Question 1

Gilligan runs the only dry-cleaning business on a desert isle.If the cost of cleaning fluid falls,he can increase profit by

Accepted Answer

A)   raising price
B)   charging the highest price he can
C)   using less cleaning fluid
D)   lowering price
E)   charging a price equal to marginal cost

Question 2

Price-discriminating,profit-maximizing monopolists charge higher prices to buyers who have more elastic demand curves.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is true of marginal revenue for a monopolist that charges a single price?

Accepted Answer

A)   P = MR because there are no close substitutes for the monopolist's product.
B)   P > MR because the monopolist must decrease price on all units sold in order to sell an additional unit.
C)   P 
D)   AR = MR because there are no close substitutes for the monopolist's product.
E)   P = MR only at the profit-maximizing quantity.

Question 4

The demand curve a monopolist faces

Accepted Answer

A)   is more elastic than a perfectly competitive firm's demand curve
B)   is the market demand curve
C)   is as elastic as a perfectly competitive firm's demand curve
D)   is not affected by the prices of complements
E)   will not shift in response to a change in consumer tastes

Question 5

If all of a monopolist's costs are fixed costs,it will produce where demand is unit elastic.

Accepted Answer

A) True 
 B)False

Question 6

For a monopolist,there is no supply curve because

Accepted Answer

A)   the supply curve is the same as the marginal cost curve
B)   the monopolist does not maximize profit
C)   the quantity supplied is independent of marginal cost
D)   the quantity supplied is independent of demand
E)   there is no unique relationship between price and quantity supplied

Question 7

Exhibit 9-5
 
-Optimal output and price for the nondiscriminating monopolist in Exhibit 9-5 are

Accepted Answer

A)   90 and $18
B)   1,500 and $24
C)   1,700 and $22
D)   1,100 and $28
E)   1,500 and $22

Question 8

Exhibit 9-3
 
-The total cost for the firm in Exhibit 9-3,a monopolist that maximizes profit while charging all customers the same price,is

Accepted Answer

A)   $3,300
B)   $3,400
C)   $2,808
D)   $2,340
E)   $1,638

Question 9

The supply curve for a monopolist

Accepted Answer

A)   is its marginal cost curve
B)   is vertical because there are no close substitutes for its product
C)   is horizontal because there are no close substitutes for its product
D)   slopes upward
E)   does not exist

Question 10

The main reason a monopolist can earn long-run economic profit,whereas a perfectly competitive firm cannot,is that

Accepted Answer

A)   monopolists operate under economies of scale
B)   perfectly competitive firms have opportunity costs
C)   demand for the monopolist's output is inelastic
D)   demand for the monopolist's output is elastic
E)   there are no barriers to entry in perfect competition

Question 11

A firm facing a downward-sloping demand curve sells 50 units of output at $10 each.The firm's marginal revenue is

Accepted Answer

A)   $500
B)   more than $10 but less than $500
C)   $10
D)   less than $10
E)   zero

Question 12

Rent-seeking activities are socially wasteful because they use scarce resources but do not add to society's output.

Accepted Answer

A) True 
 B)False

Question 13

Exhibit 9-20
 
-In Exhibit 9-20,the deadweight loss with perfect price discrimination is:

Accepted Answer

A)   $35
B)   $8
C)   $10
D)   $12
E)   $0

Question 14

For a monopolist,

Accepted Answer

A)   marginal revenue and price are constant as quantity increases
B)   marginal revenue falls but price is constant as quantity increases
C)   marginal revenue is constant but price falls as quantity increases
D)   both marginal revenue and price fall as quantity increases,but price falls faster
E)   both marginal revenue and price fall as quantity increases,but marginal revenue falls faster

Question 15

A monopolist

Accepted Answer

A)   can charge whatever price it wants
B)   charges more than almost any consumer is willing to pay
C)   is constrained by marginal cost in setting price
D)   is constrained by demand in setting price
E)   always earns an economic profit

Question 16

A monopolist's demand curve

Accepted Answer

A)   is horizontal at the market price
B)   lies above its marginal revenue curve
C)   is the same as its marginal cost curve
D)   indicates that the firm must raise price to sell additional units
E)   lies above the marginal cost curve at all levels of output

Question 17

If a perfectly competitive industry is monopolized,consumer surplus

Accepted Answer

A)   can be expected to decrease
B)   will usually remain constant
C)   can be expected to increase
D)   drops from a high value to zero
E)   increases from zero to a high value

Question 18

Exhibit 9-17
 
-In Exhibit 9-17,which area represents the amount of consumer surplus received by consumers under perfect price discrimination?

Accepted Answer

A)   area a
B)   area b
C)   area a + b + c
D)   area b + e
E)   there is no consumer surplus

Question 19

For a monopolist that produces in the short run and does not price discriminate,price always has to be

Accepted Answer

A)   equal to marginal cost at the profit-maximizing quantity
B)   equal to marginal revenue at the profit-maximizing quantity
C)   greater than marginal cost at the profit-maximizing quantity
D)   less than marginal cost at the profit-maximizing quantity
E)   less than marginal revenue at the profit-maximizing quantity

Question 20

Exhibit 9-2
 
-In Exhibit 9-2,the marginal revenue of the fourth unit is

Accepted Answer

A)   $12
B)   $3
C)   $4
D)   -$4
E)   $0

Exam 9: Amonopoly

A monopolist

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Price-discriminating,profit-maximizing monopolists charge higher prices to buyers who have more elastic demand curves.

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A monopolist's demand curve

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Exhibit 9-3 -The total cost for the firm in Exhibit 9-3,a monopolist that maximizes profit while charging all customers the same price,is

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If all of a monopolist's costs are fixed costs,it will produce where demand is unit elastic.

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Gilligan runs the only dry-cleaning business on a desert isle.If the cost of cleaning fluid falls,he can increase profit by

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The demand curve a monopolist faces

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For a monopolist that produces in the short run and does not price discriminate,price always has to be

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Which of the following is true of marginal revenue for a monopolist that charges a single price?

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Exhibit 9-2 -In Exhibit 9-2,the marginal revenue of the fourth unit is

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The main reason a monopolist can earn long-run economic profit,whereas a perfectly competitive firm cannot,is that

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For a monopolist,

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Exhibit 9-17 -In Exhibit 9-17,which area represents the amount of consumer surplus received by consumers under perfect price discrimination?

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If a perfectly competitive industry is monopolized,consumer surplus

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Exhibit 9-5 -Optimal output and price for the nondiscriminating monopolist in Exhibit 9-5 are

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For a monopolist,there is no supply curve because

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A firm facing a downward-sloping demand curve sells 50 units of output at $10 each.The firm's marginal revenue is

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The supply curve for a monopolist

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Exhibit 9-20 -In Exhibit 9-20,the deadweight loss with perfect price discrimination is:

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Rent-seeking activities are socially wasteful because they use scarce resources but do not add to society's output.

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