Question 1

-Refer to the above figure. Total cost for this firm equals

Accepted Answer

A)  P2. 
B)  P3. 
C)  0P2bQ1. 
D)  0P3cQ1. 
A)  P2. 
B)  P3. 
C)  0P2bQ1. 
D)  0P3cQ1. C

Question 2

For a monopolist, the marginal revenue gained when one more unit of output is sold is

Accepted Answer

A)  the price at which the extra unit is sold minus the loss in revenue that results from cutting the price on units sold previously. 
B)  equal to the price of the product. 
C)  negative if price is above the midpoint of the demand curve. 
D)  the average revenue created by the increased sales. 
A)  the price at which the extra unit is sold minus the loss in revenue that results from cutting the price on units sold previously. 
B)  equal to the price of the product. 
C)  negative if price is above the midpoint of the demand curve. 
D)  the average revenue created by the increased sales. A

Question 3

Barriers to entry enable many monopolists to

Accepted Answer

A)  charge as high a price as they want. 
B)  make people buy more of a good than they really want. 
C)  earn economic profits in the long run. 
D)  manipulate the government into providing special favors for themselves. 
A)  charge as high a price as they want. 
B)  make people buy more of a good than they really want. 
C)  earn economic profits in the long run. 
D)  manipulate the government into providing special favors for themselves. C

Question 4

A monopoly misallocates resources when it

Accepted Answer

A)  restricts output so that the marginal benefit of the last unit sold exceeds the marginal social cost of producing the good. 
B)  makes an above-normal profit. 
C)  sells the same product to different groups of customers at different prices. 
D)  exploits scale economies. 
A)  restricts output so that the marginal benefit of the last unit sold exceeds the marginal social cost of producing the good. 
B)  makes an above-normal profit. 
C)  sells the same product to different groups of customers at different prices. 
D)  exploits scale economies.

Question 5

-Refer to the above figure. The firm is currently producing at Q1. The firm should

Accepted Answer

A)  reduce production. 
B)  leave production as it is. 
C)  increase production. 
D)  shut down. 
A)  reduce production. 
B)  leave production as it is. 
C)  increase production. 
D)  shut down.

Question 6

-Use the above figure. Total revenue at the profit-maximizing output is

Accepted Answer

A)  $4,800. 
B)  $9,600. 
C)  $5,600. 
D)  $8,000. 
A)  $4,800. 
B)  $9,600. 
C)  $5,600. 
D)  $8,000.

Question 7

Entry barriers are most significant in

Accepted Answer

A)  pure competition. 
B)  monopolistic competition. 
C)  oligopoly. 
D)  pure monopoly. 
A)  pure competition. 
B)  monopolistic competition. 
C)  oligopoly. 
D)  pure monopoly.

Question 8

Suppose a monopolist sells 10,000 units of output at $22 per unit. The firm's total revenue is

Accepted Answer

A)  $2,200. 
B)  $22,000. 
C)  $220,000. 
D)  $2,200,000. 
A)  $2,200. 
B)  $22,000. 
C)  $220,000. 
D)  $2,200,000.

Question 9

A monopolist is producing at an output level at which ATC = $5, P = $6, MC = $4, and MR = $3. We can conclude that

Accepted Answer

A)  economic profit could be increased by producing more. 
B)  economic profit could be increased by producing less. 
C)  economic profit cannot be increased. 
D)  the firm is earning $10 in economic profits. 
A)  economic profit could be increased by producing more. 
B)  economic profit could be increased by producing less. 
C)  economic profit cannot be increased. 
D)  the firm is earning $10 in economic profits.

Question 10

-According to the above figure, the maximum profit the monopolist can receive is

Accepted Answer

A)  0. 
B)  $1,500 per day. 
C)  $9,000 per day. 
D)  $7,500 per day. 
A)  0. 
B)  $1,500 per day. 
C)  $9,000 per day. 
D)  $7,500 per day.

Question 11

-Use the above figure. The profit-maximizing price will be

Accepted Answer

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

Question 12

Which of the following regarding a monopolist is INCORRECT?

Accepted Answer

A)  The monopolist is a single supplier of a good or service. 
B)  The monopolist constitutes the entire industry. 
C)  The monopolist produces only goods of highest quality. 
D)  There are barriers to entry that allow monopoly. 
A)  The monopolist is a single supplier of a good or service. 
B)  The monopolist constitutes the entire industry. 
C)  The monopolist produces only goods of highest quality. 
D)  There are barriers to entry that allow monopoly.

Question 13

A monopolist will not be able to receive a positive economic profit at any price-output combination at which

Accepted Answer

A)  marginal cost is less than average total cost when the monopolist has equated marginal revenue and marginal cost. 
B)  the average total cost curve is everywhere above the demand curve. 
C)  marginal cost is less than average variable cost when the monopolist has equated marginal revenue and marginal cost. 
D)  marginal revenue falls at a faster rate than marginal cost increases. 
A)  marginal cost is less than average total cost when the monopolist has equated marginal revenue and marginal cost. 
B)  the average total cost curve is everywhere above the demand curve. 
C)  marginal cost is less than average variable cost when the monopolist has equated marginal revenue and marginal cost. 
D)  marginal revenue falls at a faster rate than marginal cost increases.

Question 14

For price discrimination to exist, all of the following are necessary EXCEPT

Accepted Answer

A)  a downward sloping demand curve. 
B)  an identifiable group of buyers with different elasticities of demand. 
C)  an upward sloping marginal cost curve. 
D)  there can be no resale of the product. 
A)  a downward sloping demand curve. 
B)  an identifiable group of buyers with different elasticities of demand. 
C)  an upward sloping marginal cost curve. 
D)  there can be no resale of the product.

Question 15

The profit maximizing behavior of a monopoly is different from that of a perfectly competitive firm in that a monopoly can

Accepted Answer

A)  only choose the desired output, while a competitive firm can control only price. 
B)  only choose the desired price, while a competitive firm can control only output. 
C)  control the position of its demand schedule, but a competitive firm cannot. 
D)  control the desired price and output to maximize profits, but a perfectly competitive firm can only choose the desired output. 
A)  only choose the desired output, while a competitive firm can control only price. 
B)  only choose the desired price, while a competitive firm can control only output. 
C)  control the position of its demand schedule, but a competitive firm cannot. 
D)  control the desired price and output to maximize profits, but a perfectly competitive firm can only choose the desired output.

Question 16

A patent provides legal protection for an invention for

Accepted Answer

A)  20 years. 
B)  9 years. 
C)  5 years. 
D)  3 years. 
A)  20 years. 
B)  9 years. 
C)  5 years. 
D)  3 years.

Question 17

A monopolist will earn economic profits when

Accepted Answer

A)  AVC is a minimum. 
B)  ATC equals MC. 
C)  ATC lies above the demand curve. 
D)  ATC lies below the demand curve. 
A)  AVC is a minimum. 
B)  ATC equals MC. 
C)  ATC lies above the demand curve. 
D)  ATC lies below the demand curve.

Question 18

-In the above figure, the total cost of producing the profit maximizing level of output is shown by rectangle

Accepted Answer

A)  0P1AQ1. 
B)  0P5EQ5. 
C)  0P4HQ4. 
D)  0P2BQ1. 
A)  0P1AQ1. 
B)  0P5EQ5. 
C)  0P4HQ4. 
D)  0P2BQ1.

Question 19

A monopolist can earn economic profits in the long run because

Accepted Answer

A)  a monopoly is by definition large, and this gives it the ability to make large profits. 
B)  a monopoly makes the good or service better than anyone else. 
C)  barriers to entry prevent new firms from entering the industry. 
D)  monopolies can legally force people to buy their products and to pay more for them than they are worth. 
A)  a monopoly is by definition large, and this gives it the ability to make large profits. 
B)  a monopoly makes the good or service better than anyone else. 
C)  barriers to entry prevent new firms from entering the industry. 
D)  monopolies can legally force people to buy their products and to pay more for them than they are worth.

Question 20

An important difference between perfect competition and monopoly is

Accepted Answer

A)  a monopoly is profitable and a perfect competitor is not. 
B)  the monopoly faces a downward sloping demand curve and the perfect competitor faces a horizontal demand curve. 
C)  the monopoly faces an inelastic demand curve and the perfect competitor faces an elastic demand curve. 
D)  a monopoly is not regulated by the market, while a perfect competitor is regulated by the market. 
A)  a monopoly is profitable and a perfect competitor is not. 
B)  the monopoly faces a downward sloping demand curve and the perfect competitor faces a horizontal demand curve. 
C)  the monopoly faces an inelastic demand curve and the perfect competitor faces an elastic demand curve. 
D)  a monopoly is not regulated by the market, while a perfect competitor is regulated by the market.

Exam 24: Monopoly

-Refer to the above figure. Total cost for this firm equals

For a monopolist, the marginal revenue gained when one more unit of output is sold is

Barriers to entry enable many monopolists to

A monopoly misallocates resources when it

-Refer to the above figure. The firm is currently producing at Q1. The firm should

-Use the above figure. Total revenue at the profit-maximizing output is

Entry barriers are most significant in

Suppose a monopolist sells 10,000 units of output at $22 per unit. The firm's total revenue is

A monopolist is producing at an output level at which ATC = $5, P = $6, MC = $4, and MR = $3. We can conclude that

-According to the above figure, the maximum profit the monopolist can receive is

-Use the above figure. The profit-maximizing price will be

Which of the following regarding a monopolist is INCORRECT?

A monopolist will not be able to receive a positive economic profit at any price-output combination at which

For price discrimination to exist, all of the following are necessary EXCEPT

The profit maximizing behavior of a monopoly is different from that of a perfectly competitive firm in that a monopoly can

A patent provides legal protection for an invention for

A monopolist will earn economic profits when

-In the above figure, the total cost of producing the profit maximizing level of output is shown by rectangle

A monopolist can earn economic profits in the long run because

An important difference between perfect competition and monopoly is

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Measuring the Economys Performance

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money, Banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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