Question 1

-To maximize profits, the monopolist should produce at which

Accepted Answer

A)  MR = MC. 
B)  MC intersects the demand curve. 
C)  total revenue is maximized. 
D)  total costs are minimized. 
A)  MR = MC. 
B)  MC intersects the demand curve. 
C)  total revenue is maximized. 
D)  total costs are minimized.

Question 2

What is a monopolist, and what is required for a monopolist to earn profits in the long run?

Accepted Answer

A monopolist is a single supplier of a g

Question 3

If there are no barriers to entry into an industry

Accepted Answer

A)  short-run economic profits must be zero. 
B)  long-run economic profits must be zero. 
C)  both short-run and long-run economic profits must be zero. 
D)  short-run and long-run profits must still be positive. 
A)  short-run economic profits must be zero. 
B)  long-run economic profits must be zero. 
C)  both short-run and long-run economic profits must be zero. 
D)  short-run and long-run profits must still be positive.

Question 4

-Given the data in the above table, what is the marginal revenue when the 13th 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 5

A monopolist

Accepted Answer

A)  is a price searcher. 
B)  is a price taker. 
C)  faces an upward sloping demand curve. 
D)  faces a vertical demand curve. 
A)  is a price searcher. 
B)  is a price taker. 
C)  faces an upward sloping demand curve. 
D)  faces a vertical demand curve.

Question 6

For a perfectly competitive market in which firms face an identical constant marginal costs, the amount of consumer surplus increases if

Accepted Answer

A)  market demand decreases. 
B)  market demand increases. 
C)  marginal cost increases. 
D)  none of the above: insufficient information to answer. 
A)  market demand decreases. 
B)  market demand increases. 
C)  marginal cost increases. 
D)  none of the above: insufficient information to answer.

Question 7

A pure monopolist is selling 10 units at a price of $12. If the marginal revenue of the 11th unit is $1, then the price of the 11th unit is

Accepted Answer

A)  $10. 
B)  $11. 
C)  greater than $12. 
D)  $12. 
A)  $10. 
B)  $11. 
C)  greater than $12. 
D)  $12.

Question 8

A monopolist sells a homogeneous good in several distinct submarkets, and the elasticities of demand differ in these submarkets. If the monopolist selects the rate of output to sell in each submarket by equating marginal revenue and marginal cost, then

Accepted Answer

A)  all customers in all markets end up paying the same price. 
B)  it is not price discriminating, but merely price differentiating. 
C)  customers in markets with more elastic demand will pay higher prices than customers in markets with less elastic demand. 
D)  customers in markets with more elastic demand will pay lower prices than customers in markets with less elastic demand. 
A)  all customers in all markets end up paying the same price. 
B)  it is not price discriminating, but merely price differentiating. 
C)  customers in markets with more elastic demand will pay higher prices than customers in markets with less elastic demand. 
D)  customers in markets with more elastic demand will pay lower prices than customers in markets with less elastic demand.

Question 9

Monopolies are discouraged in the United States because

Accepted Answer

A)  they are more efficient than other industries. 
B)  they can produce at lower cost in the short run. 
C)  they restrict output and raise prices. 
D)  they hire too few workers for their production volumes. 
A)  they are more efficient than other industries. 
B)  they can produce at lower cost in the short run. 
C)  they restrict output and raise prices. 
D)  they hire too few workers for their production volumes.

Question 10

A firm that faces a downward sloping demand curve is known as a

Accepted Answer

A)  price taker. 
B)  utility maximizer. 
C)  price searcher. 
D)  perfect competitor. 
A)  price taker. 
B)  utility maximizer. 
C)  price searcher. 
D)  perfect competitor.

Question 11

A profit-maximizing monopoly will NEVER produce along a range of output for which

Accepted Answer

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

Question 12

A simple way of describing the social cost of monopoly is to say that it

Accepted Answer

A)  produces too much. 
B)  makes too much money. 
C)  has too much political power. 
D)  restricts output and charges a higher price than a perfectly competitive firm. 
A)  produces too much. 
B)  makes too much money. 
C)  has too much political power. 
D)  restricts output and charges a higher price than a perfectly competitive firm.

Question 13

-A monopolistic firm will shut down if

Accepted Answer

A) P ATC for every level of output. C) P > AVC for every level of output. D) P < AVC for every level of output. A) P ATC for every level of output. C) P > AVC for every level of output. D) P < AVC for every level of output.

Question 14

-In the above figure, the difference between the competitive industry price and that of the monopolist is

Accepted Answer

A)  0B. 
B)  0A. 
C)  AB. 
D)  CE. 
A)  0B. 
B)  0A. 
C)  AB. 
D)  CE.

Question 15

"Unlike a perfect competitor, a profit-maximizing monopolist produces at an output rate at which marginal revenue exceeds marginal cost." Do you agree or disagree? Why

Accepted Answer

Disagree. To maximize profits, the monop

Question 16

If marginal cost is constant, what happens to a market if it alters from perfect competition to monopoly without any change in the position of the market demand curve or any variation in costs?

Accepted Answer

A)  Consumer surplus decreases, producer surplus increases and a deadweight loss is created. 
B)  Consumer surplus decreases, producer surplus decreases and a deadweight loss is created. 
C)  Consumer surplus increases, producer surplus decreases and a deadweight loss is created. 
D)  Consumer surplus increases, producer surplus increases and a deadweight loss is created. 
A)  Consumer surplus decreases, producer surplus increases and a deadweight loss is created. 
B)  Consumer surplus decreases, producer surplus decreases and a deadweight loss is created. 
C)  Consumer surplus increases, producer surplus decreases and a deadweight loss is created. 
D)  Consumer surplus increases, producer surplus increases and a deadweight loss is created.

Question 17

The price elasticity of demand for a monopolist's product depends on

Accepted Answer

A)  the number and similarity of substitutes. 
B)  the ATC of the item it produces. 
C)  the AVC of the item it produces. 
D)  the MC of the item it produces. 
A)  the number and similarity of substitutes. 
B)  the ATC of the item it produces. 
C)  the AVC of the item it produces. 
D)  the MC of the item it produces.

Question 18

Price discrimination is

Accepted Answer

A)  refusing to sell a given product to some group of customers. 
B)  selling a given product at more than one price. 
C)  selling a given product at more than one price, with the price differences reflecting differences in marginal cost in providing the product to different groups of customers. 
D)  selling a given product at more than one price, with the price differences being unrelated to differences in cost. 
A)  refusing to sell a given product to some group of customers. 
B)  selling a given product at more than one price. 
C)  selling a given product at more than one price, with the price differences reflecting differences in marginal cost in providing the product to different groups of customers. 
D)  selling a given product at more than one price, with the price differences being unrelated to differences in cost.

Question 19

-Refer to the above figure. Suppose this industry was perfectly competitive and then merged into one monopolistic firm. The monopoly would

Accepted Answer

A)  raise price from P1 to P2. 
B)  reduce output from Q3 to Q1. 
C)  reduce output from Q2 to Q1 and raise price from P3 to P4. 
D)  raise price from P1 to P4. 
A)  raise price from P1 to P2. 
B)  reduce output from Q3 to Q1. 
C)  reduce output from Q2 to Q1 and raise price from P3 to P4. 
D)  raise price from P1 to P4.

Question 20

-For the monopoly in the above figure, if the firm is currently producing 700 units, which of the following is correct?

Accepted Answer

A)  It could earn higher profits if it produced more units each day. 
B)  It could earn higher profits if it produced fewer units each day. 
C)  It is maximizing its profits. 
D)  It is incurring a loss. 
A)  It could earn higher profits if it produced more units each day. 
B)  It could earn higher profits if it produced fewer units each day. 
C)  It is maximizing its profits. 
D)  It is incurring a loss.

Exam 24: Monopoly

-To maximize profits, the monopolist should produce at which

What is a monopolist, and what is required for a monopolist to earn profits in the long run?

If there are no barriers to entry into an industry

-Given the data in the above table, what is the marginal revenue when the 13th unit is sold?

A monopolist

For a perfectly competitive market in which firms face an identical constant marginal costs, the amount of consumer surplus increases if

A pure monopolist is selling 10 units at a price of $12. If the marginal revenue of the 11th unit is $1, then the price of the 11th unit is

A monopolist sells a homogeneous good in several distinct submarkets, and the elasticities of demand differ in these submarkets. If the monopolist selects the rate of output to sell in each submarket by equating marginal revenue and marginal cost, then

Monopolies are discouraged in the United States because

A firm that faces a downward sloping demand curve is known as a

A profit-maximizing monopoly will NEVER produce along a range of output for which

A simple way of describing the social cost of monopoly is to say that it

-A monopolistic firm will shut down if

-In the above figure, the difference between the competitive industry price and that of the monopolist is

"Unlike a perfect competitor, a profit-maximizing monopolist produces at an output rate at which marginal revenue exceeds marginal cost." Do you agree or disagree? Why

If marginal cost is constant, what happens to a market if it alters from perfect competition to monopoly without any change in the position of the market demand curve or any variation in costs?

The price elasticity of demand for a monopolist's product depends on

Price discrimination is

-Refer to the above figure. Suppose this industry was perfectly competitive and then merged into one monopolistic firm. The monopoly would

-For the monopoly in the above figure, if the firm is currently producing 700 units, which of the following is correct?

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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