Question 1

Which of the following is generally true of monopoly?

Accepted Answer

A) Average revenue equals price. 
B) Price exceeds marginal cost. 
C) Marginal revenue is less than price. 
D) Output is restricted relative to the socially efficient level. 
E) All of the above are generally true of monopoly. 
A) Average revenue equals price. 
B) Price exceeds marginal cost. 
C) Marginal revenue is less than price. 
D) Output is restricted relative to the socially efficient level. 
E) All of the above are generally true of monopoly.

Question 2

What would be the impact if the government forced the breakup of a natural monopoly to promote greater competition in an industry?

Accepted Answer

A) Smaller firms would have a cost advantage over larger firms. 
B) The price paid by consumers would be unchanged. 
C) The average cost of producing the good would increase. 
D) The average cost of producing the good would decrease. 
A) Smaller firms would have a cost advantage over larger firms. 
B) The price paid by consumers would be unchanged. 
C) The average cost of producing the good would increase. 
D) The average cost of producing the good would decrease.

Question 3

Average-cost pricing for a natural monopoly will:

Accepted Answer

A) result in the socially efficient level of output. 
B) result in a less than socially efficient level of output. 
C) result in a greater than socially efficient level of output. 
D) result in the firm suffering economic losses. 
E) result in the firm earning economic profit. 
A) result in the socially efficient level of output. 
B) result in a less than socially efficient level of output. 
C) result in a greater than socially efficient level of output. 
D) result in the firm suffering economic losses. 
E) result in the firm earning economic profit.

Question 4

Graphically, the marginal revenue curve of a monopolist:

Accepted Answer

A) lies below the demand curve of a monopolist. 
B) is the same as the demand curve of a monopolist. 
C) lies above the demand curve of a monopolist. 
D) is the same as the marginal cost curve of a monopolist. 
A) lies below the demand curve of a monopolist. 
B) is the same as the demand curve of a monopolist. 
C) lies above the demand curve of a monopolist. 
D) is the same as the marginal cost curve of a monopolist.

Question 5

Figure 8-C
The following diagram contains information on cost and revenue curves facing a regulated monopoly.  
-Refer to Figure 8-C.If the government is able to regulate the monopolist using average-cost pricing, what price and output combinations are expected to result?

Accepted Answer

A) P5 and Q2 
B) P2 and Q2 
C) P3 and Q1 
D) P4 and Q3 
E) P6 and Q4 
A) P5 and Q2 
B) P2 and Q2 
C) P3 and Q1 
D) P4 and Q3 
E) P6 and Q4

Question 6

A natural monopoly is likely to arise when:

Accepted Answer

A) the government restricts entry through licensing. 
B) patents provide protection of intellectual property. 
C) economies of scale exist over the relevant range of demand. 
D) a firm controls a crucial input to production. 
E) any of the above occur. 
A) the government restricts entry through licensing. 
B) patents provide protection of intellectual property. 
C) economies of scale exist over the relevant range of demand. 
D) a firm controls a crucial input to production. 
E) any of the above occur.

Question 7

The demand curve of a monopolist is:

Accepted Answer

A) is identical to the marginal cost curve. 
B) downward sloping and above the marginal revenue curve. 
C) downward sloping and below the marginal revenue curve. 
D) kinked because of recognized interdependence with other firms. 
E) horizontal at the market price. 
A) is identical to the marginal cost curve. 
B) downward sloping and above the marginal revenue curve. 
C) downward sloping and below the marginal revenue curve. 
D) kinked because of recognized interdependence with other firms. 
E) horizontal at the market price.

Question 8

Figure 9-I
  
-A monopolist restricts output and charges a higher price relative to what would occur if a market were perfectly competitive.

Accepted Answer

A) True 
 B)False

Question 9

Figure 8-C
The following diagram contains information on cost and revenue curves facing a regulated monopoly.  
-Refer to Figure 8-C.Given this information, the monopoly would prefer which of the following price and output combinations?

Accepted Answer

A) P1 and Q1 
B) P2 and Q2 
C) P3 and Q1 
D) P4 and Q3 
E) P6 and Q4 
A) P1 and Q1 
B) P2 and Q2 
C) P3 and Q1 
D) P4 and Q3 
E) P6 and Q4

Question 10

The following represents a portion of the demand schedule faced by a monopoly firm. $$\begin{array} { l c } 
\text { Price } & \text { Qurantity } \
\$12 & 1 \
\$ 11 & 2 \
\$ 10 & 3 \
\$9 & 4
\end{array}$$ The marginal revenue of the third unit of output equals:

Accepted Answer

A) $12. 
B) $10. 
C) $8. 
D) $1. 
A) $12. 
B) $10. 
C) $8. 
D) $1.

Question 11

Figure 8-A  
-Refer to Figure 8-A.If the firm is profit maximizing, the region bounded by CADE represents:

Accepted Answer

A) total costs. 
B) total losses. 
C) total profits. 
D) total consumer surplus. 
A) total costs. 
B) total losses. 
C) total profits. 
D) total consumer surplus.

Question 12

When a monopolist is able to sell its product at different prices to different customers, it is likely engaging in:

Accepted Answer

A) quality-adjusted pricing. 
B) price discrimination. 
C) price differentiation. 
D) illegal activities. 
E) None of the above. 
A) quality-adjusted pricing. 
B) price discrimination. 
C) price differentiation. 
D) illegal activities. 
E) None of the above.

Question 13

U.S.public utilities are often:

Accepted Answer

A) perfect competitors. 
B) created through patent protection. 
C) regulated natural monopolies. 
D) employee-owned public enterprises. 
A) perfect competitors. 
B) created through patent protection. 
C) regulated natural monopolies. 
D) employee-owned public enterprises.

Question 14

Figure 9-I
  
-Monopoly profits cannot persist in the long run, because there are barriers to entry.

Accepted Answer

A) True 
 B)False

Question 15

What is the maximum amount of profit that the firm below could generate?

Accepted Answer

A) $2,220 
B) $3,000 
C) $3,300 
D) $3,700 
E) $5,700 
A) $2,220 
B) $3,000 
C) $3,300 
D) $3,700 
E) $5,700

Question 16

Price discrimination refers to:

Accepted Answer

A) charging different prices to different groups on the basis of production cost differences. 
B) charging different prices to different groups without a basis for doing so because of differences in production costs. 
C) the ability of a firm to charge a price in excess of marginal cost. 
D) consumer bargain hunting. 
A) charging different prices to different groups on the basis of production cost differences. 
B) charging different prices to different groups without a basis for doing so because of differences in production costs. 
C) the ability of a firm to charge a price in excess of marginal cost. 
D) consumer bargain hunting.

Question 17

Many communities have granted monopoly rights to cable companies.This is an example of a monopoly created through:

Accepted Answer

A) government licensing. 
B) ownership of the cable resources. 
C) patent protection. 
D) smart business practices by shrewd entrepreneurs. 
A) government licensing. 
B) ownership of the cable resources. 
C) patent protection. 
D) smart business practices by shrewd entrepreneurs.

Question 18

Figure 9-I
  
-In a perfectly competitive industry, the industry demand curve is ____, while in a monopolistic industry, the industry demand curve is:

Accepted Answer

A) horizontal; downward sloping. 
B) downward sloping; horizontal. 
C) downward sloping; downward sloping. 
D) horizontal; horizontal. 
A) horizontal; downward sloping. 
B) downward sloping; horizontal. 
C) downward sloping; downward sloping. 
D) horizontal; horizontal.

Question 19

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 firm's profits equal:

Accepted Answer

A) $2.35. 
B) $5. 
C) $8.25. 
D) $10. 
E) $10.25. 
A) $2.35. 
B) $5. 
C) $8.25. 
D) $10. 
E) $10.25.

Question 20

Figure 8-D  
-Refer to Figure 8-D.What price would a monopolist charge when maximizing profits?

Accepted Answer

A) P1 
B) P2 
C) P3 
D) P4 
A) P1 
B) P2 
C) P3 
D) P4

Which of the following is generally true of monopoly?

What would be the impact if the government forced the breakup of a natural monopoly to promote greater competition in an industry?

Average-cost pricing for a natural monopoly will:

Graphically, the marginal revenue curve of a monopolist:

Figure 8-C The following diagram contains information on cost and revenue curves facing a regulated monopoly. -Refer to Figure 8-C.If the government is able to regulate the monopolist using average-cost pricing, what price and output combinations are expected to result?

A natural monopoly is likely to arise when:

The demand curve of a monopolist is:

Figure 9-I -A monopolist restricts output and charges a higher price relative to what would occur if a market were perfectly competitive.

Figure 8-C The following diagram contains information on cost and revenue curves facing a regulated monopoly. -Refer to Figure 8-C.Given this information, the monopoly would prefer which of the following price and output combinations?

The following represents a portion of the demand schedule faced by a monopoly firm. Price Qurantity \1 2 1 \ 11 2 \ 10 3 \9 4 The marginal revenue of the third unit of output equals:

Figure 8-A -Refer to Figure 8-A.If the firm is profit maximizing, the region bounded by CADE represents:

When a monopolist is able to sell its product at different prices to different customers, it is likely engaging in:

U.S.public utilities are often:

Figure 9-I -Monopoly profits cannot persist in the long run, because there are barriers to entry.

What is the maximum amount of profit that the firm below could generate?

Price discrimination refers to:

Many communities have granted monopoly rights to cable companies.This is an example of a monopoly created through:

Figure 9-I -In a perfectly competitive industry, the industry demand curve is ____, while in a monopolistic industry, the industry demand curve is:

Figure 8-D -Refer to Figure 8-D.What price would a monopolist charge when maximizing profits?

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

Which of the following is generally true of monopoly?

What would be the impact if the government forced the breakup of a natural monopoly to promote greater competition in an industry?

Average-cost pricing for a natural monopoly will:

Graphically, the marginal revenue curve of a monopolist:

Figure 8-C The following diagram contains information on cost and revenue curves facing a regulated monopoly. -Refer to Figure 8-C.If the government is able to regulate the monopolist using average-cost pricing, what price and output combinations are expected to result?

A natural monopoly is likely to arise when:

The demand curve of a monopolist is:

Figure 9-I -A monopolist restricts output and charges a higher price relative to what would occur if a market were perfectly competitive.

Figure 8-C The following diagram contains information on cost and revenue curves facing a regulated monopoly. -Refer to Figure 8-C.Given this information, the monopoly would prefer which of the following price and output combinations?

The following represents a portion of the demand schedule faced by a monopoly firm. Price Qurantity \1 2 1 \ 11 2 \ 10 3 \9 4 The marginal revenue of the third unit of output equals:

Figure 8-A -Refer to Figure 8-A.If the firm is profit maximizing, the region bounded by CADE represents:

When a monopolist is able to sell its product at different prices to different customers, it is likely engaging in:

U.S.public utilities are often:

Figure 9-I -Monopoly profits cannot persist in the long run, because there are barriers to entry.

What is the maximum amount of profit that the firm below could generate?

Price discrimination refers to:

Many communities have granted monopoly rights to cable companies.This is an example of a monopoly created through:

Figure 9-I -In a perfectly competitive industry, the industry demand curve is ____, while in a monopolistic industry, the industry demand curve is:

Figure 8-D -Refer to Figure 8-D.What price would a monopolist charge when maximizing profits?

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