Question 1

All of the following might explain a firm offering quantity discounts except:

Accepted Answer

A) the lower costs of handling large orders. 
B) an inelastic demand for the good. 
C) a monopoly power in this market. 
D) the adoption of a sales maximization strategy. 
A) the lower costs of handling large orders. 
B) an inelastic demand for the good. 
C) a monopoly power in this market. 
D) the adoption of a sales maximization strategy. B

Question 2

A monopolist has marginal revenue  And marginal cost   ,where  Is some factor shifting marginal costs up.Applying comparative-static analysis to the profit-maximization condition   What can be learned about the effect of  
On monopoly output,or in mathematical terms,what can be learned about the derivative   ?
I.  
​II.  
​III.   ,if the monopolist's profit function is concave.
IV.   ,if the monopolist's profit function is concave.

Accepted Answer

A) ​I and III 
B) ​II and III 
C) ​I and IV 
D) ​II and IV 
A) ​I and III 
B) ​II and III 
C) ​I and IV 
D) ​II and IV C

Question 3

A price discriminating monopolist having identical costs in two separated markets should charge a higher price in that market:

Accepted Answer

A) which has a higher demand. 
B) which has a more elastic demand. 
C) which has a less elastic demand. 
D) which has a higher marginal revenue. 
A) which has a higher demand. 
B) which has a more elastic demand. 
C) which has a less elastic demand. 
D) which has a higher marginal revenue. C

Question 4

refer to a monopoly that faces a demand curve given by   and has a constant marginal cost as 0.2.
-In this situation,the monopoly's profits are:

Accepted Answer

A) 0.40. 
B) 0.16. 
C) 0.12. 
D) 0.08. 
A) 0.40. 
B) 0.16. 
C) 0.12. 
D) 0.08.

Question 5

Which of the following is not a technical barrier to entry in a monopolized market?

Accepted Answer

A) A patent 
B) Decreasing average cost 
C) A low cost method of production known only by monopolists 
D) Increasing returns to scale 
A) A patent 
B) Decreasing average cost 
C) A low cost method of production known only by monopolists 
D) Increasing returns to scale

Question 6

refer to a monopoly that faces a demand curve given by   and has a constant marginal cost as 0.2.
-In this situation,the deadweight loss from monopoly is:

Accepted Answer

A) 0.40. 
B) 0.16. 
C) 0.12. 
D) 0.08. 
A) 0.40. 
B) 0.16. 
C) 0.12. 
D) 0.08.

Question 7

The "deadweight loss" from a monopoly refers to:

Accepted Answer

A) the portion of a monopolist's profits that are above the competitive profit level. 
B) the increase in price due to the monopolization of a market. 
C) the inefficient use of factors of production by a monopoly. 
D) the loss of consumer surplus due to the monopolization of a market that is not transferred to another economic actor. 
A) the portion of a monopolist's profits that are above the competitive profit level. 
B) the increase in price due to the monopolization of a market. 
C) the inefficient use of factors of production by a monopoly. 
D) the loss of consumer surplus due to the monopolization of a market that is not transferred to another economic actor.

Question 8

One possible benefit of a monopoly is:

Accepted Answer

A) a more efficient allocation of resources;only one firm is needed to supply quantity demanded. 
B) greater incentives for research due to long-run positive economic profits. 
C) the government is better able to ensure that it follows laws and guidelines because there is only one firm to monitor. 
D) goods and services are provided at a lower price than under perfect competition because of a monopoly's decreasing average cost curve. 
A) a more efficient allocation of resources;only one firm is needed to supply quantity demanded. 
B) greater incentives for research due to long-run positive economic profits. 
C) the government is better able to ensure that it follows laws and guidelines because there is only one firm to monitor. 
D) goods and services are provided at a lower price than under perfect competition because of a monopoly's decreasing average cost curve.

Question 9

A monopoly's economic profits are represented by:

Accepted Answer

A) (price minus marginal cost)times number of units sold. 
B) (price minus average cost)times number of units sold. 
C) (marginal revenue minus price)times number of units sold. 
D) (marginal cost minus price)times number of units sold. 
A) (price minus marginal cost)times number of units sold. 
B) (price minus average cost)times number of units sold. 
C) (marginal revenue minus price)times number of units sold. 
D) (marginal cost minus price)times number of units sold.

Question 10

​How does monopoly product quality compare to the quality a social planner would choose?

Accepted Answer

A) ​The monopolist targets the marginal consumer's valuation of quality,whereas the social planner targets the average consumer's.This leads the monopolist to make inefficiently low-quality products. 
B) ​The monopolist targets the marginal consumer's valuation of quality,whereas the social planner targets the average consumer's.This leads the monopolist to make inefficiently high-quality products. 
C) ​There is no difference due to a standard neutrality argument. 
D) ​None of the above. 
A) ​The monopolist targets the marginal consumer's valuation of quality,whereas the social planner targets the average consumer's.This leads the monopolist to make inefficiently low-quality products. 
B) ​The monopolist targets the marginal consumer's valuation of quality,whereas the social planner targets the average consumer's.This leads the monopolist to make inefficiently high-quality products. 
C) ​There is no difference due to a standard neutrality argument. 
D) ​None of the above.

Question 11

A profit maximizing monopoly will produce that output for which:

Accepted Answer

A) marginal revenue equals price. 
B) average cost is minimized. 
C) marginal cost is minimized. 
D) marginal cost equals marginal revenue. 
A) marginal revenue equals price. 
B) average cost is minimized. 
C) marginal cost is minimized. 
D) marginal cost equals marginal revenue.

Question 12

A monopoly producer of a durable good:

Accepted Answer

A) can earn even greater profits than a producer of a non-durable. 
B) must consider competition from its own output decisions. 
C) will have higher marginal costs than most other monopolies. 
D) will not set marginal revenue equal to marginal cost. 
A) can earn even greater profits than a producer of a non-durable. 
B) must consider competition from its own output decisions. 
C) will have higher marginal costs than most other monopolies. 
D) will not set marginal revenue equal to marginal cost.

Question 13

If a monopoly is maximizing profits:

Accepted Answer

A) price will always be greater than average cost. 
B) price will always equal marginal cost. 
C) price will always be greater than marginal cost. 
D) price will always equal marginal revenue. 
A) price will always be greater than average cost. 
B) price will always equal marginal cost. 
C) price will always be greater than marginal cost. 
D) price will always equal marginal revenue.

Question 14

For the practice of price discrimination to be successful,the monopoly must:

Accepted Answer

A) be able to prevent resale of its product. 
B) face similar demand curves for various markets. 
C) have similar costs among markets. 
D) have a downward sloping marginal cost curve. 
A) be able to prevent resale of its product. 
B) face similar demand curves for various markets. 
C) have similar costs among markets. 
D) have a downward sloping marginal cost curve.

Question 15

Relative to uniform-price policy,price discrimination across segmented markets (sometimes called third-degree price discrimination):

Accepted Answer

A) always reduces welfare. 
B) always increases welfare. 
C) may increase welfare if total output falls. 
D) may increase welfare if total output rises. 
A) always reduces welfare. 
B) always increases welfare. 
C) may increase welfare if total output falls. 
D) may increase welfare if total output rises.

Question 16

A natural monopoly:

Accepted Answer

A) is a monopoly in the production of raw materials. 
B) occurs when one firm can supply the entire market more cheaply than can a number of firms. 
C) is one result of a patent. 
D) necessarily involves inefficient pricing. 
A) is a monopoly in the production of raw materials. 
B) occurs when one firm can supply the entire market more cheaply than can a number of firms. 
C) is one result of a patent. 
D) necessarily involves inefficient pricing.

Question 17

refer to a monopoly that faces a demand curve given by   and has a constant marginal cost as 0.2.
-In this situation the monopoly's profit maximizing output level is:

Accepted Answer

A) 0.2. 
B) 0.4. 
C) 0.5. 
D) 0.7. 
A) 0.2. 
B) 0.4. 
C) 0.5. 
D) 0.7.

Question 18

The supply curve for a monopoly is given by:

Accepted Answer

A) the firm's marginal cost curve above the average variable cost curve. 
B) the one point on the demand curve that corresponds to the quantity for which price is equal to MC. 
C) the one point on the demand curve that corresponds to the quantity for which MR equals MC. 
D) the entire demand curve above the point where price is equal to average cost. 
A) the firm's marginal cost curve above the average variable cost curve. 
B) the one point on the demand curve that corresponds to the quantity for which price is equal to MC. 
C) the one point on the demand curve that corresponds to the quantity for which MR equals MC. 
D) the entire demand curve above the point where price is equal to average cost.

Question 19

If the government requires a natural monopoly to price at marginal cost:

Accepted Answer

A) monopoly firms will earn zero economic profits because the price of the good equals the cost of producing that good. 
B) monopoly firms will operate at a loss because P < AC. 
C) more firms will be able to enter the market. 
D) producer surplus will increase because quantity supplied is greater. 
A) monopoly firms will earn zero economic profits because the price of the good equals the cost of producing that good. 
B) monopoly firms will operate at a loss because P < AC. 
C) more firms will be able to enter the market. 
D) producer surplus will increase because quantity supplied is greater.

Question 20

The principal difference between economic profits for a monopolist and for a competitive firm is that:

Accepted Answer

A) monopoly profits create major problems of equity whereas competitive profits do not. 
B) competitive profits exist only in the short run whereas monopoly profits may exist in the long run as well. 
C) monopoly profits represent a transfer out of consumer surplus whereas competitive profits do not. 
D) monopoly profits are usually larger than competitive profits. 
A) monopoly profits create major problems of equity whereas competitive profits do not. 
B) competitive profits exist only in the short run whereas monopoly profits may exist in the long run as well. 
C) monopoly profits represent a transfer out of consumer surplus whereas competitive profits do not. 
D) monopoly profits are usually larger than competitive profits.

All of the following might explain a firm offering quantity discounts except:

A price discriminating monopolist having identical costs in two separated markets should charge a higher price in that market:

refer to a monopoly that faces a demand curve given by and has a constant marginal cost as 0.2. -In this situation,the monopoly's profits are:

Which of the following is not a technical barrier to entry in a monopolized market?

refer to a monopoly that faces a demand curve given by and has a constant marginal cost as 0.2. -In this situation,the deadweight loss from monopoly is:

The "deadweight loss" from a monopoly refers to:

One possible benefit of a monopoly is:

A monopoly's economic profits are represented by:

How does monopoly product quality compare to the quality a social planner would choose?

A profit maximizing monopoly will produce that output for which:

A monopoly producer of a durable good:

If a monopoly is maximizing profits:

For the practice of price discrimination to be successful,the monopoly must:

Relative to uniform-price policy,price discrimination across segmented markets (sometimes called third-degree price discrimination):

A natural monopoly:

refer to a monopoly that faces a demand curve given by and has a constant marginal cost as 0.2. -In this situation the monopoly's profit maximizing output level is:

The supply curve for a monopoly is given by:

If the government requires a natural monopoly to price at marginal cost:

The principal difference between economic profits for a monopolist and for a competitive firm is that:

Preferences and Utility

Utility Maximization and Choice

Income and Substitution Effects

Demand Relationships Among Goods

Uncertainty

Game Theory

Production Functions

Cost Functions

Profit Maximization

The Partial Equilibrium Competitive Model

General Equilibrium and Welfare

Imperfect Competition

Labor Markets

Capital and Time

Asymmetric Information

Externalities and Public Goods

Filters

Exam 12: Monopoly

All of the following might explain a firm offering quantity discounts except:

A price discriminating monopolist having identical costs in two separated markets should charge a higher price in that market:

refer to a monopoly that faces a demand curve given by and has a constant marginal cost as 0.2. -In this situation,the monopoly's profits are:

Which of the following is not a technical barrier to entry in a monopolized market?

refer to a monopoly that faces a demand curve given by and has a constant marginal cost as 0.2. -In this situation,the deadweight loss from monopoly is:

The "deadweight loss" from a monopoly refers to:

One possible benefit of a monopoly is:

A monopoly's economic profits are represented by:

​How does monopoly product quality compare to the quality a social planner would choose?

A profit maximizing monopoly will produce that output for which:

A monopoly producer of a durable good:

If a monopoly is maximizing profits:

For the practice of price discrimination to be successful,the monopoly must:

Relative to uniform-price policy,price discrimination across segmented markets (sometimes called third-degree price discrimination):

A natural monopoly:

refer to a monopoly that faces a demand curve given by and has a constant marginal cost as 0.2. -In this situation the monopoly's profit maximizing output level is:

The supply curve for a monopoly is given by:

If the government requires a natural monopoly to price at marginal cost:

The principal difference between economic profits for a monopolist and for a competitive firm is that:

Preferences and Utility

Utility Maximization and Choice

Income and Substitution Effects

Demand Relationships Among Goods

Uncertainty

Game Theory

Production Functions

Cost Functions

Profit Maximization

The Partial Equilibrium Competitive Model

General Equilibrium and Welfare

Imperfect Competition

Labor Markets

Capital and Time

Asymmetric Information

Externalities and Public Goods

Filters

How does monopoly product quality compare to the quality a social planner would choose?