Question 1

If a firm could perfectly price discriminate

Accepted Answer

A) The marginal revenue curve would be the same as the demand curve 
B) The marginal revenue curve would lie below the demand curve 
C) The marginal revenue curve would lie above the demand curve 
D) There would be no marginal revenue function 
A) The marginal revenue curve would be the same as the demand curve 
B) The marginal revenue curve would lie below the demand curve 
C) The marginal revenue curve would lie above the demand curve 
D) There would be no marginal revenue function A

Question 2

If the demand curve for a single price monopolist always is a downward sloping straight line, then marginal revenue

Accepted Answer

A) Will be a straight line with a negative slope of twice the demand curve slope 
B) Will be a straight line with a negative slope of one-half the demand curve slope 
C) Will be identical to the demand curve 
D) Will be a horizontal line 
A) Will be a straight line with a negative slope of twice the demand curve slope 
B) Will be a straight line with a negative slope of one-half the demand curve slope 
C) Will be identical to the demand curve 
D) Will be a horizontal line A

Question 3

If a profit maximizing monopolist faces a linear demand curve and has zero marginal cost, it will produce at:

Accepted Answer

A) lowest point of marginal revenue curve 
B) elasticity of demand equals 1 
C) lowest point of marginal profit curve 
D) all of the choices are correct 
A) lowest point of marginal revenue curve 
B) elasticity of demand equals 1 
C) lowest point of marginal profit curve 
D) all of the choices are correct D

Question 4

If the firm facing the demand curve P = 10 - Q still has zero marginal costs and is now a perfect price discriminator instead of a single price monopolist, what will profits be if fixed costs are 12?

Accepted Answer

A) 10 
B) 12 
C) 13 
D) 38 
A) 10 
B) 12 
C) 13 
D) 38

Question 5

In first-degree price discrimination

Accepted Answer

A) The monopolist knows the equilibrium price 
B) The monopolist segments the market 
C) The monopolist charges only two different prices 
D) The monopolist gets less of the consumer surplus than would be taken if 2nd degree price discrimination was practiced 
A) The monopolist knows the equilibrium price 
B) The monopolist segments the market 
C) The monopolist charges only two different prices 
D) The monopolist gets less of the consumer surplus than would be taken if 2nd degree price discrimination was practiced

Question 6

Which of the following explains why theater prices for popcorn are three or four times higher than the popcorn price in the grocery store.

Accepted Answer

A) The grocery store sells a much higher volume and gets its profits that way 
B) The cost of popping the popcorn is high 
C) Grocery stores are satisfied with normal profit while theaters seek economic profit 
D) The demand curve for popcorn in a theater is more inelastic than the demand for popcorn at the grocery store 
A) The grocery store sells a much higher volume and gets its profits that way 
B) The cost of popping the popcorn is high 
C) Grocery stores are satisfied with normal profit while theaters seek economic profit 
D) The demand curve for popcorn in a theater is more inelastic than the demand for popcorn at the grocery store

Question 7

Say a monopolist knew that at the current price for its product demand is inelastic. If marginal costs for this firm are zero, then in order to maximize profits this monopolists should:

Accepted Answer

A) increase output 
B) reduce output 
C) keep output at the same level 
D) decrease its price 
A) increase output 
B) reduce output 
C) keep output at the same level 
D) decrease its price

Question 8

Suppose you own a firm that produces widgets and is a monopoly.The market demand is given by the equation P = 50 - 0.08Q, where P is the price of gadgets and Q is the quantity of gadgets sold per week.The marginal costs for the firm are 0.08Q
A.Draw the firm's demand, marginal revenue, and marginal cost curves.   
B.Find the profit-maximizing level of output for this firm.Will the firm earn positive or negative profits?
MR = 50 - 0.66Q

Accepted Answer

A.Draw the firm's demand, marginal reven

Question 9

For the output maximizing monopolist

Accepted Answer

A) Average total cost must be falling 
B) Marginal revenue equals marginal cost 
C) Long-run marginal cost equals demand 
D) Price equals average total cost 
A) Average total cost must be falling 
B) Marginal revenue equals marginal cost 
C) Long-run marginal cost equals demand 
D) Price equals average total cost

Question 10

When the monopolists maximizes profits the price elasticity of demand for widgets is:

Accepted Answer

A) 9 
B) 36 
C) 0.5 
D) 0.02 
A) 9 
B) 36 
C) 0.5 
D) 0.02

Question 11

A single price profit maximizing monopolist is inefficient because

Accepted Answer

A) It produces too much output 
B) It perfectly price discriminates when it can 
C) The sum of consumer and producer surplus is less than it could be 
D) It produces where price equals marginal cost rather than where marginal cost equals marginal revenue 
A) It produces too much output 
B) It perfectly price discriminates when it can 
C) The sum of consumer and producer surplus is less than it could be 
D) It produces where price equals marginal cost rather than where marginal cost equals marginal revenue

Question 12

Which of the following is not true for a profit maximizing single-price monopolist in the long run?

Accepted Answer

A) It will make profit or break even 
B) Price is greater than marginal revenue 
C) Marginal revenue equals marginal cost 
D) Demand is inelastic 
A) It will make profit or break even 
B) Price is greater than marginal revenue 
C) Marginal revenue equals marginal cost 
D) Demand is inelastic

Question 13

In the diagram above, the profit maximizing price level is

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 4 
A) 1 
B) 2 
C) 3 
D) 4

Question 14

The supply curve for a monopolist

Accepted Answer

A) Is upward sloping 
B) Is vertical 
C) Does not exist 
D) Is downward sloping 
A) Is upward sloping 
B) Is vertical 
C) Does not exist 
D) Is downward sloping

Question 15

A natural monopoly always has

Accepted Answer

A) A downward sloping long run average cost curve 
B) A downward sloping marginal cost curve 
C) Its profit maximization point where price = marginal cost 
D) Patent rights 
A) A downward sloping long run average cost curve 
B) A downward sloping marginal cost curve 
C) Its profit maximization point where price = marginal cost 
D) Patent rights

Question 16

All of the following are true about a monopolist except:

Accepted Answer

A) Average and marginal revenues are not the same 
B) Marginal revenue is greater than price 
C) Marginal revenue decreases with increases in output 
D) Marginal revenue can be negative 
A) Average and marginal revenues are not the same 
B) Marginal revenue is greater than price 
C) Marginal revenue decreases with increases in output 
D) Marginal revenue can be negative

Question 17

In the long run equilibrium for a monopolist

Accepted Answer

A) The short-run average cost curve is at its lowest point 
B) The long-run average cost curve is at its lowest point 
C) A and b 
D) None of the above is necessarily true 
A) The short-run average cost curve is at its lowest point 
B) The long-run average cost curve is at its lowest point 
C) A and b 
D) None of the above is necessarily true

Question 18

Which of the following is not true?

Accepted Answer

A) A monopolist typically seeks to maximize profits 
B) A monopolist can set price at arbitrarily high levels 
C) A monopolist may engage in advertising 
D) Monopolists price on the elastic portion of their demand curves 
A) A monopolist typically seeks to maximize profits 
B) A monopolist can set price at arbitrarily high levels 
C) A monopolist may engage in advertising 
D) Monopolists price on the elastic portion of their demand curves

Question 19

A profit maximizing monopolist faces the following information: P = $10, MR = $5, ATC = $6, MC = $5.The firm should

Accepted Answer

A) Shut down 
B) Decrease output 
C) Increase output 
D) Stay at its current level of output 
A) Shut down 
B) Decrease output 
C) Increase output 
D) Stay at its current level of output

Question 20

In the above diagram the profit maximizing firm is

Accepted Answer

A) Making positive economic profit 
B) Making zero economic profit 
C) Making negative economic profit 
D) One cannot tell 
A) Making positive economic profit 
B) Making zero economic profit 
C) Making negative economic profit 
D) One cannot tell

If a firm could perfectly price discriminate

If the demand curve for a single price monopolist always is a downward sloping straight line, then marginal revenue

If a profit maximizing monopolist faces a linear demand curve and has zero marginal cost, it will produce at:

If the firm facing the demand curve P = 10 - Q still has zero marginal costs and is now a perfect price discriminator instead of a single price monopolist, what will profits be if fixed costs are 12?

In first-degree price discrimination

Which of the following explains why theater prices for popcorn are three or four times higher than the popcorn price in the grocery store.

Say a monopolist knew that at the current price for its product demand is inelastic. If marginal costs for this firm are zero, then in order to maximize profits this monopolists should:

For the output maximizing monopolist

When the monopolists maximizes profits the price elasticity of demand for widgets is:

A single price profit maximizing monopolist is inefficient because

Which of the following is not true for a profit maximizing single-price monopolist in the long run?

In the diagram above, the profit maximizing price level is

The supply curve for a monopolist

A natural monopoly always has

All of the following are true about a monopolist except:

In the long run equilibrium for a monopolist

Which of the following is not true?

A profit maximizing monopolist faces the following information: P = $10, MR = $5, ATC = $6, MC = $5.The firm should

In the above diagram the profit maximizing firm is

Thinking Like an Economist

Supply and Demand

Rational Consumer Choice

Individual and Market Demand

Applications of Rational Choice and Demand Theories

The Economics of Information and Choice Under Uncertainty

Explaining Tastes: The Importance of Altruism and

Cognitive Limitations and Consumer Behavior

Production

Costs

Perfect Competition

Imperfect Competition: a Game-Theoretic Approach

Labor

Capital

Externalities Property Rights and the Coase Theorem

Explaining Tastes: The Importance of Altruism and

General Equilibrium and Market Efficiency

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Exam 12: Monopoly

If a firm could perfectly price discriminate

If the demand curve for a single price monopolist always is a downward sloping straight line, then marginal revenue

If a profit maximizing monopolist faces a linear demand curve and has zero marginal cost, it will produce at:

If the firm facing the demand curve P = 10 - Q still has zero marginal costs and is now a perfect price discriminator instead of a single price monopolist, what will profits be if fixed costs are 12?

In first-degree price discrimination

Which of the following explains why theater prices for popcorn are three or four times higher than the popcorn price in the grocery store.

Say a monopolist knew that at the current price for its product demand is inelastic. If marginal costs for this firm are zero, then in order to maximize profits this monopolists should:

For the output maximizing monopolist

When the monopolists maximizes profits the price elasticity of demand for widgets is:

A single price profit maximizing monopolist is inefficient because

Which of the following is not true for a profit maximizing single-price monopolist in the long run?

In the diagram above, the profit maximizing price level is

The supply curve for a monopolist

A natural monopoly always has

All of the following are true about a monopolist except:

In the long run equilibrium for a monopolist

Which of the following is not true?

A profit maximizing monopolist faces the following information: P = $10, MR = $5, ATC = $6, MC = $5.The firm should

In the above diagram the profit maximizing firm is

Thinking Like an Economist

Supply and Demand

Rational Consumer Choice

Individual and Market Demand

Applications of Rational Choice and Demand Theories

The Economics of Information and Choice Under Uncertainty

Explaining Tastes: The Importance of Altruism and

Cognitive Limitations and Consumer Behavior

Production

Costs

Perfect Competition

Imperfect Competition: a Game-Theoretic Approach

Labor

Capital

Externalities Property Rights and the Coase Theorem

Explaining Tastes: The Importance of Altruism and

General Equilibrium and Market Efficiency

Filters