Question 1

If a monopolist wants to increase the amount it sells,it

Accepted Answer

A) will keep the price the same. 
B) must lower the price on all units. 
C) must accept lower profits. 
D) must lower the cost of production. 
A) will keep the price the same. 
B) must lower the price on all units. 
C) must accept lower profits. 
D) must lower the cost of production. B

Question 2

The social cost attached to monopolies is reflected by the fact that

Accepted Answer

A) monopolies produce more output than consumers desire to buy. 
B) consumers pay prices that exceed the marginal cost of production. 
C) the demand for a monopolist's product is always lower than the demand for the products of perfectly competitive firms. 
D) consumers are always willing to pay lower prices for a monopolist's product than for the products of perfectly competitive firms. 
A) monopolies produce more output than consumers desire to buy. 
B) consumers pay prices that exceed the marginal cost of production. 
C) the demand for a monopolist's product is always lower than the demand for the products of perfectly competitive firms. 
D) consumers are always willing to pay lower prices for a monopolist's product than for the products of perfectly competitive firms. B

Question 3

Which of the following is LEAST likely to be able to regularly engage in price discrimination?

Accepted Answer

A) a farmer 
B) an airline 
C) a university 
D) a producer of copyrighted computer software 
A) a farmer 
B) an airline 
C) a university 
D) a producer of copyrighted computer software A

Question 4

$$\begin{array} { c c } 
\text { Price } & \text { Quantity } \
\hline \$ 19 & 11 \
18 & 12 \
17 & 13 \
16 & 14 \
15 & 15 \
14 & 16 \
\hline
\end{array}$$
-Given the data in the above table,the marginal revenue curve

Accepted Answer

A) lies below the demand curve. 
B) lies above the demand curve. 
C) intersects the demand curve. 
D) is equal to the demand curve. 
A) lies below the demand curve. 
B) lies above the demand curve. 
C) intersects the demand curve. 
D) is equal to the demand curve.

Question 5

The owner of a patented invention

Accepted Answer

A) may or may not have a legal monopoly. 
B) is guaranteed a profit since her idea cannot be copied. 
C) will always have demand high enough and costs low enough to ensure a profit. 
D) will only earn a profit if average total cost is less than price. 
A) may or may not have a legal monopoly. 
B) is guaranteed a profit since her idea cannot be copied. 
C) will always have demand high enough and costs low enough to ensure a profit. 
D) will only earn a profit if average total cost is less than price.

Question 6

For a monopoly earning positive economic profits at the profit-maximizing output level,all of the following are true EXCEPT

Accepted Answer

A) P > ATC. 
B) P > MR. 
C) P > MC. 
D) P = MR. 
A) P > ATC. 
B) P > MR. 
C) P > MC. 
D) P = MR.

Question 7

-In the above figure,marginal cost and marginal revenue are equal at output

Accepted Answer

A) Q5. 
B) Q1. 
C) Q3. 
D) Q2. 
A) Q5. 
B) Q1. 
C) Q3. 
D) Q2.

Question 8

If the price elasticity of demand for U.S.automobiles is higher in Europe than it is in the United States,and transport costs are zero,a price-discriminating monopolist would charge

Accepted Answer

A) the same price for autos in the United States as in Europe. 
B) a lower price for autos in the United States than in Europe. 
C) a higher price for autos in the United States than in Europe. 
D) a less profitable price for autos in the United States than in Europe. 
A) the same price for autos in the United States as in Europe. 
B) a lower price for autos in the United States than in Europe. 
C) a higher price for autos in the United States than in Europe. 
D) a less profitable price for autos in the United States than in Europe.

Question 9

A pure monopolist is selling 7 units at a price of $12.If the marginal revenue of the 8th unit is $4,then the price of the 8th unit is

Accepted Answer

A) $10. 
B) $11. 
C) greater than $12. 
D) $4. 
A) $10. 
B) $11. 
C) greater than $12. 
D) $4.

Question 10

-Use the above figure.The profit this monopolist earns is closest to

Accepted Answer

A) $3,000. 
B) $4,800. 
C) $1,600. 
D) $1,000. 
A) $3,000. 
B) $4,800. 
C) $1,600. 
D) $1,000.

Question 11

Suppose that a perfect-maximizing monopolist operates with a horizontal marginal cost curve and no fixed costs.Which of the following would NOT be represented as part of the area between its demand curve and marginal cost curve?

Accepted Answer

A) total costs 
B) economic profits 
C) consumer surplus 
D) deadweight loss 
A) total costs 
B) economic profits 
C) consumer surplus 
D) deadweight loss

Question 12

Which of the following is NOT a necessary condition for a firm to price discriminate?

Accepted Answer

A) The firm must be able to separate markets. 
B) Buyers in different markets must have different elasticities of demand. 
C) Resale of the product must be preventable. 
D) The firm must be a price-taker. 
A) The firm must be able to separate markets. 
B) Buyers in different markets must have different elasticities of demand. 
C) Resale of the product must be preventable. 
D) The firm must be a price-taker.

Question 13

-Refer to the above figure.Profits for this firm are

Accepted Answer

A) positive and equal to $P _ { 2 }$
$P _ { 1 }$ ab. 
B) positive and equal to $\mathrm { P } _ { 3 }$
$P _ { 1 }$ ac. 
C) negative and equal to $\mathrm { P } _ { 3 }$
$P _ { 2 }$ bc. 
D) negative and equal to $\mathrm { 0P } _ { 3 }$ c
$\mathrm { Q } _ { 1 }$ . 
A) positive and equal to $P _ { 2 }$
$P _ { 1 }$ ab. 
B) positive and equal to $\mathrm { P } _ { 3 }$
$P _ { 1 }$ ac. 
C) negative and equal to $\mathrm { P } _ { 3 }$
$P _ { 2 }$ bc. 
D) negative and equal to $\mathrm { 0P } _ { 3 }$ c
$\mathrm { Q } _ { 1 }$ .

Question 14

A monopolist charges a price that is ________ and produces ________ than a perfect competitor.

Accepted Answer

A) lower; less 
B) higher; less 
C) higher; more 
D) lower; more 
A) lower; less 
B) higher; less 
C) higher; more 
D) lower; more

Question 15

If a monopolist raises its price,

Accepted Answer

A) it raises the barriers to entry. 
B) the quantity demanded increases. 
C) the quantity demanded remains the same. 
D) the quantity demanded decreases. 
A) it raises the barriers to entry. 
B) the quantity demanded increases. 
C) the quantity demanded remains the same. 
D) the quantity demanded decreases.

Question 16

If a monopolist lowers its price,

Accepted Answer

A) it lowers the barriers to entry. 
B) the quantity demanded increases. 
C) the quantity demanded remains the same. 
D) the quantity demanded decreases. 
A) it lowers the barriers to entry. 
B) the quantity demanded increases. 
C) the quantity demanded remains the same. 
D) the quantity demanded decreases.

Question 17

Economic inefficiency exists when

Accepted Answer

A) P = MR. 
B) P = MC. 
C) MR = MC. 
D) P > MC. 
A) P = MR. 
B) P = MC. 
C) MR = MC. 
D) P > MC.

Question 18

Economies of scale will lead to only one firm in the industry because

Accepted Answer

A) by increasing output a firm is able to lower the cost per unit and change lower prices driving smaller firms out of business. 
B) one firm has an average cost curve,which has shifted below the average cost curves of its competitors. 
C) there are governmental entry restrictions. 
D) of government licensing. 
A) by increasing output a firm is able to lower the cost per unit and change lower prices driving smaller firms out of business. 
B) one firm has an average cost curve,which has shifted below the average cost curves of its competitors. 
C) there are governmental entry restrictions. 
D) of government licensing.

Question 19

To induce an increase in the quantity demanded of its product,a monopolist must reduce the

Accepted Answer

A) quality of its product and thereby generate a downward shift its ATC curve. 
B) price of its product and thereby generate a rightward shift in its demand curve. 
C) price of its product and thereby generate a rightward movement along its demand curve. 
D) quality of its product and thereby generate a downward movement along its ATC curve. 
A) quality of its product and thereby generate a downward shift its ATC curve. 
B) price of its product and thereby generate a rightward shift in its demand curve. 
C) price of its product and thereby generate a rightward movement along its demand curve. 
D) quality of its product and thereby generate a downward movement along its ATC curve.

Question 20

Unlike a perfectly competitive firm,a monopolist faces a demand curve that is

Accepted Answer

A) upward sloping. 
B) horizontal. 
C) vertical. 
D) downward sloping. 
A) upward sloping. 
B) horizontal. 
C) vertical. 
D) downward sloping.

Exam 11: Monopoly

If a monopolist wants to increase the amount it sells,it

The social cost attached to monopolies is reflected by the fact that

Which of the following is LEAST likely to be able to regularly engage in price discrimination?

Price Quantity \ 19 11 18 12 17 13 16 14 15 15 14 16 -Given the data in the above table,the marginal revenue curve

The owner of a patented invention

For a monopoly earning positive economic profits at the profit-maximizing output level,all of the following are true EXCEPT

-In the above figure,marginal cost and marginal revenue are equal at output

If the price elasticity of demand for U.S.automobiles is higher in Europe than it is in the United States,and transport costs are zero,a price-discriminating monopolist would charge

A pure monopolist is selling 7 units at a price of $12.If the marginal revenue of the 8th unit is $4,then the price of the 8th unit is

-Use the above figure.The profit this monopolist earns is closest to

Suppose that a perfect-maximizing monopolist operates with a horizontal marginal cost curve and no fixed costs.Which of the following would NOT be represented as part of the area between its demand curve and marginal cost curve?

Which of the following is NOT a necessary condition for a firm to price discriminate?

-Refer to the above figure.Profits for this firm are

A monopolist charges a price that is ________ and produces ________ than a perfect competitor.

If a monopolist raises its price,

If a monopolist lowers its price,

Economic inefficiency exists when

Economies of scale will lead to only one firm in the industry because

To induce an increase in the quantity demanded of its product,a monopolist must reduce the

Unlike a perfectly competitive firm,a monopolist faces a demand curve that is

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

Demand and Supply Elasticity

Consumer Choice

Rents, profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters

A monopolist charges a price that is and produces than a perfect competitor.