Question 1

-In Figure 24.1,total revenue is represented by the area

Accepted Answer

A)  ABFE.
B)  CDFE.
C)  ABGHE.

Question 2

Markets that exhibit economies of scale over the entire range of market output

Accepted Answer

A)  Are natural monopolies.
B)  Are perfectly competitive.
C)  Have downward-sloping short-run average total cost curves.

Question 3

A monopolist has market power because it

Accepted Answer

A)  Faces a downward-sloping demand curve for its own output.
B)  Can raise price as much as it wishes and not lose any customers.
C)  Is a price taker.

Question 4

A monopoly

Accepted Answer

A)  Maximizes profits at the output level where MR > MC.
B)  Produces less output than a competitive industry,ceteris paribus.
C)  Charges the same price as a competitive industry,ceteris paribus.

Question 5

Which of the following is a barrier to entry into a monopoly market?

Accepted Answer

A)  Economic profits for the monopolist.
B)  Economies of scale.
C)  A large number of firms in the industry.

Question 6

Even when a market appears to be a monopoly,it can be contestable if there are many potential entrants.

Accepted Answer

A) True 
 B)False

Question 7

Price-discriminating firms charge higher prices to those who

Accepted Answer

A)  Have greater incomes.
B)  Have lower price elasticities of demand.
C)  Have many substitutes available to them.

Question 8

According to the text,a convincing argument against concentration of market power is that

Accepted Answer

A)  Market power increases incentives for innovation and invention.
B)  Market power results in lower barriers to entry.
C)  The exercise of market power results in a higher price.

Question 9

The In the News article "XM-Sirius Merger Made Simple: One Is Always Less Than Two" discusses the proposed merger of two satellite radio companies.Antitrust officials will examine the merger in order to

Accepted Answer

A)  Prevent the abuse of market power.
B)  Prevent economies of scale.
C)  Protect the government from frivolous lawsuits.

Question 10

All of the following are limitations on the market power of a monopoly except

Accepted Answer

A)  The elasticity of demand.
B)  The ability of a firm to control demand.
C)  The ability of a company to control the quantity supplied.

Question 11

Price-discriminating firms that sell in two markets will charge higher prices in the market,ceteris paribus,

Accepted Answer

A)  With a higher positive cross-price elasticity of demand with respect to substitutes.
B)  With the more price-inelastic demand.
C)  With the more income-elastic demand.

Question 12

The marginal revenue curve is below the demand curve

Accepted Answer

A)  If a firm must lower its price to sell additional output.
B)  For a competitive firm.
C)  When a market is characterized by economies of scale.

Question 13

If the entire output of a market is produced by a single seller,the firm

Accepted Answer

A)  Is a monopoly.
B)  Faces perfectly inelastic demand.
C)  Can charge any price it wants and not lose customers.

Question 14

A monopoly

Accepted Answer

A)  Maximizes profits at the output level where P = MC.
B)  Is one of many sellers in a given market.
C)  Charges higher prices than competitive firms,ceteris paribus.

Question 15

-In Figure 24.2,the profit-maximizing level of output is

Accepted Answer

A)  Between 2 and 3 units.
B)  Between 4 and 5 units.
C)  4 units.

Question 16

The marginal revenue of a monopolist

Accepted Answer

A)  Is equal to price at all output levels.
B)  Is above a downward-sloping demand curve.
C)  Is positive up to the rate of output that maximizes total revenue.

Question 17

Sky-High Skywriters charges competitive prices for its skywriting services even though it has no competition.This is most likely because

Accepted Answer

A)  There are no economies of scale in this industry.
B)  It operates in a contestable market.
C)  It is a natural monopoly.

Question 18

-In Figure 24.2,total profit at the profit-maximizing rate of output is

Accepted Answer

A)  $16.00.
B)  $5.50.
C)  $6.00.

Question 19

-In Figure 24.2,total profit at the profit-maximizing rate of output is

Accepted Answer

A)  CDLK.
B)  CDHG.
C)  ABDLK.

Question 20

There is an inherent tendency of a monopoly industry to

Accepted Answer

A)  Lower prices and increase output.
B)  Inhibit productivity advances.
C)  Increase innovation.

Exam 24: Monopoly

The In the News article "XM-Sirius Merger Made Simple: One Is Always Less Than Two" discusses the proposed merger of two satellite radio companies.Antitrust officials will examine the merger in order to

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Price-discriminating firms charge higher prices to those who

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If the entire output of a market is produced by a single seller,the firm

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-In Figure 24.1,total revenue is represented by the area

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The marginal revenue curve is below the demand curve

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The marginal revenue of a monopolist

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-In Figure 24.2,the profit-maximizing level of output is

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According to the text,a convincing argument against concentration of market power is that

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There is an inherent tendency of a monopoly industry to

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Price-discriminating firms that sell in two markets will charge higher prices in the market,ceteris paribus,

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-In Figure 24.2,total profit at the profit-maximizing rate of output is

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Markets that exhibit economies of scale over the entire range of market output

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All of the following are limitations on the market power of a monopoly except

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A monopoly

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A monopoly

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A monopolist has market power because it

Correct AnswerverifiedShow Answer

-In Figure 24.2,total profit at the profit-maximizing rate of output is

Correct AnswerverifiedShow Answer

Even when a market appears to be a monopoly,it can be contestable if there are many potential entrants.

Correct AnswerverifiedShow Answer

Which of the following is a barrier to entry into a monopoly market?

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Sky-High Skywriters charges competitive prices for its skywriting services even though it has no competition.This is most likely because

Correct AnswerverifiedShow Answer

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