Question 1

In the real world,a monopolist's costs will often be

Accepted Answer

A) lower than for a firm in a competitive industry. 
B) equal to the costs of a firm in a competitive industry. 
C) higher than for a firm in a competitive industry. 
D) almost zero. 
A) lower than for a firm in a competitive industry. 
B) equal to the costs of a firm in a competitive industry. 
C) higher than for a firm in a competitive industry. 
D) almost zero. C

Question 2

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. A

Question 3

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. B

Question 4

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 5

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 6

Perfect (first degree)price discrimination

Accepted Answer

A) is a common occurrence in situations with many buyers. 
B) occurs fairly often in situations with only a few buyers. 
C) is only observed in competitive markets. 
D) rarely occurs because firms do not have sufficient power to differentiate among specific buyers. 
A) is a common occurrence in situations with many buyers. 
B) occurs fairly often in situations with only a few buyers. 
C) is only observed in competitive markets. 
D) rarely occurs because firms do not have sufficient power to differentiate among specific buyers.

Question 7

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 opportunities 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 opportunities 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 8

Relative to single price policy 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 9

All monopolies exist because of

Accepted Answer

A) firms' desire to maximize profits. 
B) failure of antitrust laws. 
C) barriers to entry. 
D) natural selection. 
A) firms' desire to maximize profits. 
B) failure of antitrust laws. 
C) barriers to entry. 
D) natural selection.

Question 10

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 11

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.

Question 12

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

Accepted Answer

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

Question 13

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 14

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 15

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 16

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 17

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

Question 18

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.

In the real world,a monopolist's costs will often be

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

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

A profit maximizing monopoly will produce that output for which

A monopoly's economic profits are represented by

Perfect (first degree)price discrimination

One possible benefit of a monopoly is

Relative to single price policy third degree price discrimination

All monopolies exist because of

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

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

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

The "deadweight loss" from a monopoly refers to

If a monopoly is maximizing profits

A monopoly producer of a durable good

The supply curve for a monopoly is given by

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

A natural monopoly

Preferences and Utility

Utility Maximization and Choice

Income and Substitution Effects

Demand Relationships Among Goods

Uncertainty and Information

Strategy and 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

In the real world,a monopolist's costs will often be

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

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

A profit maximizing monopoly will produce that output for which

A monopoly's economic profits are represented by

Perfect (first degree)price discrimination

One possible benefit of a monopoly is

Relative to single price policy third degree price discrimination

All monopolies exist because of

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

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

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

The "deadweight loss" from a monopoly refers to

If a monopoly is maximizing profits

A monopoly producer of a durable good

The supply curve for a monopoly is given by

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

A natural monopoly

Preferences and Utility

Utility Maximization and Choice

Income and Substitution Effects

Demand Relationships Among Goods

Uncertainty and Information

Strategy and 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