Question 1

A single price monopoly that faces the demand curve P = 10 - Q and profit maximizes by reducing price from $6 to $5 must have a marginal cost of

Accepted Answer

A) 1. 
B) 5. 
C) 6. 
D) 10. 
A) 1. 
B) 5. 
C) 6. 
D) 10. A

Question 2

According to the text, the most important of the five factors which give rise to monopoly is

Accepted Answer

A) exclusive control over important inputs. 
B) economies of scale. 
C) patents. 
D) government licenses. 
E) network economies. 
A) exclusive control over important inputs. 
B) economies of scale. 
C) patents. 
D) government licenses. 
E) network economies. B

Question 3

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. D

Question 4

Which is true of a single price monopoly firm?

Accepted Answer

A) Its supply curve is equal to its marginal cost function. 
B) It creates more welfare loss to society than a perfect price discriminating monopolist. 
C) Its shutdown point is where ATC = price. 
D) An increased profits tax will lower the quantity the firm will produce. 
A) Its supply curve is equal to its marginal cost function. 
B) It creates more welfare loss to society than a perfect price discriminating monopolist. 
C) Its shutdown point is where ATC = price. 
D) An increased profits tax will lower the quantity the firm will produce.

Question 5

The total revenue curve for a firm is given by TR = 2Q.

Accepted Answer

A) The firm is definitely a monopolist. 
B) The firm is definitely not a monopolist. 
C) The firm may be a monopolist or a perfectly competitive firm. 
D) One cannot tell from the equation what market form applies. 
A) The firm is definitely a monopolist. 
B) The firm is definitely not a monopolist. 
C) The firm may be a monopolist or a perfectly competitive firm. 
D) One cannot tell from the equation what market form applies.

Question 6

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 7

Suppose you own a firm that produces widgets and is a monopoly. The market demand is given by the equation P = 100 - 2Q, where P is the price of gadgets and Q is the quantity of gadgets sold per week. The firm's marginal costs are given by the equation MC = 16Q. When the monopolist 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 8

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 9

If the owner of the firm, shown above is a profit maximizer, the firm should ______ in the short run.

Accepted Answer

A) continue to operate at the existing output 
B) shutdown 
C) expand output to lower costs 
D) More data is needed to say definitively what the firm should do. 
A) continue to operate at the existing output 
B) shutdown 
C) expand output to lower costs 
D) More data is needed to say definitively what the firm should do.

Question 10

In the diagram below, the profit maximizing output level is

Accepted Answer

A) 0A. 
B) 0B. 
C) 0C. 
D) It is impossible to say. 
A) 0A. 
B) 0B. 
C) 0C. 
D) It is impossible to say.

Question 11

A monopolist has a marginal revenue curve given by MR = 102 - Q, and a total cost curve given by TC = Q2 + 16. The monopolist's profit maximizing price and quantity are _______, _____ respectively.

Accepted Answer

A) 85; 34 
B) 52; 50 
C) 100; 2 
D) 77; 50 
A) 85; 34 
B) 52; 50 
C) 100; 2 
D) 77; 50

Question 12

Monopoly is characterized by

Accepted Answer

A) many close substitutes. 
B) no barriers to entry. 
C) a downward sloping demand curve. 
D) a horizontal demand curve. 
A) many close substitutes. 
B) no barriers to entry. 
C) a downward sloping demand curve. 
D) a horizontal demand curve.

Question 13

I frequently buy something which then has a rebate offer attached. I must fill in all the information requested, send off the form and then wait 8 weeks for the rebate. This practice is referred to as

Accepted Answer

A) the hurdle model of price discrimination. 
B) exclusive contracting. 
C) a profit maximizing markup. 
D) network economics. 
A) the hurdle model of price discrimination. 
B) exclusive contracting. 
C) a profit maximizing markup. 
D) network economics.

Question 14

A firm facing the demand curve P = 10 - Q has zero marginal costs, fixed costs of 12, and is a single price monopolist. What quantity would it produce and what would its profit (loss) situation then be?

Accepted Answer

Quantity and Price a

Question 15

A profit maximizing monopolist sets output where

Accepted Answer

A) MC = MR. 
B) MC = P. 
C) MC = demand. 
D) it depends on the average costs in each case. 
A) MC = MR. 
B) MC = P. 
C) MC = demand. 
D) it depends on the average costs in each case.

Question 16

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.

Question 17

The demand equation for a single price monopolist is P = 120 - 3Q. The marginal revenue curve for this monopolist is

Accepted Answer

A) 120 - 1.5Q. 
B) 60 - 3Q. 
C) 60 - 6Q. 
D) 120 - 6Q. 
A) 120 - 1.5Q. 
B) 60 - 3Q. 
C) 60 - 6Q. 
D) 120 - 6Q.

Question 18

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 19

Under rate of return regulation, firms earn

Accepted Answer

A) positive economic profits. 
B) negative economic profits. 
C) zero economic profits. 
D) zero accounting profits. 
A) positive economic profits. 
B) negative economic profits. 
C) zero economic profits. 
D) zero accounting profits.

Question 20

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.

A single price monopoly that faces the demand curve P = 10 - Q and profit maximizes by reducing price from $6 to $5 must have a marginal cost of

According to the text, the most important of the five factors which give rise to monopoly is

For the output maximizing monopolist

Which is true of a single price monopoly firm?

The total revenue curve for a firm is given by TR = 2Q.

The supply curve for a monopolist

A natural monopoly always has

If the owner of the firm, shown above is a profit maximizer, the firm should ______ in the short run.

In the diagram below, the profit maximizing output level is

A monopolist has a marginal revenue curve given by MR = 102 - Q, and a total cost curve given by TC = Q2 + 16. The monopolist's profit maximizing price and quantity are ___, _ respectively.

Monopoly is characterized by

I frequently buy something which then has a rebate offer attached. I must fill in all the information requested, send off the form and then wait 8 weeks for the rebate. This practice is referred to as

A firm facing the demand curve P = 10 - Q has zero marginal costs, fixed costs of 12, and is a single price monopolist. What quantity would it produce and what would its profit (loss) situation then be?

A profit maximizing monopolist sets output where

If a firm could perfectly price discriminate,

The demand equation for a single price monopolist is P = 120 - 3Q. The marginal revenue curve for this monopolist is

A single price profit maximizing monopolist is inefficient because

Under rate of return regulation, firms earn

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

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

Departures From Standard Rational Choice Models With and Without Regret

Production

Costs

Perfect Competition

A Game-Theoretic Approach to Strategic Behavior

Oligopoly and Monopolistic Competition

Labor

Capital

Externalities, Property Rights, and the Coase Theorem

General Equilibrium and Market Efficiency

Government

Filters

Exam 11: Monopoly

A single price monopoly that faces the demand curve P = 10 - Q and profit maximizes by reducing price from $6 to $5 must have a marginal cost of

According to the text, the most important of the five factors which give rise to monopoly is

For the output maximizing monopolist

Which is true of a single price monopoly firm?

The total revenue curve for a firm is given by TR = 2Q.

The supply curve for a monopolist

A natural monopoly always has

If the owner of the firm, shown above is a profit maximizer, the firm should ______ in the short run.

In the diagram below, the profit maximizing output level is

A monopolist has a marginal revenue curve given by MR = 102 - Q, and a total cost curve given by TC = Q2 + 16. The monopolist's profit maximizing price and quantity are _______, _____ respectively.

Monopoly is characterized by

I frequently buy something which then has a rebate offer attached. I must fill in all the information requested, send off the form and then wait 8 weeks for the rebate. This practice is referred to as

A firm facing the demand curve P = 10 - Q has zero marginal costs, fixed costs of 12, and is a single price monopolist. What quantity would it produce and what would its profit (loss) situation then be?

A profit maximizing monopolist sets output where

If a firm could perfectly price discriminate,

The demand equation for a single price monopolist is P = 120 - 3Q. The marginal revenue curve for this monopolist is

A single price profit maximizing monopolist is inefficient because

Under rate of return regulation, firms earn

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

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

Departures From Standard Rational Choice Models With and Without Regret

Production

Costs

Perfect Competition

A Game-Theoretic Approach to Strategic Behavior

Oligopoly and Monopolistic Competition

Labor

Capital

Externalities, Property Rights, and the Coase Theorem

General Equilibrium and Market Efficiency

Government

Filters

A monopolist has a marginal revenue curve given by MR = 102 - Q, and a total cost curve given by TC = Q2 + 16. The monopolist's profit maximizing price and quantity are ___, _ respectively.