Question 1

For a monopolist:

Accepted Answer

A) selling price is greater than marginal revenue. 
B) selling price is equal to marginal revenue. 
C) selling price is less than marginal revenue. 
D) selling price may be above or below marginal revenue; it depends on the price buyers are willing to pay. 
A) selling price is greater than marginal revenue. 
B) selling price is equal to marginal revenue. 
C) selling price is less than marginal revenue. 
D) selling price may be above or below marginal revenue; it depends on the price buyers are willing to pay. A

Question 2

-Based on the graph above, the deadweight loss under monopoly would be:

Accepted Answer

A) 75 
B) 150 
C) 225 
D) 300 
A) 75 
B) 150 
C) 225 
D) 300 B

Question 3

A monopoly market is one with:

Accepted Answer

A) one buyer and one seller. 
B) one buyer and many sellers. 
C) many buyers and one seller. 
D) many buyers and many sellers. 
A) one buyer and one seller. 
B) one buyer and many sellers. 
C) many buyers and one seller. 
D) many buyers and many sellers. C

Question 4

The inverse elasticity pricing rule says that the optimal markup of price over marginal cost expressed as a percentage of price:

Accepted Answer

A) is equal to ½ the inverse of the price elasticity of demand. 
B) is equal to - ½. 
C) is equal to the negative of the inverse of the price elasticity of demand. 
D) is equal to the inverse of the price elasticity of demand. 
A) is equal to ½ the inverse of the price elasticity of demand. 
B) is equal to - ½. 
C) is equal to the negative of the inverse of the price elasticity of demand. 
D) is equal to the inverse of the price elasticity of demand.

Question 5

A monopoly market consists of a single seller facing many buyers.

Accepted Answer

A) True 
 B)False

Question 6

A monopsonist only uses labor to produce an output according to production function Q = 2L, where Q is output and L is labor. The output sells for a price of $20 per unit. The supply curve for labor can be written w = 4+L. What is the monopsonist's demand for labor in this market?

Accepted Answer

A) L = 12. 
B) L = 18. 
C) L = 22. 
D) L = 24. 
A) L = 12. 
B) L = 18. 
C) L = 22. 
D) L = 24.

Question 7

A group of producers that collusively determines the price and output in a market is cartel.

Accepted Answer

A) True 
 B)False

Question 8

The monopolist's profit-maximizing price will be greater than marginal cost for the last unit supplied.

Accepted Answer

A) True 
 B)False

Question 9

Price equals average revenue at the profit-maximizing quantity of output.

Accepted Answer

A) True 
 B)False

Question 10

Firms producing differentiated products face downward-sloping demand.

Accepted Answer

A) True 
 B)False

Question 11

A monopolist owns two plants in which to produce product A. The marginal cost of producing A is increasing, but currently is lower in plant 1 than in plant 2. How should the monopolist allocate production?

Accepted Answer

A)  Produce all output in plant $1 .$ 
B)  Produce all output in plant 2 . 
C)  Produce 50 percent in plant 1 and 50 percent in plant $2 .$ 
D)  Produce in plant 1 up to the point where marginal costs are equated across the plants. (In other words, reallocate production so that $M C _ { 1 } = M C _ { 2 }$.) 
A)  Produce all output in plant $1 .$ 
B)  Produce all output in plant 2 . 
C)  Produce 50 percent in plant 1 and 50 percent in plant $2 .$ 
D)  Produce in plant 1 up to the point where marginal costs are equated across the plants. (In other words, reallocate production so that $M C _ { 1 } = M C _ { 2 }$.)

Question 12

Usually the demand and marginal revenue curves for a monopoly are the same.

Accepted Answer

A) True 
 B)False

Question 13

A monopolist and a perfectly competitive firm both charge a price based on the demand curve facing the firm and the costs borne by the firm.

Accepted Answer

A) True 
 B)False

Question 14

An increase in demand for a monopolist will cause the:

Accepted Answer

A) profit-maximizing price to decrease when marginal cost decreases as quantity increases. 
B) profit-maximizing price to increase when marginal cost decreases as quantity increases. 
C) profit-maximizing price to decrease when marginal cost increases as quantity increases. 
D) profit-maximizing price to stay constant regardless of the shape of the marginal cost curve. 
A) profit-maximizing price to decrease when marginal cost decreases as quantity increases. 
B) profit-maximizing price to increase when marginal cost decreases as quantity increases. 
C) profit-maximizing price to decrease when marginal cost increases as quantity increases. 
D) profit-maximizing price to stay constant regardless of the shape of the marginal cost curve.

Question 15

A monopolist faces inverse demand $P = 300 - 6 Q$ and has marginal cost $M C = 120 + 6 Q$. What price should this monopolist charge to maximize profit?

Accepted Answer

A) 10 
B) 50 
C) 210 
D) 240 
A) 10 
B) 50 
C) 210 
D) 240

Question 16

-Based on the graph above, the profit-maximizing price for a monopolist would be

Accepted Answer

A) 180 
B) 210 
C) 240 
D) Between 210 and 240 
A) 180 
B) 210 
C) 240 
D) Between 210 and 240

Question 17

A monopolist faces a demand curve $$Q = 50 P ^ { - 4 }$$ and that the monopolist has a constant marginal cost of 75. The monopolist's profit-maximizing price is:

Accepted Answer

A) 25 
B) 50 
C) 75 
D) 100 
A) 25 
B) 50 
C) 75 
D) 100

Question 18

Which of the following examples comes the closest to describing a monopsony market?

Accepted Answer

A) The market for beryllium. 
B) The market for Microsoft Windows. 
C) The market for breakfast cereal. 
D) The market for United States military uniforms. 
A) The market for beryllium. 
B) The market for Microsoft Windows. 
C) The market for breakfast cereal. 
D) The market for United States military uniforms.

Question 19

A monopolist and a perfectly competitive firm both produce where price equals marginal cost.

Accepted Answer

A) True 
 B)False

Question 20

A monopolist faces a downward-sloping demand curve, whereas a perfectly competitive firm faces a horizontal demand curve.

Accepted Answer

A) True 
 B)False

For a monopolist:

-Based on the graph above, the deadweight loss under monopoly would be:

A monopoly market is one with:

The inverse elasticity pricing rule says that the optimal markup of price over marginal cost expressed as a percentage of price:

A monopoly market consists of a single seller facing many buyers.

A monopsonist only uses labor to produce an output according to production function Q = 2L, where Q is output and L is labor. The output sells for a price of $20 per unit. The supply curve for labor can be written w = 4+L. What is the monopsonist's demand for labor in this market?

A group of producers that collusively determines the price and output in a market is cartel.

The monopolist's profit-maximizing price will be greater than marginal cost for the last unit supplied.

Price equals average revenue at the profit-maximizing quantity of output.

Firms producing differentiated products face downward-sloping demand.

A monopolist owns two plants in which to produce product A. The marginal cost of producing A is increasing, but currently is lower in plant 1 than in plant 2. How should the monopolist allocate production?

Usually the demand and marginal revenue curves for a monopoly are the same.

A monopolist and a perfectly competitive firm both charge a price based on the demand curve facing the firm and the costs borne by the firm.

An increase in demand for a monopolist will cause the:

A monopolist faces inverse demand $P = 300 - 6 Q$ and has marginal cost $M C = 120 + 6 Q$ . What price should this monopolist charge to maximize profit?

-Based on the graph above, the profit-maximizing price for a monopolist would be

A monopolist faces a demand curve $Q = 50 P ^ { - 4 }$ and that the monopolist has a constant marginal cost of 75. The monopolist's profit-maximizing price is:

Which of the following examples comes the closest to describing a monopsony market?

A monopolist and a perfectly competitive firm both produce where price equals marginal cost.

A monopolist faces a downward-sloping demand curve, whereas a perfectly competitive firm faces a horizontal demand curve.

Analyzing Economic Problems

Demand and Supply Analysis

Consumer Preferences and the Concept of Utility

Consumer Choice

The Theory of Demand

Inputs and Production Functions

Costs and Cost Minimization

Cost Curves

Perfectly Competitive Markets

Competitive Markets: Applications

Capturing Surplus

Market Structure and Competition

Game Theory and Strategic Behavior

Risk and Information

General Equilibrium Theory

Externalities and Public Goods

Filters

Exam 11: Monopoly and Monopsony

For a monopolist:

-Based on the graph above, the deadweight loss under monopoly would be:

A monopoly market is one with:

The inverse elasticity pricing rule says that the optimal markup of price over marginal cost expressed as a percentage of price:

A monopoly market consists of a single seller facing many buyers.

A monopsonist only uses labor to produce an output according to production function Q = 2L, where Q is output and L is labor. The output sells for a price of $20 per unit. The supply curve for labor can be written w = 4+L. What is the monopsonist's demand for labor in this market?

A group of producers that collusively determines the price and output in a market is cartel.

The monopolist's profit-maximizing price will be greater than marginal cost for the last unit supplied.

Price equals average revenue at the profit-maximizing quantity of output.

Firms producing differentiated products face downward-sloping demand.

A monopolist owns two plants in which to produce product A. The marginal cost of producing A is increasing, but currently is lower in plant 1 than in plant 2. How should the monopolist allocate production?

Usually the demand and marginal revenue curves for a monopoly are the same.

A monopolist and a perfectly competitive firm both charge a price based on the demand curve facing the firm and the costs borne by the firm.

An increase in demand for a monopolist will cause the:

A monopolist faces inverse demand P=300−6QP = 300 - 6 QP=300−6Q and has marginal cost MC=120+6QM C = 120 + 6 QMC=120+6Q . What price should this monopolist charge to maximize profit?

-Based on the graph above, the profit-maximizing price for a monopolist would be

A monopolist faces a demand curve Q=50P−4Q = 50 P ^ { - 4 }Q=50P−4 and that the monopolist has a constant marginal cost of 75. The monopolist's profit-maximizing price is:

Which of the following examples comes the closest to describing a monopsony market?

A monopolist and a perfectly competitive firm both produce where price equals marginal cost.

A monopolist faces a downward-sloping demand curve, whereas a perfectly competitive firm faces a horizontal demand curve.

Analyzing Economic Problems

Demand and Supply Analysis

Consumer Preferences and the Concept of Utility

Consumer Choice

The Theory of Demand

Inputs and Production Functions

Costs and Cost Minimization

Cost Curves

Perfectly Competitive Markets

Competitive Markets: Applications

Capturing Surplus

Market Structure and Competition

Game Theory and Strategic Behavior

Risk and Information

General Equilibrium Theory

Externalities and Public Goods

Filters

A monopolist faces inverse demand $P = 300 - 6 Q$ and has marginal cost $M C = 120 + 6 Q$ . What price should this monopolist charge to maximize profit?

A monopolist faces a demand curve $Q = 50 P ^ { - 4 }$ and that the monopolist has a constant marginal cost of 75. The monopolist's profit-maximizing price is: