Question 1

-The table above gives the demand for a monopolist's output. Between which two quantities is demand elastic?

Accepted Answer

A)   6 and 5
B)   5 and 4
C)   4 and 3
D)   3 and 2E) B) and D)
F) A) and D)

Question 2

-The unregulated, single-price monopolist illustrated in the figure above makes an economic profit of

Accepted Answer

A)   zero.
B)   $8.00 per day.
C)   $10.00 per day.
D)   $40.00 per day.E) B) and D)
F) A) and B)

Question 3

For a monopoly, the market demand curve is the firm's

Accepted Answer

A)   supply curve.
B)   marginal revenue curve.
C)   demand curve.
D)   profit function.E) A) and B)
F) None of the above

Question 4

-Bob's Books is the only bookstore in town. The figure above shows the demand curve for books and Bob's Books' marginal revenue curve and marginal cost curve. Bob's Books maximizes its profit and sets the price of a book equal to ________ and has total annual revenue of ________.

Accepted Answer

A)   $40; $40,000
B)   $30; $60,000
C)   $20, $60,000
D)   $10; $40,000E) B) and D)
F) C) and D)

Question 5

For a monopoly, at the level of output where marginal revenue equals zero, then the

Accepted Answer

A)   firm earns no revenue.
B)   price elasticity of demand at this amount of output is zero.
C)   firm has maximized total revenue.
D)   firm is a price taker.E) C) and D)
F) A) and D)

Question 6

-The figure above provides information about Light-U-Up Utilities, which is a natural monopoly that provides electricity. If Light-U-Up is regulated, what is its economic profit if it must follow an average cost pricing rule?

Accepted Answer

A)   -$60
B)   -$20
C)   $0
D)   $30E) None of the above
F) C) and D)

Question 7

While smoking is on the decline in the United States, China is still puffing away madly. That's not because the government is eager to protect its citizens from the hazards of smoking. It's because China is eager to protect its own tobacco industry which is a state monopoly. What barriers, if any, exist in this market?

Accepted Answer

A)   natural barriers to entry
B)   ownership barrier to entry
C)   legal barrier to entry; a government license
D)   legal barrier to entry; a public franchiseE) A) and B)
F) B) and C)

Question 8

If marginal revenue equals zero, then demand at this level of output is

Accepted Answer

A)   perfectly inelastic.
B)   inelastic.
C)   unit elastic.
D)   elastic.E) B) and C)
F) C) and D)

Question 9

-For the monopoly shown in the figure above, when it maximizes its profit the marginal cost is ________ per unit and the price is ________ per unit.

Accepted Answer

A)   $10; $30
B)   $20; $20
C)   $10; $20
D)   $30; $20.E) A) and B)
F) All of the above

Question 10

Which produces more output: a perfectly price discriminating monopoly or a single-price monopoly?

Accepted Answer

The monopoly practicing perfec...

Question 11

Which of the following statements is TRUE?

Accepted Answer

A)   A perfectly competitive market produces more output and charges a lower price than a single-price monopoly.
B)   A perfectly competitive market produces more output and charges the same price as a single-price monopoly.
C)   A perfectly competitive market produces less output and charges a lower price than a single-price monopoly.
D)   A perfectly competitive market produces less output and charges the same price as a single-price monopoly.E) None of the above
F) A) and B)

Question 12

Which of the following can create a monopoly? I. high prices
II)  public franchise
III)  patent
IV)  government license

Accepted Answer

A)   I and II
B)   I and III
C)   I, II and III
D)   II, III and IVE) A) and D)
F) C) and D)

Question 13

A deadweight loss occurs whenever

Accepted Answer

A)   the total benefit of a good does not equal its total cost.
B)   the marginal social benefit of a good does not equal its marginal social cost.
C)   there is perfect price discrimination.
D)   there is no consumer surplus.E) C) and D)
F) A) and B)

Question 14

If a monopolist can perfectly price discriminate, then

Accepted Answer

A)   it will charge just two different prices in two different markets.
B)   it will not give a discount to those who buy in bulk.
C)   the deadweight loss is larger than if it cannot price discriminate.
D)   there will be no consumer surplus.E) All of the above
F) A) and B)

Question 15

Because of a decrease in labor costs, a monopoly finds that its marginal cost and average total cost have decreased. The monopoly ________ its price and ________ its quantity.

Accepted Answer

A)   raises; increases
B)   raises; decreases
C)   lowers; increases
D)   lowers; decreasesE) None of the above
F) C) and D)

Question 16

Compare the outcome in a market with a single-price monopoly to that in a perfectly competitive market.

Accepted Answer

The monopoly charges a higher price and ...

Question 17

"Compared to a competitive market, a single-price monopoly decreases the consumer surplus and increases the economic profit." Is the previous statement correct or incorrect? Explain your answer.

Accepted Answer

The statement is correct. A si...

Question 18

Which of the following cannot be an effective entry barrier?

Accepted Answer

A)   a firm making very high economic profits
B)   a firm being granted a patent for its product
C)   a firm owning all of a vital resource needed to produce a good
D)   when huge economies of scale existE) B) and C)
F) B) and D)

Question 19

-If the monopoly illustrated in the figure above could engage in perfect price discrimination, then when it maximizes its profit the total revenue collected by the firm would be

Accepted Answer

A)   $110.
B)   $120.
C)   $210.
D)   $310.E) None of the above
F) B) and C)

Question 20

A profit maximizing single-price monopolist charges a price equal to

Accepted Answer

A)   average total cost.
B)   marginal revenue.
C)   the highest price consumers are willing to pay for the profit maximizing quantity.
D)   the price necessary for the firm to earn a normal return on its investment.E) A) and B)
F) All of the above

Exam 13: Monopoly

-Bob's Books is the only bookstore in town. The figure above shows the demand curve for books and Bob's Books' marginal revenue curve and marginal cost curve. Bob's Books maximizes its profit and sets the price of a book equal to and has total annual revenue of .

Correct Answer
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Which of the following statements is TRUE?

Correct Answer
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-The table above gives the demand for a monopolist's output. Between which two quantities is demand elastic?

Correct Answer
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Which of the following cannot be an effective entry barrier?

Correct Answer
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A profit maximizing single-price monopolist charges a price equal to

Correct Answer
verified

If a monopolist can perfectly price discriminate, then

Correct Answer
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A deadweight loss occurs whenever

Correct Answer
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Which of the following can create a monopoly? I. high prices II) public franchise III) patent IV) government license

Correct Answer
verified

"Compared to a competitive market, a single-price monopoly decreases the consumer surplus and increases the economic profit." Is the previous statement correct or incorrect? Explain your answer.

Correct Answer
verified
The statement is correct. A si...
View Answer

-If the monopoly illustrated in the figure above could engage in perfect price discrimination, then when it maximizes its profit the total revenue collected by the firm would be

Correct Answer
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Correct Answer
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Because of a decrease in labor costs, a monopoly finds that its marginal cost and average total cost have decreased. The monopoly its price and its quantity.

Correct Answer
verified

If marginal revenue equals zero, then demand at this level of output is

Correct Answer
verified

For a monopoly, at the level of output where marginal revenue equals zero, then the

Correct Answer
verified

For a monopoly, the market demand curve is the firm's

Correct Answer
verified

-The unregulated, single-price monopolist illustrated in the figure above makes an economic profit of

Correct Answer
verified

-The figure above provides information about Light-U-Up Utilities, which is a natural monopoly that provides electricity. If Light-U-Up is regulated, what is its economic profit if it must follow an average cost pricing rule?

Correct Answer
verified

Compare the outcome in a market with a single-price monopoly to that in a perfectly competitive market.

Correct Answer
verified
The monopoly charges a higher price and ...
View Answer

Which produces more output: a perfectly price discriminating monopoly or a single-price monopoly?

Correct Answer
verified
The monopoly practicing perfec...
View Answer

-For the monopoly shown in the figure above, when it maximizes its profit the marginal cost is per unit and the price is per unit.

Correct Answer
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Exam 13: Monopoly

-Bob's Books is the only bookstore in town. The figure above shows the demand curve for books and Bob's Books' marginal revenue curve and marginal cost curve. Bob's Books maximizes its profit and sets the price of a book equal to ________ and has total annual revenue of ________.

Correct AnswerverifiedShow Answer

Which of the following statements is TRUE?

Correct AnswerverifiedShow Answer

-The table above gives the demand for a monopolist's output. Between which two quantities is demand elastic?

Correct AnswerverifiedShow Answer

Which of the following cannot be an effective entry barrier?

Correct AnswerverifiedShow Answer

A profit maximizing single-price monopolist charges a price equal to

Correct AnswerverifiedShow Answer

If a monopolist can perfectly price discriminate, then

Correct AnswerverifiedShow Answer

A deadweight loss occurs whenever

Correct AnswerverifiedShow Answer

Which of the following can create a monopoly? I. high prices II) public franchise III) patent IV) government license

Correct AnswerverifiedShow Answer

"Compared to a competitive market, a single-price monopoly decreases the consumer surplus and increases the economic profit." Is the previous statement correct or incorrect? Explain your answer.

Correct AnswerverifiedThe statement is correct. A si...View AnswerShow Answer

-If the monopoly illustrated in the figure above could engage in perfect price discrimination, then when it maximizes its profit the total revenue collected by the firm would be

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Because of a decrease in labor costs, a monopoly finds that its marginal cost and average total cost have decreased. The monopoly ________ its price and ________ its quantity.

Correct AnswerverifiedShow Answer

If marginal revenue equals zero, then demand at this level of output is

Correct AnswerverifiedShow Answer

For a monopoly, at the level of output where marginal revenue equals zero, then the

Correct AnswerverifiedShow Answer

For a monopoly, the market demand curve is the firm's

Correct AnswerverifiedShow Answer

-The unregulated, single-price monopolist illustrated in the figure above makes an economic profit of

Correct AnswerverifiedShow Answer

-The figure above provides information about Light-U-Up Utilities, which is a natural monopoly that provides electricity. If Light-U-Up is regulated, what is its economic profit if it must follow an average cost pricing rule?

Correct AnswerverifiedShow Answer

Compare the outcome in a market with a single-price monopoly to that in a perfectly competitive market.

Correct AnswerverifiedThe monopoly charges a higher price and ...View AnswerShow Answer

Which produces more output: a perfectly price discriminating monopoly or a single-price monopoly?

Correct AnswerverifiedThe monopoly practicing perfec...View AnswerShow Answer

-For the monopoly shown in the figure above, when it maximizes its profit the marginal cost is ________ per unit and the price is ________ per unit.

Correct AnswerverifiedShow Answer

-Bob's Books is the only bookstore in town. The figure above shows the demand curve for books and Bob's Books' marginal revenue curve and marginal cost curve. Bob's Books maximizes its profit and sets the price of a book equal to and has total annual revenue of .

Correct Answer
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The statement is correct. A si...
View Answer

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Correct Answer
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Because of a decrease in labor costs, a monopoly finds that its marginal cost and average total cost have decreased. The monopoly its price and its quantity.

Correct Answer
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Correct Answer
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Correct Answer
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The monopoly charges a higher price and ...
View Answer

Correct Answer
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The monopoly practicing perfec...
View Answer

-For the monopoly shown in the figure above, when it maximizes its profit the marginal cost is per unit and the price is per unit.

Correct Answer
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