Question 1

Given the same cost data,a pure monopolist producer will charge:

Accepted Answer

A)   a lower price and produce a smaller output than a purely competitive industry.
B)   a higher price and produce a smaller output than a purely competitive industry.
C)   the same price and produce the same output as a purely competitive industry.
D)   a higher price and produce a larger output than a purely competitive industry.

Question 2

C (point C) ,it is maximizing profit because MC = AC at that point. C)  point B,where MR = MC,represents the point where the difference between total revenue and total cost is the largest. D)  point A,where MR = AC,represents the point where the difference between total revenue and total cost is the largest." class="answers-bank-image d-inline" rel="preload" > In the figure above:

Accepted Answer

A)   triangle ABC represents the welfare loss to the society because of the monopoly in the market.
B)   if the firm is producing an amount QC (point 
C)  ,it is maximizing profit because MC = AC at that point.
C)   point B,where MR = MC,represents the point where the difference between total revenue and total cost is the largest.
D)   point A,where MR = AC,represents the point where the difference between total revenue and total cost is the largest.

Question 3

Price-fixing is illegal under Section 1 of the Sherman Act.

Accepted Answer

A) True 
 B)False

Question 4

Which is an example of a privately owned monopoly?

Accepted Answer

A)   The De Beers diamond syndicate
B)   State of Utah Liquor Commission Stores
C)   U.S.Postal Service
D)   New Jersey State Lottery

Question 5

Refer to the above diagram.The quantity difference between areas A and C for the indicated price reduction measures:

Accepted Answer

A)   marginal cost.
B)   marginal revenue.
C)   monopoly price.
D)   a welfare or efficiency loss.

Question 6

The nondiscriminating pure monopolist's demand curve:

Accepted Answer

A)   is the industry demand curve.
B)   shows a direct or positive relationship between price and quantity demanded.
C)   tends to be inelastic at high prices and elastic at low prices.
D)   is identical to its marginal revenue curve.

Question 7

One feature of pure monopoly is that the demand curve:

Accepted Answer

A)   is vertical.
B)   is horizontal.
C)   slopes upward.
D)   slopes downward.

Question 8

There is substantial evidence that antitrust policy has been effective in identifying and prosecuting price-fixing by businesses.

Accepted Answer

A) True 
 B)False

Question 9

The supply curve for a monopoly is:

Accepted Answer

A)   the portion of the marginal cost curve that lies above the average variable cost curve.
B)   the portion of the marginal cost curve that lies above the average total cost curve.
C)   the portion of the marginal cost curve that lies above the average fixed cost curve.
D)   not a curve but a single point.

Question 10

Which of the above shows the correct relationship between demand and marginal revenue?

Accepted Answer

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

Question 11

When compared with the purely competitive industry with identical costs of production,a monopolist will produce:

Accepted Answer

A)   more output and charge the same price.
B)   more output and charge a higher price.
C)   less output and charge a higher price.
D)   less output and charge the same price.

Question 12

At an equilibrium level of output in a pure monopoly:

Accepted Answer

A)   P = MC and P = minimum ATC.
B)   P = MC and P > minimum ATC.
C)   P > MC and P > minimum ATC.
D)   P > MC and P = minimum ATC.

Question 13

Which is most characteristic of a pure monopoly?

Accepted Answer

A)   There is a dominant firm in a multifirm industry.
B)   The firm produces a good or a service for which there are no close substitutes.
C)   The firm has considerable control over the quantity of the output produced,but not over price.
D)   Exit from the industry is blocked but entry into the industry is relatively easy.

Question 14

The following data show the relationship between output,total costs,and total revenue for a pure monopoly  Within which of the following output ranges does the firm earn maximum economic profits?

Accepted Answer

A)   50 to 60 units
B)   60 to 70 units
C)   70 to 80 units
D)   80 to 90 unitsIn output range 60-70,profit is $300.This is higher than profits in any other range.

Question 15

The first Federal antitrust law,passed by Congress in 1890,was the:

Accepted Answer

A)   Clayton Act.
B)   Federal Trade Commission Act.
C)   Celler-Kefauver Act.
D)   Sherman Act.

Question 16

The Sherman Act declares that price discrimination,tying contracts,stock acquisitions between corporations,and interlocking directorates are illegal when their effect is to reduce competition.

Accepted Answer

A) True 
 B)False

Question 17

One general policy option to deal with a monopoly that obtains its position through anticompetitive actions,exhibits economic inefficiency,and is long lasting is to break up the firm.

Accepted Answer

A) True 
 B)False

Question 18

Any activity designed to transfer income or wealth to a particular individual or firm at society's expense is called:

Accepted Answer

A)   patent protection.
B)   X-inefficiency.
C)   price discrimination.
D)   rent-seeking.

Question 19

Natural monopolies result from:

Accepted Answer

A)   patents.
B)   copyrights.
C)   control over an essential natural resource.
D)   extensive economies of scale in production.

Question 20

Pure monopolists:

Accepted Answer

A)   maximize MR.
B)   are price takers.
C)   sell where P > MC.
D)   confront demand curves that are perfectly inelastic.

Exam 8: Pure Monopoly

The Sherman Act declares that price discrimination,tying contracts,stock acquisitions between corporations,and interlocking directorates are illegal when their effect is to reduce competition.

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Pure monopolists:

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There is substantial evidence that antitrust policy has been effective in identifying and prosecuting price-fixing by businesses.

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The first Federal antitrust law,passed by Congress in 1890,was the:

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The nondiscriminating pure monopolist's demand curve:

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Price-fixing is illegal under Section 1 of the Sherman Act.

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In the figure above:

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Natural monopolies result from:

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Which of the above shows the correct relationship between demand and marginal revenue?

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Refer to the above diagram.The quantity difference between areas A and C for the indicated price reduction measures:

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Which is an example of a privately owned monopoly?

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At an equilibrium level of output in a pure monopoly:

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The following data show the relationship between output,total costs,and total revenue for a pure monopoly Within which of the following output ranges does the firm earn maximum economic profits?

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One general policy option to deal with a monopoly that obtains its position through anticompetitive actions,exhibits economic inefficiency,and is long lasting is to break up the firm.

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One feature of pure monopoly is that the demand curve:

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Given the same cost data,a pure monopolist producer will charge:

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When compared with the purely competitive industry with identical costs of production,a monopolist will produce:

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Any activity designed to transfer income or wealth to a particular individual or firm at society's expense is called:

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The supply curve for a monopoly is:

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Which is most characteristic of a pure monopoly?

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