Question 1

To increase the price,a monopolist will increase the quantity produced.

Accepted Answer

A) True 
 B)False  False

Question 2

Which of the following is true in both perfect competition and monopoly?

Accepted Answer

A)  Firms produce a differentiated product. 
B)  Firms cannot earn economic profit in the long run. 
C)  Individual firms have no ability to control the price of their output but must accept the market price. 
D)  Firms go out of business in the long run if total revenue cannot cover total cost. 
E)  Firms can earn economic profit in the long run. 
A)  Firms produce a differentiated product. 
B)  Firms cannot earn economic profit in the long run. 
C)  Individual firms have no ability to control the price of their output but must accept the market price. 
D)  Firms go out of business in the long run if total revenue cannot cover total cost. 
E)  Firms can earn economic profit in the long run. D

Question 3

A monopolist maximizes profit at the quantity where the slope of its total revenue curve equals the slope of its total cost curve.

Accepted Answer

A) True 
 B)False  True

Question 4

Which of the following falsely describes a nondiscriminating monopolist at profit maximization?

Accepted Answer

A)  Price is greater than marginal cost. 
B)  Economic profit is always positive. 
C)  Marginal revenue is equal to marginal cost. 
D)  Marginal revenue will typically be less than price. 
E)  Average total cost will not be at a minimum. 
A)  Price is greater than marginal cost. 
B)  Economic profit is always positive. 
C)  Marginal revenue is equal to marginal cost. 
D)  Marginal revenue will typically be less than price. 
E)  Average total cost will not be at a minimum.

Question 5

Exhibit 9-14
  
-The firm in Exhibit 9-14 will have an economic

Accepted Answer

A)  profit of $85 
B)  loss of $48 
C)  profit of $132 
D)  loss of $96 
E)  loss of $34 
A)  profit of $85 
B)  loss of $48 
C)  profit of $132 
D)  loss of $96 
E)  loss of $34

Question 6

U.S.patent laws establish property rights for inventors of new products

Accepted Answer

A)  forever 
B)  until a superior invention comes along 
C)  for 3 years 
D)  for 10 years 
E)  for 20 years 
A)  forever 
B)  until a superior invention comes along 
C)  for 3 years 
D)  for 10 years 
E)  for 20 years

Question 7

Total deadweight loss in society is reduced through rent seeking by monopolists.

Accepted Answer

A) True 
 B)False

Question 8

Price discrimination occurs when a monopolist charges

Accepted Answer

A)  both c and d 
B)  different prices to different buyers for different products 
C)  different prices to different groups of buyers,based on differences in the cost of providing the commodity to the buyer 
D)  different prices to different groups of buyers for reasons unrelated to the cost of providing the commodity to the buyer 
E)  all buyers the same price for the same product 
A)  both c and d 
B)  different prices to different buyers for different products 
C)  different prices to different groups of buyers,based on differences in the cost of providing the commodity to the buyer 
D)  different prices to different groups of buyers for reasons unrelated to the cost of providing the commodity to the buyer 
E)  all buyers the same price for the same product

Question 9

For which of the following products would price discrimination be most difficult?

Accepted Answer

A)  photograph developing 
B)  tooth extractions 
C)  airline tickets 
D)  beer 
E)  college education 
A)  photograph developing 
B)  tooth extractions 
C)  airline tickets 
D)  beer 
E)  college education

Question 10

Exhibit 9-16
  
-Exhibit 9-16 depicts the cost and demand conditions facing a profit-maximizing monopolist that does not price discriminate.Which of the following statements is true?

Accepted Answer

A)  An output of 50 is allocatively efficient,but the monopolist will produce 100 units. 
B)  An output of 50 is allocatively efficient,but the monopolist will produce 75 units. 
C)  An output of 75 is allocatively efficient,but the monopolist will produce 100 units. 
D)  An output of 100 is allocatively efficient,but the monopolist will produce 50 units. 
E)  An output of 100 is allocatively efficient,but the monopolist will produce 75 units. 
A)  An output of 50 is allocatively efficient,but the monopolist will produce 100 units. 
B)  An output of 50 is allocatively efficient,but the monopolist will produce 75 units. 
C)  An output of 75 is allocatively efficient,but the monopolist will produce 100 units. 
D)  An output of 100 is allocatively efficient,but the monopolist will produce 50 units. 
E)  An output of 100 is allocatively efficient,but the monopolist will produce 75 units.

Question 11

Exhibit 9-15
  
-Why might the true deadweight loss from a nondiscriminating monopolist be less than the loss indicated in Exhibit 9-15?

Accepted Answer

A)  The monopolist might have diseconomies of scale 
B)  The monopolist might charge lower prices to discourage competition 
C)  The monopolist might engage in rent seeking 
D)  The monopolist might advertise more to maintain its position 
E)  The monopolist may face diminishing marginal returns 
A)  The monopolist might have diseconomies of scale 
B)  The monopolist might charge lower prices to discourage competition 
C)  The monopolist might engage in rent seeking 
D)  The monopolist might advertise more to maintain its position 
E)  The monopolist may face diminishing marginal returns

Question 12

Exhibit 9-5
  
-The nondiscriminating monopolist at its profit-maximizing quantity in Exhibit 9-5 is making a profit of

Accepted Answer

A)  $6,200 
B)  $13,320 
C)  $11,000 
D)  $15,200 
E)  $0 
A)  $6,200 
B)  $13,320 
C)  $11,000 
D)  $15,200 
E)  $0

Question 13

Why would we be likely to observe dentists engaging in price discrimination?

Accepted Answer

A)  Dental care is expensive. 
B)  All dentists are basically alike. 
C)  It is very important to exercise care in choosing a dentist. 
D)  It is nearly impossible to resell the services of a dentist. 
E)  The demand for dentists is very inelastic. 
A)  Dental care is expensive. 
B)  All dentists are basically alike. 
C)  It is very important to exercise care in choosing a dentist. 
D)  It is nearly impossible to resell the services of a dentist. 
E)  The demand for dentists is very inelastic.

Question 14

Which of the following is not an example of price discrimination?

Accepted Answer

A)  IBM charges business users of its laser printer more than home users 
B)  Intel offered faster and slower versions of a computer chip 
C)  An amusement park charges the same admission fee to local residents and out-of-towners 
D)  Adobe stripped some features from Photoshop to offer a cheaper version 
E)  Holders of Nevada driver's licenses pay less to ride the Las Vegas monorail 
A)  IBM charges business users of its laser printer more than home users 
B)  Intel offered faster and slower versions of a computer chip 
C)  An amusement park charges the same admission fee to local residents and out-of-towners 
D)  Adobe stripped some features from Photoshop to offer a cheaper version 
E)  Holders of Nevada driver's licenses pay less to ride the Las Vegas monorail

Question 15

A monopolist is

Accepted Answer

A)  one of a large number of small firms that produce a homogeneous good 
B)  one of a small number of large firms that produce a differentiated good 
C)  a single seller of a product with many close substitutes 
D)  one of a small number of large firms that produce a homogeneous good 
E)  a single seller of a product with no close substitutes 
A)  one of a large number of small firms that produce a homogeneous good 
B)  one of a small number of large firms that produce a differentiated good 
C)  a single seller of a product with many close substitutes 
D)  one of a small number of large firms that produce a homogeneous good 
E)  a single seller of a product with no close substitutes

Question 16

Exhibit 9-17
  
-Which area in Exhibit 9-17 represents monopoly profit without price discrimination?

Accepted Answer

A)  area a 
B)  area b 
C)  area c 
D)  area b + e 
E)  area b + e + c + f 
A)  area a 
B)  area b 
C)  area c 
D)  area b + e 
E)  area b + e + c + f

Question 17

Exhibit 9-2
  
-In Exhibit 9-2,the average revenue of the fourth unit is

Accepted Answer

A)  $12 
B)  $3 
C)  $4 
D)  -$4 
E)  $0 
A)  $12 
B)  $3 
C)  $4 
D)  -$4 
E)  $0

Question 18

Exhibit 9-18
  
-In Exhibit 9-18,at the profit maximizing level of output,the price is:

Accepted Answer

A)  $5 
B)  $27 
C)  $29 
D)  $31 
E)  $34 
A)  $5 
B)  $27 
C)  $29 
D)  $31 
E)  $34

Question 19

Monopolists always earn positive short-run economic profit.

Accepted Answer

A) True 
 B)False

Question 20

Firms can earn economic profits even in the long run if

Accepted Answer

A)  they charge the highest price possible 
B)  there is a cost-reducing technological change 
C)  there are significant barriers to entry 
D)  marginal revenue equals marginal cost 
E)  price is less than average variable cost at all rates of output 
A)  they charge the highest price possible 
B)  there is a cost-reducing technological change 
C)  there are significant barriers to entry 
D)  marginal revenue equals marginal cost 
E)  price is less than average variable cost at all rates of output

Exam 9: Amonopoly

To increase the price,a monopolist will increase the quantity produced.

Which of the following is true in both perfect competition and monopoly?

A monopolist maximizes profit at the quantity where the slope of its total revenue curve equals the slope of its total cost curve.

Which of the following falsely describes a nondiscriminating monopolist at profit maximization?

Exhibit 9-14 -The firm in Exhibit 9-14 will have an economic

U.S.patent laws establish property rights for inventors of new products

Total deadweight loss in society is reduced through rent seeking by monopolists.

Price discrimination occurs when a monopolist charges

For which of the following products would price discrimination be most difficult?

Exhibit 9-16 -Exhibit 9-16 depicts the cost and demand conditions facing a profit-maximizing monopolist that does not price discriminate.Which of the following statements is true?

Exhibit 9-15 -Why might the true deadweight loss from a nondiscriminating monopolist be less than the loss indicated in Exhibit 9-15?

Exhibit 9-5 -The nondiscriminating monopolist at its profit-maximizing quantity in Exhibit 9-5 is making a profit of

Why would we be likely to observe dentists engaging in price discrimination?

Which of the following is not an example of price discrimination?

A monopolist is

Exhibit 9-17 -Which area in Exhibit 9-17 represents monopoly profit without price discrimination?

Exhibit 9-2 -In Exhibit 9-2,the average revenue of the fourth unit is

Exhibit 9-18 -In Exhibit 9-18,at the profit maximizing level of output,the price is:

Monopolists always earn positive short-run economic profit.

Firms can earn economic profits even in the long run if

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