Question 1

If a monopolist's marginal revenue is less than zero over a range of output, then price elasticity of demand must be:

Accepted Answer

A) greater than one. 
B) equal to one. 
C) less than one. 
D) equal to zero. 
E) infinite. 
A) greater than one. 
B) equal to one. 
C) less than one. 
D) equal to zero. 
E) infinite.

Question 2

Which of the following is not a characteristic of a successful price discriminator?

Accepted Answer

A) It has monopoly power. 
B) It can prevent the resale of the product. 
C) Its marginal costs of production differ across customers. 
D) Willingness to pay for its product differs across customers. 
A) It has monopoly power. 
B) It can prevent the resale of the product. 
C) Its marginal costs of production differ across customers. 
D) Willingness to pay for its product differs across customers.

Question 3

Will all monopolistic firms always generate economic profits? Why or why not?

Accepted Answer

No, a monopolistic firm will not necessa

Question 4

Based on the table below what is the marginal revenue of the 28th unit of output? $\begin{array}{llcc}
  \underline{\text { Quantity } }&  \underline{\text {Price  }} \
27&\$28.50\
28&\$27.00\
29&\$25.50
\end{array}$

Accepted Answer

A) -$16.50 
B) -$13.50 
C) $13.50 
D) $16.50 
E) $27.00 
A) -$16.50 
B) -$13.50 
C) $13.50 
D) $16.50 
E) $27.00

Question 5

Based on the table below, what is the maximum amount of profit this firm could earn? $$\begin{array} { c c c } 
\mathrm { Q } & \mathrm { P } & \mathrm { TC } \
\hline 40 & \$ 80 & \$ 2,500 \
41 & \$ 79 & \$ 2,510 \
42 & \$ 78 & \$ 2,530 \
43 & \$ 77 & \$ 2,560 \
44 & \$ 76 & \$ 2,600
\end{array}$$

Accepted Answer

A) $746 
B) $751 
C) $2,560 
D) $3,311 
E) $3,344 
A) $746 
B) $751 
C) $2,560 
D) $3,311 
E) $3,344

Question 6

Figure 8-C
The following diagram contains information on cost and revenue curves facing a regulated monopoly.  
-Refer to Figure 8-C.The socially efficient level of output would occur where:

Accepted Answer

A) price equals average total cost at Q3. 
B) price equals marginal cost at Q4. 
C) price equals marginal revenue at Q1. 
D) marginal revenue equals marginal cost at Q2. 
E) None of the above. 
A) price equals average total cost at Q3. 
B) price equals marginal cost at Q4. 
C) price equals marginal revenue at Q1. 
D) marginal revenue equals marginal cost at Q2. 
E) None of the above.

Question 7

Which of the following would likely be an example of a monopolistic industry?

Accepted Answer

A) fast-food restaurants 
B) wireless phone service 
C) auto manufacturing 
D) none of the above 
A) fast-food restaurants 
B) wireless phone service 
C) auto manufacturing 
D) none of the above

Question 8

At his current level of output, a monopolist has a MR of $10, a MC of $6, and an economic profit of zero.If the market demand curve is downward sloping and his marginal cost curve is upward sloping, the monopolist:

Accepted Answer

A) is producing at the profit-maximizing level of output. 
B) could increase profit by increasing output. 
C) could increase profit by increasing his price. 
D) should exit the market if significant fixed costs have been incurred. 
A) is producing at the profit-maximizing level of output. 
B) could increase profit by increasing output. 
C) could increase profit by increasing his price. 
D) should exit the market if significant fixed costs have been incurred.

Question 9

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

Accepted Answer

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

Question 10

The practice of selling a product to different customers at different prices when marginal cost is the same is known as:

Accepted Answer

A) price discrimination. 
B) monopoly pricing. 
C) arbitrage. 
D) price segregation. 
A) price discrimination. 
B) monopoly pricing. 
C) arbitrage. 
D) price segregation.

Question 11

Table 8-A
 $$\begin{array} { c c c } 
\text { Quantity } & \text { Total Revenue } & \text { Total Cost } \
8 & 95 & 90 \
9 & 105 & 93 \
10 & 114 & 98 \
11 & 122 & 105 \
12 & 129 & 114
\end{array}$$
-Refer to Table 8-A.The profit-maximizing level of output:

Accepted Answer

A) is equal to 9 units of output. 
B) is equal to 10 units of output. 
C) is equal to 11 units of output. 
D) is equal to 12 units of output. 
E) cannot be determined from the information provided. 
A) is equal to 9 units of output. 
B) is equal to 10 units of output. 
C) is equal to 11 units of output. 
D) is equal to 12 units of output. 
E) cannot be determined from the information provided.

Question 12

A monopolist would charge ____ prices and produce ____ output than would exist under perfect competition.

Accepted Answer

A) higher; less. 
B) lower; more. 
C) higher; more. 
D) the same; the same. 
A) higher; less. 
B) lower; more. 
C) higher; more. 
D) the same; the same.

Question 13

Based on the table below what is the marginal revenue of the 14th unit of output? $\begin{array}{llcc}
  \underline{\text { Quantity } }&  \underline{\text {Price  }} \
13&\$50.00\
14&\$49.75\
15&\$49.50
\end{array}$

Accepted Answer

A) $0.25 
B) $46.00 
C) $46.50 
D) $49.75 
A) $0.25 
B) $46.00 
C) $46.50 
D) $49.75

Question 14

The DeBeers Diamond Company, which owns most of the South African diamond production, has market power over the diamond trade.This market power was obtained through:

Accepted Answer

A) illegal means. 
B) control of a scarce resource. 
C) patent protection. 
D) government licensing. 
A) illegal means. 
B) control of a scarce resource. 
C) patent protection. 
D) government licensing.

Question 15

Figure 9-I
  
-The welfare loss from monopoly is not really a loss to society as a whole, since it is just a transfer from consumers to producers.

Accepted Answer

A) True 
 B)False

Question 16

Under marginal cost pricing by a natural monopoly,

Accepted Answer

A) price is less than average cost. 
B) there will be a welfare cost. 
C) the producer will earn a higher than normal rate of return. 
D) there is little or no incentive for the producer to hold down costs. 
E) all of the above are true. 
A) price is less than average cost. 
B) there will be a welfare cost. 
C) the producer will earn a higher than normal rate of return. 
D) there is little or no incentive for the producer to hold down costs. 
E) all of the above are true.

Question 17

Which of the following is likely in a monopolized market?

Accepted Answer

A) a price that exceeds marginal cost 
B) a price that exceeds marginal revenue 
C) a welfare loss due to the restriction of output 
D) the potential for continued profitability in the long run 
E) all of the above 
A) a price that exceeds marginal cost 
B) a price that exceeds marginal revenue 
C) a welfare loss due to the restriction of output 
D) the potential for continued profitability in the long run 
E) all of the above

Question 18

If there are economies of scale throughout the relevant output range of production, which is false?

Accepted Answer

A) It is a natural monopoly. 
B) It is more efficient to have a single firm produce the good. 
C) It would typically result from a firm's possession of an exclusive patent. 
D) One large firm can produce at lower cost than two or more smaller firms. 
E) None of the above is false; all are true. 
A) It is a natural monopoly. 
B) It is more efficient to have a single firm produce the good. 
C) It would typically result from a firm's possession of an exclusive patent. 
D) One large firm can produce at lower cost than two or more smaller firms. 
E) None of the above is false; all are true.

Question 19

A market structure in which only one firm survives because of economies of scale:

Accepted Answer

A) is called a structural monopoly. 
B) is called a patented monopoly. 
C) is called a natural monopoly. 
D) is called a government monopoly. 
A) is called a structural monopoly. 
B) is called a patented monopoly. 
C) is called a natural monopoly. 
D) is called a government monopoly.

Question 20

Figure 9-I
  
-One difficulty associated with average cost pricing regulation of natural monopolies is that firms have little or no incentive to minimize production costs.

Accepted Answer

A) True 
 B)False

If a monopolist's marginal revenue is less than zero over a range of output, then price elasticity of demand must be:

Which of the following is not a characteristic of a successful price discriminator?

Will all monopolistic firms always generate economic profits? Why or why not?

Based on the table below what is the marginal revenue of the 28^th unit of output? 27 \2 8.50 28 \2 7.00 29 \2 5.50

Based on the table below, what is the maximum amount of profit this firm could earn? 40 \ 80 \ 2,500 41 \ 79 \ 2,510 42 \ 78 \ 2,530 43 \ 77 \ 2,560 44 \ 76 \ 2,600

Figure 8-C The following diagram contains information on cost and revenue curves facing a regulated monopoly. -Refer to Figure 8-C.The socially efficient level of output would occur where:

Which of the following would likely be an example of a monopolistic industry?

At his current level of output, a monopolist has a MR of $10, a MC of $6, and an economic profit of zero.If the market demand curve is downward sloping and his marginal cost curve is upward sloping, the monopolist:

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

The practice of selling a product to different customers at different prices when marginal cost is the same is known as:

Table 8-A Quantity Total Revenue Total Cost 8 95 90 9 105 93 10 114 98 11 122 105 12 129 114 -Refer to Table 8-A.The profit-maximizing level of output:

A monopolist would charge prices and produce output than would exist under perfect competition.

Based on the table below what is the marginal revenue of the 14^th unit of output? 13 \5 0.00 14 \4 9.75 15 \4 9.50

The DeBeers Diamond Company, which owns most of the South African diamond production, has market power over the diamond trade.This market power was obtained through:

Figure 9-I -The welfare loss from monopoly is not really a loss to society as a whole, since it is just a transfer from consumers to producers.

Under marginal cost pricing by a natural monopoly,

Which of the following is likely in a monopolized market?

If there are economies of scale throughout the relevant output range of production, which is false?

A market structure in which only one firm survives because of economies of scale:

Figure 9-I -One difficulty associated with average cost pricing regulation of natural monopolies is that firms have little or no incentive to minimize production costs.

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

If a monopolist's marginal revenue is less than zero over a range of output, then price elasticity of demand must be:

Which of the following is not a characteristic of a successful price discriminator?

Will all monopolistic firms always generate economic profits? Why or why not?

Based on the table below what is the marginal revenue of the 28th unit of output? 27 \2 8.50 28 \2 7.00 29 \2 5.50

Based on the table below, what is the maximum amount of profit this firm could earn? 40 \ 80 \ 2,500 41 \ 79 \ 2,510 42 \ 78 \ 2,530 43 \ 77 \ 2,560 44 \ 76 \ 2,600

Figure 8-C The following diagram contains information on cost and revenue curves facing a regulated monopoly. -Refer to Figure 8-C.The socially efficient level of output would occur where:

Which of the following would likely be an example of a monopolistic industry?

At his current level of output, a monopolist has a MR of $10, a MC of $6, and an economic profit of zero.If the market demand curve is downward sloping and his marginal cost curve is upward sloping, the monopolist:

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

The practice of selling a product to different customers at different prices when marginal cost is the same is known as:

Table 8-A Quantity Total Revenue Total Cost 8 95 90 9 105 93 10 114 98 11 122 105 12 129 114 -Refer to Table 8-A.The profit-maximizing level of output:

A monopolist would charge ____ prices and produce ____ output than would exist under perfect competition.

Based on the table below what is the marginal revenue of the 14th unit of output? 13 \5 0.00 14 \4 9.75 15 \4 9.50

The DeBeers Diamond Company, which owns most of the South African diamond production, has market power over the diamond trade.This market power was obtained through:

Figure 9-I -The welfare loss from monopoly is not really a loss to society as a whole, since it is just a transfer from consumers to producers.

Under marginal cost pricing by a natural monopoly,

Which of the following is likely in a monopolized market?

If there are economies of scale throughout the relevant output range of production, which is false?

A market structure in which only one firm survives because of economies of scale:

Figure 9-I -One difficulty associated with average cost pricing regulation of natural monopolies is that firms have little or no incentive to minimize production costs.

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

Based on the table below what is the marginal revenue of the 28^th unit of output? 27 \2 8.50 28 \2 7.00 29 \2 5.50

A monopolist would charge prices and produce output than would exist under perfect competition.

Based on the table below what is the marginal revenue of the 14^th unit of output? 13 \5 0.00 14 \4 9.75 15 \4 9.50