Question 1

As other firms enter a monopoly's market, the demand curve a monopoly faces

Accepted Answer

A) is unaffected. 
B) becomes more inelastic. 
C) becomes more elastic. 
D) may become more or less elastic, depending on its Lerner Index. 
A) is unaffected. 
B) becomes more inelastic. 
C) becomes more elastic. 
D) may become more or less elastic, depending on its Lerner Index. C

Question 2

A monopoly shuts down when

Accepted Answer

A) the short run price is below its average variable costs. 
B) the long run price is below its average variable costs. 
C) the average cost is less than price. 
D) never, because it can raise its prices as high as necessary to keep operating and maximize profits. 
A) the short run price is below its average variable costs. 
B) the long run price is below its average variable costs. 
C) the average cost is less than price. 
D) never, because it can raise its prices as high as necessary to keep operating and maximize profits. A

Question 3

The monopoly can shift the demand for its product rightward by

Accepted Answer

A) accommodating entry. 
B) advertising new uses for its product. 
C) moving along the learning curve. 
D) All of the above. 
A) accommodating entry. 
B) advertising new uses for its product. 
C) moving along the learning curve. 
D) All of the above. B

Question 4

-The above figure shows the demand and cost curves facing a monopoly. If a $100 per unit tax is charged, what is the incidence of the tax on consumers?

Accepted Answer

A) 100% 
B) 50% 
C) 25% 
D) 0% 
A) 100% 
B) 50% 
C) 25% 
D) 0%

Question 5

Government actions that create monopolies

Accepted Answer

A) spur product innovation by the monopoly. 
B) create deadweight loss. 
C) result in lower average costs of production. 
D) ensure that firms price at marginal cost. 
A) spur product innovation by the monopoly. 
B) create deadweight loss. 
C) result in lower average costs of production. 
D) ensure that firms price at marginal cost.

Question 6

If the inverse demand curve a monopoly faces is p = 100 - 2Q, and MC is constant at 16, then profit maximization

Accepted Answer

A) is achieved when 21 units are produced. 
B) is achieved by setting price equal to 21. 
C) is achieved only by shutting down in the short run. 
D) cannot be determined solely from the information provided. 
A) is achieved when 21 units are produced. 
B) is achieved by setting price equal to 21. 
C) is achieved only by shutting down in the short run. 
D) cannot be determined solely from the information provided.

Question 7

Which of the following average cost functions suggests the presence of a natural monopoly?

Accepted Answer

A) AC = 2 
B) AC = 100/Q + 2 
C) TC = 100/Q + 2Q 
D) All of the above. 
A) AC = 2 
B) AC = 100/Q + 2 
C) TC = 100/Q + 2Q 
D) All of the above.

Question 8

-The above figure shows the demand and cost curves facing a monopoly. The deadweight loss of this monopoly is

Accepted Answer

A) $100. 
B) $250. 
C) $1,250. 
D) $2,500. 
A) $100. 
B) $250. 
C) $1,250. 
D) $2,500.

Question 9

All of the following government actions create barriers to entry EXCEPT

Accepted Answer

A) limiting the number of airlines that may operate at an airport. 
B) granting a patent to a drug company. 
C) requiring a pizza parlor to get a business license. 
D) giving a power company exclusive use of the city's transmission lines. 
A) limiting the number of airlines that may operate at an airport. 
B) granting a patent to a drug company. 
C) requiring a pizza parlor to get a business license. 
D) giving a power company exclusive use of the city's transmission lines.

Question 10

The monopolist's supply curve

Accepted Answer

A) doesn't exist. 
B) is the region of its marginal cost curve above average cost. 
C) is identical to the demand curve. 
D) is the region of its marginal cost curve that lies above the marginal revenue curve. 
A) doesn't exist. 
B) is the region of its marginal cost curve above average cost. 
C) is identical to the demand curve. 
D) is the region of its marginal cost curve that lies above the marginal revenue curve.

Question 11

-The above figure shows the demand and cost curves facing a monopoly. If a $100 per unit tax is charged, the loss in welfare resulting from the tax is

Accepted Answer

A) $250. 
B) $312.50. 
C) $1,250. 
D) $1,562.50. 
A) $250. 
B) $312.50. 
C) $1,250. 
D) $1,562.50.

Question 12

Market power guarantees profit.

Accepted Answer

A) True, which is why firm's locate as far away from each other as possible. 
B) False, market power guarantees price greater than marginal cost. 
C) True, market power guarantees price greater than average cost. 
D) False, market power guarantees price equal to average cost. 
A) True, which is why firm's locate as far away from each other as possible. 
B) False, market power guarantees price greater than marginal cost. 
C) True, market power guarantees price greater than average cost. 
D) False, market power guarantees price equal to average cost.

Question 13

The situation in which a person places greater value on a good as more and more people possess it is called the

Accepted Answer

A) Bandwagon Effect. 
B) Greater Value Effect. 
C) Snob Effect. 
D) Behavioral Effect. 
A) Bandwagon Effect. 
B) Greater Value Effect. 
C) Snob Effect. 
D) Behavioral Effect.

Question 14

The use of "introductory prices" suggests

Accepted Answer

A) firms engaged in multi-period decision making. 
B) firms engaged in price gouging. 
C) firms engaged in anti-competitive behavior. 
D) firms engaged in single-period decision making. 
A) firms engaged in multi-period decision making. 
B) firms engaged in price gouging. 
C) firms engaged in anti-competitive behavior. 
D) firms engaged in single-period decision making.

Question 15

The more inelastic the demand curve, a monopoly

Accepted Answer

A) will have a smaller Lerner Index. 
B) will face a lower marginal cost. 
C) will earn less profit. 
D) will lose fewer sales as it raises its price. 
A) will have a smaller Lerner Index. 
B) will face a lower marginal cost. 
C) will earn less profit. 
D) will lose fewer sales as it raises its price.

Question 16

If the demand for a monopoly's output shifts leftward, the change in quantity produced is NOT predictable because

Accepted Answer

A) the monopoly is a profit maximizer. 
B) the monopoly is a price taker. 
C) the monopoly has no supply curve. 
D) the monopoly's marginal cost curve might not be upward sloping. 
A) the monopoly is a profit maximizer. 
B) the monopoly is a price taker. 
C) the monopoly has no supply curve. 
D) the monopoly's marginal cost curve might not be upward sloping.

Question 17

If the inverse demand function for a monopoly's product is p = 100 - 2Q, then the firm's marginal revenue function is

Accepted Answer

A) -2. 
B) 100 - 4Q. 
C) 200 - 4Q. 
D) 200 - 2Q. 
A) -2. 
B) 100 - 4Q. 
C) 200 - 4Q. 
D) 200 - 2Q.

Question 18

If the inverse demand function for a monopoly's product is p = a - bQ, then the firm's marginal revenue function is

Accepted Answer

A) a. 
B) a - (1/2)bQ. 
C) a - bQ. 
D) a - 2bQ. 
A) a. 
B) a - (1/2)bQ. 
C) a - bQ. 
D) a - 2bQ.

Question 19

A flour mill holding exclusive contracts to 95% of the wheat in a large geographic area may operate as a flour producing monopoly locally because

Accepted Answer

A) the mill has a very inelastic supply curve. 
B) the mill is a natural monopoly. 
C) the mill controls a key input. 
D) the government will declare it a monopoly. 
A) the mill has a very inelastic supply curve. 
B) the mill is a natural monopoly. 
C) the mill controls a key input. 
D) the government will declare it a monopoly.

Question 20

An exclusive right to sell a new and useful product, process, substance, or design for a fixed period of time is called a

Accepted Answer

A) patent. 
B) barrier to entry. 
C) monopoly. 
D) research disincentive. 
A) patent. 
B) barrier to entry. 
C) monopoly. 
D) research disincentive.

As other firms enter a monopoly's market, the demand curve a monopoly faces

A monopoly shuts down when

The monopoly can shift the demand for its product rightward by

-The above figure shows the demand and cost curves facing a monopoly. If a $100 per unit tax is charged, what is the incidence of the tax on consumers?

Government actions that create monopolies

If the inverse demand curve a monopoly faces is p = 100 - 2Q, and MC is constant at 16, then profit maximization

Which of the following average cost functions suggests the presence of a natural monopoly?

-The above figure shows the demand and cost curves facing a monopoly. The deadweight loss of this monopoly is

All of the following government actions create barriers to entry EXCEPT

The monopolist's supply curve

-The above figure shows the demand and cost curves facing a monopoly. If a $100 per unit tax is charged, the loss in welfare resulting from the tax is

Market power guarantees profit.

The situation in which a person places greater value on a good as more and more people possess it is called the

The use of "introductory prices" suggests

The more inelastic the demand curve, a monopoly

If the demand for a monopoly's output shifts leftward, the change in quantity produced is NOT predictable because

If the inverse demand function for a monopoly's product is p = 100 - 2Q, then the firm's marginal revenue function is

If the inverse demand function for a monopoly's product is p = a - bQ, then the firm's marginal revenue function is

A flour mill holding exclusive contracts to 95% of the wheat in a large geographic area may operate as a flour producing monopoly locally because

An exclusive right to sell a new and useful product, process, substance, or design for a fixed period of time is called a

Introduction

Supply and Demand

Empirical Methods for Demand Analysis

Consumer Choice

Production

Costs

Firm Organization and Market Structure

Competitive Firms and Markets

Pricing With Market Power

Oligopoly and Monopolistic Competition

Game Theory and Business Strategy

Strategies Over Time

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Government and Business

Global Business

Filters

Exam 9: Monopoly

As other firms enter a monopoly's market, the demand curve a monopoly faces

A monopoly shuts down when

The monopoly can shift the demand for its product rightward by

-The above figure shows the demand and cost curves facing a monopoly. If a $100 per unit tax is charged, what is the incidence of the tax on consumers?

Government actions that create monopolies

If the inverse demand curve a monopoly faces is p = 100 - 2Q, and MC is constant at 16, then profit maximization

Which of the following average cost functions suggests the presence of a natural monopoly?

-The above figure shows the demand and cost curves facing a monopoly. The deadweight loss of this monopoly is

All of the following government actions create barriers to entry EXCEPT

The monopolist's supply curve

-The above figure shows the demand and cost curves facing a monopoly. If a $100 per unit tax is charged, the loss in welfare resulting from the tax is

Market power guarantees profit.

The situation in which a person places greater value on a good as more and more people possess it is called the

The use of "introductory prices" suggests

The more inelastic the demand curve, a monopoly

If the demand for a monopoly's output shifts leftward, the change in quantity produced is NOT predictable because

If the inverse demand function for a monopoly's product is p = 100 - 2Q, then the firm's marginal revenue function is

If the inverse demand function for a monopoly's product is p = a - bQ, then the firm's marginal revenue function is

A flour mill holding exclusive contracts to 95% of the wheat in a large geographic area may operate as a flour producing monopoly locally because

An exclusive right to sell a new and useful product, process, substance, or design for a fixed period of time is called a

Introduction

Supply and Demand

Empirical Methods for Demand Analysis

Consumer Choice

Production

Costs

Firm Organization and Market Structure

Competitive Firms and Markets

Pricing With Market Power

Oligopoly and Monopolistic Competition

Game Theory and Business Strategy

Strategies Over Time

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Government and Business

Global Business

Filters