Question 1

Which of the following is TRUE of a perfectly competitive firm and a monopoly in the long run?

Accepted Answer

A)   P = MC
B)   P = ATC
C)   MR = MC
D)   P = MRE) None of the above
F) A) and B)

Question 2

A monopolist will maximize its profits by charging a higher price for customers with a price elasticity of

Accepted Answer

A)   0.7.
B)   1.
C)   1.5.
D)   10.E) A) and D)
F) All of the above

Question 3

Which of the following is TRUE?

Accepted Answer

A)   Monopoly results in a higher quantity of output being sold compared with perfect competition.
B)   Price discrimination occurs when there are differences in prices that reflect differences in marginal cost.
C)   Charging all customers the same price when costs vary can actually be a case of price discrimination.
D)   Price discrimination guarantees that the monopolist will make a profit.E) A) and D)
F) B) and C)

Question 4

The monopolist should NEVER produce in the

Accepted Answer

A)   elastic segment of its demand curve because it can increase total revenue and reduce total cost by lowering price.
B)   inelastic segment of its demand curve because further lowering of the price reduces total revenue.
C)   range of output for which the price elasticity of demand is infinity.
D)   range of output for which there is a price elasticity exceeding one.E) A) and C)
F) B) and C)

Question 5

-In the above figure, if the firm is producing Q1 units at a price P1, the firm should

Accepted Answer

A)   increase output and decrease price.
B)   decrease output and increase price.
C)   not change output or price.
D)   shut down.E) A) and D)
F) None of the above

Question 6

Why is price less than marginal revenue for a monopolist?

Accepted Answer

<img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> Consider the above figure. If the monop...

Question 7

-A monopolist would not be able to make a positive profit at any price output combination when

Accepted Answer

A)   marginal cost is less than average total cost for one more unit of output.
B)   the average variable cost curve is everywhere above the marginal revenue curve.
C)   the minimum point of the average total cost curve lies to the right of the minimum of the average variable cost curve.
D)   the average total cost curve is everywhere above the demand curve.E) B) and C)
F) All of the above

Question 8

For a monopolist to maximize profits, its

Accepted Answer

A)   price exceeds marginal cost.
B)   price equals marginal revenue.
C)   price equals average total cost.
D)   marginal revenue exceeds price.E) A) and C)
F) None of the above

Question 9

If a monopolist raises its price

Accepted Answer

A)   it raises the barriers to entry.
B)   the quantity demanded increases.
C)   the quantity demanded remains the same.
D)   the quantity demanded decreases.E) B) and C)
F) A) and B)

Question 10

Which of the following is NOT a necessary condition for a firm to price discriminate?

Accepted Answer

A)   The firm must be able to separate markets.
B)   Buyers in different markets must have different elasticities of demand.
C)   Resale of the product must be preventable.
D)   The firm must be a price-taker.E) B) and D)
F) A) and D)

Question 11

Which of the following is NOT a precondition for price discrimination?

Accepted Answer

A)   The product cannot be resold to another customer.
B)   The price elasticities of demand are different for each group of consumers.
C)   The product is a durable good.
D)   The seller must have some market power.E) A) and B)
F) A) and C)

Question 12

-Use the above figure. The profit-maximizing or loss minimizing output and price will be

Accepted Answer

A)   Q1 and P2.
B)   Q2 and P3.
C)   Q3 and P3.
D)   Q4 and P1.E) A) and B)
F) C) and D)

Question 13

A profit-maximizing monopolist earns an economic loss whenever

Accepted Answer

A)   it pays taxes to the government on each unit of output it produces.
B)   the price it charges for its product exceeds average total cost.
C)   the demand curve lies completely below the ATC curve.
D)   it produces along the elastic portion of a demand curve.E) None of the above
F) B) and C)

Question 14

The portion of consumer surplus that no one in society is able to obtain in a situation of monopoly is known as

Accepted Answer

A)   a market failure.
B)   a deadweight loss.
C)   an unrealized loss.
D)   a market externality.E) B) and C)
F) A) and D)

Question 15

-Refer to the above table. Given the demand and cost schedules, what is the profit maximizing quantity for this monopolist?

Accepted Answer

A)   15
B)   20
C)   25
D)   30E) B) and C)
F) C) and D)

Question 16

Which of the following statements is TRUE?

Accepted Answer

A)   At the monopolist's equilibrium, resources are being efficiently allocated.
B)   With a monopoly, the value to society of the last unit produced is less than it's production cost.
C)   Monopolists raise the price and restrict production, compared to a competitive situation.
D)   A monopolist always produces a higher level of output than would be produced if the market were competitive.E) A) and D)
F) All of the above

Question 17

"Unlike a monopoly, consumer surplus in a perfectly competitive market is zero." Do you agree or disagree? Why?

Accepted Answer

Disagree. As long as the market demand c...

Question 18

-Referring to the above graphic, which of the following statements is FALSE?

Accepted Answer

A)   In panel (a) , a competitive situation is shown in which equilibrium is established at the intersection of D and S at point E.
B)   In panel (a) , the equilibrium price is Pe and the equilibrium quantity Qe.
C)   The price the monopolist charges in panel (b)  at Pm is lower than the price that the competitive producer charges.
D)   The monopolist produces at Qm, and charges a price ofPm, while maximizing profits at the intersection of MC and MR.E) None of the above
F) A) and D)

Question 19

Other things being equal, a price-discriminating firm will charge more to the customers who

Accepted Answer

A)   have the highest incomes.
B)   have the least elastic demand for its product.
C)   have the most elastic demand for the product.
D)   are the least rational in making their decisions.E) A) and B)
F) B) and C)

Question 20

-The owner of a patented invention

Accepted Answer

A)   may or may not have a legal monopoly.
B)   is guaranteed a profit since her idea cannot be copied.
C)   will always have demand high enough and costs low enough to ensure a profit.
D)   will only earn a profit if average total cost is less than price.E) A) and D)
F) C) and D)

Exam 24: Monopoly

The monopolist should NEVER produce in the

Correct AnswerverifiedShow Answer

For a monopolist to maximize profits, its

Correct AnswerverifiedShow Answer

Which of the following is NOT a necessary condition for a firm to price discriminate?

Correct AnswerverifiedShow Answer

Why is price less than marginal revenue for a monopolist?

Correct Answerverified Consider the above figure. If the monop...View AnswerShow Answer

Which of the following statements is TRUE?

Correct AnswerverifiedShow Answer

-Refer to the above table. Given the demand and cost schedules, what is the profit maximizing quantity for this monopolist?

Correct AnswerverifiedShow Answer

The portion of consumer surplus that no one in society is able to obtain in a situation of monopoly is known as

Correct AnswerverifiedShow Answer

A profit-maximizing monopolist earns an economic loss whenever

Correct AnswerverifiedShow Answer

"Unlike a monopoly, consumer surplus in a perfectly competitive market is zero." Do you agree or disagree? Why?

Correct AnswerverifiedDisagree. As long as the market demand c...View AnswerShow Answer

-Use the above figure. The profit-maximizing or loss minimizing output and price will be

Correct AnswerverifiedShow Answer

Other things being equal, a price-discriminating firm will charge more to the customers who

Correct AnswerverifiedShow Answer

Which of the following is NOT a precondition for price discrimination?

Correct AnswerverifiedShow Answer

-A monopolist would not be able to make a positive profit at any price output combination when

Correct AnswerverifiedShow Answer

Which of the following is TRUE?

Correct AnswerverifiedShow Answer

Which of the following is TRUE of a perfectly competitive firm and a monopoly in the long run?

Correct AnswerverifiedShow Answer

A monopolist will maximize its profits by charging a higher price for customers with a price elasticity of

Correct AnswerverifiedShow Answer

-The owner of a patented invention

Correct AnswerverifiedShow Answer

-Referring to the above graphic, which of the following statements is FALSE?

Correct AnswerverifiedShow Answer

-In the above figure, if the firm is producing Q1 units at a price P1, the firm should

Correct AnswerverifiedShow Answer

If a monopolist raises its price

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Consider the above figure. If the monop...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Disagree. As long as the market demand c...
View 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