Question 1

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-In the above figure,the total cost of producing the profit maximizing level of output is shown by rectangle

Accepted Answer

A)  0P1AQ1.
B)  0P5EQ5.
C)  0P4HQ4.
D)  0P2BQ1.

Question 2

Assume that a monopoly is producing at a profit-maximizing output level.If the firm's total fixed costs decrease,the firm

Accepted Answer

A)  should lower its price.
B)  should increase its price.
C)  should continue to produce at the same level.
D)  increase its output level.

Question 3

Price discrimination is

Accepted Answer

A)  refusing to sell a given product to some group of customers.
B)  selling a given product at more than one price.
C)  selling a given product at more than one price,with the price differences reflecting differences in marginal cost in providing the product to different groups of customers.
D)  selling a given product at more than one price,with the price differences being unrelated to differences in cost.

Question 4

"Unlike a perfect competitor,a profit-maximizing monopolist produces at an output rate at which marginal revenue exceeds marginal cost." Do you agree or disagree? Why

Accepted Answer

Disagree.To maximize profits,the monopol...

Question 5

How does a monopoly maximize profits? What price does it charge?

Accepted Answer

A monopoly finds the rate of output at w...

Question 6

A monopoly misallocates resources when it

Accepted Answer

A)  restricts output so that the marginal benefit of the last unit sold exceeds the marginal social cost of producing the good.
B)  makes an above-normal profit.
C)  sells the same product to different groups of customers at different prices.
D)  exploits scale economies.

Question 7

If Japanese producers sell computer chips at a higher price in the United States than in Japan,and if there is no cost difference in producing or transporting the chips,the Japanese producers would be practicing

Accepted Answer

A)  cartel pricing.
B)  price discrimination.
C)  simple monopoly behavior.
D)  price sampling.

Question 8

-In the above figure,what is total revenue at the profit-maximizing point?

Accepted Answer

A)  $182
B)  $126
C)  $170
D)  $176

Question 9

For a monopolist,the marginal revenue gained when one more unit of output is sold is

Accepted Answer

A)  the price at which the extra unit is sold minus the loss in revenue that results from cutting the price on units sold previously.
B)  equal to the price of the product.
C)  negative if price is above the midpoint of the demand curve.
D)  the average revenue created by the increased sales.

Question 10

If a monopoly situation arises from a perfectly competitive market,the portion of producer surplus that increases in a monopoly is transferred from the perfectly competitive market's

Accepted Answer

A)  fixed cost.
B)  long-run positive economic profit.
C)  deadweight loss.
D)  consumer surplus.

Question 11

To sell more units,a monopolist must

Accepted Answer

A)  merely produce more units.
B)  advertise more.
C)  produce the profit maximizing rate of production.
D)  lower price.

Question 12

An important difference between perfect competition and monopoly is

Accepted Answer

A)  a monopoly is profitable and a perfect competitor is not.
B)  the monopoly faces a downward sloping demand curve and the perfect competitor faces a horizontal demand curve.
C)  the monopoly faces an inelastic demand curve and the perfect competitor faces an elastic demand curve.
D)  a monopoly is not regulated by the market,while a perfect competitor is regulated by the market.

Question 13

A monopolist's demand curve is

Accepted Answer

A)  perfectly elastic.
B)  perfectly inelastic.
C)  of unit elasticity throughout.
D)  the industry demand curve.

Question 14

Which of the following would most likely be classified as a natural monopoly?

Accepted Answer

A)  A city water district
B)  Microsoft
C)  Disneyland
D)  Exxon-Mobil

Question 15

The portion of consumer surplus that would have existed in a perfectly competitive market but is unobtainable by anyone in society under a monopoly is known as

Accepted Answer

A)  monopoly profits.
B)  an unattainable surplus.
C)  a deadweight loss.
D)  an external cost.

Question 16

A price discriminating monopolist will

Accepted Answer

A)  charge a lower price to those consumers who have more elastic demand.
B)  charge a higher price to those consumers who have more inelastic demand.
C)  charge more to those consumers who have more substitute goods.
D)  charge the same price to all consumers.

Question 17

What is the main difference between the demand curves for the perfect competitor and the monopolist?

Accepted Answer

The perfect competitor faces a horizonta...

Question 18

-The profit-maximizing price and quantity of the monopolist compared to the perfectly competitive industry in the above figure are,respectively

Accepted Answer

A)  A and B.
B)  A and C.
C)  A and F.
D)  C and F.

Question 19

In principle,can a monopolist hold its monopoly power in the long run? Explain.

Accepted Answer

Yes.Monopoly power exists in the long ru...

Question 20

Which of the following statements is TRUE about the relationship between a firm's demand curve under perfect competition and monopoly?

Accepted Answer

A)  Under perfect competition,the demand curve is perfectly elastic; under monopoly,the demand curve has elastic,unit-elastic and inelastic portions.
B)  Under monopoly,the demand curve is perfectly elastic; under perfect competition,the demand curve has elastic,unit-elastic and inelastic portions.
C)  The demand curves for a monopoly and perfect competition are always inelastic.
D)  We can define a demand curve under perfect competition but not under monopoly.

Exam 11: Monopoly

Which of the following would most likely be classified as a natural monopoly?

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Which of the following statements is TRUE about the relationship between a firm's demand curve under perfect competition and monopoly?

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An important difference between perfect competition and monopoly is

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A monopolist's demand curve is

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"Unlike a perfect competitor,a profit-maximizing monopolist produces at an output rate at which marginal revenue exceeds marginal cost." Do you agree or disagree? Why

Correct AnswerverifiedDisagree.To maximize profits,the monopol...View AnswerShow Answer

Assume that a monopoly is producing at a profit-maximizing output level.If the firm's total fixed costs decrease,the firm

Correct AnswerverifiedShow Answer

-The profit-maximizing price and quantity of the monopolist compared to the perfectly competitive industry in the above figure are,respectively

Correct AnswerverifiedShow Answer

For a monopolist,the marginal revenue gained when one more unit of output is sold is

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-In the above figure,what is total revenue at the profit-maximizing point?

Correct AnswerverifiedShow Answer

To sell more units,a monopolist must

Correct AnswerverifiedShow Answer

The portion of consumer surplus that would have existed in a perfectly competitive market but is unobtainable by anyone in society under a monopoly is known as

Correct AnswerverifiedShow Answer

Price discrimination is

Correct AnswerverifiedShow Answer

A price discriminating monopolist will

Correct AnswerverifiedShow Answer

What is the main difference between the demand curves for the perfect competitor and the monopolist?

Correct AnswerverifiedThe perfect competitor faces a horizonta...View AnswerShow Answer

If a monopoly situation arises from a perfectly competitive market,the portion of producer surplus that increases in a monopoly is transferred from the perfectly competitive market's

Correct AnswerverifiedShow Answer

If Japanese producers sell computer chips at a higher price in the United States than in Japan,and if there is no cost difference in producing or transporting the chips,the Japanese producers would be practicing

Correct AnswerverifiedShow Answer

A monopoly misallocates resources when it

Correct AnswerverifiedShow Answer

How does a monopoly maximize profits? What price does it charge?

Correct AnswerverifiedA monopoly finds the rate of output at w...View AnswerShow Answer

-In the above figure,the total cost of producing the profit maximizing level of output is shown by rectangle

Correct AnswerverifiedShow Answer

In principle,can a monopolist hold its monopoly power in the long run? Explain.

Correct AnswerverifiedYes.Monopoly power exists in the long ru...View AnswerShow Answer

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Disagree.To maximize profits,the monopol...
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The perfect competitor faces a horizonta...
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A monopoly finds the rate of output at w...
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Correct Answer
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Yes.Monopoly power exists in the long ru...
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