Question 1

If a profit maximizing monopolist faces a linear demand curve and has zero marginal cost, it will produce where demand elasticity is __________________ if it will produce at all.

Accepted Answer

A)  inelastic
B)  elastic
C)  1
D)  Information is inadequate to answer the question.

Question 2

In long-run equilibrium for a single-price monopolist,

Accepted Answer

A)  the plant size is always the one at the bottom of the long-run ATC curve.
B)  output is at the level where short-run and long-run marginal costs are the same.
C)  marginal cost equals ATC.
D)  marginal revenue equals price.

Question 3

Say a monopolist sells in two separate markets, with demand PA = 100 - 2Q and PB = 50 - Q respectively. Marginal costs in both markets are constant and equal to 8. The monopolist would charge a price of _______ in market B in order to maximize profits.

Accepted Answer

A)  29
B)  21
C)  8
D)  0

Question 4

If the monopolist facing the demand curve P = 10 - Q is a perfectly discriminating monopolist and marginal cost is constant at $4, how much will the firm sell if it profit maximizes?

Accepted Answer

A)  6
B)  5
C)  4
D)  10

Question 5

Under rate of return regulation,

Accepted Answer

A)  P = MC.
B)  P = ATC.
C)  P = AVC.
D)  P > ATC.

Question 6

All of the following are true about a monopolist except:

Accepted Answer

A)  Average and marginal revenues are not the same.
B)  Marginal revenue is greater than price.
C)  Marginal revenue decreases with increases in output.
D)  Marginal revenue can be negative.

Question 7

Which statement is true for a profit maximizing monopolist?

Accepted Answer

A)  It always faces a downward sloping demand curve.
B)  It can avoid diminishing returns to production.
C)  It will not produce where marginal cost equals marginal revenue.
D)  It can charge whatever price it wants.

Question 8

A single-price monopolist with a positive marginal cost will maximize profit by producing where

Accepted Answer

A)  demand is price elastic.
B)  demand is price inelastic.
C)  demand is unit elastic.
D)  Any of these may apply.

Question 9

If the demand curve is P = 48 - 2Q and MC = 0, calculate the lost social welfare that results from a single price monopoly profit maximizing strategy.

Accepted Answer

A monopolist will have MR = 48 - 4Q and ...

Question 10

Which of the following is false?

Accepted Answer

A)  Profit is maximized when MR = MC for both monopolies and perfect competition firms
B)  Monopolies profit maximize and perfect competitive firms output maximize
C)  Both monopolies and perfect competition firms earn zero profit in the long run
D)  At equilibrium, price is higher than marginal cost for monopolies but not for competitive firms

Question 11

A profit maximizing monopolist faces the following information: P = $4, MR = $2, MC = $1.50. The firm should

Accepted Answer

A)  shut down.
B)  decrease output.
C)  increase output.
D)  stay at its current level of output.

Question 12

Which of the following is not true?

Accepted Answer

A)  A monopolist typically seeks to maximize profits.
B)  A monopolist can set price at arbitrarily high levels.
C)  Economies of scale are the cause of natural monopolies.
D)  Monopolists price on the elastic portion of their demand curves.

Question 13

Which of the following is not a source of monopoly power?

Accepted Answer

A)  Exclusive control over inputs
B)  Economies of scale
C)  Patents
D)  Rapid low cost technological change in the industry

Question 14

If the demand curve for a single price monopolist always is a downward sloping straight line, then marginal revenue will be

Accepted Answer

A)  a straight line with a negative slope of twice the demand curve slope.
B)  a straight line with a negative slope of one-half the demand curve slope.
C)  identical to the demand curve.
D)  a horizontal line.

Question 15

The profit maximizing markup (over MC)  is given by

Accepted Answer

A)  1/elasticity.
B)  elasticity.
C)  elasticity2.
D)  elasticity + 1.

Question 16

The marginal revenue curve of a single price monopolist

Accepted Answer

A)  lies above the demand curve.
B)  lies below the demand curve.
C)  lies along the demand curve.
D)  is a horizontal line.

Question 17

In the long-run, profit maximizing monopolists

Accepted Answer

A)  price where MC and price are equal.
B)  never make positive economic profits.
C)  produce where average total costs are minimized.
D)  will produce where MC is below long run ATC.

Question 18

A single price monopolist has a demand curve: P = 500 - 50Q. It has the total cost curve: TC = 1000 + 100Q. If the firm is a profit maximizer or loss minimizer, what output and price should it plan for?

Accepted Answer

500 - 100Q...

Question 19

If the firm facing the demand curve P = 10 - Q still has zero marginal costs and is now a perfect price discriminator instead of a single price monopolist, what will profits be if fixed costs are 12?

Accepted Answer

A)  10
B)  12
C)  13
D)  38

Question 20

The demand equation for a single price monopolist is P = 50 - Q. The marginal revenue equation for this monopolist is

Accepted Answer

A)  25 - Q.
B)  50 - 2Q.
C)  50 - Q.
D)  100 - Q.

Exam 11: Monopoly

If the demand curve is P = 48 - 2Q and MC = 0, calculate the lost social welfare that results from a single price monopoly profit maximizing strategy.

Correct AnswerverifiedA monopolist will have MR = 48 - 4Q and ...View AnswerShow Answer

If a profit maximizing monopolist faces a linear demand curve and has zero marginal cost, it will produce where demand elasticity is __________________ if it will produce at all.

Correct AnswerverifiedShow Answer

Say a monopolist sells in two separate markets, with demand PA = 100 - 2Q and PB = 50 - Q respectively. Marginal costs in both markets are constant and equal to 8. The monopolist would charge a price of _______ in market B in order to maximize profits.

Correct AnswerverifiedShow Answer

Under rate of return regulation,

Correct AnswerverifiedShow Answer

The profit maximizing markup (over MC) is given by

Correct AnswerverifiedShow Answer

All of the following are true about a monopolist except:

Correct AnswerverifiedShow Answer

The marginal revenue curve of a single price monopolist

Correct AnswerverifiedShow Answer

A single-price monopolist with a positive marginal cost will maximize profit by producing where

Correct AnswerverifiedShow Answer

The demand equation for a single price monopolist is P = 50 - Q. The marginal revenue equation for this monopolist is

Correct AnswerverifiedShow Answer

Which of the following is not true?

Correct AnswerverifiedShow Answer

In long-run equilibrium for a single-price monopolist,

Correct AnswerverifiedShow Answer

Which statement is true for a profit maximizing monopolist?

Correct AnswerverifiedShow Answer

A single price monopolist has a demand curve: P = 500 - 50Q. It has the total cost curve: TC = 1000 + 100Q. If the firm is a profit maximizer or loss minimizer, what output and price should it plan for?

Correct Answerverified500 - 100Q...View AnswerShow Answer

A profit maximizing monopolist faces the following information: P = $4, MR = $2, MC = $1.50. The firm should

Correct AnswerverifiedShow Answer

If the monopolist facing the demand curve P = 10 - Q is a perfectly discriminating monopolist and marginal cost is constant at $4, how much will the firm sell if it profit maximizes?

Correct AnswerverifiedShow Answer

In the long-run, profit maximizing monopolists

Correct AnswerverifiedShow Answer

If the demand curve for a single price monopolist always is a downward sloping straight line, then marginal revenue will be

Correct AnswerverifiedShow Answer

Which of the following is false?

Correct AnswerverifiedShow Answer

Which of the following is not a source of monopoly power?

Correct AnswerverifiedShow Answer

If the firm facing the demand curve P = 10 - Q still has zero marginal costs and is now a perfect price discriminator instead of a single price monopolist, what will profits be if fixed costs are 12?

Correct AnswerverifiedShow Answer

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A monopolist will have MR = 48 - 4Q and ...
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500 - 100Q...
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