Question 1

Barriers to entry do not exist for a monopoly.

Accepted Answer

A) True 
 B)False

Question 2

The deadweight loss of a monopoly is the amount of benefits transferred from consumers to the monopoly.

Accepted Answer

A) True 
 B)False

Question 3

What are some reasons for a monopoly to see both its market power and profits reduce?

Accepted Answer

A monopoly might see its profits reduced...

Question 4

Suppose a firm is able to distinguish among its customers in terms of how much they are willing to pay. Will the firm be able to price-discriminate?

Accepted Answer

If a firm is able to distinguish among i...

Question 5

Explain why decreasing or increasing output beyond the point at which marginal cost equals marginal revenue will reduce profits for a monopoly.

Accepted Answer

By virtue of the shape of the marginal r...

Question 6

Exhibit 10-10 
-Refer to Exhibit 10-10. Calculate the amount of consumer surplus transferred to the monopoly as compared with the efficient output and price.

Accepted Answer

$120
Monopoly price and output...

Question 7

Exhibit 10-2 
-Refer to Exhibit 10-2. Suppose fixed costs are $10. What are the profit-maximizing output, output price, and total profit?

Accepted Answer

4; $38; $88
MR₄ = 26; MR_...

Question 8

For a monopoly, when demand is elastic, marginal revenue is

Accepted Answer

A)   zero and total revenue is at its maximum.
B)   positive and total revenue is falling.
C)   positive and total revenue is rising.
D)   negative and total revenue is rising.
E)   negative and total revenue is falling.

Question 9

Which of the following describes one of the differences in profit-maximizing behavior between a monopoly and a competitive firm?

Accepted Answer

A)   A monopoly produces more and charges the same price as a competitive firm.
B)   A monopoly produces less and charges the same price as a competitive firm.
C)   A monopoly produces more and charges a higher price than a competitive firm.
D)   A monopoly produces less and charges a lower price than a competitive firm.
E)   A monopoly produces less and charges a higher price than a competitive firm.

Question 10

For a given price and average total cost, a monopoly's economic profits are computed differently than the economic profits of competitors.

Accepted Answer

A) True 
 B)False

Question 11

Exhibit 10-1 
-Refer to Exhibit 10-1. Profits are maximized when the level of output is

Accepted Answer

A)   10 units.
B)   50 units.
C)   90 units.
D)   more than 90 units.
E)   0 units.

Question 12

Given the same unit costs, a monopoly will

Accepted Answer

A)   charge a lower price than a competitive firm.
B)   produce the same output as a competitive firm.
C)   produce less output than a competitive firm.
D)   produce more output than a competitive firm.
E)   charge the same price as a competitive firm.

Question 13

The purpose of patents and copyrights is to

Accepted Answer

A)   give government a role in the economy.
B)   create monopolies.
C)   grant advantages to a privileged few.
D)   promote innovation.
E)   destroy competition.

Question 14

Monopolies transfer some of the potential consumer surplus from buyers to sellers.

Accepted Answer

A) True 
 B)False

Question 15

Exhibit 10-6 
-Refer to Exhibit 10-6. To maximize profits, the firm should

Accepted Answer

A)   produce 45 units and charge a price of $23.
B)   produce 45 units and charge a price of $19.
C)   produce 30 units and charge a price of $23.
D)   produce 30 units and charge a price of $10.
E)   produce nothing.

Question 16

The table below gives the total costs for a typical firm in a competitive industry.

Accepted Answer

The answer of The table below gives the total costs...

Question 17

For a monopoly, the demand curve equals marginal revenue at each level of output.

Accepted Answer

A) True 
 B)False

Question 18

The price-cost margin is approximately equal to the

Accepted Answer

A)   marginal cost minus price.
B)   price elasticity of demand.
C)   inverse of the price elasticity of demand.
D)   ratio of price divided by marginal cost.
E)   difference between price and marginal cost.

Question 19

What do you think about the merits and demerits of the patent law that protects newly-developed products in medical research?

Accepted Answer

One key merit of a patent is that it pro...

Question 20

For a monopoly, price can remain greater than average total cost in the long run.

Accepted Answer

A) True 
 B)False

Exam 10: Monopoly

For a monopoly, price can remain greater than average total cost in the long run.

Correct AnswerverifiedShow Answer

The deadweight loss of a monopoly is the amount of benefits transferred from consumers to the monopoly.

Correct AnswerverifiedShow Answer

The price-cost margin is approximately equal to the

Correct AnswerverifiedShow Answer

Given the same unit costs, a monopoly will

Correct AnswerverifiedShow Answer

For a monopoly, the demand curve equals marginal revenue at each level of output.

Correct AnswerverifiedShow Answer

For a given price and average total cost, a monopoly's economic profits are computed differently than the economic profits of competitors.

Correct AnswerverifiedShow Answer

Monopolies transfer some of the potential consumer surplus from buyers to sellers.

Correct AnswerverifiedShow Answer

The table below gives the total costs for a typical firm in a competitive industry.

Correct AnswerverifiedShow Answer

The purpose of patents and copyrights is to

Correct AnswerverifiedShow Answer

Exhibit 10-2 -Refer to Exhibit 10-2. Suppose fixed costs are $10. What are the profit-maximizing output, output price, and total profit?

Correct Answerverified4; $38; $88MR4 = 26; MR...View AnswerShow Answer

Which of the following describes one of the differences in profit-maximizing behavior between a monopoly and a competitive firm?

Correct AnswerverifiedShow Answer

Explain why decreasing or increasing output beyond the point at which marginal cost equals marginal revenue will reduce profits for a monopoly.

Correct AnswerverifiedBy virtue of the shape of the marginal r...View AnswerShow Answer

Exhibit 10-1 -Refer to Exhibit 10-1. Profits are maximized when the level of output is

Correct AnswerverifiedShow Answer

Exhibit 10-10 -Refer to Exhibit 10-10. Calculate the amount of consumer surplus transferred to the monopoly as compared with the efficient output and price.

Correct Answerverified$120Monopoly price and output...View AnswerShow Answer

Suppose a firm is able to distinguish among its customers in terms of how much they are willing to pay. Will the firm be able to price-discriminate?

Correct AnswerverifiedIf a firm is able to distinguish among i...View AnswerShow Answer

What do you think about the merits and demerits of the patent law that protects newly-developed products in medical research?

Correct AnswerverifiedOne key merit of a patent is that it pro...View AnswerShow Answer

For a monopoly, when demand is elastic, marginal revenue is

Correct AnswerverifiedShow Answer

What are some reasons for a monopoly to see both its market power and profits reduce?

Correct AnswerverifiedA monopoly might see its profits reduced...View AnswerShow Answer

Barriers to entry do not exist for a monopoly.

Correct AnswerverifiedShow Answer

Exhibit 10-6 -Refer to Exhibit 10-6. To maximize profits, the firm should

Correct AnswerverifiedShow Answer

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4; $38; $88
MR₄ = 26; MR_...
View Answer

Correct Answer
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Correct Answer
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By virtue of the shape of the marginal r...
View Answer

Correct Answer
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Correct Answer
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$120
Monopoly price and output...
View Answer

Correct Answer
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If a firm is able to distinguish among i...
View Answer

Correct Answer
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One key merit of a patent is that it pro...
View Answer

Correct Answer
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Correct Answer
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A monopoly might see its profits reduced...
View Answer

Correct Answer
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Correct Answer
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