Question 1

When considering marginal revenue for the monopolist, which of the following is FALSE?

Accepted Answer

A)  To sell more of a particular product, given the industry demand curve, the monopoly firm must lower the price. 
B)  An essential point for the monopolist, marginal revenue is always less than price. 
C)  Marginal revenue is always less than price because price must be reduced on all units to sell more. 
D)  The more the monopolist wants to sell, the higher the price it has to charge in order to make more profits. 
A)  To sell more of a particular product, given the industry demand curve, the monopoly firm must lower the price. 
B)  An essential point for the monopolist, marginal revenue is always less than price. 
C)  Marginal revenue is always less than price because price must be reduced on all units to sell more. 
D)  The more the monopolist wants to sell, the higher the price it has to charge in order to make more profits.

Question 2

Why is a monopoly inefficient?

Accepted Answer

A monopoly is inefficient because it pro

Question 3

For a monopolist

Accepted Answer

A)  marginal revenue is less than price. 
B)  marginal revenue equals price. 
C)  marginal revenue is greater than price. 
D)  marginal revenue equals average revenue. 
A)  marginal revenue is less than price. 
B)  marginal revenue equals price. 
C)  marginal revenue is greater than price. 
D)  marginal revenue equals average revenue.

Question 4

Which of the following is NOT true about a tariff?

Accepted Answer

A)  It is a barrier to entry in a market. 
B)  It leads to a natural monopoly. 
C)  It is a tax. 
D)  It affects imported goods. 
A)  It is a barrier to entry in a market. 
B)  It leads to a natural monopoly. 
C)  It is a tax. 
D)  It affects imported goods.

Question 5

The monopolist is a

Accepted Answer

A)  price taker who tries to find the profit-maximizing rate of output. 
B)  price taker who tries to find the profit-maximizing price. 
C)  price searcher who tries to find the profit-maximizing price-output combination. 
D)  price searcher who tries to find the rate of output that maximizes price. 
A)  price taker who tries to find the profit-maximizing rate of output. 
B)  price taker who tries to find the profit-maximizing price. 
C)  price searcher who tries to find the profit-maximizing price-output combination. 
D)  price searcher who tries to find the rate of output that maximizes price.

Question 6

When a firm experiences declining long-run average total costs as it produces more output, it is known as a(n)

Accepted Answer

A)  oligopoly. 
B)  rent seeker. 
C)  natural monopoly. 
D)  monopolistic competitor. 
A)  oligopoly. 
B)  rent seeker. 
C)  natural monopoly. 
D)  monopolistic competitor.

Question 7

Which of the following conditions is TRUE for a monopolist?

Accepted Answer

A)  MR < P 
B)  MR = P 
C)  MR = AFC 
D)  MR < AVC 
A)  MR < P 
B)  MR = P 
C)  MR = AFC 
D)  MR < AVC

Question 8

For a monopolist

Accepted Answer

A)  marginal revenue is equal to price for all units being sold. 
B)  marginal revenue is less than price for all units being sold except the first unit. 
C)  marginal revenue is greater than price for all units being sold except for the first unit. 
D)  there is no relationship between marginal revenue and price. 
A)  marginal revenue is equal to price for all units being sold. 
B)  marginal revenue is less than price for all units being sold except the first unit. 
C)  marginal revenue is greater than price for all units being sold except for the first unit. 
D)  there is no relationship between marginal revenue and price.

Question 9

A monopoly will look for opportunities to price discriminate because the practice

Accepted Answer

A)  leads to selling more units. 
B)  leads to greater profits. 
C)  allows it to charge higher prices. 
D)  is desired by customers. 
A)  leads to selling more units. 
B)  leads to greater profits. 
C)  allows it to charge higher prices. 
D)  is desired by customers.

Question 10

Which of the following is NOT an example of price discrimination?

Accepted Answer

A)  student discount at a local movie theater 
B)  breakfast cereal makers sending coupons to select buyers 
C)  Pharmaceutical companies charge customers living in wealthier countries higher prices than for identical drugs in poorer nations. 
D)  a hard cover book selling for more than the same book in electronic form 
A)  student discount at a local movie theater 
B)  breakfast cereal makers sending coupons to select buyers 
C)  Pharmaceutical companies charge customers living in wealthier countries higher prices than for identical drugs in poorer nations. 
D)  a hard cover book selling for more than the same book in electronic form

Question 11

-If the above figure accurately portrays the market conditions for a given monopolist, we can be assured that the monopolist

Accepted Answer

A)  is making a normal profit. 
B)  is producing at the level that will maximize benefit to society. 
C)  is making excessive profits. 
D)  will be forced to go out of business in the long run. 
A)  is making a normal profit. 
B)  is producing at the level that will maximize benefit to society. 
C)  is making excessive profits. 
D)  will be forced to go out of business in the long run.

Question 12

-In the above figure, at the firm's profit maximizing output, total revenue is rectangle

Accepted Answer

A)  0P1AQ1. 
B)  0P3FQ3. 
C)  0P5EQ5. 
D)  0P2BQ1. 
A)  0P1AQ1. 
B)  0P3FQ3. 
C)  0P5EQ5. 
D)  0P2BQ1.

Question 13

Which of the following is a characteristic of a monopoly firm?

Accepted Answer

A)  horizontal individual demand curve 
B)  barriers to entry 
C)  easy entry and exit 
D)  many buyers and sellers 
A)  horizontal individual demand curve 
B)  barriers to entry 
C)  easy entry and exit 
D)  many buyers and sellers

Question 14

Senior citizens can buy movie tickets at a lower price than the general public. This is an example of

Accepted Answer

A)  age discrimination. 
B)  demand discrimination. 
C)  price discrimination. 
D)  price differentiation. 
A)  age discrimination. 
B)  demand discrimination. 
C)  price discrimination. 
D)  price differentiation.

Question 15

Unlike a perfectly competitive firm, a monopolist faces a demand curve that is

Accepted Answer

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

Question 16

-In the above figure, the distance between A and B represents this monopoly firm's

Accepted Answer

A)  total profit. 
B)  total revenue. 
C)  average profit per unit. 
D)  average cost per unit. 
A)  total profit. 
B)  total revenue. 
C)  average profit per unit. 
D)  average cost per unit.

Question 17

A price discriminating monopolist will

Accepted Answer

A)  charge a lower price to those consumers who have more elastic demand. 
B)  charge a higher price for a good with more market demand. 
C)  charge more to those consumers who have more substitute goods. 
D)  charge the same price to all consumers. 
A)  charge a lower price to those consumers who have more elastic demand. 
B)  charge a higher price for a good with more market demand. 
C)  charge more to those consumers who have more substitute goods. 
D)  charge the same price to all consumers.

Question 18

The market structure in which there is a single supplier of a good or service for which there is no close substitute is

Accepted Answer

A)  a price searcher. 
B)  a monopoly. 
C)  a price taker. 
D)  perfect competition. 
A)  a price searcher. 
B)  a monopoly. 
C)  a price taker. 
D)  perfect competition.

Question 19

-According to the above figure, the profit maximizing price-output combination for the monopolist is a price of

Accepted Answer

A)  50 cents and an output of 40,000 newspapers per day. 
B)  30 cents and an output of 30,000 newspapers per day. 
C)  60 cents and an output of 30,000 newspapers per day. 
D)  45 cents and an output of 45,000 newspapers per day. 
A)  50 cents and an output of 40,000 newspapers per day. 
B)  30 cents and an output of 30,000 newspapers per day. 
C)  60 cents and an output of 30,000 newspapers per day. 
D)  45 cents and an output of 45,000 newspapers per day.

Question 20

A monopolist is

Accepted Answer

A)  a firm with the largest annual sales in a country. 
B)  a single supplier of a good for which there is no close substitute. 
C)  a large firm that makes all the other firms in the industry do what it wants. 
D)  a supplier of a good that everyone needs with the result that it makes large profits. 
A)  a firm with the largest annual sales in a country. 
B)  a single supplier of a good for which there is no close substitute. 
C)  a large firm that makes all the other firms in the industry do what it wants. 
D)  a supplier of a good that everyone needs with the result that it makes large profits.

Exam 24: Monopoly

When considering marginal revenue for the monopolist, which of the following is FALSE?

Why is a monopoly inefficient?

For a monopolist

Which of the following is NOT true about a tariff?

The monopolist is a

When a firm experiences declining long-run average total costs as it produces more output, it is known as a(n)

Which of the following conditions is TRUE for a monopolist?

For a monopolist

A monopoly will look for opportunities to price discriminate because the practice

Which of the following is NOT an example of price discrimination?

-If the above figure accurately portrays the market conditions for a given monopolist, we can be assured that the monopolist

-In the above figure, at the firm's profit maximizing output, total revenue is rectangle

Which of the following is a characteristic of a monopoly firm?

Senior citizens can buy movie tickets at a lower price than the general public. This is an example of

Unlike a perfectly competitive firm, a monopolist faces a demand curve that is

-In the above figure, the distance between A and B represents this monopoly firm's

A price discriminating monopolist will

The market structure in which there is a single supplier of a good or service for which there is no close substitute is

-According to the above figure, the profit maximizing price-output combination for the monopolist is a price of

A monopolist is

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