Question 1

The price-output combination that maximizes profits for a monopolist occurs at the point where

Accepted Answer

A)  total revenues and total costs are equal. 
B)  the difference between total revenues and total costs is the greatest. 
C)  total revenues are the greatest. 
D)  the elasticity of demand equals one. 
A)  total revenues and total costs are equal. 
B)  the difference between total revenues and total costs is the greatest. 
C)  total revenues are the greatest. 
D)  the elasticity of demand equals one.

Question 2

Discuss and explain the relationships between the monopolist's demand curve, average revenue curve, and marginal revenue curve.

Accepted Answer

The monopolist's demand curve is the ind

Question 3

-Refer to the above figure. What is the socially optimal point of production?

Accepted Answer

A)  P1 and Q1. 
B)  P4 and Q1. 
C)  P1 and Q4. 
D)  P3 and Q2. 
A)  P1 and Q1. 
B)  P4 and Q1. 
C)  P1 and Q4. 
D)  P3 and Q2.

Question 4

-In the above figure, marginal cost and marginal revenue are equal at output

Accepted Answer

A)  Q5. 
B)  Q1. 
C)  Q3. 
D)  Q2. 
A)  Q5. 
B)  Q1. 
C)  Q3. 
D)  Q2.

Question 5

If a monopolist lowers its price

Accepted Answer

A)  the quantity demanded becomes zero. 
B)  the quantity demanded increases. 
C)  the quantity demanded remains the same. 
D)  the quantity demanded decreases. 
A)  the quantity demanded becomes zero. 
B)  the quantity demanded increases. 
C)  the quantity demanded remains the same. 
D)  the quantity demanded decreases.

Question 6

If a monopolist produces to a point at which marginal revenue is less than marginal cost then

Accepted Answer

A)  profits are being maximized. 
B)  profits will always be negative. 
C)  the incremental cost of producing the last unit exceeds the incremental revenue. 
D)  the incremental cost of producing the last unit is less than the incremental revenue. 
A)  profits are being maximized. 
B)  profits will always be negative. 
C)  the incremental cost of producing the last unit exceeds the incremental revenue. 
D)  the incremental cost of producing the last unit is less than the incremental revenue.

Question 7

What is deadweight loss? Whose loss is it? Explain.

Accepted Answer

Deadweight loss is the portion of consum

Question 8

Selling a product at different prices when the price difference is unrelated to costs is a practice known as

Accepted Answer

A)  price fixing. 
B)  price monopolization. 
C)  price discrimination. 
D)  price differentiation. 
A)  price fixing. 
B)  price monopolization. 
C)  price discrimination. 
D)  price differentiation.

Question 9

If different markets for a product produced by a monopolist can be separated and if the elasticity of demand differs between the two markets, then the monopolist will

Accepted Answer

A)  be able to make higher profits by using price discrimination. 
B)  charge a single price in all markets. 
C)  go out of business. 
D)  sell the product in only one of the markets with inelastic demand curves. 
A)  be able to make higher profits by using price discrimination. 
B)  charge a single price in all markets. 
C)  go out of business. 
D)  sell the product in only one of the markets with inelastic demand curves.

Question 10

-Use the above figure. The profit this monopolist earns is closest to

Accepted Answer

A)  $3,000. 
B)  $4,800. 
C)  $1,600. 
D)  $1,000. 
A)  $3,000. 
B)  $4,800. 
C)  $1,600. 
D)  $1,000.

Question 11

When comparing perfect competition and monopoly, a major assumption made is that

Accepted Answer

A)  the monopolist faces a downward sloping demand curve. 
B)  consumers only care about the price of the good and not whether the seller is a monopoly or not. 
C)  the costs of production are the same under monopoly as under perfect competition. 
D)  the monopolist can make an above normal rate of return. 
A)  the monopolist faces a downward sloping demand curve. 
B)  consumers only care about the price of the good and not whether the seller is a monopoly or not. 
C)  the costs of production are the same under monopoly as under perfect competition. 
D)  the monopolist can make an above normal rate of return.

Question 12

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

Accepted Answer

A)  $155 
B)  $143 
C)  $175 
D)  $164 
A)  $155 
B)  $143 
C)  $175 
D)  $164

Question 13

-In the above figure, what is total cost at the profit-maximizing point?

Accepted Answer

A)  $182 
B)  $126 
C)  $112 
D)  $170 
A)  $182 
B)  $126 
C)  $112 
D)  $170

Question 14

Which of the following statements with respect to the monopolist is FALSE?

Accepted Answer

A)  A monopolist can make higher profits if it can price discriminate. 
B)  A monopoly tends to result in a lower quantity being sold than perfect competition does. 
C)  Monopoly is a situation in which a single firm dominates. 
D)  A monopoly arises in a situation with few barriers to entry into the marketplace. 
A)  A monopolist can make higher profits if it can price discriminate. 
B)  A monopoly tends to result in a lower quantity being sold than perfect competition does. 
C)  Monopoly is a situation in which a single firm dominates. 
D)  A monopoly arises in a situation with few barriers to entry into the marketplace.

Question 15

Suppose a monopolist's costs and revenues are as follows: ATC = $50; MC = $45; MR = $35; P = $55. 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 16

A natural monopoly

Accepted Answer

A)  requires government licensing initially. 
B)  is derived from deposits of natural resources. 
C)  usually arises when there are large economies of scale. 
D)  involves multiple firms selling differentiated products. 
A)  requires government licensing initially. 
B)  is derived from deposits of natural resources. 
C)  usually arises when there are large economies of scale. 
D)  involves multiple firms selling differentiated products.

Question 17

To induce an increase in the quantity demanded of its product, a monopolist must reduce the

Accepted Answer

A)  quality of its product and thereby generate a downward shift its ATC curve. 
B)  price of its product and thereby generate a rightward shift in its demand curve. 
C)  price of its product and thereby generate a rightward movement along its demand curve. 
D)  quality of its product and thereby generate a downward movement along its ATC curve. 
A)  quality of its product and thereby generate a downward shift its ATC curve. 
B)  price of its product and thereby generate a rightward shift in its demand curve. 
C)  price of its product and thereby generate a rightward movement along its demand curve. 
D)  quality of its product and thereby generate a downward movement along its ATC curve.

Question 18

If Samsung sells TVs at a higher price in the United States than in Korea, and if there is no cost difference in producing or transporting the TV sets, Samsung would be practicing

Accepted Answer

A)  cartel pricing. 
B)  price discrimination. 
C)  simple monopoly behavior. 
D)  price differentiation. 
A)  cartel pricing. 
B)  price discrimination. 
C)  simple monopoly behavior. 
D)  price differentiation.

Question 19

If a firm sells 50 units of output at $9 per unit and 60 units of output when price is reduced to $8, its marginal revenue from selling the sixth unit is

Accepted Answer

A)  $10. 
B)  $480. 
C)  $450. 
D)  $30. 
A)  $10. 
B)  $480. 
C)  $450. 
D)  $30.

Question 20

The demand curve facing a monopolist is

Accepted Answer

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

Exam 24: Monopoly

The price-output combination that maximizes profits for a monopolist occurs at the point where

Discuss and explain the relationships between the monopolist's demand curve, average revenue curve, and marginal revenue curve.

-Refer to the above figure. What is the socially optimal point of production?

-In the above figure, marginal cost and marginal revenue are equal at output

If a monopolist lowers its price

If a monopolist produces to a point at which marginal revenue is less than marginal cost then

What is deadweight loss? Whose loss is it? Explain.

Selling a product at different prices when the price difference is unrelated to costs is a practice known as

If different markets for a product produced by a monopolist can be separated and if the elasticity of demand differs between the two markets, then the monopolist will

-Use the above figure. The profit this monopolist earns is closest to

When comparing perfect competition and monopoly, a major assumption made is that

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

-In the above figure, what is total cost at the profit-maximizing point?

Which of the following statements with respect to the monopolist is FALSE?

Suppose a monopolist's costs and revenues are as follows: ATC = $50; MC = $45; MR = $35; P = $55. The firm should

A natural monopoly

To induce an increase in the quantity demanded of its product, a monopolist must reduce the

If Samsung sells TVs at a higher price in the United States than in Korea, and if there is no cost difference in producing or transporting the TV sets, Samsung would be practicing

If a firm sells 50 units of output at $9 per unit and 60 units of output when price is reduced to $8, its marginal revenue from selling the sixth unit is

The demand curve facing a monopolist 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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