Question 1

A natural monopoly exists if:

Accepted Answer

A) several former competitors merge to become the only producer in the industry. 
B) average cost of production is lowest when only one firm produces the entire industry output. 
C) one firm controls the supply of an essential input used by the industry. 
D) a firm has a patent or copyright. 
A) several former competitors merge to become the only producer in the industry. 
B) average cost of production is lowest when only one firm produces the entire industry output. 
C) one firm controls the supply of an essential input used by the industry. 
D) a firm has a patent or copyright. B

Question 2

If the demand curve facing a monopoly was 1 unit at $7, 2 units at $6, 3 units at $5, 4 units at $4, and 5 units at $3, the marginal revenue from selling the third unit of output:

Accepted Answer

A) is $5. 
B) is $4. 
C) is $3 
D) is $1 
E) cannot be determined from the above information. 
A) is $5. 
B) is $4. 
C) is $3 
D) is $1 
E) cannot be determined from the above information. C

Question 3

Figure 9-I
  
-A natural monopolist will voluntarily choose to produce at the point of allocative efficiency.

Accepted Answer

A) True 
 B)False  False

Question 4

The aim of antitrust policy is to:

Accepted Answer

A) provide adequate incentives for inventors and entrepreneurs. 
B) prevent firms from acquiring or exercising undue market power. 
C) protect established firms by deterring new entry into industries. 
D) regulate the prices charged by perfectly competitive firms. 
A) provide adequate incentives for inventors and entrepreneurs. 
B) prevent firms from acquiring or exercising undue market power. 
C) protect established firms by deterring new entry into industries. 
D) regulate the prices charged by perfectly competitive firms.

Question 5

Figure 9-I
  
-Monopoly is at the other end of the spectrum from ____.

Accepted Answer

A) monopolistic competition 
B) perfect competition 
C) oligopoly 
D) none of the above 
A) monopolistic competition 
B) perfect competition 
C) oligopoly 
D) none of the above

Question 6

Which of the following need not be true of a monopoly?

Accepted Answer

A) The firm must be the only producer of the product. 
B) The product must have no close substitutes. 
C) There must be high barriers to entry. 
D) The firm must earn an economic profit. 
E) All of the above are true of monopoly. 
A) The firm must be the only producer of the product. 
B) The product must have no close substitutes. 
C) There must be high barriers to entry. 
D) The firm must earn an economic profit. 
E) All of the above are true of monopoly.

Question 7

Figure 9-I
  
-A monopoly firm can sell as much output as it wants at whatever price it sets.

Accepted Answer

A) True 
 B)False

Question 8

Figure 8-C
The following diagram contains information on cost and revenue curves facing a regulated monopoly.  
-Refer to Figure 8-C.If regulators set a price according to average-cost pricing, the firm will:

Accepted Answer

A) earn positive economic profits. 
B) make zero economic profits. 
C) suffer an economic loss. 
D) earn the same level of profits as it would absent regulation. 
A) earn positive economic profits. 
B) make zero economic profits. 
C) suffer an economic loss. 
D) earn the same level of profits as it would absent regulation.

Question 9

For a profit-maximizing monopolist, the price of a product is:

Accepted Answer

A) always equal to marginal revenue. 
B) always greater than marginal revenue. 
C) always less than marginal revenue. 
D) always equal to the average total cost of production. 
E) always greater than the average total cost of production. 
A) always equal to marginal revenue. 
B) always greater than marginal revenue. 
C) always less than marginal revenue. 
D) always equal to the average total cost of production. 
E) always greater than the average total cost of production.

Question 10

Which of the following firms practices price discrimination?

Accepted Answer

A) automobile dealerships 
B) airlines 
C) movie theaters 
D) amusement parks 
E) all of the above 
A) automobile dealerships 
B) airlines 
C) movie theaters 
D) amusement parks 
E) all of the above

Question 11

Which landmark legislation made it illegal to engage in predatory pricing and also prohibited mergers if it led to weakened competition?

Accepted Answer

A) Sherman Act 
B) Robinson-Patman Act 
C) Cellar-Kefauver Act 
D) Clayton Act 
A) Sherman Act 
B) Robinson-Patman Act 
C) Cellar-Kefauver Act 
D) Clayton Act

Question 12

Why does the government allow some markets to be monopolized by granting patents?

Accepted Answer

A) to promote a more equal distribution of income 
B) to correct for negative externalities 
C) to promote technological progress 
D) to ensure lower prices for consumers in the short run 
A) to promote a more equal distribution of income 
B) to correct for negative externalities 
C) to promote technological progress 
D) to ensure lower prices for consumers in the short run

Question 13

Figure 8-A  
-Refer to Figure 8-A.The profit-maximizing firm will produce at what level of output?

Accepted Answer

A) 0Q1 
B) 0Q2 
C) 0Q3 
D) None of the above. 
A) 0Q1 
B) 0Q2 
C) 0Q3 
D) None of the above.

Question 14

Figure 9-I
  
-The monopolist, like the perfect competitor, maximizes profits at the output where marginal revenue equals marginal cost.

Accepted Answer

A) True 
 B)False

Question 15

If a firm seeks to maximize total revenue, it should produce the quantity where:

Accepted Answer

A) marginal revenue equals zero. 
B) elasticity of demand is less than one. 
C) elasticity of demand is greater than one. 
D) marginal revenue is maximized. 
E) average total cost is minimized. 
A) marginal revenue equals zero. 
B) elasticity of demand is less than one. 
C) elasticity of demand is greater than one. 
D) marginal revenue is maximized. 
E) average total cost is minimized.

Question 16

Figure 9-I
  
-A profit-maximizing monopolist will choose to operate along the inelastic portion of its demand curve.

Accepted Answer

A) True 
 B)False

Question 17

Figure 9-I
  
-In order to implement average cost pricing regulation, it is necessary to provide a natural monopolist with a subsidy equal to the economic loss.

Accepted Answer

A) True 
 B)False

Question 18

If an unregulated monopolist operates in a market, then:

Accepted Answer

A) customers will pay higher prices than if the market were competitive. 
B) customers will purchase fewer units of output than if the market were competitive. 
C) society will not be allocating its resources efficiently. 
D) all of the above will occur. 
A) customers will pay higher prices than if the market were competitive. 
B) customers will purchase fewer units of output than if the market were competitive. 
C) society will not be allocating its resources efficiently. 
D) all of the above will occur.

Question 19

Figure 9-I
  
-Monopolies will tend to produce a greater quantity and charge higher prices than perfectly competitive industries.

Accepted Answer

A) True 
 B)False

Question 20

A monopolist can sell 7 units per day at $7 per unit, or 8 units per day at $6 per unit.Its marginal revenue for the eighth unit of output is:

Accepted Answer

A) $48. 
B) $6. 
C) $1. 
D) $-1 
E) impossible to determine. 
A) $48. 
B) $6. 
C) $1. 
D) $-1 
E) impossible to determine.

A natural monopoly exists if:

If the demand curve facing a monopoly was 1 unit at $7, 2 units at $6, 3 units at $5, 4 units at $4, and 5 units at $3, the marginal revenue from selling the third unit of output:

Figure 9-I -A natural monopolist will voluntarily choose to produce at the point of allocative efficiency.

The aim of antitrust policy is to:

Figure 9-I -Monopoly is at the other end of the spectrum from ____.

Which of the following need not be true of a monopoly?

Figure 9-I -A monopoly firm can sell as much output as it wants at whatever price it sets.

Figure 8-C The following diagram contains information on cost and revenue curves facing a regulated monopoly. -Refer to Figure 8-C.If regulators set a price according to average-cost pricing, the firm will:

For a profit-maximizing monopolist, the price of a product is:

Which of the following firms practices price discrimination?

Which landmark legislation made it illegal to engage in predatory pricing and also prohibited mergers if it led to weakened competition?

Why does the government allow some markets to be monopolized by granting patents?

Figure 8-A -Refer to Figure 8-A.The profit-maximizing firm will produce at what level of output?

Figure 9-I -The monopolist, like the perfect competitor, maximizes profits at the output where marginal revenue equals marginal cost.

If a firm seeks to maximize total revenue, it should produce the quantity where:

Figure 9-I -A profit-maximizing monopolist will choose to operate along the inelastic portion of its demand curve.

Figure 9-I -In order to implement average cost pricing regulation, it is necessary to provide a natural monopolist with a subsidy equal to the economic loss.

If an unregulated monopolist operates in a market, then:

Figure 9-I -Monopolies will tend to produce a greater quantity and charge higher prices than perfectly competitive industries.

A monopolist can sell 7 units per day at $7 per unit, or 8 units per day at $6 per unit.Its marginal revenue for the eighth unit of output is:

The Role and Method of Economics

The Economic Way of Thinking

Supply and Demand

Using Supply and Demand

Market Failure and Public Choice

Production and Costs

Firms in Competitive Markets

Monopolistic Competition and Oligopoly

Labor Markets, Income Distribution, and Poverty

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Economic Growth

Aggregate Demand and Aggregate Supply

Fiscal Policy

Monetary Institutions

The Federal Reserve System and Monetary Policy

Issues in Macroeconomic Theory and Policy

International Economics

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Exam 8: Monopoly

A natural monopoly exists if:

If the demand curve facing a monopoly was 1 unit at $7, 2 units at $6, 3 units at $5, 4 units at $4, and 5 units at $3, the marginal revenue from selling the third unit of output:

Figure 9-I -A natural monopolist will voluntarily choose to produce at the point of allocative efficiency.

The aim of antitrust policy is to:

Figure 9-I -Monopoly is at the other end of the spectrum from ____.

Which of the following need not be true of a monopoly?

Figure 9-I -A monopoly firm can sell as much output as it wants at whatever price it sets.

Figure 8-C The following diagram contains information on cost and revenue curves facing a regulated monopoly. -Refer to Figure 8-C.If regulators set a price according to average-cost pricing, the firm will:

For a profit-maximizing monopolist, the price of a product is:

Which of the following firms practices price discrimination?

Which landmark legislation made it illegal to engage in predatory pricing and also prohibited mergers if it led to weakened competition?

Why does the government allow some markets to be monopolized by granting patents?

Figure 8-A -Refer to Figure 8-A.The profit-maximizing firm will produce at what level of output?

Figure 9-I -The monopolist, like the perfect competitor, maximizes profits at the output where marginal revenue equals marginal cost.

If a firm seeks to maximize total revenue, it should produce the quantity where:

Figure 9-I -A profit-maximizing monopolist will choose to operate along the inelastic portion of its demand curve.

Figure 9-I -In order to implement average cost pricing regulation, it is necessary to provide a natural monopolist with a subsidy equal to the economic loss.

If an unregulated monopolist operates in a market, then:

Figure 9-I -Monopolies will tend to produce a greater quantity and charge higher prices than perfectly competitive industries.

A monopolist can sell 7 units per day at $7 per unit, or 8 units per day at $6 per unit.Its marginal revenue for the eighth unit of output is:

The Role and Method of Economics

The Economic Way of Thinking

Supply and Demand

Using Supply and Demand

Market Failure and Public Choice

Production and Costs

Firms in Competitive Markets

Monopolistic Competition and Oligopoly

Labor Markets, Income Distribution, and Poverty

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Economic Growth

Aggregate Demand and Aggregate Supply

Fiscal Policy

Monetary Institutions

The Federal Reserve System and Monetary Policy

Issues in Macroeconomic Theory and Policy

International Economics

Filters