Question 1

In the U.S. ,antitrust laws have been designed to _____.

Accepted Answer

A)  increase producer surplus
B)  reduce market capitalization of firms
C)  restrict monopoly power
D)  promote profitability of American firmsE) B) and C)
F) None of the above

Question 2

A firm that has monopoly power _____.

Accepted Answer

A)  can profitably set price above marginal cost
B)  sells goods at higher prices due to economies of scale
C)  faces a horizontal demand curve
D)  produces easily substitutable goodsE) A) and B)
F) A) and C)

Question 3

In response to a rightward shift in the demand for a commodity,a monopoly firm that is producing at the profit-maximizing level of output will:

Accepted Answer

A)  decrease price and output.
B)  decrease output and increase price.
C)  increase price but maintain the level of output.
D)  increase output and price.E) A) and D)
F) A) and C)

Question 4

The following table shows the total revenue and total cost for a monopolist at various levels of output.

Refer to Table 11-2.At an output of 9 units,the price elasticity of demand _____.

Accepted Answer

A)  is more than one.
B)  is less than one.
C)  is equal to one.
D)  cannot be determined without more data.E) A) and B)
F) C) and D)

Question 5

Which of the following is not necessarily true at the profit-maximizing quantity for a monopolist?

Accepted Answer

A)  The marginal revenue is equal to the marginal cost of production.
B)  The slope of the marginal revenue curve equals the slope of the marginal cost curve.
C)  The difference between total revenue and total cost is maximized.
D)  The difference between price and average cost is maximized.E) B) and C)
F) A) and B)

Question 6

The following figure shows the marginal revenue [MR],demand,and average cost [AC] curves for a profit-maximizing monopolist in the long run. 
Refer to Figure 11-3.A profit-maximizing monopoly firm will produce output equal to _____.

Accepted Answer

A)  OC
B)  OE
C)  OJ
D)  CJE) A) and C)
F) None of the above

Question 7

A monopolist has the following short-run total cost,marginal cost,and demand functions:
Total Cost:  
 Marginal Cost:  
Demand:  
where P is the price per unit of output,and Q is the quantity of output.
a)What price and quantity combination maximizes the monopolist's total revenue?
b)What is the price range over which a price decrease would lead to an increase in the monopolist's total revenue?
c)What price will the profit-maximizing monopolist charge? What will profits equal?
d)What is the allocatively efficient price-quantity combination?

Accepted Answer

a)Total revenue is maximized when margin...

Question 8

For a monopoly firm to maximize profits,its price markup should:

Accepted Answer

A)  be at its maximum possible point.
B)  equal the price elasticity of demand.
C)  equal the inverse of demand elasticity.
D)  equal marginal revenue.E) B) and C)
F) C) and D)

Question 9

The following table shows the total revenue and total cost for a monopolist at various levels of output.

Refer to Table 11-2.The economic profit earned by the firm by producing the profit-maximizing level of output is _____.

Accepted Answer

A)  $13
B)  $9
C)  $18
D)  $4E) B) and D)
F) None of the above

Question 10

An important difference between a monopoly and a competitive industry is that:

Accepted Answer

A)  a monopoly earns zero profits while competitive firms earn positive economic profits in the long run.
B)  a profit-maximizing monopolist equates price and marginal cost while profit-maximizing firms in competitive industries equate marginal revenue and marginal cost.
C)  a monopoly is a price maker while a competitive industry faces a horizontal demand curve.
D)  a monopoly has a vertical supply curve while a competitive firm's marginal cost curve is the supply curve.E) B) and C)
F) A) and B)

Question 11

When comparing a monopoly firm and a competitive firm in the long run,which of the following statements is not correct?

Accepted Answer

A)  A monopoly firm does not need to produce output at the lowest possible cost but a competitive firm must.
B)  A monopoly firm earns economic profit at its profit-maximizing level of output but a competitive firm does not.
C)  A monopoly firm operates at the minimum point on its average cost curve but a competitive firm does not.
D)  A monopoly firm will produce more than the efficient level of output but a competitive firm will always produce the efficient level of output.E) B) and D)
F) C) and D)

Question 12

When the marginal cost for a monopoly firm is constant,the average cost curve is _____.

Accepted Answer

A)  U-shaped
B)  horizontal
C)  positively sloped
D)  non-linearE) B) and C)
F) None of the above

Question 13

If a monopolist's marginal cost is zero,in order to maximize profit the monopolist will:

Accepted Answer

A)  set a price where demand is unit elastic.
B)  produce where demand is elastic.
C)  expand output to the limit of its physical capacity.
D)  not impose an efficiency loss on the society,since P=MC.E) A) and B)
F) B) and D)

Question 14

Monopoly power does not guarantee positive profits because _____.

Accepted Answer

A)  demand elasticity in monopoly markets is relatively low
B)  monopoly firms are price takers
C)  sales and profits of monopoly firms are restricted by the demand curve
D)  the monopolist's demand curve is the same as the marginal revenue curveE) None of the above
F) A) and B)

Question 15

Which of the following statements about the effects of monopoly is incorrect?

Accepted Answer

A)  A monopoly restricts output to maximize profits.
B)  A monopoly raises price above the competitive level.
C)  A monopoly causes input prices to rise.
D)  A monopoly causes a redistribution of income.E) None of the above
F) All of the above

Question 16

The following figure shows the marginal revenue [MR],demand,and average cost [AC] curves for a profit-maximizing monopolist in the long run. 
Refer to Figure 11-3.The profit of the monopolist is shown by the area _____.

Accepted Answer

A)  AFCO
B)  IHB
C)  AFGB
D)  AFHBE) B) and C)
F) A) and B)

Question 17

If marginal costs are zero,a monopolist will maximize profit by producing at the point where:

Accepted Answer

A)  average revenue is zero.
B)  price is maximum.
C)  total revenue is maximum.
D)  marginal revenue is maximum.E) A) and D)
F) C) and D)

Question 18

Assume that a firm faces a linear demand curve P = 170 - 4Q.Its cost function is given by C = 40 + 10Q.Show how the equilibrium output varies when the firm operates as a monopoly and as a perfectly competitive firm.

Accepted Answer

The monopolist's profit-maximizing outpu...

Question 19

A profit-maximizing monopolist will produce at a point on the _____ portion of the demand curve where _____.

Accepted Answer

A)  elastic;average revenue is negative
B)  inelastic;marginal cost is falling
C)  inelastic;total revenue is increasing
D)  elastic;marginal revenue is positiveE) A) and B)
F) A) and D)

Question 20

The markup of price over marginal cost for a monopolist is _____.

Accepted Answer

A)  independent of the price elasticity of demand
B)  inversely related to the price elasticity of demand
C)  the same as the price elasticity of demand
D)  the same as the price elasticity of supplyE) B) and C)
F) A) and D)

Exam 11: Monopoly

For a monopoly firm to maximize profits,its price markup should:

Correct Answer
verified

In the U.S. ,antitrust laws have been designed to _____.

Correct Answer
verified

When comparing a monopoly firm and a competitive firm in the long run,which of the following statements is not correct?

Correct Answer
verified

A firm that has monopoly power _____.

Correct Answer
verified

Which of the following is not necessarily true at the profit-maximizing quantity for a monopolist?

Correct Answer
verified

The following figure shows the marginal revenue [MR],demand,and average cost [AC] curves for a profit-maximizing monopolist in the long run. Refer to Figure 11-3.The profit of the monopolist is shown by the area _____.

Correct Answer
verified

The following table shows the total revenue and total cost for a monopolist at various levels of output. Refer to Table 11-2.At an output of 9 units,the price elasticity of demand _____.

Correct Answer
verified

In response to a rightward shift in the demand for a commodity,a monopoly firm that is producing at the profit-maximizing level of output will:

Correct Answer
verified

An important difference between a monopoly and a competitive industry is that:

Correct Answer
verified

The following figure shows the marginal revenue [MR],demand,and average cost [AC] curves for a profit-maximizing monopolist in the long run. Refer to Figure 11-3.A profit-maximizing monopoly firm will produce output equal to _____.

Correct Answer
verified

If marginal costs are zero,a monopolist will maximize profit by producing at the point where:

Correct Answer
verified

The following table shows the total revenue and total cost for a monopolist at various levels of output. Refer to Table 11-2.The economic profit earned by the firm by producing the profit-maximizing level of output is _____.

Correct Answer
verified

The markup of price over marginal cost for a monopolist is _____.

Correct Answer
verified

Monopoly power does not guarantee positive profits because _____.

Correct Answer
verified

Which of the following statements about the effects of monopoly is incorrect?

Correct Answer
verified

When the marginal cost for a monopoly firm is constant,the average cost curve is _____.

Correct Answer
verified

A profit-maximizing monopolist will produce at a point on the _ portion of the demand curve where _.

Correct Answer
verified

Assume that a firm faces a linear demand curve P = 170 - 4Q.Its cost function is given by C = 40 + 10Q.Show how the equilibrium output varies when the firm operates as a monopoly and as a perfectly competitive firm.

Correct Answer
verified
The monopolist's profit-maximizing outpu...
View Answer

If a monopolist's marginal cost is zero,in order to maximize profit the monopolist will:

Correct Answer
verified

Correct Answer
verified
a)Total revenue is maximized when margin...
View Answer

Exam 11: Monopoly

For a monopoly firm to maximize profits,its price markup should:

Correct AnswerverifiedShow Answer

In the U.S. ,antitrust laws have been designed to _____.

Correct AnswerverifiedShow Answer

When comparing a monopoly firm and a competitive firm in the long run,which of the following statements is not correct?

Correct AnswerverifiedShow Answer

A firm that has monopoly power _____.

Correct AnswerverifiedShow Answer

Which of the following is not necessarily true at the profit-maximizing quantity for a monopolist?

Correct AnswerverifiedShow Answer

The following figure shows the marginal revenue [MR],demand,and average cost [AC] curves for a profit-maximizing monopolist in the long run. Refer to Figure 11-3.The profit of the monopolist is shown by the area _____.

Correct AnswerverifiedShow Answer

The following table shows the total revenue and total cost for a monopolist at various levels of output. Refer to Table 11-2.At an output of 9 units,the price elasticity of demand _____.

Correct AnswerverifiedShow Answer

In response to a rightward shift in the demand for a commodity,a monopoly firm that is producing at the profit-maximizing level of output will:

Correct AnswerverifiedShow Answer

An important difference between a monopoly and a competitive industry is that:

Correct AnswerverifiedShow Answer

The following figure shows the marginal revenue [MR],demand,and average cost [AC] curves for a profit-maximizing monopolist in the long run. Refer to Figure 11-3.A profit-maximizing monopoly firm will produce output equal to _____.

Correct AnswerverifiedShow Answer

If marginal costs are zero,a monopolist will maximize profit by producing at the point where:

Correct AnswerverifiedShow Answer

The following table shows the total revenue and total cost for a monopolist at various levels of output. Refer to Table 11-2.The economic profit earned by the firm by producing the profit-maximizing level of output is _____.

Correct AnswerverifiedShow Answer

The markup of price over marginal cost for a monopolist is _____.

Correct AnswerverifiedShow Answer

Monopoly power does not guarantee positive profits because _____.

Correct AnswerverifiedShow Answer

Which of the following statements about the effects of monopoly is incorrect?

Correct AnswerverifiedShow Answer

When the marginal cost for a monopoly firm is constant,the average cost curve is _____.

Correct AnswerverifiedShow Answer

A profit-maximizing monopolist will produce at a point on the _____ portion of the demand curve where _____.

Correct AnswerverifiedShow Answer

Assume that a firm faces a linear demand curve P = 170 - 4Q.Its cost function is given by C = 40 + 10Q.Show how the equilibrium output varies when the firm operates as a monopoly and as a perfectly competitive firm.

Correct AnswerverifiedThe monopolist's profit-maximizing outpu...View AnswerShow Answer

If a monopolist's marginal cost is zero,in order to maximize profit the monopolist will:

Correct AnswerverifiedShow Answer

Correct Answerverifieda)Total revenue is maximized when margin...View AnswerShow Answer

Correct Answer
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A profit-maximizing monopolist will produce at a point on the _ portion of the demand curve where _.

Correct Answer
verified

Correct Answer
verified
The monopolist's profit-maximizing outpu...
View Answer

Correct Answer
verified

Correct Answer
verified
a)Total revenue is maximized when margin...
View Answer