Question 1

-Refer to the graph above.The loss of consumer surplus resulting from monopoly is

Accepted Answer

A)  $112.50. 
B)  $200. 
C)  $312.50. 
D)  $425. 
E)  $450. 
A)  $112.50. 
B)  $200. 
C)  $312.50. 
D)  $425. 
E)  $450.

Question 2

Another appropriate name for cost-plus regulation is

Accepted Answer

A)  marginal-cost regulation. 
B)  average-cost regulation. 
C)  efficient regulation. 
D)  tax-subsidy regulation. 
E)  inflation regulation. 
A)  marginal-cost regulation. 
B)  average-cost regulation. 
C)  efficient regulation. 
D)  tax-subsidy regulation. 
E)  inflation regulation.

Question 3

-Refer to the graph above.If regulators set price at marginal cost,this firm would earn

Accepted Answer

A)  economic losses,forcing it to shut down in the long run. 
B)  the same amount of profit it would earn without regulation. 
C)  zero economic profit. 
D)  a positive economic profit,though not as much as the profit it would earn without regulation. 
E)  economic losses,though not as much as without regulation. 
A)  economic losses,forcing it to shut down in the long run. 
B)  the same amount of profit it would earn without regulation. 
C)  zero economic profit. 
D)  a positive economic profit,though not as much as the profit it would earn without regulation. 
E)  economic losses,though not as much as without regulation.

Question 4

Which of the following statements is FALSE?

Accepted Answer

A)  To sell more,a price setter must lower price. 
B)  A price taker must charge the market price. 
C)  If a price setter raises price,they will sell less. 
D)  A price taker's revenue will rise if they sell more. 
E)  Price setters can sell any quantity at any price. 
A)  To sell more,a price setter must lower price. 
B)  A price taker must charge the market price. 
C)  If a price setter raises price,they will sell less. 
D)  A price taker's revenue will rise if they sell more. 
E)  Price setters can sell any quantity at any price.

Question 5

A monopolist can sell nine units at $10 per unit.Since he can sell ten units if he lowers his price to $9 per unit,he would lower his price to $9 if his

Accepted Answer

A)  average variable cost is $9. 
B)  marginal cost is $9. 
C)  total fixed cost is $9. 
D)  marginal cost is $0. 
E)  total fixed cost is $0. 
A)  average variable cost is $9. 
B)  marginal cost is $9. 
C)  total fixed cost is $9. 
D)  marginal cost is $0. 
E)  total fixed cost is $0.

Question 6

Industries where economies of scale exist will tend to be

Accepted Answer

A)  dominated by either a single firm or a few firms. 
B)  resistant to cutting price. 
C)  comprised of many equal-sized firms. 
D)  less concerned with expanding output. 
E)  highly profitable. 
A)  dominated by either a single firm or a few firms. 
B)  resistant to cutting price. 
C)  comprised of many equal-sized firms. 
D)  less concerned with expanding output. 
E)  highly profitable.

Question 7

If the monopolist's marginal revenue curve is MR = 30 - 6Q,the marginal revenue of the third unit of output is

Accepted Answer

A)  $6. 
B)  $12. 
C)  $18. 
D)  $30. 
E)  unknown. 
A)  $6. 
B)  $12. 
C)  $18. 
D)  $30. 
E)  unknown.

Question 8

A monopolistically competitive firm will experience a decrease in the demand for its product when

Accepted Answer

A)  existing firms leave the industry. 
B)  it increases its expenditure on advertising. 
C)  the product becomes more popular. 
D)  it improves the product. 
E)  new firms enter the industry. 
A)  existing firms leave the industry. 
B)  it increases its expenditure on advertising. 
C)  the product becomes more popular. 
D)  it improves the product. 
E)  new firms enter the industry.

Question 9

A firm has a production function Q = LK,where L is labour and K is capital.If L and K can take whole values ,then the firm has

Accepted Answer

A)  increasing returns to scale. 
B)  constant returns to scale. 
C)  diseconomies of scale. 
D)  decreasing returns to scale. 
E)  rising average total costs. 
A)  increasing returns to scale. 
B)  constant returns to scale. 
C)  diseconomies of scale. 
D)  decreasing returns to scale. 
E)  rising average total costs.

Question 10

Suppose that a firm is collecting $100 in total revenue when it sells 10 units and $99 in total revenue when it sells 11 units.The firm is a(n)

Accepted Answer

A)  pure monopolist. 
B)  oligopolist. 
C)  perfect competitor. 
D)  imperfect competitor. 
E)  monopolistic competitor. 
A)  pure monopolist. 
B)  oligopolist. 
C)  perfect competitor. 
D)  imperfect competitor. 
E)  monopolistic competitor.

Question 11

Price setters face

Accepted Answer

A)  perfectly elastic demand. 
B)  a market determined price. 
C)  perfectly inelastic demand. 
D)  less than perfectly elastic demand. 
E)  more than perfectly elastic demand. 
A)  perfectly elastic demand. 
B)  a market determined price. 
C)  perfectly inelastic demand. 
D)  less than perfectly elastic demand. 
E)  more than perfectly elastic demand.

Question 12

Increasing returns to scale occur when a 50% increase in all inputs

Accepted Answer

A)  increases output by 50%. 
B)  increases output by more than 50%. 
C)  increases input prices by more than 50%. 
D)  increases output by less than 50%. 
E)  decreases output by more than 50%. 
A)  increases output by 50%. 
B)  increases output by more than 50%. 
C)  increases input prices by more than 50%. 
D)  increases output by less than 50%. 
E)  decreases output by more than 50%.

Question 13

The following diagram shows the demand curve,D,the marginal revenue curve,MR,and the marginal cost curve,MC,facing a monopolist.  
-Refer to the diagram above.The distance representing the profit maximizing level of output to the monopolist is

Accepted Answer

A)  0H. 
B)  GI. 
C)  0B. 
D)  0A. 
E)  0C. 
A)  0H. 
B)  GI. 
C)  0B. 
D)  0A. 
E)  0C.

Question 14

When a monopolist sells additional units,

Accepted Answer

A)  total revenue always increases. 
B)  marginal revenue is constant. 
C)  total revenue always decreases. 
D)  marginal revenue increases. 
E)  total revenue may increase,decrease,or remain unchanged. 
A)  total revenue always increases. 
B)  marginal revenue is constant. 
C)  total revenue always decreases. 
D)  marginal revenue increases. 
E)  total revenue may increase,decrease,or remain unchanged.

Question 15

-Refer to the table above.If these data refer to a profit-maximizing monopolist,the price and quantity combination in this market is __________ whereas,if the data refer to a perfectly competitive firm,the price and quantity combination will be _________.

Accepted Answer

A)  $8 per unit and 3 units;$8 per unit and 3 units 
B)  $6 per unit and 5 units;$8 per unit and 3 units 
C)  $6 per unit and 5 units;$6 per unit and 5 units 
D)  $7 per unit and 4 units;$6 per unit and 5 units 
E)  $8 per unit and 3 units;$6 per unit and 5 units 
A)  $8 per unit and 3 units;$8 per unit and 3 units 
B)  $6 per unit and 5 units;$8 per unit and 3 units 
C)  $6 per unit and 5 units;$6 per unit and 5 units 
D)  $7 per unit and 4 units;$6 per unit and 5 units 
E)  $8 per unit and 3 units;$6 per unit and 5 units

Question 16

Economies of scale exist when

Accepted Answer

A)  constant returns to scale are present. 
B)  input prices are falling. 
C)  average cost falls as the scale of production grows. 
D)  a 10% increase in all inputs causes a 9% increase in output. 
E)  firms become extremely large. 
A)  constant returns to scale are present. 
B)  input prices are falling. 
C)  average cost falls as the scale of production grows. 
D)  a 10% increase in all inputs causes a 9% increase in output. 
E)  firms become extremely large.

Question 17

Which of the following is NOT considered a source of market power?

Accepted Answer

A)  Inelastic demand. 
B)  Economies of scale. 
C)  Patents. 
D)  Exclusive licences. 
E)  Control of important inputs. 
A)  Inelastic demand. 
B)  Economies of scale. 
C)  Patents. 
D)  Exclusive licences. 
E)  Control of important inputs.

Question 18

Economic regulation includes all of the following EXCEPT

Accepted Answer

A)  regulations on the level of profit. 
B)  cost-plus regulation. 
C)  price setting with normal profit. 
D)  setting the cost of production. 
E)  quantity setting with appropriate subsidies. 
A)  regulations on the level of profit. 
B)  cost-plus regulation. 
C)  price setting with normal profit. 
D)  setting the cost of production. 
E)  quantity setting with appropriate subsidies.

Question 19

The following diagram shows the demand curve,D,the marginal revenue curve,MR,and the marginal cost curve,MC,facing a monopolist.  
-Refer to the diagram above.A perfectly competitive equilibrium would have resulted in a price equal to the distance __________ and a quantity equal to the distance __________.

Accepted Answer

A)  0B;0A 
B)  0G;0H 
C)  0C;BK 
D)  0J;CE 
E)  0G;AH 
A)  0B;0A 
B)  0G;0H 
C)  0C;BK 
D)  0J;CE 
E)  0G;AH

Question 20

-According to the data above,firm __________ has the lowest average total cost,while firm __________ has the highest.

Accepted Answer

A)  M;L 
B)  M;N 
C)  N;M 
D)  N;L 
E)  L;N 
A)  M;L 
B)  M;N 
C)  N;M 
D)  N;L 
E)  L;N

-Refer to the graph above.The loss of consumer surplus resulting from monopoly is

Another appropriate name for cost-plus regulation is

-Refer to the graph above.If regulators set price at marginal cost,this firm would earn

Which of the following statements is FALSE?

A monopolist can sell nine units at $10 per unit.Since he can sell ten units if he lowers his price to $9 per unit,he would lower his price to $9 if his

Industries where economies of scale exist will tend to be

If the monopolist's marginal revenue curve is MR = 30 - 6Q,the marginal revenue of the third unit of output is

A monopolistically competitive firm will experience a decrease in the demand for its product when

A firm has a production function Q = LK,where L is labour and K is capital.If L and K can take whole values ,then the firm has

Suppose that a firm is collecting $100 in total revenue when it sells 10 units and $99 in total revenue when it sells 11 units.The firm is a(n)

Price setters face

Increasing returns to scale occur when a 50% increase in all inputs

The following diagram shows the demand curve,D,the marginal revenue curve,MR,and the marginal cost curve,MC,facing a monopolist. -Refer to the diagram above.The distance representing the profit maximizing level of output to the monopolist is

When a monopolist sells additional units,

-Refer to the table above.If these data refer to a profit-maximizing monopolist,the price and quantity combination in this market is __ whereas,if the data refer to a perfectly competitive firm,the price and quantity combination will be _.

Economies of scale exist when

Which of the following is NOT considered a source of market power?

Economic regulation includes all of the following EXCEPT

The following diagram shows the demand curve,D,the marginal revenue curve,MR,and the marginal cost curve,MC,facing a monopolist. -Refer to the diagram above.A perfectly competitive equilibrium would have resulted in a price equal to the distance and a quantity equal to the distance .

-According to the data above,firm has the lowest average total cost,while firm has the highest.

Thinking Like an Economist

Comparative Advantage: the Basis for Exchange

Supply and Demand: an Introduction

Demand: the Benefit Side of the Market

Perfectly Competitive Supply: the Cost Side of the Market

Efficiency and Exchange

The Quest for Profit and the Invisible Hand

Thinking Strategically

Externalities and Property Rights

The Economics of Information

Labour Markets

The Economics of Public Policy

Public Goods and Taxation

Income Distribution

Filters

Exam 8: Monopoly and Other Forms of Imperfect Competition

-Refer to the graph above.The loss of consumer surplus resulting from monopoly is

Another appropriate name for cost-plus regulation is

-Refer to the graph above.If regulators set price at marginal cost,this firm would earn

Which of the following statements is FALSE?

A monopolist can sell nine units at $10 per unit.Since he can sell ten units if he lowers his price to $9 per unit,he would lower his price to $9 if his

Industries where economies of scale exist will tend to be

If the monopolist's marginal revenue curve is MR = 30 - 6Q,the marginal revenue of the third unit of output is

A monopolistically competitive firm will experience a decrease in the demand for its product when

A firm has a production function Q = LK,where L is labour and K is capital.If L and K can take whole values ,then the firm has

Suppose that a firm is collecting $100 in total revenue when it sells 10 units and $99 in total revenue when it sells 11 units.The firm is a(n)

Price setters face

Increasing returns to scale occur when a 50% increase in all inputs

The following diagram shows the demand curve,D,the marginal revenue curve,MR,and the marginal cost curve,MC,facing a monopolist. -Refer to the diagram above.The distance representing the profit maximizing level of output to the monopolist is

When a monopolist sells additional units,

-Refer to the table above.If these data refer to a profit-maximizing monopolist,the price and quantity combination in this market is __________ whereas,if the data refer to a perfectly competitive firm,the price and quantity combination will be _________.

Economies of scale exist when

Which of the following is NOT considered a source of market power?

Economic regulation includes all of the following EXCEPT

-According to the data above,firm __________ has the lowest average total cost,while firm __________ has the highest.

Thinking Like an Economist

Comparative Advantage: the Basis for Exchange

Supply and Demand: an Introduction

Demand: the Benefit Side of the Market

Perfectly Competitive Supply: the Cost Side of the Market

Efficiency and Exchange

The Quest for Profit and the Invisible Hand

Thinking Strategically

Externalities and Property Rights

The Economics of Information

Labour Markets

The Economics of Public Policy

Public Goods and Taxation

Income Distribution

Filters

-Refer to the table above.If these data refer to a profit-maximizing monopolist,the price and quantity combination in this market is __ whereas,if the data refer to a perfectly competitive firm,the price and quantity combination will be _.

-According to the data above,firm has the lowest average total cost,while firm has the highest.