Question 1

A monopolist's marginal revenue curve is

Accepted Answer

A)   the same as a perfectly competitive firm's marginal revenue curve.
B)   higher than the monopolist's demand curve.
C)   below the firm's demand curve.
D)   a horizontal line at the market price.

Question 2

Which of the following is NOT necessary in order for a monopolist to practice effective price discrimination?

Accepted Answer

A)   The marginal cost of providing the same good to different groups of buyers must be different.
B)   The monopolist must be able to segregate its market into different submarkets.
C)   The buyers in various markets must face different price elasticities of demand.
D)   The monopolist must have a downward sloping demand curve.

Question 3

A monopolist has four distinct groups of customers. Group A has an elasticity of demand of 0.2, B has an elasticity of demand of 0.8, C has an elasticity of demand of 1.0, and D has an elasticity of demand of 2.0. The group paying the highest price for the product will be

Accepted Answer

A)   A.
B)   B.
C)   C.
D)   D.

Question 4

A simple way of describing the social cost of monopoly is to say that it

Accepted Answer

A)   produces too much.
B)   makes too much money.
C)   has too much political power.
D)   restricts output and charges a higher price than a perfectly competitive firm.

Question 5

If a monopolist were to produce in the inelastic segment of its demand curve,

Accepted Answer

A)   total revenue would be at a maximum.
B)   total revenue would be at a minimum.
C)   the firm would maximize profits.
D)   a further drop in the price will change quantity demanded less than proportionately.

Question 6

A monopolist would not be able to make a positive profit at any price output combination when

Accepted Answer

A)   marginal cost is less than average total cost for one more unit of output.
B)   the average variable cost curve is everywhere above the marginal revenue curve.
C)   the minimum point of the average total cost curve lies to the right of the minimum of the average variable cost curve.
D)   the average total cost curve is everywhere above the demand curve.

Question 7

A firm that faces a downward sloping demand curve is

Accepted Answer

A)   a price taker.
B)   a price provider.
C)   a price searcher.
D)   a price creator.

Question 8

If a monopolist is producing the quantity at which marginal revenue equals marginal cost, it should

Accepted Answer

A)   continue to produce this amount if it wants to maximize profits.
B)   reduce output if it wants to maximize profits.
C)   increase price and keep output unchanged if it wants to maximize profits.
D)   increase output if it wants to maximize profits.

Question 9

A firm that faces a downward sloping demand curve is known as a

Accepted Answer

A)   price taker.
B)   utility maximizer.
C)   price searcher.
D)   perfect competitor.

Question 10

All of the following are considered a barrier to entry into a market EXCEPT

Accepted Answer

A)   ownership of resources without close substitutes.
B)   when firms can only earn a normal rate of return in a market.
C)   economies of scale.
D)   governmental restrictions on a firm's ability enter a market.

Question 11

-Use the above figure. The profit-maximizing output and price is

Accepted Answer

A)   600 and $16, respectively.
B)   600 and $10, respectively.
C)   600 and $8, respectively.
D)   800 and $10, respectively.

Question 12

"A monopolist refers to any firm that is large in size." Do you agree or disagree? Why?

Accepted Answer

Disagree. A monopolist does no...

Question 13

Which of the following are barriers to entry?

Accepted Answer

A)   Economies of scale
B)   Patents and copyrights
C)   Control of resources
D)   All of the above

Question 14

For a perfectly competitive market in which firms face an identical constant marginal costs, the amount of consumer surplus increases if

Accepted Answer

A)   market demand decreases.
B)   market demand increases.
C)   marginal cost increases.
D)   none of the above: insufficient information to answer.

Question 15

Suppose a monopolist's costs and revenues are as follows: ATC = $50.00; MC = $45.00; MR = $40.00; P = $55.00. The firm should

Accepted Answer

A)   increase output and decrease price.
B)   decrease output and increase price.
C)   not change output or price.
D)   shut down.

Question 16

A monopolist produces in the elastic segment of its demand curve because when it lowers the price,

Accepted Answer

A)   the percentage change increase in quantity demanded is greater than the percentage change decrease in price and total revenue increases.
B)   the percentage change increase in quantity demanded is less than the percentage change decrease in price and total revenue increases.
C)   the percentage change increase in quantity demanded is greater than the percentage change decrease in price and total revenue decreases.
D)   the percentage change decrease in quantity demanded is less than the percentage change decrease in price and total revenue increases.

Question 17

A tax that is imposed on an imported good is called a

Accepted Answer

A)   tariff.
B)   quota.
C)   government license.
D)   patent.

Question 18

If a monopolist can sell 3 units at price of $150 per unit and 4 units at a price of $140 per unit, its marginal revenue at an output of 4 is

Accepted Answer

A)   $-10.00.
B)   $10.00.
C)   $560.00.
D)   $110.00.

Question 19

How does a monopoly maximize profits? What price does it charge?

Accepted Answer

A monopoly finds the rate of output at w...

Question 20

The monopolist's marginal revenue is less than price since

Accepted Answer

A)   additional units can only be sold if the price is lowered on all units sold.
B)   the demand function is horizontal.
C)   average revenue is also less than price.
D)   average total cost is declining.

Exam 24: Monopoly

How does a monopoly maximize profits? What price does it charge?

Correct AnswerverifiedA monopoly finds the rate of output at w...View AnswerShow Answer

If a monopolist were to produce in the inelastic segment of its demand curve,

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A monopolist produces in the elastic segment of its demand curve because when it lowers the price,

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Which of the following is NOT necessary in order for a monopolist to practice effective price discrimination?

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If a monopolist is producing the quantity at which marginal revenue equals marginal cost, it should

Correct AnswerverifiedShow Answer

A simple way of describing the social cost of monopoly is to say that it

Correct AnswerverifiedShow Answer

For a perfectly competitive market in which firms face an identical constant marginal costs, the amount of consumer surplus increases if

Correct AnswerverifiedShow Answer

A monopolist would not be able to make a positive profit at any price output combination when

Correct AnswerverifiedShow Answer

Which of the following are barriers to entry?

Correct AnswerverifiedShow Answer

A tax that is imposed on an imported good is called a

Correct AnswerverifiedShow Answer

A firm that faces a downward sloping demand curve is known as a

Correct AnswerverifiedShow Answer

All of the following are considered a barrier to entry into a market EXCEPT

Correct AnswerverifiedShow Answer

If a monopolist can sell 3 units at price of $150 per unit and 4 units at a price of $140 per unit, its marginal revenue at an output of 4 is

Correct AnswerverifiedShow Answer

Suppose a monopolist's costs and revenues are as follows: ATC = $50.00; MC = $45.00; MR = $40.00; P = $55.00. The firm should

Correct AnswerverifiedShow Answer

A firm that faces a downward sloping demand curve is

Correct AnswerverifiedShow Answer

"A monopolist refers to any firm that is large in size." Do you agree or disagree? Why?

Correct AnswerverifiedDisagree. A monopolist does no...View AnswerShow Answer

A monopolist has four distinct groups of customers. Group A has an elasticity of demand of 0.2, B has an elasticity of demand of 0.8, C has an elasticity of demand of 1.0, and D has an elasticity of demand of 2.0. The group paying the highest price for the product will be

Correct AnswerverifiedShow Answer

The monopolist's marginal revenue is less than price since

Correct AnswerverifiedShow Answer

-Use the above figure. The profit-maximizing output and price is

Correct AnswerverifiedShow Answer

A monopolist's marginal revenue curve is

Correct AnswerverifiedShow Answer

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A monopoly finds the rate of output at w...
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Disagree. A monopolist does no...
View Answer

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