Question 1

In the short run, a monopolist:

Accepted Answer

A) always suffers an economic loss. 
B) always earns an economic profit. 
C) always earns a normal rate of return. 
D) may make an economic loss, an economic profit, or zero economic profits. 
A) always suffers an economic loss. 
B) always earns an economic profit. 
C) always earns a normal rate of return. 
D) may make an economic loss, an economic profit, or zero economic profits.

Question 2

If there is just one producer in an industry where the average total cost curve declines throughout the output range up to where it intersects the industry demand curve:

Accepted Answer

A) the industry will be a natural monopoly. 
B) charging a price equal to marginal cost would entail economic losses for the producer. 
C) charging a price equal to average cost would entail a welfare cost. 
D) if the producer was left free to choose its profit maximizing price, less than the efficient amount would be produced. 
E) all of the above would be true. 
A) the industry will be a natural monopoly. 
B) charging a price equal to marginal cost would entail economic losses for the producer. 
C) charging a price equal to average cost would entail a welfare cost. 
D) if the producer was left free to choose its profit maximizing price, less than the efficient amount would be produced. 
E) all of the above would be true.

Question 3

Which of the following accurately describes a major difference between a monopolist and firms in perfectly competitive markets?

Accepted Answer

A) The monopolist maximizes profit; firms in perfectly competitive markets maximize sales. 
B) The monopolist may earn long-run economic profit; firms in perfectly competitive markets cannot. 
C) The monopolist is a price taker; firms in other markets are price searchers. 
D) The monopolist may earn short-run profit; firms in perfectly competitive markets cannot. 
A) The monopolist maximizes profit; firms in perfectly competitive markets maximize sales. 
B) The monopolist may earn long-run economic profit; firms in perfectly competitive markets cannot. 
C) The monopolist is a price taker; firms in other markets are price searchers. 
D) The monopolist may earn short-run profit; firms in perfectly competitive markets cannot.

Question 4

What was the first important law regulating monopoly that prohibited "restraint of trade"?

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 5

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 marginal cost of the last unit produced at the profit-maximizing level of output is equal to:

Accepted Answer

A) $5. 
B) $7. 
C) $8. 
D) $10. 
E) none of the above. 
A) $5. 
B) $7. 
C) $8. 
D) $10. 
E) none of the above.

Question 6

In the long run, economic profits are:

Accepted Answer

A) possible both for a monopolist and for a perfectly competitive firm. 
B) possible for a monopolist but not for a perfectly competitive firm. 
C) possible for a perfectly competitive firms but not for a monopolist. 
D) impossible for both a monopolist and for a perfectly competitive firm. 
A) possible both for a monopolist and for a perfectly competitive firm. 
B) possible for a monopolist but not for a perfectly competitive firm. 
C) possible for a perfectly competitive firms but not for a monopolist. 
D) impossible for both a monopolist and for a perfectly competitive firm.

Question 7

Which of the following is not a criticism sometimes leveled at monopolies?

Accepted Answer

A) A monopoly promotes inefficiency. 
B) A monopoly creates a welfare loss. 
C) A monopoly retards innovation. 
D) A monopoly leads to improved economies of scale in production. 
A) A monopoly promotes inefficiency. 
B) A monopoly creates a welfare loss. 
C) A monopoly retards innovation. 
D) A monopoly leads to improved economies of scale in production.

Question 8

In the short run, a monopolist:

Accepted Answer

A) always earns an economic profit. 
B) never earns an economic profit. 
C) never earns an accounting profit. 
D) always earns an accounting profit. 
E) None of the above are correct. 
A) always earns an economic profit. 
B) never earns an economic profit. 
C) never earns an accounting profit. 
D) always earns an accounting profit. 
E) None of the above are correct.

Question 9

Does the monopolist have an incentive to reduce cost under average cost pricing? How can this be overcome?

Accepted Answer

Under average cost pricing, the monopoli

Question 10

The patent system is intended to:

Accepted Answer

A) prevent natural monopolies from unfairly exploiting their cost advantages. 
B) reward innovators by granting them temporary monopolies. 
C) spread information among firms as quickly and economically as possible. 
D) give small businesses a competitive edge over larger businesses. 
A) prevent natural monopolies from unfairly exploiting their cost advantages. 
B) reward innovators by granting them temporary monopolies. 
C) spread information among firms as quickly and economically as possible. 
D) give small businesses a competitive edge over larger businesses.

Question 11

A monopoly firm is charging the price the market will bear at a level of output where MC equals $6 and is increasing, MR equals $9, and average variable cost equals $5.To maximize profits, the firm should:

Accepted Answer

A) increase both output and price. 
B) increase output but decrease the price. 
C) decrease output and increase the price. 
D) decrease both output and price. 
E) not change either the output or the price. 
A) increase both output and price. 
B) increase output but decrease the price. 
C) decrease output and increase the price. 
D) decrease both output and price. 
E) not change either the output or the price.

Question 12

A price-discriminating monopolist will tend to charge a lower price to students if it believes that students:

Accepted Answer

A) have a lower willingness to pay than other demanders. 
B) have a greater willingness to pay than other demanders. 
C) have very elastic demand curves. 
D) have nearly vertical demand curves. 
A) have a lower willingness to pay than other demanders. 
B) have a greater willingness to pay than other demanders. 
C) have very elastic demand curves. 
D) have nearly vertical demand curves.

Question 13

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.What would the monopolist's profit-maximizing level of output be?

Accepted Answer

A) 2 cans of iced coffee 
B) 3 cans of iced coffee 
C) 4 cans of iced coffee 
D) 5 cans of iced coffee 
E) 6 cans of iced coffee 
A) 2 cans of iced coffee 
B) 3 cans of iced coffee 
C) 4 cans of iced coffee 
D) 5 cans of iced coffee 
E) 6 cans of iced coffee

Question 14

A monopoly is inefficient because:

Accepted Answer

A) consumers are forced to pay higher prices for products. 
B) firms are able to earn economic profits. 
C) the cost of increased production is less than the value that society places on it. 
D) price exceeds marginal revenue. 
A) consumers are forced to pay higher prices for products. 
B) firms are able to earn economic profits. 
C) the cost of increased production is less than the value that society places on it. 
D) price exceeds marginal revenue.

Question 15

Figure 9-I
  
-Monopolists, unlike perfectly competitive firms, can continue to earn positive economic profits over time.

Accepted Answer

A) True 
 B)False

Question 16

Many people believe that a monopolist can set his own price which consumers have little recourse but to pay, and thereby reap enormous profits.Is this true?

Accepted Answer

A monopolist can set his own price for a

Question 17

What conditions should be met to practice price discrimination in a market?

Accepted Answer

To practice price di

Question 18

Which of the following best explains why a monopolist's marginal revenue is less than the sale price?

Accepted Answer

A) To sell more units, a monopolist must increase the price on all units sold. 
B) As a monopolist expands output, its average total cost declines. 
C) When a firm has a monopoly, consumers have no choice other than to pay the price set by the monopolist. 
D) When a monopolist reduces price in order to sell more units, it must lower the price of some units that could otherwise have been sold at a higher price. 
A) To sell more units, a monopolist must increase the price on all units sold. 
B) As a monopolist expands output, its average total cost declines. 
C) When a firm has a monopoly, consumers have no choice other than to pay the price set by the monopolist. 
D) When a monopolist reduces price in order to sell more units, it must lower the price of some units that could otherwise have been sold at a higher price.

Question 19

Average cost regulation of a natural monopoly does not involve:

Accepted Answer

A) production at a socially inefficient level of output. 
B) a tendency for average total cost curves to shift upward over time. 
C) a subsidy. 
D) production at the output level at which demand intersects the average total cost curve. 
A) production at a socially inefficient level of output. 
B) a tendency for average total cost curves to shift upward over time. 
C) a subsidy. 
D) production at the output level at which demand intersects the average total cost curve.

Question 20

A profit-maximizing monopolist operates where demand is:

Accepted Answer

A) inelastic. 
B) unit elastic. 
C) elastic. 
D) infinitely elastic. 
E) none of the above. 
A) inelastic. 
B) unit elastic. 
C) elastic. 
D) infinitely elastic. 
E) none of the above.

In the short run, a monopolist:

If there is just one producer in an industry where the average total cost curve declines throughout the output range up to where it intersects the industry demand curve:

Which of the following accurately describes a major difference between a monopolist and firms in perfectly competitive markets?

What was the first important law regulating monopoly that prohibited "restraint of trade"?

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 marginal cost of the last unit produced at the profit-maximizing level of output is equal to:

In the long run, economic profits are:

Which of the following is not a criticism sometimes leveled at monopolies?

In the short run, a monopolist:

Does the monopolist have an incentive to reduce cost under average cost pricing? How can this be overcome?

The patent system is intended to:

A monopoly firm is charging the price the market will bear at a level of output where MC equals $6 and is increasing, MR equals $9, and average variable cost equals $5.To maximize profits, the firm should:

A price-discriminating monopolist will tend to charge a lower price to students if it believes that students:

A monopoly is inefficient because:

Figure 9-I -Monopolists, unlike perfectly competitive firms, can continue to earn positive economic profits over time.

Many people believe that a monopolist can set his own price which consumers have little recourse but to pay, and thereby reap enormous profits.Is this true?

What conditions should be met to practice price discrimination in a market?

Which of the following best explains why a monopolist's marginal revenue is less than the sale price?

Average cost regulation of a natural monopoly does not involve:

A profit-maximizing monopolist operates where demand 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

In the short run, a monopolist:

If there is just one producer in an industry where the average total cost curve declines throughout the output range up to where it intersects the industry demand curve:

Which of the following accurately describes a major difference between a monopolist and firms in perfectly competitive markets?

What was the first important law regulating monopoly that prohibited "restraint of trade"?

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 marginal cost of the last unit produced at the profit-maximizing level of output is equal to:

In the long run, economic profits are:

Which of the following is not a criticism sometimes leveled at monopolies?

In the short run, a monopolist:

Does the monopolist have an incentive to reduce cost under average cost pricing? How can this be overcome?

The patent system is intended to:

A monopoly firm is charging the price the market will bear at a level of output where MC equals $6 and is increasing, MR equals $9, and average variable cost equals $5.To maximize profits, the firm should:

A price-discriminating monopolist will tend to charge a lower price to students if it believes that students:

A monopoly is inefficient because:

Figure 9-I -Monopolists, unlike perfectly competitive firms, can continue to earn positive economic profits over time.

Many people believe that a monopolist can set his own price which consumers have little recourse but to pay, and thereby reap enormous profits.Is this true?

What conditions should be met to practice price discrimination in a market?

Which of the following best explains why a monopolist's marginal revenue is less than the sale price?

Average cost regulation of a natural monopoly does not involve:

A profit-maximizing monopolist operates where demand 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