Question 1

A monopolist determines the profit-maximizing output

Accepted Answer

A)  at the point at which TR = TC. 
B)  at the point at which MR = MC. 
C)  at any point it wants because it is the only producer of the product. 
D)  at the point at which TR is maximum. 
A)  at the point at which TR = TC. 
B)  at the point at which MR = MC. 
C)  at any point it wants because it is the only producer of the product. 
D)  at the point at which TR is maximum.

Question 2

Which of the following is NOT a restriction the government imposes to keep potential entrants out of a market?

Accepted Answer

A)  patents 
B)  tariffs 
C)  assistance with opening new firms 
D)  copyrights 
A)  patents 
B)  tariffs 
C)  assistance with opening new firms 
D)  copyrights

Question 3

Using a graph, show the profits of a monopoly. Suppose fixed costs increased enough to make the firm earn an economic loss. Show such a situation. Would the monopolist earn economic losses in the long run? Why or why not?

Accepted Answer

@#IMG-DLM& In the above figure, the monopolist pro

Question 4

A barrier to entry

Accepted Answer

A)  makes it illegal for firms to enter the industry. 
B)  can be thought of as unrelated to monopoly. 
C)  slows or even prevents entry into a market. 
D)  usually takes the form of a cartel. 
A)  makes it illegal for firms to enter the industry. 
B)  can be thought of as unrelated to monopoly. 
C)  slows or even prevents entry into a market. 
D)  usually takes the form of a cartel.

Question 5

The profit-maximizing monopolist will never operate in a price range over which

Accepted Answer

A)  the demand curve slopes downward. 
B)  demand is inelastic. 
C)  P > MR. 
D)  P > MC. 
A)  the demand curve slopes downward. 
B)  demand is inelastic. 
C)  P > MR. 
D)  P > MC.

Question 6

Economies of scale can

Accepted Answer

A)  result in an increasing cost industry. 
B)  cause firm exits out of the industry. 
C)  prevent the entry of new firms into a market. 
D)  reduce the rate of return which the firm may earn. 
A)  result in an increasing cost industry. 
B)  cause firm exits out of the industry. 
C)  prevent the entry of new firms into a market. 
D)  reduce the rate of return which the firm may earn.

Question 7

Legal or governmental restrictions that give monopolistic advantages to a firm include all of the following EXCEPT

Accepted Answer

A)  economies of scale. 
B)  tariffs. 
C)  licenses. 
D)  franchises. 
A)  economies of scale. 
B)  tariffs. 
C)  licenses. 
D)  franchises.

Question 8

-In the above figure, what is the profit-maximizing price and output?

Accepted Answer

A)  $9, 14 
B)  $13, 14 
C)  $11, 16 
D)  $10, 17 
A)  $9, 14 
B)  $13, 14 
C)  $11, 16 
D)  $10, 17

Question 9

The monopolist determines the price and quantity combination that maximizes short-run profits by

Accepted Answer

A)  finding the quantity at which marginal cost and marginal revenue are equal and then using the demand curve to find price. 
B)  determining the price by finding the highest price at which sales can be made and then using the demand curve to find the appropriate quantity. 
C)  finding the point at which marginal revenue and demand intersect. This gives the price and quantity that maximizes profits. 
D)  finding the quantity at which average revenue and average total cost are furthest apart. 
A)  finding the quantity at which marginal cost and marginal revenue are equal and then using the demand curve to find price. 
B)  determining the price by finding the highest price at which sales can be made and then using the demand curve to find the appropriate quantity. 
C)  finding the point at which marginal revenue and demand intersect. This gives the price and quantity that maximizes profits. 
D)  finding the quantity at which average revenue and average total cost are furthest apart.

Question 10

When a firm experiences declining long-run average total costs as it produces more output, there are

Accepted Answer

A)  increasing marginal returns to variable inputs. 
B)  economies of scale. 
C)  diseconomies of scale. 
D)  constant returns to scale. 
A)  increasing marginal returns to variable inputs. 
B)  economies of scale. 
C)  diseconomies of scale. 
D)  constant returns to scale.

Question 11

The profit-maximizing monopolist will operate in a price range over which

Accepted Answer

A)  demand is elastic. 
B)  demand is inelastic. 
C)  the price elasticity of demand is less than 1. 
D)  supply is elastic. 
A)  demand is elastic. 
B)  demand is inelastic. 
C)  the price elasticity of demand is less than 1. 
D)  supply is elastic.

Question 12

If a monopolist is producing the quantity at which marginal revenue exceeds marginal cost, it should

Accepted Answer

A)  continue to produce this amount if it wants to maximize profits. 
B)  reduce output if it wants to maximize profits. 
C)  reduce price and keep output unchanged if it wants to maximize profits. 
D)  increase output if it wants to maximize profits. 
A)  continue to produce this amount if it wants to maximize profits. 
B)  reduce output if it wants to maximize profits. 
C)  reduce price and keep output unchanged if it wants to maximize profits. 
D)  increase output if it wants to maximize profits.

Question 13

A firm that must determine the price-output combination that maximizes profit because it faces a downward-sloped demand curve

Accepted Answer

A)  has a perfectly elastic demand curve. 
B)  has a perfectly inelastic demand curve. 
C)  is a price-taker. 
D)  is a price searcher. 
A)  has a perfectly elastic demand curve. 
B)  has a perfectly inelastic demand curve. 
C)  is a price-taker. 
D)  is a price searcher.

Question 14

A profit-maximizing monopolist will receive zero profits when

Accepted Answer

A)  the average total cost curve lies above the demand curve for all possible rates of output. 
B)  the average total cost curve is tangent to the demand curve at the profit maximizing price. 
C)  marginal revenue, marginal cost, and average total cost are all equal. 
D)  a second firm enters the industry. 
A)  the average total cost curve lies above the demand curve for all possible rates of output. 
B)  the average total cost curve is tangent to the demand curve at the profit maximizing price. 
C)  marginal revenue, marginal cost, and average total cost are all equal. 
D)  a second firm enters the industry.

Question 15

A monopolist charges a price that is ________ and produces ________ than a perfect competitor.

Accepted Answer

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

Question 16

-A monopolist will not earn any economic profits when

Accepted Answer

A)  AVC is a minimum. 
B)  AFC is very high. 
C)  ATC lies above the demand curve. 
D)  ATC lies below the demand curve. 
A)  AVC is a minimum. 
B)  AFC is very high. 
C)  ATC lies above the demand curve. 
D)  ATC lies below the demand curve.

Question 17

Price discrimination refers to

Accepted Answer

A)  selling a product at different prices according to the differences in marginal cost of providing it to different consumers. 
B)  selling a product at different prices, with the price difference being unrelated to differences in marginal cost. 
C)  charging the same prices to all consumers but selling them different quantities. 
D)  a deliberate effort on the part of a monopoly producer to confuse consumers. 
A)  selling a product at different prices according to the differences in marginal cost of providing it to different consumers. 
B)  selling a product at different prices, with the price difference being unrelated to differences in marginal cost. 
C)  charging the same prices to all consumers but selling them different quantities. 
D)  a deliberate effort on the part of a monopoly producer to confuse consumers.

Question 18

Establishing different prices for similar products to reflect differences in marginal cost in providing those goods to different groups of buyers is

Accepted Answer

A)  price discrimination. 
B)  cost-plus pricing. 
C)  price differentiation. 
D)  product differentiation. 
A)  price discrimination. 
B)  cost-plus pricing. 
C)  price differentiation. 
D)  product differentiation.

Question 19

For a firm facing a downward sloping demand curve, marginal revenue

Accepted Answer

A)  is at a minimum at the midpoint of the demand curve. 
B)  is greater at higher prices than at lower prices. 
C)  increases each time prices are lowered. 
D)  falls each time prices are raised. 
A)  is at a minimum at the midpoint of the demand curve. 
B)  is greater at higher prices than at lower prices. 
C)  increases each time prices are lowered. 
D)  falls each time prices are raised.

Question 20

The demand curve faced by the monopolist

Accepted Answer

A)  is perfectly elastic. 
B)  is perfectly inelastic. 
C)  slopes downward. 
D)  slopes upward. 
A)  is perfectly elastic. 
B)  is perfectly inelastic. 
C)  slopes downward. 
D)  slopes upward.

Exam 24: Monopoly

A monopolist determines the profit-maximizing output

Which of the following is NOT a restriction the government imposes to keep potential entrants out of a market?

Using a graph, show the profits of a monopoly. Suppose fixed costs increased enough to make the firm earn an economic loss. Show such a situation. Would the monopolist earn economic losses in the long run? Why or why not?

A barrier to entry

The profit-maximizing monopolist will never operate in a price range over which

Economies of scale can

Legal or governmental restrictions that give monopolistic advantages to a firm include all of the following EXCEPT

-In the above figure, what is the profit-maximizing price and output?

The monopolist determines the price and quantity combination that maximizes short-run profits by

When a firm experiences declining long-run average total costs as it produces more output, there are

The profit-maximizing monopolist will operate in a price range over which

If a monopolist is producing the quantity at which marginal revenue exceeds marginal cost, it should

A firm that must determine the price-output combination that maximizes profit because it faces a downward-sloped demand curve

A profit-maximizing monopolist will receive zero profits when

A monopolist charges a price that is ________ and produces ________ than a perfect competitor.

-A monopolist will not earn any economic profits when

Price discrimination refers to

Establishing different prices for similar products to reflect differences in marginal cost in providing those goods to different groups of buyers is

For a firm facing a downward sloping demand curve, marginal revenue

The demand curve faced by the monopolist

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

A monopolist charges a price that is and produces than a perfect competitor.