Question 1

The actual deadweight loss from monopoly in the United States is likely to be greater than the calculated estimates because some:​

Accepted Answer

A)  monopolies experience strong economies of scale.
B)  monopolists spend resources to secure and maintain their monopoly.
C)  monopolists often keep price lower than their profit-maximizing level in order to increase barriers to entry.
D)  monopolists' markets are contestable.
E)  monopolists' prices and profits are regulated by the government.

Question 2

Which of the following is true when a perfectly competitive firm is in short-run equilibrium but not when a non-discriminating monopolist is in equilibrium?​

Accepted Answer

A)  Price equals marginal cost.
B)  Price is greater than marginal cost.
C)  Marginal revenue equals marginal cost.
D)  Marginal revenue is less than marginal cost.
E)  Marginal revenue is greater than average revenue.

Question 3

The table below shows the price and output combinations at different output levels for a non price-discriminating monopolist. The profit-maximizing output for this monopolist is _____.​ ​
Table 9.6
​​

Accepted Answer

A)  1 unit​
B)  2 units
C)  3 units
D)  4 units
E)  5 units

Question 4

A firm facing a downward-sloping demand curve sells 50 units of output at $10 each. Which of the following can be concluded about the firm's marginal revenue for this output level?​

Accepted Answer

A)  Marginal revenue is equal to $500.
B)  Marginal revenue is more than $10.
C)  Marginal revenue is equal to $10.
D)  Marginal revenue is less than $10 but more than zero.
E)  Marginal revenue is zero.

Question 5

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 6

Suppose a restaurant has a monopoly in a certain small town. Its rent, which is one of the several fixed costs it incurs whether it sells food or not, has gone up. In the short run, the restaurant should:​

Accepted Answer

A)  pay the higher rent and increase menu prices.
B)  pay the higher rent and leave menu prices unchanged.
C)  pay the higher rent and lower menu prices.
D)  open another restaurant in the same town.
E)  shut down.

Question 7

The figure below shows the total cost and total revenue curves for a monopolist. The total profit earned by the monopolist at the profit-maximizing output is _____.​ ​
Figure 9.3
​

Accepted Answer

A)  $20
B)  $30
C)  $0
D)  $70
E)  $40

Question 8

A profit-maximizing monopolist will always operate where demand is unit elastic.​

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is true for a monopolist that engages in perfect price discrimination?​

Accepted Answer

A)  Perfect price discrimination restricts the total output produced by the monopolist.
B)  Perfect price discrimination allows the monopolist to just break even and transfers the gain to consumers.
C)  Perfect price discrimination results in the maximization of consumer surplus.
D)  Perfect price discrimination creates a deadweight loss.
E)  Perfect price discrimination allows the monopolist to reap the entire gains from production.

Question 10

If the government breaks up a monopoly that does not practice discrimination and faces a horizontal marginal cost curve into a perfectly competitive market, _____.​

Accepted Answer

A)  output and price will decrease
B)  output will increase and price will decrease
C)  output and price will increase
D)  output will decrease and price will increase
E)  output and price will remain unchanged

Question 11

A monopolist that fails to recover a short-run loss in the long run generally leaves the market.​

Accepted Answer

A) True 
 B)False

Question 12

Which of the following prevents potential competitors from entering a monopolized market?​

Accepted Answer

A)  Legal restrictions
B)  Diseconomies of scale
C)  Product differentiation
D)  Stable market demand
E)  An abundant supply of resources

Question 13

Which of the following factors explain the difference in long-run profits earned by a monopolist and a perfectly competitive firm?​

Accepted Answer

A)  Monopolists experience economies of scale.
B)  Perfectly competitive firms have high opportunity costs.
C)  The demand for the monopolist's output is inelastic.
D)  The demand for the monopolist's output is elastic.
E)  There are no barriers to entry in perfect competition.

Question 14

Which of these is a key difference between a perfectly competitive firm and a monopolist that does not practice price discrimination?​

Accepted Answer

A)  The marginal cost curve is U-shaped for a perfectly competitive firm but not for a monopolist.
B)  Price is equal to average revenue for a perfectly competitive firm in equilibrium but not for a monopolist.
C)  Price is equal to marginal revenue for a perfectly competitive firm in equilibrium but not for a monopolist.
D)  The average revenue curve is the demand curve for a perfectly competitive firm but not for a monopolist.
E)  A monopolist aims to maximize profits, while a perfectly competitive firm tries to maximize total revenue.

Question 15

A monopolist must choose between two points on its demand curve. It can either sell 100 units for $3 each, or sell 150 units for $2 each. This implies that, for the given range of output, elasticity of demand for the monopolist's product is:​

Accepted Answer

A)  zero.
B)  one.
C)  more than one but less than two.
D)  infinite.
E)  between zero and one.

Question 16

The figure below shows the cost and revenue curves for a monopolist. The profit-maximizing price for the non-discriminating monopolist is _____.​ ​
Figure 9.6
​

Accepted Answer

A)  $60
B)  $76
C)  $110
D)  $120
E)  $136

Question 17

A monopolist maximizes profit at the quantity where the slope of its total revenue curve equals the slope of its total cost curve.​

Accepted Answer

A) True 
 B)False

Question 18

Suppose the marginal cost for the 1,000th unit of a monopolist's output is $40, marginal revenue is $30, the average variable cost of producing 1,000 units is $30, and the average total cost is $50. In order to maximize profit or minimize loss in the short run, the firm should:​

Accepted Answer

A)  shut down.
B)  continue to produce 1,000 units.
C)  produce fewer than 1,000 units but still operate.
D)  produce more than 1,000 units.
E)  increase its plant size to gain economies of scale.

Question 19

The figure below shows the cost and revenue curves faced by a profit-maximizing monopolist. If the monopolist engages in perfect price discrimination, its profit-maximizing output will be _____.​ ​
Figure 9.6
​

Accepted Answer

A)  700 units
B)  810 units
C)  884 units
D)  976 units
E)  1,000 units

Question 20

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.

Exam 9: Monopoly

Which of these is a key difference between a perfectly competitive firm and a monopolist that does not practice price discrimination?​

Correct AnswerverifiedShow Answer

A firm facing a downward-sloping demand curve sells 50 units of output at $10 each. Which of the following can be concluded about the firm's marginal revenue for this output level?​

Correct AnswerverifiedShow Answer

Which of the following is true for a monopolist that engages in perfect price discrimination?​

Correct AnswerverifiedShow Answer

The figure below shows the cost and revenue curves for a monopolist. The profit-maximizing price for the non-discriminating monopolist is _____.​ ​ Figure 9.6 ​

Correct AnswerverifiedShow Answer

A monopolist maximizes profit at the quantity where the slope of its total revenue curve equals the slope of its total cost curve.​

Correct AnswerverifiedShow Answer

The table below shows the price and output combinations at different output levels for a non price-discriminating monopolist. The profit-maximizing output for this monopolist is _____.​ ​ Table 9.6 ​​

Correct AnswerverifiedShow Answer

A monopolist that fails to recover a short-run loss in the long run generally leaves the market.​

Correct AnswerverifiedShow Answer

Which of the following prevents potential competitors from entering a monopolized market?​

Correct AnswerverifiedShow Answer

The actual deadweight loss from monopoly in the United States is likely to be greater than the calculated estimates because some:​

Correct AnswerverifiedShow Answer

Which of the following is true when a perfectly competitive firm is in short-run equilibrium but not when a non-discriminating monopolist is in equilibrium?​

Correct AnswerverifiedShow Answer

The figure below shows the cost and revenue curves faced by a profit-maximizing monopolist. If the monopolist engages in perfect price discrimination, its profit-maximizing output will be _____.​ ​ Figure 9.6 ​

Correct AnswerverifiedShow Answer

The figure below shows the total cost and total revenue curves for a monopolist. The total profit earned by the monopolist at the profit-maximizing output is _____.​ ​ Figure 9.3 ​

Correct AnswerverifiedShow Answer

Suppose a restaurant has a monopoly in a certain small town. Its rent, which is one of the several fixed costs it incurs whether it sells food or not, has gone up. In the short run, the restaurant should:​

Correct AnswerverifiedShow Answer

Which of the following factors explain the difference in long-run profits earned by a monopolist and a perfectly competitive firm?​

Correct AnswerverifiedShow Answer

The supply curve for a monopolist:​

Correct AnswerverifiedShow Answer

If the government breaks up a monopoly that does not practice discrimination and faces a horizontal marginal cost curve into a perfectly competitive market, _____.​

Correct AnswerverifiedShow Answer

A profit-maximizing monopolist will always operate where demand is unit elastic.​

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Suppose the marginal cost for the 1,000th unit of a monopolist's output is $40, marginal revenue is $30, the average variable cost of producing 1,000 units is $30, and the average total cost is $50. In order to maximize profit or minimize loss in the short run, the firm should:​

Correct AnswerverifiedShow Answer

A monopolist must choose between two points on its demand curve. It can either sell 100 units for $3 each, or sell 150 units for $2 each. This implies that, for the given range of output, elasticity of demand for the monopolist's product is:​

Correct AnswerverifiedShow Answer

Which of these is a key difference between a perfectly competitive firm and a monopolist that does not practice price discrimination?

Correct Answer
verified

A firm facing a downward-sloping demand curve sells 50 units of output at $10 each. Which of the following can be concluded about the firm's marginal revenue for this output level?

Correct Answer
verified

Which of the following is true for a monopolist that engages in perfect price discrimination?

Correct Answer
verified

The figure below shows the cost and revenue curves for a monopolist. The profit-maximizing price for the non-discriminating monopolist is _____. Figure 9.6

Correct Answer
verified

A monopolist maximizes profit at the quantity where the slope of its total revenue curve equals the slope of its total cost curve.

Correct Answer
verified

The table below shows the price and output combinations at different output levels for a non price-discriminating monopolist. The profit-maximizing output for this monopolist is _____. Table 9.6

Correct Answer
verified

A monopolist that fails to recover a short-run loss in the long run generally leaves the market.

Correct Answer
verified

Which of the following prevents potential competitors from entering a monopolized market?

Correct Answer
verified

The actual deadweight loss from monopoly in the United States is likely to be greater than the calculated estimates because some:

Correct Answer
verified

Which of the following is true when a perfectly competitive firm is in short-run equilibrium but not when a non-discriminating monopolist is in equilibrium?

Correct Answer
verified

The figure below shows the cost and revenue curves faced by a profit-maximizing monopolist. If the monopolist engages in perfect price discrimination, its profit-maximizing output will be _____. Figure 9.6

Correct Answer
verified

The figure below shows the total cost and total revenue curves for a monopolist. The total profit earned by the monopolist at the profit-maximizing output is _____. Figure 9.3

Correct Answer
verified

Suppose a restaurant has a monopoly in a certain small town. Its rent, which is one of the several fixed costs it incurs whether it sells food or not, has gone up. In the short run, the restaurant should:

Correct Answer
verified

Which of the following factors explain the difference in long-run profits earned by a monopolist and a perfectly competitive firm?

Correct Answer
verified

The supply curve for a monopolist:

Correct Answer
verified

If the government breaks up a monopoly that does not practice discrimination and faces a horizontal marginal cost curve into a perfectly competitive market, _____.

Correct Answer
verified

A profit-maximizing monopolist will always operate where demand is unit elastic.

Correct Answer
verified

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

Correct Answer
verified

Suppose the marginal cost for the 1,000^th unit of a monopolist's output is $40, marginal revenue is $30, the average variable cost of producing 1,000 units is $30, and the average total cost is $50. In order to maximize profit or minimize loss in the short run, the firm should:

Correct Answer
verified

A monopolist must choose between two points on its demand curve. It can either sell 100 units for $3 each, or sell 150 units for $2 each. This implies that, for the given range of output, elasticity of demand for the monopolist's product is:

Correct Answer
verified