Question 1

What is deadweight loss? Whose loss is it? Explain.

Accepted Answer

Deadweight loss is the portion of consum...

Question 2

-Given the data in the above table, what is the marginal revenue when the 12th unit is sold?

Accepted Answer

A)   $7.00
B)   $5.00
C)   $3.00
D)   $1.00

Question 3

The effect of a tariff

Accepted Answer

A)   is negligible since it applies to firms outside the U.S.
B)   can lead to economies of scale for firms inside the U.S.
C)   can lead to a monopoly advantage for firms inside the U.S. since they become the sole suppliers inside the U.S.
D)   will be more beneficial to large firms than to small firms.

Question 4

Suppose that a drug for treating cancer is cleared by the Food and Drug Administration and that the company is successful in obtaining a patent for its product. Which of the following is then true?

Accepted Answer

A)   The patent holder now faces barriers to entry.
B)   The method of producing the product would not be considered intellectual property.
C)   The patent holder has a monopoly.
D)   The drug would have many close substitutes.

Question 5

For a monopolist,

Accepted Answer

A)   marginal revenue is less than price.
B)   marginal revenue equals price.
C)   marginal revenue is greater than price.
D)   marginal revenue equals average revenue.

Question 6

If a monopolist produces to a point at which marginal revenue is more than marginal cost then

Accepted Answer

A)   the firm should increase output.
B)   the firm should reduce output.
C)   the firm is maximizing profits.
D)   we do not know if the firm should increase or reduce without more information.

Question 7

If a monopolist is producing the quantity at which marginal revenue exceeds 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)   reduce price and keep output unchanged if it wants to maximize profits.
D)   increase output if it wants to maximize profits.

Question 8

-Referring to the above graphic, which of the following statements is FALSE?

Accepted Answer

A)   In panel (a) , a competitive situation is shown in which equilibrium is established at the intersection of D and S at point E.
B)   In panel (a) , the equilibrium price is  and the equilibrium quantity  .
C)   The price the monopolist charges in panel (b)  at  is lower than the price that the competitive producer charges.
D)   The monopolist produces at  , and charges a price of  , while maximizing profits at the intersection of MC and MR.

Question 9

A monopoly will maximize profits at the level of output at which

Accepted Answer

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

Question 10

A monopolist will maximize its profits by charging a higher price for customers with a price elasticity of

Accepted Answer

A)   0.1.
B)   1.
C)   1.5.
D)   10.

Question 11

Suppose a monopolist sells 10,000 units of output at $22 per unit. The firm's total revenue is

Accepted Answer

A)   $2,200.
B)   $22,000.
C)   $220,000.
D)   $2,200,000.

Question 12

3. The firm should A)  increase output and decrease price. B)  decrease output and increase price. C)  not change output or price. D)  shut down." class="answers-bank-image d-inline" rel="preload" >
-In the above figure, suppose the monopolist is producing at Q3. 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 13

A monopolist faces

Accepted Answer

A)   a perfectly elastic demand curve.
B)   a perfectly inelastic demand curve.
C)   the market demand curve.
D)   a two-tiered demand curve.

Question 14

A profit-maximizing monopolist will receive zero profits when

Accepted Answer

A)   the average total cost curve lies above the demand curve for all possible rates of output.
B)   the average total cost curve is tangent to the demand curve at the profit maximizing price.
C)   marginal revenue, marginal cost, and average total cost are all equal.
D)   a second firm enters the industry.

Question 15

Barriers to entry enable many monopolists to

Accepted Answer

A)   charge as high a price as they want.
B)   make people buy more of a good than they really want.
C)   earn economic profits in the long run.
D)   manipulate the government into providing special favors for themselves.

Question 16

5. B)  Q1. C)  Q3. D)  Q2." class="answers-bank-image d-inline" rel="preload" >
-In the above figure, marginal cost and marginal revenue are equal at output

Accepted Answer

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

Question 17

-Refer to the above figure. The firm is currently producing at  . The firm should

Accepted Answer

A)   reduce production.
B)   leave production as it is.
C)   increase production.
D)   shut down.

Question 18

When a firm experiences declining long-run average total costs as it produces more output, there are

Accepted Answer

A)   increasing marginal returns to variable inputs.
B)   economies of scale.
C)   diseconomies of scale.
D)   constant returns to scale.

Question 19

-According to the above figure, the maximum profit the monopolist can receive is

Accepted Answer

A)   0.
B)   $1,500 per day.
C)   $9,000 per day.
D)   $7,500 per day.

Question 20

A monopolist finds the price-output combination that maximizes its profits by

Accepted Answer

A)   equating total revenue and total cost.
B)   equating marginal revenue and marginal cost.
C)   finding the combination for which the difference between marginal revenue and marginal cost is the greatest.
D)   equating price and marginal cost.

Exam 24: Monopoly

-According to the above figure, the maximum profit the monopolist can receive is

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A monopolist finds the price-output combination that maximizes its profits by

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Suppose that a drug for treating cancer is cleared by the Food and Drug Administration and that the company is successful in obtaining a patent for its product. Which of the following is then true?

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-In the above figure, suppose the monopolist is producing at Q3. The firm should

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-Refer to the above figure. The firm is currently producing at . The firm should

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When a firm experiences declining long-run average total costs as it produces more output, there are

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A monopoly will maximize profits at the level of output at which

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

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For a monopolist,

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Barriers to entry enable many monopolists to

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

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-Given the data in the above table, what is the marginal revenue when the 12th unit is sold?

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If a monopolist produces to a point at which marginal revenue is more than marginal cost then

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A profit-maximizing monopolist will receive zero profits when

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The effect of a tariff

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A monopolist faces

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-Referring to the above graphic, which of the following statements is FALSE?

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Suppose a monopolist sells 10,000 units of output at $22 per unit. The firm's total revenue is

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A monopolist will maximize its profits by charging a higher price for customers with a price elasticity of

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What is deadweight loss? Whose loss is it? Explain.

Correct AnswerverifiedDeadweight loss is the portion of consum...View AnswerShow Answer

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-In the above figure, suppose the monopolist is producing at Q_3. The firm should

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Deadweight loss is the portion of consum...
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