Question 1

The De Beers Diamond company advertises heavily to promote the sale of all diamonds, not just its own. This is evidence that it has a monopoly position to some degree.

Accepted Answer

A) True 
 B)False

Question 2

Financial aid to college students, quantity discounts, and senior citizen discounts are all examples of

Accepted Answer

A)   consumer surplus.
B)   deadweight loss.
C)   price discrimination.
D)   nonprofit pricing strategies.E) C) and D)
F) B) and D)

Question 3

Figure 15-4 
-Refer to Figure 15-4. If the monopoly firm wants to maximize its profit, it should operate at a level of output equal to

Accepted Answer

A)   Q1.
B)   Q2.
C)   Q3.
D)   Q4.E) All of the above
F) C) and D)

Question 4

Which of the following is not one of the ways that antitrust laws promote competition?

Accepted Answer

A)   Antitrust laws allow the government to prevent mergers.
B)   Antitrust laws allow the government to break up companies into smaller ones.
C)   Antitrust laws prevent companies from coordinating their activities in ways that make markets less competitive.
D)   Antitrust laws allow the government to shut down any firm the government believes has monopoly power.E) None of the above
F) B) and D)

Question 5

Sizable economic profits can persist over time under monopoly if the monopolist

Accepted Answer

A)   produces that output where average total cost is at a maximum.
B)   is protected by barriers to entry.
C)   operates as a price taker rather than a price maker.
D)   earns revenues that exceed variable costs.E) C) and D)
F) A) and B)

Question 6

If a profit-maximizing monopolist faces a downward-sloping market demand curve, its

Accepted Answer

A)   average revenue is less than the price of the product.
B)   average revenue is less than marginal revenue.
C)   marginal revenue is less than the price of the product.
D)   marginal revenue is greater than the price of the product.E) A) and B)
F) A) and C)

Question 7

Suppose a monopolist charges a price of $27 for its product and sells 10 units at that price. At 10 units of production the firm has average fixed cost equal to $10 and average variable cost equal to $12. How much total profit is the firm earning at this price?

Accepted Answer

A)   $5
B)   $25
C)   $50
D)   $140E) None of the above
F) All of the above

Question 8

A monopoly market

Accepted Answer

A)   always maximizes total economic well-being.
B)   always minimizes consumer surplus.
C)   generally fails to maximize total economic well-being.
D)   generally fails to maximize producer surplus.E) C) and D)
F) A) and B)

Question 9

A monopolist earns higher profits by charging one price than by practicing price discrimination.

Accepted Answer

A) True 
 B)False

Question 10

Compared to the monopoly outcome with a single price, imperfect price discrimination i)  sometimes raises total surplus.
Ii)  sometimes lowers total surplus.
Iii)  always leads to a lower quantity of output.

Accepted Answer

A)   i)  and ii)  only
B)   ii)  and iii)  only
C)   i)  and iii)  only
D)   i) , ii) , and iii) E) A) and C)
F) A) and B)

Question 11

For a monopoly firm,

Accepted Answer

A)   price always equals marginal revenue.
B)   price always exceeds average revenue.
C)   any price-quantity combination will maximize profits.
D)   None of the above is correct.E) A) and B)
F) B) and C)

Question 12

The fundamental cause of monopoly is

Accepted Answer

A)   incompetent management in competitive firms.
B)   the zero-profit feature of long-run equilibrium in competitive markets.
C)   advertising.
D)   barriers to entry.E) A) and B)
F) All of the above

Question 13

Figure 15-6 
-Refer to Figure 15-6. What price will the monopolist charge?

Accepted Answer

A)   A
B)   C
C)   K
D)   LE) None of the above
F) A) and B)

Question 14

Figure 15-4 
-Refer to Figure 15-4. Profit can always be increased by increasing the level of output by one unit if the monopolist is currently operating at i)  Q1.
Ii)  Q2.
Iii)  Q3.
Iv)  Q4.

Accepted Answer

A)   ii)  only
B)   i)  or ii)  only
C)   i)  only
D)   i) , ii) , or iii)  onlyE) All of the above
F) B) and D)

Question 15

Figure 15-25 
-Refer to Figure 15-25. If a regulator requires this firm to charge a socially optimal price, how much deadweight loss results?

Accepted Answer

The answer of Figure 15-25 
-Refer to Figure 15-25. If...

Question 16

Monopoly pricing prevents some mutually beneficial trades from taking place. These unrealized, mutually beneficial trades are

Accepted Answer

A)   not a concern if a market is perfectly competitive.
B)   a deadweight loss to society.
C)   a function of the reduction in the quantity produced by a monopolist in comparison to a competitive market.
D)   All of the above are correct.E) A) and C)
F) A) and D)

Question 17

Which of the following is not correct?

Accepted Answer

A)   The demand curve facing a competitive firm is perfectly elastic.
B)   The demand curve facing a monopolist is the market demand curve.
C)   A monopolist can charge any price and sell any quantity that it chooses.
D)   A monopolist can alter the market price by adjusting the quantity that it produces.E) C) and D)
F) B) and C)

Question 18

A natural monopoly occurs when

Accepted Answer

A)   the product is sold in its natural state, such as water or diamonds.
B)   there are economies of scale over the relevant range of output.
C)   the firm is characterized by a rising marginal cost curve.
D)   production requires the use of free natural resources, such as water or air.E) None of the above
F) All of the above

Question 19

Suppose a profit-maximizing monopolist faces a constant marginal cost of $20, produces an output level of 100 units, and charges a price of $50. The socially efficient level of output is 200 units. Assume that the demand curve and marginal revenue curve are the typical downward-sloping straight lines. The monopoly deadweight loss equals $1,500.

Accepted Answer

A) True 
 B)False

Question 20

Because a monopolist is the sole producer in its market, it can necessarily alter the price of its good i)  without affecting the quantity sold.
Ii)  without affecting its average total cost.
Iii)  by adjusting the quantity it supplies to the market.

Accepted Answer

A)   ii)  only
B)   iii)  only
C)   i)  and ii)  only
D)   ii)  and iii)  onlyE) None of the above
F) All of the above

Exam 14: Monopoly

Figure 15-4 -Refer to Figure 15-4. If the monopoly firm wants to maximize its profit, it should operate at a level of output equal to

Correct Answer
verified

Sizable economic profits can persist over time under monopoly if the monopolist

Correct Answer
verified

A monopoly market

Correct Answer
verified

Which of the following is not one of the ways that antitrust laws promote competition?

Correct Answer
verified

Figure 15-25 -Refer to Figure 15-25. If a regulator requires this firm to charge a socially optimal price, how much deadweight loss results?

Correct Answer
verified

Figure 15-6 -Refer to Figure 15-6. What price will the monopolist charge?

Correct Answer
verified

Suppose a monopolist charges a price of $27 for its product and sells 10 units at that price. At 10 units of production the firm has average fixed cost equal to $10 and average variable cost equal to $12. How much total profit is the firm earning at this price?

Correct Answer
verified

Monopoly pricing prevents some mutually beneficial trades from taking place. These unrealized, mutually beneficial trades are

Correct Answer
verified

A natural monopoly occurs when

Correct Answer
verified

Which of the following is not correct?

Correct Answer
verified

For a monopoly firm,

Correct Answer
verified

Compared to the monopoly outcome with a single price, imperfect price discrimination i) sometimes raises total surplus. Ii) sometimes lowers total surplus. Iii) always leads to a lower quantity of output.

Correct Answer
verified

If a profit-maximizing monopolist faces a downward-sloping market demand curve, its

Correct Answer
verified

The fundamental cause of monopoly is

Correct Answer
verified

Correct Answer
verified

Figure 15-4 -Refer to Figure 15-4. Profit can always be increased by increasing the level of output by one unit if the monopolist is currently operating at i) Q1. Ii) Q2. Iii) Q3. Iv) Q4.

Correct Answer
verified

A monopolist earns higher profits by charging one price than by practicing price discrimination.

Correct Answer
verified

Financial aid to college students, quantity discounts, and senior citizen discounts are all examples of

Correct Answer
verified

Because a monopolist is the sole producer in its market, it can necessarily alter the price of its good i) without affecting the quantity sold. Ii) without affecting its average total cost. Iii) by adjusting the quantity it supplies to the market.

Correct Answer
verified

The De Beers Diamond company advertises heavily to promote the sale of all diamonds, not just its own. This is evidence that it has a monopoly position to some degree.

Correct Answer
verified

Exam 14: Monopoly

Figure 15-4 -Refer to Figure 15-4. If the monopoly firm wants to maximize its profit, it should operate at a level of output equal to

Correct AnswerverifiedShow Answer

Sizable economic profits can persist over time under monopoly if the monopolist

Correct AnswerverifiedShow Answer

A monopoly market

Correct AnswerverifiedShow Answer

Which of the following is not one of the ways that antitrust laws promote competition?

Correct AnswerverifiedShow Answer

Figure 15-25 -Refer to Figure 15-25. If a regulator requires this firm to charge a socially optimal price, how much deadweight loss results?

Correct AnswerverifiedShow Answer

Figure 15-6 -Refer to Figure 15-6. What price will the monopolist charge?

Correct AnswerverifiedShow Answer

Suppose a monopolist charges a price of $27 for its product and sells 10 units at that price. At 10 units of production the firm has average fixed cost equal to $10 and average variable cost equal to $12. How much total profit is the firm earning at this price?

Correct AnswerverifiedShow Answer

Monopoly pricing prevents some mutually beneficial trades from taking place. These unrealized, mutually beneficial trades are

Correct AnswerverifiedShow Answer

A natural monopoly occurs when

Correct AnswerverifiedShow Answer

Which of the following is not correct?

Correct AnswerverifiedShow Answer

For a monopoly firm,

Correct AnswerverifiedShow Answer

Compared to the monopoly outcome with a single price, imperfect price discrimination i) sometimes raises total surplus. Ii) sometimes lowers total surplus. Iii) always leads to a lower quantity of output.

Correct AnswerverifiedShow Answer

If a profit-maximizing monopolist faces a downward-sloping market demand curve, its

Correct AnswerverifiedShow Answer

The fundamental cause of monopoly is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 15-4 -Refer to Figure 15-4. Profit can always be increased by increasing the level of output by one unit if the monopolist is currently operating at i) Q1. Ii) Q2. Iii) Q3. Iv) Q4.

Correct AnswerverifiedShow Answer

A monopolist earns higher profits by charging one price than by practicing price discrimination.

Correct AnswerverifiedShow Answer

Financial aid to college students, quantity discounts, and senior citizen discounts are all examples of

Correct AnswerverifiedShow Answer

Because a monopolist is the sole producer in its market, it can necessarily alter the price of its good i) without affecting the quantity sold. Ii) without affecting its average total cost. Iii) by adjusting the quantity it supplies to the market.

Correct AnswerverifiedShow Answer

The De Beers Diamond company advertises heavily to promote the sale of all diamonds, not just its own. This is evidence that it has a monopoly position to some degree.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified