Question 1

One difference between a perfectly competitive firm and a monopoly is that a perfectly competitive firm produces where

Accepted Answer

A)   marginal cost equals price, while a monopolist produces where price exceeds marginal cost.
B)   marginal cost equals price, while a monopolist produces where marginal cost exceeds price.
C)   price exceeds marginal cost, while a monopolist produces where marginal cost equals price.
D)   marginal cost exceeds price, while a monopolist produces where marginal cost equals price.E) A) and C)
F) A) and B)

Question 2

A monopoly

Accepted Answer

A)   can set the price it charges for its output and earn unlimited profits.
B)   takes the market price as given and earns small but positive profits.
C)   can set the price it charges for its output but faces a downward-sloping demand curve so it cannot earn unlimited profits.
D)   can set the price it charges for its output but faces a horizontal demand curve so it can earn unlimited profits.E) A) and B)
F) A) and C)

Question 3

What are the four ways that government policymakers can respond to the problem of monopoly?

Accepted Answer

First, the government can try to make mo...

Question 4

The inefficiency associated with monopoly is due to

Accepted Answer

A)   the monopoly's profits.
B)   underproduction of the good.
C)   the monopoly's losses.
D)   overproduction of the good.E) All of the above
F) A) and D)

Question 5

Public ownership of natural monopolies

Accepted Answer

A)   creates synergies between the newly acquired firm and other government-owned companies.
B)   usually lowers the cost of production dramatically.
C)   tends to be inefficient.
D)   does none of the things described in these answers.E) A) and B)
F) A) and C)

Question 6

A monopolist maximizes profit by producing the quantity at which

Accepted Answer

A)   marginal cost equals price.
B)   marginal revenue equals price.
C)   marginal revenue equals marginal cost.
D)   marginal cost equals demand.
E)   marginal cost is minimized.F) C) and E)
G) C) and D)

Question 7

Why might economists prefer private ownership of monopolies over public ownership of monopolies?

Accepted Answer

The private monopolist is governed by th...

Question 8

What is the deadweight loss due to profit-maximizing monopoly pricing under the following conditions: The price charged for goods produced is €10. The intersection of the marginal revenue and marginal cost curves occurs where output is 100 units and marginal revenue is €5. The socially efficient level of production is 110 units. The demand curve is linear and downward sloping, and the marginal cost curve is constant.

Accepted Answer

1/2*(110-1...

Question 9

One example of price discrimination occurs in the publishing industry when a publisher initially releases an expensive hardcover edition of a popular novel and later releases a cheaper paperback edition. Use this example to demonstrate the benefits and potential pitfalls of a price discrimination pricing strategy. The answer should address the three basic lessons of price discrimination.

Accepted Answer

First, price discrimination is a rationa...

Question 10

If marginal revenue exceeds marginal cost, a monopolist should

Accepted Answer

A)   raise the price.
B)   decrease output.
C)   keep output the same because profits are maximized when marginal revenue exceeds marginal cost.
D)   increase output.E) All of the above
F) B) and D)

Question 11

Patents grant

Accepted Answer

A)   permanent monopoly status to creators of inventions.
B)   permanent right to creators of inventions to produce the product they have invented.
C)   temporary monopoly status to creators of inventions.
D)   temporary right to creators of inventions to produce the product they have invented.E) None of the above
F) A) and D)

Question 12

Compared to a perfectly competitive market, a monopoly market will usually generate

Accepted Answer

A)   lower prices and lower output.
B)   higher prices and higher output.
C)   higher prices and lower output.
D)   lower prices and higher output.E) A) and C)
F) A) and B)

Question 13

If a monopolist can sell 7 units when the price is €3 and 8 units when the price is €2, then marginal revenue of selling the eighth unit is equal to

Accepted Answer

A)   €2.
B)   €3.
C)   €16.
D)   €-5.E) B) and D)
F) A) and C)

Question 14

Most markets are not monopolies in the real world because

Accepted Answer

A)   firms usually face downward-sloping demand curves.
B)   supply curves slope upward.
C)   price is usually set equal to marginal cost by firms.
D)   there are reasonable substitutes for most goods.E) B) and D)
F) A) and B)

Question 15

When a monopolist produces an additional unit, the marginal revenue generated by that unit must be

Accepted Answer

A)   above the price because the output effect outweighs the price effect.
B)   below the price because the price effect outweighs the output effect.
C)   above the price because the price effect outweighs the output effect.
D)   below the price because the output effect outweighs the price effect.E) C) and D)
F) None of the above

Question 16

A firm whose average total cost continually declines at least to the quantity that could supply the entire market is known as a

Accepted Answer

A)   regulated monopoly.
B)   perfect competitor.
C)   government monopoly.
D)   natural monopoly.E) A) and B)
F) None of the above

Question 17

A monopoly is the sole seller of a product with no close substitutes.

Accepted Answer

A) True 
 B)False

Exam 14: Market Structures I: Monopoly

If a monopolist can sell 7 units when the price is €3 and 8 units when the price is €2, then marginal revenue of selling the eighth unit is equal to

Correct Answer
verified

When a monopolist produces an additional unit, the marginal revenue generated by that unit must be

Correct Answer
verified

Correct Answer
verified
First, price discrimination is a rationa...
View Answer

A monopolist maximizes profit by producing the quantity at which

Correct Answer
verified

A monopoly

Correct Answer
verified

Most markets are not monopolies in the real world because

Correct Answer
verified

A monopoly is the sole seller of a product with no close substitutes.

Correct Answer
verified

If marginal revenue exceeds marginal cost, a monopolist should

Correct Answer
verified

Why might economists prefer private ownership of monopolies over public ownership of monopolies?

Correct Answer
verified
The private monopolist is governed by th...
View Answer

Patents grant

Correct Answer
verified

Compared to a perfectly competitive market, a monopoly market will usually generate

Correct Answer
verified

What are the four ways that government policymakers can respond to the problem of monopoly?

Correct Answer
verified
First, the government can try to make mo...
View Answer

Correct Answer
verified
1/2*(110-1...
View Answer

A firm whose average total cost continually declines at least to the quantity that could supply the entire market is known as a

Correct Answer
verified

One difference between a perfectly competitive firm and a monopoly is that a perfectly competitive firm produces where

Correct Answer
verified

Public ownership of natural monopolies

Correct Answer
verified

The inefficiency associated with monopoly is due to

Correct Answer
verified

Exam 14: Market Structures I: Monopoly

If a monopolist can sell 7 units when the price is €3 and 8 units when the price is €2, then marginal revenue of selling the eighth unit is equal to

Correct AnswerverifiedShow Answer

When a monopolist produces an additional unit, the marginal revenue generated by that unit must be

Correct AnswerverifiedShow Answer

Correct AnswerverifiedFirst, price discrimination is a rationa...View AnswerShow Answer

A monopolist maximizes profit by producing the quantity at which

Correct AnswerverifiedShow Answer

A monopoly

Correct AnswerverifiedShow Answer

Most markets are not monopolies in the real world because

Correct AnswerverifiedShow Answer

A monopoly is the sole seller of a product with no close substitutes.

Correct AnswerverifiedShow Answer

If marginal revenue exceeds marginal cost, a monopolist should

Correct AnswerverifiedShow Answer

Why might economists prefer private ownership of monopolies over public ownership of monopolies?

Correct AnswerverifiedThe private monopolist is governed by th...View AnswerShow Answer

Patents grant

Correct AnswerverifiedShow Answer

Compared to a perfectly competitive market, a monopoly market will usually generate

Correct AnswerverifiedShow Answer

What are the four ways that government policymakers can respond to the problem of monopoly?

Correct AnswerverifiedFirst, the government can try to make mo...View AnswerShow Answer

Correct Answerverified1/2*(110-1...View AnswerShow Answer

A firm whose average total cost continually declines at least to the quantity that could supply the entire market is known as a

Correct AnswerverifiedShow Answer

One difference between a perfectly competitive firm and a monopoly is that a perfectly competitive firm produces where

Correct AnswerverifiedShow Answer

Public ownership of natural monopolies

Correct AnswerverifiedShow Answer

The inefficiency associated with monopoly is due to

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
First, price discrimination is a rationa...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The private monopolist is governed by th...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
First, the government can try to make mo...
View Answer

Correct Answer
verified
1/2*(110-1...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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