Question 1

An increase in fixed cost will, in the long run, alter the industry output of

Accepted Answer

A)  both a monopolist and a competitive industry. 
B)  only a monopolist. 
C)  only a competitive industry. 
D)  neither a monopolist nor a competitive industry. 
A)  both a monopolist and a competitive industry. 
B)  only a monopolist. 
C)  only a competitive industry. 
D)  neither a monopolist nor a competitive industry. C

Question 2

In assessing the difference between monopoly performance and that of perfect competition, the best approach is to

Accepted Answer

A)  measure the output of the monopolist and the output of the perfectly competitive firm. 
B)  measure the output of the monopolist and the output of the perfectly competitive industry. 
C)  measure the output purchased by consumers from the monopolist and from the perfectly competitive firm. 
D)  calculate the marginal cost of the monopolist and of the perfectly competitive firm. 
A)  measure the output of the monopolist and the output of the perfectly competitive firm. 
B)  measure the output of the monopolist and the output of the perfectly competitive industry. 
C)  measure the output purchased by consumers from the monopolist and from the perfectly competitive firm. 
D)  calculate the marginal cost of the monopolist and of the perfectly competitive firm. B

Question 3

Wendy retails motor homes, which she buys for a sum that does not vary with the number she purchases from the manufacturer.She can sell eleven per week at $40,000.If she limits sales to ten, she can charge $41,000 each.She will sell eleven per week if the cost of each vehicle is no more than

Accepted Answer

A)  $20,000. 
B)  $30,000. 
C)  $40,000. 
D)  $41,000. 
A)  $20,000. 
B)  $30,000. 
C)  $40,000. 
D)  $41,000. B

Question 4

Monopoly firms may lead to higher costs than perfectly competitive firms.

Accepted Answer

A) True 
 B)False

Question 5

A monopolist's profit per unit is shown by the difference between price and marginal cost per unit.

Accepted Answer

A) True 
 B)False

Question 6

Figure 11-1
  
-The Red Cross is virtually the only operator of blood banks in the United States.In Figure 11-1 are the demand and cost curves facing the Red Cross blood bank.If the Red Cross were to set price and quantity at the level that it would obtain in the long run in a competitive industry, how much blood would it sell?

Accepted Answer

A)  OA 
B)  OB 
C)  OD 
D)  OC 
A)  OA 
B)  OB 
C)  OD 
D)  OC

Question 7

The U.S.government

Accepted Answer

A)  intervenes to prevent the monopolization of any market. 
B)  forbids the creation of legal impediments to entry into any market. 
C)  intervenes to prevent the monopolization of some markets and actively encourages the monopolization of others. 
D)  encourages the permanent monopolization of all markets in which the monopolist has technical superiority over potential competitors. 
A)  intervenes to prevent the monopolization of any market. 
B)  forbids the creation of legal impediments to entry into any market. 
C)  intervenes to prevent the monopolization of some markets and actively encourages the monopolization of others. 
D)  encourages the permanent monopolization of all markets in which the monopolist has technical superiority over potential competitors.

Question 8

Pure monopoly markets are very common in the real world.

Accepted Answer

A) True 
 B)False

Question 9

In cases of natural monopolies, society would be better off with many firms competing with each other.

Accepted Answer

A) True 
 B)False

Question 10

Table 11-1
 $ \begin{array}{lrrrrrr}\text { Quantity (units) } & 18 & 16 & 14 & 12 & 10 & 4 \ \text { Price per unit (dollars) } & 1 & 2 & 3 & 4 & 5 & 6 \ \text { Total cost (dollars) } & 44 & 38 & 32 & 26 & 20 & 14\end{array} $
-Table 11-1 shows demand and total cost schedules for the monopolist Monopoliteria.Monopoliteria's profit-maximizing price per unit in dollars is

Accepted Answer

A)  1. 
B)  3. 
C)  5. 
D)  4. 
E)  6. 
A)  1. 
B)  3. 
C)  5. 
D)  4. 
E)  6.

Question 11

Compared to a perfectly competitive firm, a monopolist

Accepted Answer

A)  is less likely to advertise. 
B)  will, according to Schumpeter, invest fewer resources in research and development. 
C)  usually produces an inefficiently small level of output. 
D)  is less likely to face government regulation. 
A)  is less likely to advertise. 
B)  will, according to Schumpeter, invest fewer resources in research and development. 
C)  usually produces an inefficiently small level of output. 
D)  is less likely to face government regulation.

Question 12

Is the monopolist supply decision more complicated than that of competitive supply?

Accepted Answer

A)  Yes, because the monopolist can choose its price, and the perfect competitor cannot. 
B)  No, because they are both price takers. 
C)  No, because the market determines the quantity for the monopolist. 
D)  No, because the market determines the price for both firms. 
A)  Yes, because the monopolist can choose its price, and the perfect competitor cannot. 
B)  No, because they are both price takers. 
C)  No, because the market determines the quantity for the monopolist. 
D)  No, because the market determines the price for both firms.

Question 13

A natural monopoly occurs when a single firm can produce the entire output of the market at a lower average cost than could many firms.

Accepted Answer

A) True 
 B)False

Question 14

Under monopoly, resources are allocated as efficiently as in perfect competition.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following can be said about a monopoly?

Accepted Answer

A)  Monopolies are always inefficient and are therefore the least desirable form of market. 
B)  They can cause a shift in the demand curve to benefit society. 
C)  They may aid in innovation. 
D)  All of the above are correct. 
A)  Monopolies are always inefficient and are therefore the least desirable form of market. 
B)  They can cause a shift in the demand curve to benefit society. 
C)  They may aid in innovation. 
D)  All of the above are correct.

Question 16

Figure 11-9
  
-In Figure 11-9, how much more than the long-run competitive price will the profit-maximizing monopolist charge?

Accepted Answer

A)  $1 
B)  $2 
C)  $3 
D)  $11 
A)  $1 
B)  $2 
C)  $3 
D)  $11

Question 17

In the long run,

Accepted Answer

A)  both monopolists and perfectly competitive firms produce at minimum long-run average total cost. 
B)  a monopolist will exit the industry if he is earning zero economic profit. 
C)  a monopolist will always charge a higher price than he charges in the short run. 
D)  consumer surplus is smaller if an industry is a monopoly than if it is perfectly competitive. 
A)  both monopolists and perfectly competitive firms produce at minimum long-run average total cost. 
B)  a monopolist will exit the industry if he is earning zero economic profit. 
C)  a monopolist will always charge a higher price than he charges in the short run. 
D)  consumer surplus is smaller if an industry is a monopoly than if it is perfectly competitive.

Question 18

Table 11-2
 $$\begin{array} { l c c } 
 \underline{ Q }  &  \underline{ T R }  &  \underline{ T C }  \
{ 8 }&{ 95 }&{ 90 }\
9 & 102 & 93 \
10 & 110 & 100 \
11 & 112 & 105 \
12 & 115 & 110
\end{array}$$
-In Table 11-2, MC of the last unit produced at the profit-maximizing output is

Accepted Answer

A)  $5. 
B)  $7. 
C)  $8. 
D)  $10. 
A)  $5. 
B)  $7. 
C)  $8. 
D)  $10.

Question 19

Under monopoly

Accepted Answer

A)  too small a share of society's resources is used to produce the monopolized commodity. 
B)  Adam Smith's invisible hand assures efficient resource allocation. 
C)  too large a share of society's resources is being used to produce the monopolized commodity. 
D)  MC > MU. 
A)  too small a share of society's resources is used to produce the monopolized commodity. 
B)  Adam Smith's invisible hand assures efficient resource allocation. 
C)  too large a share of society's resources is being used to produce the monopolized commodity. 
D)  MC > MU.

Question 20

Inefficient resource allocation is a major problem with monopolies.

Accepted Answer

A) True 
 B)False

Exam 11: Monopoly

An increase in fixed cost will, in the long run, alter the industry output of

In assessing the difference between monopoly performance and that of perfect competition, the best approach is to

Wendy retails motor homes, which she buys for a sum that does not vary with the number she purchases from the manufacturer.She can sell eleven per week at $40,000.If she limits sales to ten, she can charge $41,000 each.She will sell eleven per week if the cost of each vehicle is no more than

Monopoly firms may lead to higher costs than perfectly competitive firms.

A monopolist's profit per unit is shown by the difference between price and marginal cost per unit.

The U.S.government

Pure monopoly markets are very common in the real world.

In cases of natural monopolies, society would be better off with many firms competing with each other.

Table 11-1 Quantity (units) 18 16 14 12 10 4 Price per unit (dollars) 1 2 3 4 5 6 Total cost (dollars) 44 38 32 26 20 14 -Table 11-1 shows demand and total cost schedules for the monopolist Monopoliteria.Monopoliteria's profit-maximizing price per unit in dollars is

Compared to a perfectly competitive firm, a monopolist

Is the monopolist supply decision more complicated than that of competitive supply?

A natural monopoly occurs when a single firm can produce the entire output of the market at a lower average cost than could many firms.

Under monopoly, resources are allocated as efficiently as in perfect competition.

Which of the following can be said about a monopoly?

Figure 11-9 -In Figure 11-9, how much more than the long-run competitive price will the profit-maximizing monopolist charge?

In the long run,

Table 11-2 8 95 90 9 102 93 10 110 100 11 112 105 12 115 110 -In Table 11-2, MC of the last unit produced at the profit-maximizing output is

Under monopoly

Inefficient resource allocation is a major problem with monopolies.

What Is Economics?

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: An Initial Look

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: The Importance of Marginal Analysis

Securities: Business Finance, and the Economy: The Tail that Wags the Dog?

The Firm and the Industry under Perfect Competition

Between Competition and Monopoly

Limiting Market Power: Regulation and Antitrust

The Case for Free Markets I: The Price System

The Shortcomings of Free Markets

The Market's Prime Achievement: Innovation and Growth

Externalities, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: The Human Inputs

Poverty, Inequality, and Discrimination

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation?

Bringing in the Supply Side: Unemployment and Inflation?

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

The Debate over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade-Off between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder?

Exchange Rates and the Macroeconomy

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