Question 1

What is the shape of the monopolist's marginal revenue curve?

Accepted Answer

A)   a downward-sloping line that is identical to the demand curve
B)   a downward-sloping line that lies below the demand curve
C)   a horizontal line that is identical to the demand curve
D)   a horizontal line that lies below the demand curveE) None of the above
F) A) and C)

Question 2

To maximize total surplus with a monopoly firm, a benevolent social planner would choose the level of output where

Accepted Answer

A)   MR = MC.
B)   MR intersects the demand curve.
C)   MC intersects the demand curve.
D)   MR exceeds MC by the greatest amount.E) A) and C)
F) A) and B)

Question 3

Which of the following would be most likely to have monopoly power?

Accepted Answer

A)   a national florist
B)   an online bookstore
C)   a local restaurant
D)   a local electrical cooperativeE) B) and D)
F) C) and D)

Question 4

Figure 15-14 
-Refer to Figure 15-14. A benevolent social planner would have the monopoly operate at an output level

Accepted Answer

A)   less than Q0.
B)   greater than Q0.
C)   equal to Q0.
D)   equal to zero.E) A) and D)
F) A) and C)

Question 5

Table 15-9
Consider the following demand and cost information for a monopoly.
 
-Refer to Table 15-9. What is the monopolist's average total cost of production at the profit­maximizing price?

Accepted Answer

A)   $12
B)   $14
C)   $16
D)   $17E) None of the above
F) All of the above

Question 6

After the patent runs out on a brand name drug, generic drugs enter the market. What happens next in the market?

Accepted Answer

A)   Price increases, and total surplus decreases.
B)   Price decreases, and total surplus decreases.
C)   Price decreases, and total surplus increases.
D)   Price increases, and total surplus increases.E) B) and C)
F) A) and D)

Question 7

A natural monopoly arises when

Accepted Answer

A)   there are constant returns to scale over the relevant range of output.
B)   there are economies of scale over the relevant range of output.
C)   one firm owns a key natural resource.
D)   the government gives a single firm the exclusive right to produce a particular good or service.E) A) and B)
F) A) and C)

Question 8

Figure 15-5 
-Refer to Figure 15-5. A profit-maximizing monopoly will produce an output level of

Accepted Answer

A)   Q1.
B)   Q2.
C)   Q3.
D)   Q4.E) B) and C)
F) A) and C)

Question 9

Comparing firms in perfectly competitive markets to monopoly firms, which can earn economic profits in the long run?

Accepted Answer

The answer of Comparing firms in perfectly competitive markets to...

Question 10

When a certain monopoly sets its price at $8 it sells 64 units. When the monopoly sets its price at $10 it sells 60 units. The marginal revenue for the firm over this range is

Accepted Answer

A)   $11.
B)   $22.
C)   $33.
D)   $44.E) B) and D)
F) B) and C)

Question 11

Suppose when a monopolist produces 50 units its average revenue is $8 per unit, its marginal revenue is $4 per unit, its marginal cost is $4 per unit, and its average total cost is $3 per unit. What can we conclude about this monopolist?

Accepted Answer

A)   The monopolist is currently maximizing profits, and its total profits are $200.
B)   The monopolist is currently maximizing profits, and its total profits are $250.
C)   The monopolist is not currently maximizing its profits; it should produce more units and charge a lower price to maximize profit.
D)   The monopolist is not currently maximizing its profits; it should produce fewer units and charger a higher price to maximize profit.E) C) and D)
F) B) and C)

Question 12

The legislation passed by Congress in 1890 to reduce the market power of large and powerful "trusts" was the

Accepted Answer

A)   Morgan Act.
B)   Sherman Act.
C)   Clayton Act.
D)   14th Amendment.E) C) and D)
F) A) and C)

Question 13

A firm cannot price discriminate if

Accepted Answer

A)   its has declining marginal revenue.
B)   it operates in a competitive market.
C)   buyers only reveal the price they are willing to pay for the product.
D)   it has a constant marginal cost.E) All of the above
F) A) and B)

Question 14

Price discrimination requires the firm to

Accepted Answer

A)   separate customers according to their willingnesses to pay.
B)   differentiate between different units of its product.
C)   engage in arbitrage.
D)   use coupons.E) A) and D)
F) A) and C)

Question 15

A monopoly firm can sell 150 units of output for $10 per unit. Alternatively, it can sell 151 units of output for $9.90 per unit. The marginal revenue of the 151st unit of output is

Accepted Answer

A)   -$5.10.
B)   -$0.10.
C)   $2.45.
D)   $5.10.E) B) and C)
F) A) and B)

Question 16

Goods that do not have close substitutes have downward-sloping demand curves.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is a characteristic of a monopoly?

Accepted Answer

A)   rising average total costs
B)   one buyer
C)   rising fixed costs
D)   a product without close substitutesE) None of the above
F) A) and D)

Question 18

Which of the following is not an example of a barrier to entry?

Accepted Answer

A)   Mighty Mitch's Mining Company owns a unique plot of land in Tanzania, under which lies the only large deposit of Tanzanite in the world.
B)   A college student starts a part-time tutoring business.
C)   A novelist obtains a copyright for her new book.
D)   A taxi cab driver in New York City obtains a license to legally provide transportation in New York City.E) All of the above
F) A) and D)

Question 19

Figure 15-15 
-Refer to Figure 15-15. To maximize total surplus, a benevolent social planner would choose which of the following outcomes?

Accepted Answer

A)   Q = 30 and P = 30
B)   Q = 30 and P = 60
C)   Q = 45 and P = 45
D)   Q = 60 and P = 30E) None of the above
F) C) and D)

Question 20

Even with market power, monopolists cannot achieve any level of profit they desire because they will sell lower quantities at higher prices.

Accepted Answer

A) True 
 B)False

Exam 14: Monopoly

A monopoly firm can sell 150 units of output for $10 per unit. Alternatively, it can sell 151 units of output for $9.90 per unit. The marginal revenue of the 151st unit of output is

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Even with market power, monopolists cannot achieve any level of profit they desire because they will sell lower quantities at higher prices.

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Price discrimination requires the firm to

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Table 15-9 Consider the following demand and cost information for a monopoly. -Refer to Table 15-9. What is the monopolist's average total cost of production at the profit­maximizing price?

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What is the shape of the monopolist's marginal revenue curve?

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Figure 15-5 -Refer to Figure 15-5. A profit-maximizing monopoly will produce an output level of

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Which of the following is a characteristic of a monopoly?

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Which of the following would be most likely to have monopoly power?

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Figure 15-14 -Refer to Figure 15-14. A benevolent social planner would have the monopoly operate at an output level

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Goods that do not have close substitutes have downward-sloping demand curves.

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After the patent runs out on a brand name drug, generic drugs enter the market. What happens next in the market?

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Figure 15-15 -Refer to Figure 15-15. To maximize total surplus, a benevolent social planner would choose which of the following outcomes?

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When a certain monopoly sets its price at $8 it sells 64 units. When the monopoly sets its price at $10 it sells 60 units. The marginal revenue for the firm over this range is

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The legislation passed by Congress in 1890 to reduce the market power of large and powerful "trusts" was the

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Which of the following is not an example of a barrier to entry?

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Suppose when a monopolist produces 50 units its average revenue is $8 per unit, its marginal revenue is $4 per unit, its marginal cost is $4 per unit, and its average total cost is $3 per unit. What can we conclude about this monopolist?

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A firm cannot price discriminate if

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A natural monopoly arises when

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Comparing firms in perfectly competitive markets to monopoly firms, which can earn economic profits in the long run?

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To maximize total surplus with a monopoly firm, a benevolent social planner would choose the level of output where

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Table 15-9 Consider the following demand and cost information for a monopoly. -Refer to Table 15-9. What is the monopolist's average total cost of production at the profitmaximizing price?

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