Question 1

The shaded area in Figure 24.1 represents

Accepted Answer

A)   Total revenue.
B)   Total cost.
C)   Total profit.
D)   Total loss.

Question 2

If tourists are charged a much higher price than the natives of a country for exactly the same item, what kind of pricing is involved?

Accepted Answer

A)   Monopoly pricing.
B)   Price discrimination.
C)   Competitive pricing.
D)   MC = MR pricing.

Question 3

In Figure 24.1, total revenue is represented by the area

Accepted Answer

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

Question 4

The World View article titled "Foxy Soviets Pelt the West: Sable Monopoly Traps Hard Currency, Coats Capitalists" provides evidence that the Soviets experienced

Accepted Answer

A)   Market power.
B)   Economies of scale.
C)   Barriers to entry.
D)   Price discrimination.

Question 5

If a firm can change market prices by altering its output, then it

Accepted Answer

A)   Has market power.
B)   Faces a flat demand curve.
C)   Is a price taker.
D)   Engages in marginal cost pricing.

Question 6

When markets are contestable, a monopoly firm must behave as if it had competitors, even though the market structure is monopolistic.

Accepted Answer

A) True 
 B)False

Question 7

Price discrimination allows a producer to

Accepted Answer

A)   Reap the highest possible average price for the quantity supplied.
B)   Increase the elasticity of consumer demand.
C)   Minimize marginal costs.
D)   Decrease total costs.

Question 8

For a monopolist, profit is maximized at the level of output where MR = MC.

Accepted Answer

A) True 
 B)False

Question 9

A monopolist that does not practice price discrimination should never produce in the

Accepted Answer

A)   Elastic portion of its demand curve because it can increase total revenue and reduce total costs by lowering the price.
B)   Inelastic portion of its demand curve because it can increase total revenue and reduce total costs by increasing the price.
C)   Inelastic portion of its demand curve because it can increase total revenue by more than it increases total cost by reducing the price.
D)   Segment of its demand curve where the price elasticity of demand is greater than 1.

Question 10

Monopolists have an advantage over competitive markets in receiving the full benefit of research and development efforts.

Accepted Answer

A) True 
 B)False

Question 11

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.
D)   Is negative up to the rate of output that maximizes total revenue.

Question 12

In Table 24.1, according to the profit maximization rule, at the profit-maximizing level of output marginal, cost is

Accepted Answer

A)   $200.
B)   $250.
C)   $300.
D)   $350.

Question 13

Which of the following prohibits exclusive dealing?

Accepted Answer

A)   The Sherman Act.
B)   The Clayton Act.
C)   The Federal Trade Commission Act.
D)   Case decisions, such as those for AT&T and IBM.

Question 14

Which of the following prohibits price discrimination, certain types of mergers, and interlocking boards of directors among competing companies?

Accepted Answer

A)   The Sherman Act.
B)   The Clayton Act.
C)   The Federal Trade Commission Act.
D)   The Full Employment and Balanced Growth Act.

Question 15

The essence of market power is the ability to alter the price of a product.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is an accurate argument in support of market power?

Accepted Answer

A)   It restricts output and raises prices, contributing to more efficient use of resources.
B)   It contributes to efficient production when there are diseconomies of scale.
C)   It provides the economic profit necessary for survival and efficient production in a market.
D)   It provides greater ability to fund research and development.

Question 17

A multi-plant monopolist produces more than if each of its plants were a separate firm in a competitive market.

Accepted Answer

A) True 
 B)False

Question 18

Economies of scale involve a reduction in minimum average costs as a result of an increase in the size of plants and equipment.

Accepted Answer

A) True 
 B)False

Question 19

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.
D)   Use minimum average cost pricing.

Question 20

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.
D)   Between 5 and 6 units.

Exam 10: Self-Adjustment or Instability

A monopolist that does not practice price discrimination should never produce in the

Correct AnswerverifiedShow Answer

The essence of market power is the ability to alter the price of a product.

Correct AnswerverifiedShow Answer

Which of the following prohibits exclusive dealing?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The World View article titled "Foxy Soviets Pelt the West: Sable Monopoly Traps Hard Currency, Coats Capitalists" provides evidence that the Soviets experienced

Correct AnswerverifiedShow Answer

If a firm can change market prices by altering its output, then it

Correct AnswerverifiedShow Answer

Economies of scale involve a reduction in minimum average costs as a result of an increase in the size of plants and equipment.

Correct AnswerverifiedShow Answer

There is an inherent tendency of a monopoly industry to

Correct AnswerverifiedShow Answer

In Figure 24.1, total revenue is represented by the area

Correct AnswerverifiedShow Answer

The shaded area in Figure 24.1 represents

Correct AnswerverifiedShow Answer

A multi-plant monopolist produces more than if each of its plants were a separate firm in a competitive market.

Correct AnswerverifiedShow Answer

Which of the following is an accurate argument in support of market power?

Correct AnswerverifiedShow Answer

If tourists are charged a much higher price than the natives of a country for exactly the same item, what kind of pricing is involved?

Correct AnswerverifiedShow Answer

The marginal revenue of a monopolist

Correct AnswerverifiedShow Answer

Monopolists have an advantage over competitive markets in receiving the full benefit of research and development efforts.

Correct AnswerverifiedShow Answer

In Table 24.1, according to the profit maximization rule, at the profit-maximizing level of output marginal, cost is

Correct AnswerverifiedShow Answer

Price discrimination allows a producer to

Correct AnswerverifiedShow Answer

When markets are contestable, a monopoly firm must behave as if it had competitors, even though the market structure is monopolistic.

Correct AnswerverifiedShow Answer

Which of the following prohibits price discrimination, certain types of mergers, and interlocking boards of directors among competing companies?

Correct AnswerverifiedShow Answer

For a monopolist, profit is maximized at the level of output where MR = MC.

Correct AnswerverifiedShow Answer

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