Question 1

For a monopoly,marginal revenue is less than price because

Accepted Answer

A)  the demand for the firm's output is downward sloping. 
B)  the firm has no supply curve. 
C)  the firm can sell all of its output at any price. 
D)  the demand for the firm's output is perfectly elastic. 
A)  the demand for the firm's output is downward sloping. 
B)  the firm has no supply curve. 
C)  the firm can sell all of its output at any price. 
D)  the demand for the firm's output is perfectly elastic. A

Question 2

A profit-maximizing monopolist will never operate in the portion of the demand curve with price elasticity equal to

Accepted Answer

A)  -3. 
B)  -1. 
C)  -1/3. 
D)  None of the above-the price elasticity does not matter. 
A)  -3. 
B)  -1. 
C)  -1/3. 
D)  None of the above-the price elasticity does not matter. C

Question 3

-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% B

Question 4

A monopoly sets a price of $50 per unit for an item that has a marginal cost of $10.Assuming profit maximization,the implicit demand elasticity is

Accepted Answer

A)  -0.2. 
B)  -0.8. 
C)  -1.25. 
D)  -5.0. 
A)  -0.2. 
B)  -0.8. 
C)  -1.25. 
D)  -5.0.

Question 5

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.

Question 6

The situation in which one firm can produce the total output of the market at lower cost than several firms is called

Accepted Answer

A)  natural monopoly. 
B)  pure monopoly. 
C)  ruling monopoly. 
D)  cost monopoly. 
A)  natural monopoly. 
B)  pure monopoly. 
C)  ruling monopoly. 
D)  cost monopoly.

Question 7

A firm that has market power

Accepted Answer

A)  can charge whatever it wants for its product. 
B)  can charge a price above marginal cost. 
C)  has positive economic profits. 
D)  does not lose sales when increasing price. 
A)  can charge whatever it wants for its product. 
B)  can charge a price above marginal cost. 
C)  has positive economic profits. 
D)  does not lose sales when increasing price.

Question 8

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 but below the demand 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 but below the demand curve.

Question 9

A monopolist that chooses price

Accepted Answer

A)  necessarily produces less than a monopolist that chooses quantity, hence the laws against price fixing. 
B)  produces the same amount as a monopolist that chooses quantity. 
C)  produces more than a monopolist that chooses quantity, thus the irony of laws against price fixing. 
D)  operates according to the Harvard tradition rather than the Chicago tradition. 
A)  necessarily produces less than a monopolist that chooses quantity, hence the laws against price fixing. 
B)  produces the same amount as a monopolist that chooses quantity. 
C)  produces more than a monopolist that chooses quantity, thus the irony of laws against price fixing. 
D)  operates according to the Harvard tradition rather than the Chicago tradition.

Question 10

The more elastic the demand curve,a monopoly

Accepted Answer

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

Question 11

Market power is illegal.

Accepted Answer

A)  True, no one is allowed to charge a price greater than marginal cost. 
B)  False. 
C)  True, no one is allowed to charge a price greater than average cost. 
D)  False, because market power guarantees price equal to average cost. 
A)  True, no one is allowed to charge a price greater than marginal cost. 
B)  False. 
C)  True, no one is allowed to charge a price greater than average cost. 
D)  False, because market power guarantees price equal to average cost.

Question 12

A monopoly incurs a marginal cost of $1 for each unit produced.If the price elasticity of demand equals -2.0,the monopoly maximizes profit by charging a price of

Accepted Answer

A)  $1.00. 
B)  $1.50. 
C)  $2.00. 
D)  $3.00. 
A)  $1.00. 
B)  $1.50. 
C)  $2.00. 
D)  $3.00.

Question 13

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 14

Limited government licenses that create a monopoly do so because

Accepted Answer

A)  the license generates a marginal cost advantage. 
B)  the monopoly will become a natural monopoly. 
C)  a barrier to enter the market exists. 
D)  All of the above. 
A)  the license generates a marginal cost advantage. 
B)  the monopoly will become a natural monopoly. 
C)  a barrier to enter the market exists. 
D)  All of the above.

Question 15

A monopoly that is maximizing profits operates in the ________ portion of the demand curve.

Accepted Answer

A)  unitary elastic 
B)  elastic 
C)  inelastic 
D)  horizontal 
A)  unitary elastic 
B)  elastic 
C)  inelastic 
D)  horizontal

Question 16

The loss associated with the fact that at the profit-maximizing quantity consumers value the goods more than it cost to produce them is called

Accepted Answer

A)  deadweight loss. 
B)  comparative loss. 
C)  Lerner Loss. 
D)  Consumer Value Loss. 
A)  deadweight loss. 
B)  comparative loss. 
C)  Lerner Loss. 
D)  Consumer Value Loss.

Question 17

Marginal Revenue is

Accepted Answer

A)  the increase in total revenue from selling one more unit of output. 
B)  equal to P(1+1/e) 
C)  equal to P when the price elasticity of demand is infinite. 
D)  All of the above. 
A)  the increase in total revenue from selling one more unit of output. 
B)  equal to P(1+1/e) 
C)  equal to P when the price elasticity of demand is infinite. 
D)  All of the above.

Question 18

If a monopoly's demand curve shifts to the right the monopoly

Accepted Answer

A)  will charge a higher price. 
B)  will charge a lower price. 
C)  will sell more. 
D)  decision cannot be determined. 
A)  will charge a higher price. 
B)  will charge a lower price. 
C)  will sell more. 
D)  decision cannot be determined.

Question 19

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 20

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.

For a monopoly,marginal revenue is less than price because

A profit-maximizing monopolist will never operate in the portion of the demand curve with price elasticity equal to

-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?

A monopoly sets a price of $50 per unit for an item that has a marginal cost of $10.Assuming profit maximization,the implicit demand elasticity is

A monopoly shuts down when

The situation in which one firm can produce the total output of the market at lower cost than several firms is called

A firm that has market power

The monopolist's supply curve

A monopolist that chooses price

The more elastic the demand curve,a monopoly

Market power is illegal.

A monopoly incurs a marginal cost of $1 for each unit produced.If the price elasticity of demand equals -2.0,the monopoly maximizes profit by charging a price of

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

Limited government licenses that create a monopoly do so because

A monopoly that is maximizing profits operates in the ________ portion of the demand curve.

The loss associated with the fact that at the profit-maximizing quantity consumers value the goods more than it cost to produce them is called

Marginal Revenue is

If a monopoly's demand curve shifts to the right the monopoly

The use of "introductory prices" suggests

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

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

For a monopoly,marginal revenue is less than price because

A profit-maximizing monopolist will never operate in the portion of the demand curve with price elasticity equal to

-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?

A monopoly sets a price of $50 per unit for an item that has a marginal cost of $10.Assuming profit maximization,the implicit demand elasticity is

A monopoly shuts down when

The situation in which one firm can produce the total output of the market at lower cost than several firms is called

A firm that has market power

The monopolist's supply curve

A monopolist that chooses price

The more elastic the demand curve,a monopoly

Market power is illegal.

A monopoly incurs a marginal cost of $1 for each unit produced.If the price elasticity of demand equals -2.0,the monopoly maximizes profit by charging a price of

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

Limited government licenses that create a monopoly do so because

A monopoly that is maximizing profits operates in the ________ portion of the demand curve.

The loss associated with the fact that at the profit-maximizing quantity consumers value the goods more than it cost to produce them is called

Marginal Revenue is

If a monopoly's demand curve shifts to the right the monopoly

The use of "introductory prices" suggests

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

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