Question 1

Which of the following statements concerning a monopolist is FALSE?

Accepted Answer

A)  A monopolist will produce at which MR = MC. 
B)  For a monopolist, marginal revenue is less than price. 
C)  A monopolist will charge the highest price at which any individual will purchase the product. 
D)  A monopolist will shut down if price is less than average variable cost. 
A)  A monopolist will produce at which MR = MC. 
B)  For a monopolist, marginal revenue is less than price. 
C)  A monopolist will charge the highest price at which any individual will purchase the product. 
D)  A monopolist will shut down if price is less than average variable cost.

Question 2

-A monopolist is maximizing profit at an output rate of 100 units per week. At this output rate, the price that its customers are willing and able to pay is $8 per unit, average total cost is $5 per unit, and marginal cost is $6 per unit. It may be concluded that at this monthly output rate, marginal revenue is

Accepted Answer

A)  $5 per unit, and the monopolist earns zero economic profits. 
B)  $6 per unit, and the monopolist earns economic profits of $200 per week. 
C)  $6 per unit, and the monopolist earns economic losses of $100 per week. 
D)  $6 per unit, and the monopolist earns economic profits of $300 per week. 
A)  $5 per unit, and the monopolist earns zero economic profits. 
B)  $6 per unit, and the monopolist earns economic profits of $200 per week. 
C)  $6 per unit, and the monopolist earns economic losses of $100 per week. 
D)  $6 per unit, and the monopolist earns economic profits of $300 per week.

Question 3

The demand curve for a monopolist is

Accepted Answer

A)  the industry demand curve. 
B)  the same as the demand curve for a perfectly competitive firm. 
C)  a perfectly inelastic demand curve. 
D)  a unitary elastic demand curve. 
A)  the industry demand curve. 
B)  the same as the demand curve for a perfectly competitive firm. 
C)  a perfectly inelastic demand curve. 
D)  a unitary elastic demand curve.

Question 4

A natural monopoly usually arises when

Accepted Answer

A)  there are diseconomies of scale in an industry. 
B)  the government allows unrestricted access to a market. 
C)  there are large economies of scale relative to the industry's demand. 
D)  companies band together to form a larger company. 
A)  there are diseconomies of scale in an industry. 
B)  the government allows unrestricted access to a market. 
C)  there are large economies of scale relative to the industry's demand. 
D)  companies band together to form a larger company.

Question 5

When a monopolist sells the same product at different prices and the prices are NOT related to cost differences, we have

Accepted Answer

A)  monopoly pricing. 
B)  marginal cost pricing. 
C)  price discrimination. 
D)  price differentiation. 
A)  monopoly pricing. 
B)  marginal cost pricing. 
C)  price discrimination. 
D)  price differentiation.

Question 6

Which of the following conditions is NOT necessary for a firm to be able to engage in price discrimination? I. The firm must be able to produce to the point at which price equals marginal revenue.
II) The firm must easily be able to identify consumers with different demand elasticities.
III) The firm must be able to prevent resale of the item it produces and sells.

Accepted Answer

A)  I only 
B)  III only 
C)  Both I and II only 
D)  Both II and III only 
A)  I only 
B)  III only 
C)  Both I and II only 
D)  Both II and III only

Question 7

Which of the following statements about a monopolist is TRUE?

Accepted Answer

A)  Monopolies tend to misallocate resources. 
B)  All monopolies are unlawful in the United States. 
C)  Monopolies tend to supply goods at lower prices than those charged by firms in perfect competition. 
D)  Monopolies will always make a profit in the long run. 
A)  Monopolies tend to misallocate resources. 
B)  All monopolies are unlawful in the United States. 
C)  Monopolies tend to supply goods at lower prices than those charged by firms in perfect competition. 
D)  Monopolies will always make a profit in the long run.

Question 8

Price discrimination is more likely in the case of services than in the case of goods because

Accepted Answer

A)  producers of goods usually do not face downward sloping demand curves. 
B)  it is easier to distinguish customers with different elasticities of demand with respect to services than with goods. 
C)  elasticities of demand vary more with services than with goods. 
D)  it is more difficult to resell services. 
A)  producers of goods usually do not face downward sloping demand curves. 
B)  it is easier to distinguish customers with different elasticities of demand with respect to services than with goods. 
C)  elasticities of demand vary more with services than with goods. 
D)  it is more difficult to resell services.

Question 9

-Given the data in the above table, what is the marginal revenue when the 12th unit is sold?

Accepted Answer

A)  $7.00 
B)  $5.00 
C)  $3.00 
D)  $1.00 
A)  $7.00 
B)  $5.00 
C)  $3.00 
D)  $1.00

Question 10

A monopolist would probably earn fewer profits if

Accepted Answer

A)  the importance of specialized capital equipment in its production techniques increased. 
B)  the time length of patents increased. 
C)  environmental regulations increased that required the purchase of special capital equipment. 
D)  tariffs on competing products were lowered. 
A)  the importance of specialized capital equipment in its production techniques increased. 
B)  the time length of patents increased. 
C)  environmental regulations increased that required the purchase of special capital equipment. 
D)  tariffs on competing products were lowered.

Question 11

In the long run, all of the following are true for a monopolist EXCEPT

Accepted Answer

A)  P > ATC. 
B)  P = MC. 
C)  MR = MC. 
D)  P > AVC. 
A)  P > ATC. 
B)  P = MC. 
C)  MR = MC. 
D)  P > AVC.

Question 12

In a perfectly competitive market, consumer surplus typically is

Accepted Answer

A)  positive. 
B)  negative. 
C)  zero. 
D)  undefined. 
A)  positive. 
B)  negative. 
C)  zero. 
D)  undefined.

Question 13

The demand curve faced by the monopolist

Accepted Answer

A)  has a constant price elasticity. 
B)  is the industry demand curve. 
C)  is identical to the firm's MR curve. 
D)  is identical to the firm's TR curve. 
A)  has a constant price elasticity. 
B)  is the industry demand curve. 
C)  is identical to the firm's MR curve. 
D)  is identical to the firm's TR curve.

Question 14

-According to the above figure, when the monopolist maximizes profits, its profits are equal to the area given by

Accepted Answer

A)  AKMC. 
B)  AKOD. 
C)  BLPE. 
D)  EPRF. 
A)  AKMC. 
B)  AKOD. 
C)  BLPE. 
D)  EPRF.

Question 15

-Use the above figure. The profit-maximizing output and price is

Accepted Answer

A)  600 and $16, respectively. 
B)  600 and $10, respectively. 
C)  600 and $8, respectively. 
D)  800 and $10, respectively. 
A)  600 and $16, respectively. 
B)  600 and $10, respectively. 
C)  600 and $8, respectively. 
D)  800 and $10, respectively.

Question 16

Price discrimination occurs when a firm sells

Accepted Answer

A)  a given product at different prices at different points in time. 
B)  a given product at different prices to different ethnic groups. 
C)  a given product at different prices unrelated to differences in cost. 
D)  a given product at different prices when it is produced in different colors. 
A)  a given product at different prices at different points in time. 
B)  a given product at different prices to different ethnic groups. 
C)  a given product at different prices unrelated to differences in cost. 
D)  a given product at different prices when it is produced in different colors.

Question 17

A monopolist faces

Accepted Answer

A)  a perfectly elastic demand curve. 
B)  a perfectly inelastic demand curve. 
C)  the market demand curve. 
D)  a two-tiered demand curve. 
A)  a perfectly elastic demand curve. 
B)  a perfectly inelastic demand curve. 
C)  the market demand curve. 
D)  a two-tiered demand curve.

Question 18

In a perfectly competitive market in which identical firms face the same horizontal marginal cost curve, if demand increases, then the amount of consumer surplus will

Accepted Answer

A)  increase. 
B)  decrease. 
C)  become negative. 
D)  not change. 
A)  increase. 
B)  decrease. 
C)  become negative. 
D)  not change.

Question 19

The profit-maximizing price and quantity of the monopolist compared to the perfectly competitive industry in the above figure are, respectively

Accepted Answer

A)  A and B. 
B)  A and C. 
C)  A and F. 
D)  C and F. 
A)  A and B. 
B)  A and C. 
C)  A and F. 
D)  C and F.

Question 20

The more substitutes there are for a monopolist's product

Accepted Answer

A)  the less elastic is the demand curve. 
B)  the more elastic is the demand curve. 
C)  the steeper is the demand curve. 
D)  the more positively sloped the demand curve becomes. 
A)  the less elastic is the demand curve. 
B)  the more elastic is the demand curve. 
C)  the steeper is the demand curve. 
D)  the more positively sloped the demand curve becomes.

Exam 24: Monopoly

Which of the following statements concerning a monopolist is FALSE?

The demand curve for a monopolist is

A natural monopoly usually arises when

When a monopolist sells the same product at different prices and the prices are NOT related to cost differences, we have

Which of the following statements about a monopolist is TRUE?

Price discrimination is more likely in the case of services than in the case of goods because

-Given the data in the above table, what is the marginal revenue when the 12th unit is sold?

A monopolist would probably earn fewer profits if

In the long run, all of the following are true for a monopolist EXCEPT

In a perfectly competitive market, consumer surplus typically is

The demand curve faced by the monopolist

-According to the above figure, when the monopolist maximizes profits, its profits are equal to the area given by

-Use the above figure. The profit-maximizing output and price is

Price discrimination occurs when a firm sells

A monopolist faces

In a perfectly competitive market in which identical firms face the same horizontal marginal cost curve, if demand increases, then the amount of consumer surplus will

The profit-maximizing price and quantity of the monopolist compared to the perfectly competitive industry in the above figure are, respectively

The more substitutes there are for a monopolist's product

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

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Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

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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

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Environmental Economics

Comparative Advantage and the Open Economy

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