitive and then becomes a monopoly.Which of the following statements regarding economic surplus in each market structure is true?

Accepted Answer

A)  Under perfectly competitive conditions, economic surplus in this industry equals consumer surplus plus producer surplus. Under monopoly conditions, some consumer surplus is transferred to producer surplus, but economic surplus is the same as it was under perfectly competitive conditions. 
B)  Under perfectly competitive conditions, economic surplus in this industry is maximised. Under monopoly conditions, economic surplus is minimised. 
C)  Under perfectly competitive conditions, economic surplus is equal to consumer surplus; there is no producer surplus because firms are price takers. Under monopoly conditions, economic surplus is equal to producer surplus. 
D)  Under perfectly competitive conditions, economic surplus is maximised. Under monopoly conditions, economic surplus is less than under perfect competition and there is a deadweight loss. 
A)  Under perfectly competitive conditions, economic surplus in this industry equals consumer surplus plus producer surplus. Under monopoly conditions, some consumer surplus is transferred to producer surplus, but economic surplus is the same as it was under perfectly competitive conditions. 
B)  Under perfectly competitive conditions, economic surplus in this industry is maximised. Under monopoly conditions, economic surplus is minimised. 
C)  Under perfectly competitive conditions, economic surplus is equal to consumer surplus; there is no producer surplus because firms are price takers. Under monopoly conditions, economic surplus is equal to producer surplus. 
D)  Under perfectly competitive conditions, economic surplus is maximised. Under monopoly conditions, economic surplus is less than under perfect competition and there is a deadweight loss.

Question 20

Governments grant patents to encourage

Accepted Answer

A)  research and development on new products. 
B)  competition. 
C)  low prices. 
D)  firms to form public enterprises. 
A)  research and development on new products. 
B)  competition. 
C)  low prices. 
D)  firms to form public enterprises.

A monopolist currently sells 18 units of a good.If marginal revenue on the last unit sold is $117,then the price of the good must be less than $117.

Assume a hypothetical case where an industry begins as perfectly competitive and then becomes a monopoly.Which of the following statements comparing the conditions in the industry under both market structures is true?

'Being the only seller in the market,the monopolist can choose any price and quantity it desires.' Evaluate this statement: Is it true or false? Explain your answer.

Figure 8-2 Figure 8-2 above shows the demand and cost curves facing a monopolist. -Refer to Figure 8-2.If the firm's average total cost curve is ATC2,the firm will

To maximise profit a monopolist will produce where

Which of the following is a characteristic shared by a perfectly competitive firm and a monopoly?

The term 'early adopters' refers to

If a monopolist's marginal revenue is $35 per unit and its marginal cost is $25,then to maximise profit

What is the difference between a monopoly's marginal revenue curve and a perfect competitor's marginal revenue curve?

Which of the following statements is true?

A patent

A narrow definition of monopoly is that a firm is a monopoly if it can ignore

Which of the following is true for a monopolist?

Which of the following statements is consistent with the views of Joseph Schumpeter?

Figure 8-13 Figure 8-13 shows the market demand and cost curves facing a natural monopoly. -Refer to Figure 8-13.If the regulators of the natural monopoly allow the owners of the firm to break even on their investment,the firm will produce an output of and charge a price of .

Assume a hypothetical case where an industry begins as perfectly competitive and then becomes a monopoly.Which of the following statements regarding economic surplus in each market structure is true?

Governments grant patents to encourage

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Healthcare

Firms,the Stock Market,and Corporate Governance

Consumer Choice and Elasticity

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, international Trade, and Exchange Rates

Filters

Exam 8: Technology, production, and Costs

A monopolist currently sells 18 units of a good.If marginal revenue on the last unit sold is $117,then the price of the good must be less than $117.

Assume a hypothetical case where an industry begins as perfectly competitive and then becomes a monopoly.Which of the following statements comparing the conditions in the industry under both market structures is true?

'Being the only seller in the market,the monopolist can choose any price and quantity it desires.' Evaluate this statement: Is it true or false? Explain your answer.

Figure 8-2 Figure 8-2 above shows the demand and cost curves facing a monopolist. -Refer to Figure 8-2.If the firm's average total cost curve is ATC2,the firm will

To maximise profit a monopolist will produce where

Which of the following is a characteristic shared by a perfectly competitive firm and a monopoly?

The term 'early adopters' refers to

If a monopolist's marginal revenue is $35 per unit and its marginal cost is $25,then to maximise profit

What is the difference between a monopoly's marginal revenue curve and a perfect competitor's marginal revenue curve?

Which of the following statements is true?

A patent

A narrow definition of monopoly is that a firm is a monopoly if it can ignore

Which of the following is true for a monopolist?

Which of the following statements is consistent with the views of Joseph Schumpeter?

Figure 8-13 Figure 8-13 shows the market demand and cost curves facing a natural monopoly. -Refer to Figure 8-13.If the regulators of the natural monopoly allow the owners of the firm to break even on their investment,the firm will produce an output of ________ and charge a price of ________.

Assume a hypothetical case where an industry begins as perfectly competitive and then becomes a monopoly.Which of the following statements regarding economic surplus in each market structure is true?

Governments grant patents to encourage

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Healthcare

Firms,the Stock Market,and Corporate Governance

Consumer Choice and Elasticity

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, international Trade, and Exchange Rates

Filters

Figure 8-13 Figure 8-13 shows the market demand and cost curves facing a natural monopoly. -Refer to Figure 8-13.If the regulators of the natural monopoly allow the owners of the firm to break even on their investment,the firm will produce an output of and charge a price of .