Question 1

Figure 11-2
 
In Figure 11-2, at what price would the monopolist maximize profit?

Accepted Answer

A) E 
B) F 
C) G 
D) H 
A) E 
B) F 
C) G 
D) H D

Question 2

Table 11-2   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. B

Question 3

Offering discounts to senior citizens is

Accepted Answer

A) a philanthropic decision. 
B) peak-level pricing. 
C) price discrimination. 
D) an inefficient practice. 
A) a philanthropic decision. 
B) peak-level pricing. 
C) price discrimination. 
D) an inefficient practice. C

Question 4

A similarity between monopoly and perfect competition is that both types of firms are able to earn economic profits in the short run.

Accepted Answer

A) True 
 B)False

Question 5

A monopoly restricts output and charges a higher price than other types of firms.

Accepted Answer

A) True 
 B)False

Question 6

Owning a patent can provide a firm with monopolistic power.

Accepted Answer

A) True 
 B)False

Question 7

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 or she is earning zero economic profit. 
C) a monopolist will always charge a higher price than he or she 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 or she is earning zero economic profit. 
C) a monopolist will always charge a higher price than he or she charges in the short run. 
D) consumer surplus is smaller if an industry is a monopoly than if it is perfectly competitive.

Question 8

A monopolist maximizes profits by producing where which of the following occurs?

Accepted Answer

A) MC = P. 
B) AC = P. 
C) MC = MR. 
D) AC = AR. 
A) MC = P. 
B) AC = P. 
C) MC = MR. 
D) AC = AR.

Question 9

The marginal revenue curve for a monopolist is

Accepted Answer

A) always above the demand curve. 
B) generally below the average cost curve. 
C) always above the average revenue curve. 
D) always below the demand curve. 
A) always above the demand curve. 
B) generally below the average cost curve. 
C) always above the average revenue curve. 
D) always below the demand curve.

Question 10

Advertising by the monopolist

Accepted Answer

A) is not done because the monopolist has the only supply of the product and doesn't need to advertise. 
B) would have the effect of shifting its demand curve to the left. 
C) may lead to expanded production by the monopolist. 
D) makes no sense because there are no substitute commodities available to consumers. 
A) is not done because the monopolist has the only supply of the product and doesn't need to advertise. 
B) would have the effect of shifting its demand curve to the left. 
C) may lead to expanded production by the monopolist. 
D) makes no sense because there are no substitute commodities available to consumers.

Question 11

A natural monopoly is defined as an industry in which one firm

Accepted Answer

A) can produce the entire industry output at a lower average cost than a larger number of firms could. 
B) can produce the entire industry output at a lower marginal cost than a larger number of firms could. 
C) is very large relative to other firms that could enter the industry. 
D) can earn higher profits if it is the only firm in the industry rather than if other firms also enter the industry. 
A) can produce the entire industry output at a lower average cost than a larger number of firms could. 
B) can produce the entire industry output at a lower marginal cost than a larger number of firms could. 
C) is very large relative to other firms that could enter the industry. 
D) can earn higher profits if it is the only firm in the industry rather than if other firms also enter the industry.

Question 12

A monopolist's total profit is shown by the difference between price and average cost per unit times the number of units sold.

Accepted Answer

A) True 
 B)False

Question 13

There exist only two causes of monopoly: barriers to entry and government restrictions.

Accepted Answer

A) True 
 B)False

Question 14

Table 11-1   Table 11-1 shows demand and total cost schedules for Monopoliteria. At the profit-maximizing output, what quantity is Monopoliteria producing?

Accepted Answer

A) 10 
B) 12 
C) 14 
D) 16 
A) 10 
B) 12 
C) 14 
D) 16

Question 15

One of the conclusions of the model of monopoly is that the firm earns economic profits above the required opportunity cost of the factors of production. Are these profits lost to society? Do they take spending power from the economy, and act as a brake on economic growth?

Accepted Answer

No. The profits are "transferred" from t

Question 16

As the demand for a product falls, it is not uncommon for the industry to become a monopoly. This is most likely due to

Accepted Answer

A) an increase in the number of barriers. 
B) legal restrictions being imposed. 
C) the surviving firm operating on the declining part of its average cost curve. 
D) patent protection causing high prices. 
A) an increase in the number of barriers. 
B) legal restrictions being imposed. 
C) the surviving firm operating on the declining part of its average cost curve. 
D) patent protection causing high prices.

Question 17

A monopolist's cost curves will

Accepted Answer

A) be identical to those of a competitive firm. 
B) be higher than a competitive firm's cost curves. 
C) be peculiar to the individual producer since there is only one. 
D) drop more steeply as output increases. 
A) be identical to those of a competitive firm. 
B) be higher than a competitive firm's cost curves. 
C) be peculiar to the individual producer since there is only one. 
D) drop more steeply as output increases.

Question 18

A monopolist supply curve can be defined in the same way that it can for a perfectly competitive firm.

Accepted Answer

A) True 
 B)False

Question 19

The U.S. Postal Service enjoys a monopoly position because of patent rights.

Accepted Answer

A) True 
 B)False

Question 20

Figure 11-3
 
In Figure 11-3, which of the following is true, whether or not the monopolist is maximizing profits?

Accepted Answer

A) MR 
B) MC = P. 
C) MC 
D) MR = P. 
A) MR 
B) MC = P. 
C) MC 
D) MR = P.

Exam 12: Monopoly

Figure 11-2 In Figure 11-2, at what price would the monopolist maximize profit?

Table 11-2 In Table 11-2, MC of the last unit produced at the profit-maximizing output is

Offering discounts to senior citizens is

A similarity between monopoly and perfect competition is that both types of firms are able to earn economic profits in the short run.

A monopoly restricts output and charges a higher price than other types of firms.

Owning a patent can provide a firm with monopolistic power.

In the long run,

A monopolist maximizes profits by producing where which of the following occurs?

The marginal revenue curve for a monopolist is

Advertising by the monopolist

A natural monopoly is defined as an industry in which one firm

A monopolist's total profit is shown by the difference between price and average cost per unit times the number of units sold.

There exist only two causes of monopoly: barriers to entry and government restrictions.

Table 11-1 Table 11-1 shows demand and total cost schedules for Monopoliteria. At the profit-maximizing output, what quantity is Monopoliteria producing?

One of the conclusions of the model of monopoly is that the firm earns economic profits above the required opportunity cost of the factors of production. Are these profits lost to society? Do they take spending power from the economy, and act as a brake on economic growth?

As the demand for a product falls, it is not uncommon for the industry to become a monopoly. This is most likely due to

A monopolist's cost curves will

A monopolist supply curve can be defined in the same way that it can for a perfectly competitive firm.

The U.S. Postal Service enjoys a monopoly position because of patent rights.

Figure 11-3 In Figure 11-3, which of the following is true, whether or not the monopolist is maximizing profits?

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

The Financial Markets and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

The Case for Free Markets: the Price System

Between Competition and Monopoly

Limiting Market Power: Antitrust and Regulation

The Shortcomings of Free Markets

Externalities, Externaliteis, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

International Trade and Comparative Advantage

Contemporary Issues in the Us Economy

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