Question 1

Compared to perfect competition, a monopoly will produce ________ output, and charge a ________ price.

Accepted Answer

A)  more; higher 
B)  more; lower 
C)  less; higher 
D)  less; lower 
A)  more; higher 
B)  more; lower 
C)  less; higher 
D)  less; lower

Question 2

Economists criticize monopolies because monopolies

Accepted Answer

A)  always price discriminate. 
B)  receive accounting profits. 
C)  restrict output and raise prices compared to a competitive situation. 
D)  make consumers pay more for their product than the customers value the product. 
A)  always price discriminate. 
B)  receive accounting profits. 
C)  restrict output and raise prices compared to a competitive situation. 
D)  make consumers pay more for their product than the customers value the product.

Question 3

Which of the following are barriers to entry?

Accepted Answer

A)  economies of scale 
B)  patents and copyrights 
C)  control of resources 
D)  all of the above 
A)  economies of scale 
B)  patents and copyrights 
C)  control of resources 
D)  all of the above

Question 4

-According to the above figure, the profit-maximizing price for the monopolist is

Accepted Answer

A)  A. 
B)  B. 
C)  C. 
D)  D. 
A)  A. 
B)  B. 
C)  C. 
D)  D.

Question 5

Which of the following statements is TRUE about the relationship between a firm's demand curve under perfect competition and monopoly?

Accepted Answer

A)  Under perfect competition, the demand curve is perfectly elastic; under monopoly, the demand curve has elastic, unit-elastic and inelastic portions. 
B)  Under monopoly, the demand curve is perfectly elastic; under perfect competition, the demand curve has elastic, unit-elastic and inelastic portions. 
C)  The demand curves for a monopoly and perfect competition are always inelastic. 
D)  We can define a demand curve under perfect competition but not under monopoly. 
A)  Under perfect competition, the demand curve is perfectly elastic; under monopoly, the demand curve has elastic, unit-elastic and inelastic portions. 
B)  Under monopoly, the demand curve is perfectly elastic; under perfect competition, the demand curve has elastic, unit-elastic and inelastic portions. 
C)  The demand curves for a monopoly and perfect competition are always inelastic. 
D)  We can define a demand curve under perfect competition but not under monopoly.

Question 6

To sell one more unit of a good, a monopolist must

Accepted Answer

A)  lower the price on the last unit only. 
B)  lower the price on all units. 
C)  raise the price only on the last unit sold. 
D)  raise the prices on all goods. 
A)  lower the price on the last unit only. 
B)  lower the price on all units. 
C)  raise the price only on the last unit sold. 
D)  raise the prices on all goods.

Question 7

-Refer to the above figure. The firm is currently producing at Q2. 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 8

A monopoly's goal using price discrimination is to increase

Accepted Answer

A)  total revenue. 
B)  marginal revenue. 
C)  total profit. 
D)  the per unit profit. 
A)  total revenue. 
B)  marginal revenue. 
C)  total profit. 
D)  the per unit profit.

Question 9

The demand curve a monopoly faces is

Accepted Answer

A)  horizontal. 
B)  vertical. 
C)  upward sloping. 
D)  downward sloping. 
A)  horizontal. 
B)  vertical. 
C)  upward sloping. 
D)  downward sloping.

Question 10

The demand curve faced by a pure monopolist

Accepted Answer

A)  is the same as its marginal revenue curve. 
B)  is perfectly inelastic. 
C)  lies below the marginal revenue curve. 
D)  is the market demand curve. 
A)  is the same as its marginal revenue curve. 
B)  is perfectly inelastic. 
C)  lies below the marginal revenue curve. 
D)  is the market demand curve.

Question 11

If a monopolist can sell 9 units at price of $100 per unit and 10 units at a price of $90 per unit, its marginal revenue at an output of 10 units is

Accepted Answer

A)  $-90. 
B)  $0. 
C)  $90. 
D)  $100. 
A)  $-90. 
B)  $0. 
C)  $90. 
D)  $100.

Question 12

If a monopolist wants to increase the amount it sells, it

Accepted Answer

A)  will keep the price the same. 
B)  must lower the price on all units. 
C)  must accept lower profits. 
D)  must lower the cost of production. 
A)  will keep the price the same. 
B)  must lower the price on all units. 
C)  must accept lower profits. 
D)  must lower the cost of production.

Question 13

Suppose a monopolist's costs and revenues are as follows: ATC = $45.00; MC = $35.00; MR = $35.00; P = $45.00. The firm should

Accepted Answer

A)  increase output and decrease price. 
B)  decrease output and increase price. 
C)  not change output or price. 
D)  shut down. 
A)  increase output and decrease price. 
B)  decrease output and increase price. 
C)  not change output or price. 
D)  shut down.

Question 14

The use of a tariff provides monopoly protection since

Accepted Answer

A)  it allows more imports into the country. 
B)  it reduces competition from imports by raising the import price. 
C)  it reduces exporters' profits. 
D)  it expands tax credits. 
A)  it allows more imports into the country. 
B)  it reduces competition from imports by raising the import price. 
C)  it reduces exporters' profits. 
D)  it expands tax credits.

Question 15

If a firm is price differentiating, then it is

Accepted Answer

A)  producing a homogeneous product. 
B)  charging different prices to different consumers based on differences in marginal costs. 
C)  charging different prices based on quality. 
D)  charging different prices based on advertising costs. 
A)  producing a homogeneous product. 
B)  charging different prices to different consumers based on differences in marginal costs. 
C)  charging different prices based on quality. 
D)  charging different prices based on advertising costs.

Question 16

-Refer to the above table. Given the demand and cost schedules, what is the profit-maximizing price for this monopolist?

Accepted Answer

A)  $13 
B)  $12 
C)  $11 
D)  $10 
A)  $13 
B)  $12 
C)  $11 
D)  $10

Question 17

If a monopolist is producing at an output rate at which P = ATC, then

Accepted Answer

A)  its economic profit will be zero. 
B)  its economic profit will be positive. 
C)  it is maximizing its profits. 
D)  it is minimizing its losses. 
A)  its economic profit will be zero. 
B)  its economic profit will be positive. 
C)  it is maximizing its profits. 
D)  it is minimizing its losses.

Question 18

-Refer to the above table. Given the demand and cost schedules, what are the maximized economic profits for this monopolist?

Accepted Answer

A)  $122 
B)  $152 
C)  $220 
D)  $150 
A)  $122 
B)  $152 
C)  $220 
D)  $150

Question 19

Profits can be maximized by equating MR = MC = Price

Accepted Answer

A)  only in perfectly competitive markets. 
B)  only in monopoly markets. 
C)  only in discriminating monopoly markets. 
D)  only with government price controls. 
A)  only in perfectly competitive markets. 
B)  only in monopoly markets. 
C)  only in discriminating monopoly markets. 
D)  only with government price controls.

Question 20

Which of the following statements is TRUE about the price that a monopolist charges?

Accepted Answer

A)  The price is the same as the price that would be charged if there was perfect competition. 
B)  The difference between the price charged by a monopolist and a perfect competitor is due to differences in costs. 
C)  The value that society places on the last unit produced in a monopoly is greater than its cost. 
D)  Too much of the good is being produced in a competitive market and not enough is being produced in a monopoly. Due to the way that prices are set. 
A)  The price is the same as the price that would be charged if there was perfect competition. 
B)  The difference between the price charged by a monopolist and a perfect competitor is due to differences in costs. 
C)  The value that society places on the last unit produced in a monopoly is greater than its cost. 
D)  Too much of the good is being produced in a competitive market and not enough is being produced in a monopoly. Due to the way that prices are set.

Exam 24: Monopoly

Compared to perfect competition, a monopoly will produce ________ output, and charge a ________ price.

Economists criticize monopolies because monopolies

Which of the following are barriers to entry?

-According to the above figure, the profit-maximizing price for the monopolist is

Which of the following statements is TRUE about the relationship between a firm's demand curve under perfect competition and monopoly?

To sell one more unit of a good, a monopolist must

-Refer to the above figure. The firm is currently producing at Q2. The firm should

A monopoly's goal using price discrimination is to increase

The demand curve a monopoly faces is

The demand curve faced by a pure monopolist

If a monopolist can sell 9 units at price of $100 per unit and 10 units at a price of $90 per unit, its marginal revenue at an output of 10 units is

If a monopolist wants to increase the amount it sells, it

Suppose a monopolist's costs and revenues are as follows: ATC = $45.00; MC = $35.00; MR = $35.00; P = $45.00. The firm should

The use of a tariff provides monopoly protection since

If a firm is price differentiating, then it is

-Refer to the above table. Given the demand and cost schedules, what is the profit-maximizing price for this monopolist?

If a monopolist is producing at an output rate at which P = ATC, then

-Refer to the above table. Given the demand and cost schedules, what are the maximized economic profits for this monopolist?

Profits can be maximized by equating MR = MC = Price

Which of the following statements is TRUE about the price that a monopolist charges?

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

Filters

Compared to perfect competition, a monopoly will produce output, and charge a price.