Question 1

When there are significant differences among customers,a monopolist will look for opportunities to price discriminate.

Accepted Answer

A) True 
 B)False  True

Question 2

Market Diagram

The following questions refer to the accompanying market diagram. PC and QC are the equilibrium price and quantity if the firm behaves competitively, and PM and QM are the equilibrium price and quantity if the firm is a simple monopoly.
 
-Refer to the market diagram.Of the surplus that consumers lose because there is a monopoly (and not perfect competition),how much is lost to the monopoly itself?

Accepted Answer

A)  Area C + D 
B)  Area E + H 
C)  Area A + B 
D)  Area C + D + E 
A)  Area C + D 
B)  Area E + H 
C)  Area A + B 
D)  Area C + D + E A

Question 3

Both first-degree price discrimination and the two-part tariff,when perfectly implemented,reduce consumers' surplus to zero.

Accepted Answer

A) True 
 B)False  True

Question 4

A firm has monopoly power when it is the single seller of a good or service.

Accepted Answer

A) True 
 B)False

Question 5

Standard graphical analysis shows that monopoly creates a deadweight loss.

Accepted Answer

The answer of Standard graphical analysis shows that monopoly creates...

Question 6

Market Diagram

The following questions refer to the accompanying market diagram. PC and QC are the equilibrium price and quantity if the firm behaves competitively, and PM and QM are the equilibrium price and quantity if the firm is a simple monopoly.
 
-Refer to Market Diagram.The difference between producer's surplus as a monopolist and producer's surplus when setting price at what would exist in a competitive market is

Accepted Answer

A)  Area C + D + E - G - H. 
B)  Area C + D - H. 
C)  Area C + D + E - A - B. 
D)  Area E + H. 
A)  Area C + D + E - G - H. 
B)  Area C + D - H. 
C)  Area C + D + E - A - B. 
D)  Area E + H.

Question 7

When a simple monopolist chooses to sell an additional unit of a good or service

Accepted Answer

A)  marginal revenue will be equal to the going market price. 
B)  marginal revenue will always be negative. 
C)  it will only have to lower its price on the additional unit. 
D)  it will have to lower its price on the additional unit and on all other units. 
A)  marginal revenue will be equal to the going market price. 
B)  marginal revenue will always be negative. 
C)  it will only have to lower its price on the additional unit. 
D)  it will have to lower its price on the additional unit and on all other units.

Question 8

If regulators require a monopoly to earn zero economic profit,the monopoly will produce the quantity where

Accepted Answer

A)  the marginal cost curve crosses the average cost curve. 
B)  the marginal cost curve crosses the demand curve. 
C)  the average cost curve crosses the demand curve. 
D)  the marginal cost curve crosses the marginal revenue curve. 
A)  the marginal cost curve crosses the average cost curve. 
B)  the marginal cost curve crosses the demand curve. 
C)  the average cost curve crosses the demand curve. 
D)  the marginal cost curve crosses the marginal revenue curve.

Question 9

A monopoly's supply curve is the portion of its marginal cost curve that lies above its average variable cost curve.

Accepted Answer

A) True 
 B)False

Question 10

Consider a price ceiling imposed on a monopoly.For what quantities will the monopoly's new marginal revenue curve be horizontal at the ceiling price?

Accepted Answer

A)  For quantities where the demand curve lies above the ceiling price. 
B)  For quantities where demand is elastic. 
C)  For quantities where marginal cost is rising. 
D)  Marginal revenue will be constant and equal to the ceiling price for all quantities. 
A)  For quantities where the demand curve lies above the ceiling price. 
B)  For quantities where demand is elastic. 
C)  For quantities where marginal cost is rising. 
D)  Marginal revenue will be constant and equal to the ceiling price for all quantities.

Question 11

Third-degree price discrimination occurs when a monopoly

Accepted Answer

A)  separates its customers into distinct markets,charging a different price to each group. 
B)  charges different prices for the same good sold to the same customer. 
C)  requires the consumer to pay a separate fee simply for the right to purchase the good. 
D)  charges each customer the maximum that he is willing to pay for each item purchased. 
A)  separates its customers into distinct markets,charging a different price to each group. 
B)  charges different prices for the same good sold to the same customer. 
C)  requires the consumer to pay a separate fee simply for the right to purchase the good. 
D)  charges each customer the maximum that he is willing to pay for each item purchased.

Question 12

When a firm with market power practices third-degree price discrimination,it charges the highest price to the group that

Accepted Answer

A)  has the most elastic demand. 
B)  has the most inelastic demand. 
C)  purchases the highest quantity. 
D)  purchases the lowest quantity. 
A)  has the most elastic demand. 
B)  has the most inelastic demand. 
C)  purchases the highest quantity. 
D)  purchases the lowest quantity.

Question 13

A monopoly's marginal revenue curve is always

Accepted Answer

A)  is always above the demand curve. 
B)  identical to that of a perfectly competitive firm. 
C)  twice as steep as the demand curve. 
D)  none of the above. 
A)  is always above the demand curve. 
B)  identical to that of a perfectly competitive firm. 
C)  twice as steep as the demand curve. 
D)  none of the above.

Question 14

In both the short-run and the long-run,a monopoly is guaranteed to earn positive profits.

Accepted Answer

A) True 
 B)False

Question 15

A simple monopoly will maximize its profit by producing the quantity where

Accepted Answer

A)  price and marginal cost are equal. 
B)  the demand curve crosses the average cost curve. 
C)  marginal cost reaches its minimum. 
D)  marginal revenue equals marginal cost. 
A)  price and marginal cost are equal. 
B)  the demand curve crosses the average cost curve. 
C)  marginal cost reaches its minimum. 
D)  marginal revenue equals marginal cost.

Question 16

An economic problem with using subsidies or price ceilings to move a monopoly toward the competitive equilibrium is that

Accepted Answer

A)  it may increase monopoly profits. 
B)  it may decrease monopoly profits. 
C)  policy makers may not be able to determine what the competitive equilibrium is. 
D)  policy makers always need to be lobbied before taking any actions. 
A)  it may increase monopoly profits. 
B)  it may decrease monopoly profits. 
C)  policy makers may not be able to determine what the competitive equilibrium is. 
D)  policy makers always need to be lobbied before taking any actions.

Question 17

Suppose a monopolist sells in two distinct markets.The demand and marginal revenue for the first market are given by P1 = 240 - 2Q1 and MR1 = 240 - 4Q1,respectively,where Q1 is the quantity demanded and P1 is the price paid by the first group.The demand and marginal revenue for the second market are given by P2 = 120 - Q2 and MR2 = 120 - 2Q2,respectively,where Q2 is the quantity demanded and P2 is the price paid by the second group.The monopoly's marginal cost is given by MC = 4/9 Q,where Q is the total output produced by the monopoly.

Accepted Answer

Question 18

Deadweight loss because of a monopoly can be attributed to the fact that monopolies produce at a quantity where the price of the good exceeds the marginal cost of producing the last unit.

Accepted Answer

A) True 
 B)False

Question 19

A simple profit-maximizing monopoly will choose its price and quantity from the elastic portion of its demand curve.

Accepted Answer

A) True 
 B)False

Question 20

Rate of return regulation will

Accepted Answer

A)  always result in the firm producing the quantity that would be produced if the market were competitive. 
B)  always result in the firm producing less than the quantity that would be produced if the market were competitive. 
C)  always result in the firm producing more than the quantity that would be produced in a competitive industry. 
D)  result in a new equilibrium with either more or loss produced in comparison to a competitive market. 
A)  always result in the firm producing the quantity that would be produced if the market were competitive. 
B)  always result in the firm producing less than the quantity that would be produced if the market were competitive. 
C)  always result in the firm producing more than the quantity that would be produced in a competitive industry. 
D)  result in a new equilibrium with either more or loss produced in comparison to a competitive market.

When there are significant differences among customers,a monopolist will look for opportunities to price discriminate.

Both first-degree price discrimination and the two-part tariff,when perfectly implemented,reduce consumers' surplus to zero.

A firm has monopoly power when it is the single seller of a good or service.

Standard graphical analysis shows that monopoly creates a deadweight loss.

When a simple monopolist chooses to sell an additional unit of a good or service

If regulators require a monopoly to earn zero economic profit,the monopoly will produce the quantity where

A monopoly's supply curve is the portion of its marginal cost curve that lies above its average variable cost curve.

Consider a price ceiling imposed on a monopoly.For what quantities will the monopoly's new marginal revenue curve be horizontal at the ceiling price?

Third-degree price discrimination occurs when a monopoly

When a firm with market power practices third-degree price discrimination,it charges the highest price to the group that

A monopoly's marginal revenue curve is always

In both the short-run and the long-run,a monopoly is guaranteed to earn positive profits.

A simple monopoly will maximize its profit by producing the quantity where

An economic problem with using subsidies or price ceilings to move a monopoly toward the competitive equilibrium is that

Deadweight loss because of a monopoly can be attributed to the fact that monopolies produce at a quantity where the price of the good exceeds the marginal cost of producing the last unit.

A simple profit-maximizing monopoly will choose its price and quantity from the elastic portion of its demand curve.

Rate of return regulation will

Supply,demand,and Equilibrium

Prices,costs and Gains From Trade

The Behavior of Consumers

Consumers in the Marketplace

The Behavior of Firms

Production and Costs

Competition

Welfare Economics and the Gains From Trade

Knowledge and Information

Market Power,collusion,and Oligopoly

The Theory of Games

External Costs and Benefits

Common Property and Public Goods

The Demand for Factors of Production

The Market for Labor

Allocating Goods Over Time

Risk and Uncertainty

What Is Economics

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Exam 10: Monopoly

When there are significant differences among customers,a monopolist will look for opportunities to price discriminate.

Both first-degree price discrimination and the two-part tariff,when perfectly implemented,reduce consumers' surplus to zero.

A firm has monopoly power when it is the single seller of a good or service.

Standard graphical analysis shows that monopoly creates a deadweight loss.

When a simple monopolist chooses to sell an additional unit of a good or service

If regulators require a monopoly to earn zero economic profit,the monopoly will produce the quantity where

A monopoly's supply curve is the portion of its marginal cost curve that lies above its average variable cost curve.

Consider a price ceiling imposed on a monopoly.For what quantities will the monopoly's new marginal revenue curve be horizontal at the ceiling price?

Third-degree price discrimination occurs when a monopoly

When a firm with market power practices third-degree price discrimination,it charges the highest price to the group that

A monopoly's marginal revenue curve is always

In both the short-run and the long-run,a monopoly is guaranteed to earn positive profits.

A simple monopoly will maximize its profit by producing the quantity where

An economic problem with using subsidies or price ceilings to move a monopoly toward the competitive equilibrium is that

Deadweight loss because of a monopoly can be attributed to the fact that monopolies produce at a quantity where the price of the good exceeds the marginal cost of producing the last unit.

A simple profit-maximizing monopoly will choose its price and quantity from the elastic portion of its demand curve.

Rate of return regulation will

Supply,demand,and Equilibrium

Prices,costs and Gains From Trade

The Behavior of Consumers

Consumers in the Marketplace

The Behavior of Firms

Production and Costs

Competition

Welfare Economics and the Gains From Trade

Knowledge and Information

Market Power,collusion,and Oligopoly

The Theory of Games

External Costs and Benefits

Common Property and Public Goods

The Demand for Factors of Production

The Market for Labor

Allocating Goods Over Time

Risk and Uncertainty

What Is Economics

Filters