Question 1

For a monopolist facing a downward-sloping average cost curve,under cost-plus regulation,there is an incentive for this monopolist to

Accepted Answer

A)  raise market price. 
B)  increase output. 
C)  reduce the cost of production even further. 
D)  set price equal to marginal cost. 
E)  inflate costs. 
A)  raise market price. 
B)  increase output. 
C)  reduce the cost of production even further. 
D)  set price equal to marginal cost. 
E)  inflate costs.

Question 2

Perfect competition maximized total economic surplus and monopoly does not,because in perfect competition __________ while in monopoly __________.

Accepted Answer

A) P = MC;P > MC B) P < MR;P = MR C) P = MR;P < MR D) P = MC;P < MC E) P = MR;P = MC A) P = MC;P > MC B) P < MR;P = MR C) P = MR;P < MR D) P = MC;P < MC E) P = MR;P = MC

Question 3

-Refer to the graph above.The __________ at the level of output which maximized total economic surplus will be __________ at the profit maximizing level of output.

Accepted Answer

A)  loss;smaller than 
B)  profit;smaller than 
C)  loss;larger than 
D)  profit;larger than 
E)  loss;the same as 
A)  loss;smaller than 
B)  profit;smaller than 
C)  loss;larger than 
D)  profit;larger than 
E)  loss;the same as

Question 4

Electricity is typically sold to residential consumers at a higher price than the price charged to commercial or industrial consumers.Which of the following does NOT help to explain this widespread example of imperfect price discrimination?

Accepted Answer

A)  Residential consumers can be identified. 
B)  Residential and industrial consumers are usually in different geographic areas. 
C)  Resale of electricity by the industrial consumer to the residential consumer is virtually impossible. 
D)  Commercial and industrial consumers can be identified. 
E)  Electricity is a necessity to residential consumers but not to commercial or industrial consumers. 
A)  Residential consumers can be identified. 
B)  Residential and industrial consumers are usually in different geographic areas. 
C)  Resale of electricity by the industrial consumer to the residential consumer is virtually impossible. 
D)  Commercial and industrial consumers can be identified. 
E)  Electricity is a necessity to residential consumers but not to commercial or industrial consumers.

Question 5

-Refer to the graph above.If this firm were allowed to choose the profit-maximizing level of output,it would charge a price of

Accepted Answer

A)  $11.50 per unit. 
B)  $9 per unit. 
C)  $8 per unit. 
D)  $5.50 per unit. 
E)  $2.50 per unit. 
A)  $11.50 per unit. 
B)  $9 per unit. 
C)  $8 per unit. 
D)  $5.50 per unit. 
E)  $2.50 per unit.

Question 6

A total cost function of the form TC = a + bQ,with both a > 0 and b > 0,best describes a firm that has

Accepted Answer

A)  small fixed cost and increasing marginal cost. 
B)  significant fixed cost and increasing marginal cost. 
C)  small fixed cost and decreasing marginal cost. 
D)  significant fixed cost and small,constant marginal cost. 
E)  significant fixed cost and decreasing marginal cost. 
A)  small fixed cost and increasing marginal cost. 
B)  significant fixed cost and increasing marginal cost. 
C)  small fixed cost and decreasing marginal cost. 
D)  significant fixed cost and small,constant marginal cost. 
E)  significant fixed cost and decreasing marginal cost.

Question 7

If it is possible to spread total fixed cost efficiently over a larger and larger quantity of output,then a firm will not experience

Accepted Answer

A)  an elastic demand curve. 
B)  economies of scale. 
C)  increasing returns to scale. 
D)  decreasing returns to scale. 
E)  the law of demand. 
A)  an elastic demand curve. 
B)  economies of scale. 
C)  increasing returns to scale. 
D)  decreasing returns to scale. 
E)  the law of demand.

Question 8

Suppose that a monopolist produces good X.He sells one version of X to consumers and another version to businesses.The marginal cost of the consumer version is $5,while the business version has a marginal cost of $5.75.One can infer that

Accepted Answer

A)  the monopolist will charge two different prices and is not practicing price discrimination. 
B)  the monopolist will charge one uniform price to both consumers and businesses. 
C)  the monopolist will charge two different prices and is perfectly price-discriminating. 
D)  the monopolist will charge two different prices and is imperfectly price-discriminating. 
E)  businesses will try to sell their units to consumers for a profit. 
A)  the monopolist will charge two different prices and is not practicing price discrimination. 
B)  the monopolist will charge one uniform price to both consumers and businesses. 
C)  the monopolist will charge two different prices and is perfectly price-discriminating. 
D)  the monopolist will charge two different prices and is imperfectly price-discriminating. 
E)  businesses will try to sell their units to consumers for a profit.

Question 9

The only difference between monopolistic competition and perfect competition is that a firm in monopolistic competition _____________ and a firm in perfect competition ____________.

Accepted Answer

A)  is in an industry with only a few other firms;is in an industry with many other firms 
B)  sells a differentiated product;sells a homogeneous product 
C)  sells a homogeneous product;sells a differentiated product 
D)  cannot easily leave the industry;can easily leave the industry 
E)  can easily leave the industry;cannot easily leave the industry 
A)  is in an industry with only a few other firms;is in an industry with many other firms 
B)  sells a differentiated product;sells a homogeneous product 
C)  sells a homogeneous product;sells a differentiated product 
D)  cannot easily leave the industry;can easily leave the industry 
E)  can easily leave the industry;cannot easily leave the industry

Question 10

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 price 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 11

If the monopolist's demand curve is P = 70 - 14Q,then the slope of her marginal revenue curve is

Accepted Answer

A)  -28. 
B)  -14. 
C)  -7. 
D)  -1. 
E)  unknown. 
A)  -28. 
B)  -14. 
C)  -7. 
D)  -1. 
E)  unknown.

Question 12

Market power refers to a firm's ability to

Accepted Answer

A)  undercut the price of rivals in order to capture the entire market. 
B)  ignore environmental regulations. 
C)  resist unionization efforts by workers. 
D)  charge any price it wants. 
E)  raise price without losing 100% of its sales. 
A)  undercut the price of rivals in order to capture the entire market. 
B)  ignore environmental regulations. 
C)  resist unionization efforts by workers. 
D)  charge any price it wants. 
E)  raise price without losing 100% of its sales.

Question 13

The application of exclusive contracting by governments is best suited to services that

Accepted Answer

A)  are extremely complex. 
B)  require large expenditures on fixed investments. 
C)  are relatively simple to provide. 
D)  have highly uncertain costs. 
E)  are localized. 
A)  are extremely complex. 
B)  require large expenditures on fixed investments. 
C)  are relatively simple to provide. 
D)  have highly uncertain costs. 
E)  are localized.

Question 14

The condition where a single firm can supply an entire market at a lower unit cost than could a number of competing firms defines a

Accepted Answer

A)  dominant firm oligopoly. 
B)  structured market. 
C)  natural monopoly. 
D)  trust. 
E)  duopoly. 
A)  dominant firm oligopoly. 
B)  structured market. 
C)  natural monopoly. 
D)  trust. 
E)  duopoly.

Question 15

In long-run equilibrium,a monopolistically competitive firm will

Accepted Answer

A)  produce that level of output at which the firm achieves minimum long-run average cost. 
B)  produce that level of output for which marginal cost is greater than marginal revenue. 
C)  never produce that level of output at which the firm achieves minimum long-run average cost. 
D)  produce that level of output for which average revenue is greater than long-run average cost. 
E)  always earn a profit. 
A)  produce that level of output at which the firm achieves minimum long-run average cost. 
B)  produce that level of output for which marginal cost is greater than marginal revenue. 
C)  never produce that level of output at which the firm achieves minimum long-run average cost. 
D)  produce that level of output for which average revenue is greater than long-run average cost. 
E)  always earn a profit.

Question 16

Patents and copyrights,which confer market power,exist to

Accepted Answer

A)  protect the consumer from imitations. 
B)  ensure excessive profits to the holders. 
C)  protect research and development,and creative expression. 
D)  reduce competition in all sectors of the economy. 
E)  magnify the dominance of large firms. 
A)  protect the consumer from imitations. 
B)  ensure excessive profits to the holders. 
C)  protect research and development,and creative expression. 
D)  reduce competition in all sectors of the economy. 
E)  magnify the dominance of large firms.

Question 17

The defining characteristic of a natural monopoly is

Accepted Answer

A)  positive economic profit. 
B)  that average cost always exceeds marginal cost. 
C)  that marginal cost always exceeds average cost. 
D)  diseconomies of scale. 
E)  that marginal revenue always equals price. 
A)  positive economic profit. 
B)  that average cost always exceeds marginal cost. 
C)  that marginal cost always exceeds average cost. 
D)  diseconomies of scale. 
E)  that marginal revenue always equals price.

Question 18

-Refer to the table above.Because of the monopoly structure in this market,__________ units are produced and the price is __________ when compared to perfect competition.

Accepted Answer

A)  3 fewer;$1 higher 
B)  2 fewer;$2 higher 
C)  3 fewer;$2 higher 
D)  3 more;$2 higher 
E)  3 more;$1 higher 
A)  3 fewer;$1 higher 
B)  2 fewer;$2 higher 
C)  3 fewer;$2 higher 
D)  3 more;$2 higher 
E)  3 more;$1 higher

Question 19

-Refer to the graph above.A profit-maximizing monopolist would earn total profit of

Accepted Answer

A)  $100. 
B)  $200. 
C)  $300. 
D)  $400. 
E)  $500. 
A)  $100. 
B)  $200. 
C)  $300. 
D)  $400. 
E)  $500.

Question 20

Suppose that a firm increases its inputs by 10% and observes a 13% increase in output.The firm is

Accepted Answer

A)  experiencing increasing returns to scale. 
B)  experiencing constant returns to scale. 
C)  violating the law of diminishing marginal returns. 
D)  increasing its average cost. 
E)  reducing its total cost. 
A)  experiencing increasing returns to scale. 
B)  experiencing constant returns to scale. 
C)  violating the law of diminishing marginal returns. 
D)  increasing its average cost. 
E)  reducing its total cost.

For a monopolist facing a downward-sloping average cost curve,under cost-plus regulation,there is an incentive for this monopolist to

Perfect competition maximized total economic surplus and monopoly does not,because in perfect competition while in monopoly .

-Refer to the graph above.The at the level of output which maximized total economic surplus will be at the profit maximizing level of output.

Electricity is typically sold to residential consumers at a higher price than the price charged to commercial or industrial consumers.Which of the following does NOT help to explain this widespread example of imperfect price discrimination?

-Refer to the graph above.If this firm were allowed to choose the profit-maximizing level of output,it would charge a price of

A total cost function of the form TC = a + bQ,with both a > 0 and b > 0,best describes a firm that has

If it is possible to spread total fixed cost efficiently over a larger and larger quantity of output,then a firm will not experience

Suppose that a monopolist produces good X.He sells one version of X to consumers and another version to businesses.The marginal cost of the consumer version is $5,while the business version has a marginal cost of $5.75.One can infer that

The only difference between monopolistic competition and perfect competition is that a firm in monopolistic competition _ and a firm in perfect competition .

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 price to the monopolist is

If the monopolist's demand curve is P = 70 - 14Q,then the slope of her marginal revenue curve is

Market power refers to a firm's ability to

The application of exclusive contracting by governments is best suited to services that

The condition where a single firm can supply an entire market at a lower unit cost than could a number of competing firms defines a

In long-run equilibrium,a monopolistically competitive firm will

Patents and copyrights,which confer market power,exist to

The defining characteristic of a natural monopoly is

-Refer to the table above.Because of the monopoly structure in this market, units are produced and the price is when compared to perfect competition.

-Refer to the graph above.A profit-maximizing monopolist would earn total profit of

Suppose that a firm increases its inputs by 10% and observes a 13% increase in output.The firm is

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

For a monopolist facing a downward-sloping average cost curve,under cost-plus regulation,there is an incentive for this monopolist to

Perfect competition maximized total economic surplus and monopoly does not,because in perfect competition __________ while in monopoly __________.

-Refer to the graph above.The __________ at the level of output which maximized total economic surplus will be __________ at the profit maximizing level of output.

Electricity is typically sold to residential consumers at a higher price than the price charged to commercial or industrial consumers.Which of the following does NOT help to explain this widespread example of imperfect price discrimination?

-Refer to the graph above.If this firm were allowed to choose the profit-maximizing level of output,it would charge a price of

A total cost function of the form TC = a + bQ,with both a > 0 and b > 0,best describes a firm that has

If it is possible to spread total fixed cost efficiently over a larger and larger quantity of output,then a firm will not experience

Suppose that a monopolist produces good X.He sells one version of X to consumers and another version to businesses.The marginal cost of the consumer version is $5,while the business version has a marginal cost of $5.75.One can infer that

The only difference between monopolistic competition and perfect competition is that a firm in monopolistic competition _____________ and a firm in perfect competition ____________.

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 price to the monopolist is

If the monopolist's demand curve is P = 70 - 14Q,then the slope of her marginal revenue curve is

Market power refers to a firm's ability to

The application of exclusive contracting by governments is best suited to services that

The condition where a single firm can supply an entire market at a lower unit cost than could a number of competing firms defines a

In long-run equilibrium,a monopolistically competitive firm will

Patents and copyrights,which confer market power,exist to

The defining characteristic of a natural monopoly is

-Refer to the table above.Because of the monopoly structure in this market,__________ units are produced and the price is __________ when compared to perfect competition.

-Refer to the graph above.A profit-maximizing monopolist would earn total profit of

Suppose that a firm increases its inputs by 10% and observes a 13% increase in output.The firm is

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

Perfect competition maximized total economic surplus and monopoly does not,because in perfect competition while in monopoly .

-Refer to the graph above.The at the level of output which maximized total economic surplus will be at the profit maximizing level of output.

The only difference between monopolistic competition and perfect competition is that a firm in monopolistic competition _ and a firm in perfect competition .

-Refer to the table above.Because of the monopoly structure in this market, units are produced and the price is when compared to perfect competition.