Question 1

A monopolist will operate at the quantity where:

Accepted Answer

A) MR = MC and charge a price equal to marginal revenue. 
B) MR = MC and charge a price equal to average variable cost. 
C) MR = MC and charge a price corresponding to demand at that level. 
D) MR = MC and charge a price corresponding to average total cost at that level. 
A) MR = MC and charge a price equal to marginal revenue. 
B) MR = MC and charge a price equal to average variable cost. 
C) MR = MC and charge a price corresponding to demand at that level. 
D) MR = MC and charge a price corresponding to average total cost at that level.

Question 2

Figure 9-I
  
-In order for a firm to be able to price discriminate it must not be a price taker, there must be different demand from different groups of consumers, and there must be an ability to prevent resale.

Accepted Answer

A) True 
 B)False

Question 3

Based on the table below, what is the maximum amount of profit this firm could earn? $$\begin{array} { c c c } 
\mathrm { Q } & \mathrm { P } & \mathrm { TC } \
\hline 98 & \$ 51.25 & \$ 1,000 \
99 & \$ 51.00 & \$ 1,025 \
100 & \$ 50.75 & \$ 1,075 \
101 & \$ 50.50 & \$ 1.175 \
102 & \$ 50.25 & \$ 1,350
\end{array}$$

Accepted Answer

A) $1,000 
B) $1,350 
C) $5,049.00 
D) $5,125.50 
E) none of the above 
A) $1,000 
B) $1,350 
C) $5,049.00 
D) $5,125.50 
E) none of the above

Question 4

Figure 9-I
  
-The demand curve faced by a monopolist is the same as the marginal revenue curve.

Accepted Answer

A) True 
 B)False

Question 5

Figure 9-I
  
-Monopoly firms, which are provided a subsidy equal to their losses and subject to marginal cost-pricing regulation, have little incentive to minimize costs.

Accepted Answer

A) True 
 B)False

Question 6

Figure 8-A  
-Refer to Figure 8-A.The socially efficient level of output equals:

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 7

Figure 9-I
  
-A price-discriminating monopoly firm will tend to charge a higher price to customers with a greater willingness to pay than it does to customers with a lower willingness to pay.

Accepted Answer

A) True 
 B)False

Question 8

How can economies of scale lead to monopoly?

Accepted Answer

A single firm, which experiences economi

Question 9

When a single firm can produce output over the relevant range of demand more efficiently than two or more firms can, because of the existence of economies of scale, we have:

Accepted Answer

A) perfect competition. 
B) monopolistic competition. 
C) diseconomies of scale. 
D) a natural monopoly. 
A) perfect competition. 
B) monopolistic competition. 
C) diseconomies of scale. 
D) a natural monopoly.

Question 10

Figure 8-D  
-Refer to Figure 8-D.What quantity of output would a profit-maximizing monopolist produce?

Accepted Answer

A) 0 
B) Q1 
C) Q2 
D) Q3 
E) Q4 
A) 0 
B) Q1 
C) Q2 
D) Q3 
E) Q4

Question 11

A monopoly industry:

Accepted Answer

A) has very significant barriers to entry. 
B) faces a downward sloping demand curve. 
C) produces a product for which there are no close substitutes. 
D) may earn economic profits or losses in the short run. 
E) has all of the above characteristics. 
A) has very significant barriers to entry. 
B) faces a downward sloping demand curve. 
C) produces a product for which there are no close substitutes. 
D) may earn economic profits or losses in the short run. 
E) has all of the above characteristics.

Question 12

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

Accepted Answer

A) $49. 
B) $7. 
C) $1. 
D) $-1 
E) impossible to determine. 
A) $49. 
B) $7. 
C) $1. 
D) $-1 
E) impossible to determine.

Question 13

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, at the point along the curve where 3 units are being sold, the elasticity of demand:

Accepted Answer

A) is greater than one. 
B) is equal to one. 
C) is less than one. 
D) cannot be determined from the above information. 
A) is greater than one. 
B) is equal to one. 
C) is less than one. 
D) cannot be determined from the above information.

Question 14

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.Marginal revenue at the profit-maximizing level of output is equal to:

Accepted Answer

A) $5. 
B) $7. 
C) $8. 
D) $9. 
E) $10. 
A) $5. 
B) $7. 
C) $8. 
D) $9. 
E) $10.

Question 15

A monopolist will shut down in the short run if:

Accepted Answer

A) price exceeds marginal revenue. 
B) price is less than marginal revenue. 
C) price is less than average total cost. 
D) total revenue is less than total variable cost. 
E) total revenue is less than total fixed cost. 
A) price exceeds marginal revenue. 
B) price is less than marginal revenue. 
C) price is less than average total cost. 
D) total revenue is less than total variable cost. 
E) total revenue is less than total fixed cost.

Question 16

Table 8-B
A monopoly producer of canned iced coffee produces with the following costs:
 $$\begin{array} { c l l l l l l l } 
\text { Cans of iced coffee: } & 1 & 2 & 3 & 4 & 5 & 6 & 7 \
\text { Total Cast: (in dollars) } & 4 & 7 & 9 & 12 & 16 & 24 & 35
\end{array}$$ Consumers demand iced coffee according to the following demand schedule:
 $\begin{array}{llllllll}
\text { Cans demanded: } & 1 & 2 & 3 & 4 & 5 & 6 & 7 \
\text { Price per can: } & 6.25 & 6.00 & 5.75 & 5.50 & 5.25 & 5.00 & 4.75
\end{array}$ 
-Refer to Table 8-B.At the profit-maximizing level of output, the difference between price and marginal cost equals:

Accepted Answer

A) $1.00. 
B) $1.25. 
C) $1.50. 
D) $2.00. 
E) $3.00. 
A) $1.00. 
B) $1.25. 
C) $1.50. 
D) $2.00. 
E) $3.00.

Question 17

Which piece of legislation forbids most forms of price discrimination?

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 18

Figure 9-I
  
-A welfare loss occurs when a monopolist chooses not to produce units of output that are of greater marginal value to consumers than the marginal cost of producing them.

Accepted Answer

A) True 
 B)False

Question 19

A profit-maximizing monopolist, if producing at all, chooses a level of output where:

Accepted Answer

A) total revenue is maximized. 
B) total cost is minimized. 
C) average total cost is minimized. 
D) marginal revenue equals marginal cost. 
E) price equals marginal cost. 
A) total revenue is maximized. 
B) total cost is minimized. 
C) average total cost is minimized. 
D) marginal revenue equals marginal cost. 
E) price equals marginal cost.

Question 20

Allocative efficiency occurs where:

Accepted Answer

A) the price of a good is less than the marginal cost of producing it. 
B) the price of a good is greater than the marginal cost of producing it. 
C) the price of a good is equal to the marginal cost of producing it. 
D) the greatest quantity of output is available for sale. 
E) the price of a good equals the average variable cost of producing it. 
A) the price of a good is less than the marginal cost of producing it. 
B) the price of a good is greater than the marginal cost of producing it. 
C) the price of a good is equal to the marginal cost of producing it. 
D) the greatest quantity of output is available for sale. 
E) the price of a good equals the average variable cost of producing it.

A monopolist will operate at the quantity where:

Figure 9-I -In order for a firm to be able to price discriminate it must not be a price taker, there must be different demand from different groups of consumers, and there must be an ability to prevent resale.

Based on the table below, what is the maximum amount of profit this firm could earn? 98 \ 51.25 \ 1,000 99 \ 51.00 \ 1,025 100 \ 50.75 \ 1,075 101 \ 50.50 \ 1.175 102 \ 50.25 \ 1,350

Figure 9-I -The demand curve faced by a monopolist is the same as the marginal revenue curve.

Figure 9-I -Monopoly firms, which are provided a subsidy equal to their losses and subject to marginal cost-pricing regulation, have little incentive to minimize costs.

Figure 8-A -Refer to Figure 8-A.The socially efficient level of output equals:

Figure 9-I -A price-discriminating monopoly firm will tend to charge a higher price to customers with a greater willingness to pay than it does to customers with a lower willingness to pay.

How can economies of scale lead to monopoly?

When a single firm can produce output over the relevant range of demand more efficiently than two or more firms can, because of the existence of economies of scale, we have:

Figure 8-D -Refer to Figure 8-D.What quantity of output would a profit-maximizing monopolist produce?

A monopoly industry:

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

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, at the point along the curve where 3 units are being sold, the elasticity of demand:

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.Marginal revenue at the profit-maximizing level of output is equal to:

A monopolist will shut down in the short run if:

Which piece of legislation forbids most forms of price discrimination?

Figure 9-I -A welfare loss occurs when a monopolist chooses not to produce units of output that are of greater marginal value to consumers than the marginal cost of producing them.

A profit-maximizing monopolist, if producing at all, chooses a level of output where:

Allocative efficiency occurs where:

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

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Exam 8: Monopoly

A monopolist will operate at the quantity where:

Figure 9-I -In order for a firm to be able to price discriminate it must not be a price taker, there must be different demand from different groups of consumers, and there must be an ability to prevent resale.

Based on the table below, what is the maximum amount of profit this firm could earn? 98 \ 51.25 \ 1,000 99 \ 51.00 \ 1,025 100 \ 50.75 \ 1,075 101 \ 50.50 \ 1.175 102 \ 50.25 \ 1,350

Figure 9-I -The demand curve faced by a monopolist is the same as the marginal revenue curve.

Figure 9-I -Monopoly firms, which are provided a subsidy equal to their losses and subject to marginal cost-pricing regulation, have little incentive to minimize costs.

Figure 8-A -Refer to Figure 8-A.The socially efficient level of output equals:

Figure 9-I -A price-discriminating monopoly firm will tend to charge a higher price to customers with a greater willingness to pay than it does to customers with a lower willingness to pay.

How can economies of scale lead to monopoly?

When a single firm can produce output over the relevant range of demand more efficiently than two or more firms can, because of the existence of economies of scale, we have:

Figure 8-D -Refer to Figure 8-D.What quantity of output would a profit-maximizing monopolist produce?

A monopoly industry:

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

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, at the point along the curve where 3 units are being sold, the elasticity of demand:

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.Marginal revenue at the profit-maximizing level of output is equal to:

A monopolist will shut down in the short run if:

Which piece of legislation forbids most forms of price discrimination?

Figure 9-I -A welfare loss occurs when a monopolist chooses not to produce units of output that are of greater marginal value to consumers than the marginal cost of producing them.

A profit-maximizing monopolist, if producing at all, chooses a level of output where:

Allocative efficiency occurs where:

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