Question 1

The classic example of a private,unregulated monopoly is:

Accepted Answer

A)   Intel.
B)   De Beers.
C)   General Motors.
D)   General Electric.E) B) and D)
F) B) and C)

Question 2

In the short run,a monopolist's profits:

Accepted Answer

A)   may be positive,negative,or zero.
B)   are positive because of the monopolist's market power.
C)   are positive if the monopolist's elasticity of demand is less than 1.
D)   are positive if the monopolist's selling price is above average variable cost.E) C) and D)
F) B) and D)

Question 3

The general view of economists is that a pure monopoly will not be technologically progressive.

Accepted Answer

A) True 
 B)False

Question 4

On the graph above,what is the profit-maximizing level of output for a pure monopolist?

Accepted Answer

A)   A
B)   B
C)   C
D)   DE) C) and D)
F) All of the above

Question 5

If a price-discriminating monopolist sells the same product in two markets but charges a higher price in market X and a lower price in market Y,the pricing difference indicates that demand is:

Accepted Answer

A)   more elastic in market X than market Y.
B)   less elastic in market X than market Y.
C)   less elastic in market Y than market X.
D)   the same in both markets X and Y.E) A) and D)
F) A) and C)

Question 6

The pure monopolist who is nondiscriminating must decrease price on all units of a product sold in order to sell additional units.This explains why:

Accepted Answer

A)   there are barriers to entry in pure monopoly.
B)   a monopoly has a perfectly elastic demand curve.
C)   marginal revenue is less than average revenue at all levels of output.
D)   total revenues are greater than total costs at the profit-maximizing level of output.E) A) and C)
F) All of the above

Question 7

Laws and government actions designed to prevent monopoly and promote competition are the focus of:

Accepted Answer

A)   social regulation.
B)   industrial regulation.
C)   antitrust policy.
D)   incomes policy.E) A) and B)
F) C) and D)

Question 8

Refer to the above graph.Consider a monopolist in short-run equilibrium.This monopolist:

Accepted Answer

A)   has a loss per unit equal to DE.
B)   has total fixed costs equal to area BEFC.
C)   earns economic profit equal to area ABED.
D)   will cease production since its economic profits are negative.E) B) and C)
F) A) and D)

Question 9

Refer to the figures above.Suppose the graphs represent the demand for use of a local golf course for which there is no significant competition (it has a local monopoly) .P denotes the price of a round of golf and Q is the quantity of rounds sold each day.If the left graph represents the demand during weekdays and the right graph the weekend demand,how much economic profit will this profit-maximizing golf course earn over the course of a full seven-day week?

Accepted Answer

A)   $4200
B)   $3700
C)   $3400
D)   $2700The monopolist should set MC = MR in both markets.That means the weekday output should be 200 with a price of $7 and the weekend output should be 100 with a price of $10.This means 5 days of 100 rounds each and 200 weekend rounds for a total of 1200.Average total cost is $4 per round,so weekday profits are $3 * 200 * 5 = $3000 and weekend profits are $6 * 200 = $1200.Total profits are $4200.E) A) and B)
F) A) and D)

Question 10

Which does not necessarily apply to a pure monopoly?

Accepted Answer

A)   The product the firm produces must have no close substitutes.
B)   The firm must be the sole producer of a product.
C)   The firm must earn economic profits.
D)   Entry must be blocked.E) B) and D)
F) None of the above

Question 11

A nondiscriminating monopolist will find that marginal revenue:

Accepted Answer

A)   exceeds average revenue or price.
B)   is identical to price.
C)   is sometimes greater and sometimes less than price.
D)   is less than average revenue or price.E) A) and B)
F) B) and C)

Question 12

Equilibrium for the monopolist occurs where P > MR > MC > Average total cost.

Accepted Answer

A) True 
 B)False

Question 13

Patents and licenses are barriers to entry.

Accepted Answer

A) True 
 B)False

Question 14

Refer to the above graph.The profit-maximizing monopolist shown sets its output at:

Accepted Answer

A)   0V.
B)   0Y.
C)   0T.
D)   0X.E) A) and C)
F) B) and C)

Question 15

A barrier to entry that significantly contributes to the establishment of a monopoly would be:

Accepted Answer

A)   patents.
B)   X-inefficiency.
C)   price-taking behavior.
D)   diseconomies of scale.E) A) and B)
F) A) and C)

Question 16

In a monopoly,price is less than minimum average total cost.

Accepted Answer

A) True 
 B)False

Question 17

The cornerstone of antitrust policy in the United States is generally considered to be the Sherman Antitrust Act of 1890.

Accepted Answer

A) True 
 B)False

Question 18

If a pure monopolist can engage in price discrimination:

Accepted Answer

A)   the marginal revenue curve and the total revenue curve will then coincide.
B)   the marginal revenue curve will now shift to a position above the demand curve.
C)   the firm will face multiple marginal revenue curves.
D)   marginal revenue will become less at each level of output than it would be without price discrimination.E) All of the above
F) B) and D)

Question 19

A price-discriminating pure monopolist will attempt to charge each buyer (or group of buyers) :

Accepted Answer

A)   different prices to compensate for differences in the characteristics of the product.
B)   the same price if per-unit cost is constant for each unit of the product.
C)   the price that equals the buyer's marginal cost.
D)   the maximum price each would be willing to pay.E) C) and D)
F) B) and D)

Question 20

In many large U.S.cities,taxicabs operate as near monopolies because of:

Accepted Answer

A)   patents.
B)   licenses.
C)   economies of scale.
D)   control of essential resources.E) B) and C)
F) A) and D)

Exam 8: Pure Monopoly

Correct Answer
verified

Equilibrium for the monopolist occurs where P > MR > MC > Average total cost.

Correct Answer
verified

Refer to the above graph.The profit-maximizing monopolist shown sets its output at:

Correct Answer
verified

Refer to the above graph.Consider a monopolist in short-run equilibrium.This monopolist:

Correct Answer
verified

In many large U.S.cities,taxicabs operate as near monopolies because of:

Correct Answer
verified

The general view of economists is that a pure monopoly will not be technologically progressive.

Correct Answer
verified

In a monopoly,price is less than minimum average total cost.

Correct Answer
verified

Patents and licenses are barriers to entry.

Correct Answer
verified

A barrier to entry that significantly contributes to the establishment of a monopoly would be:

Correct Answer
verified

Laws and government actions designed to prevent monopoly and promote competition are the focus of:

Correct Answer
verified

The cornerstone of antitrust policy in the United States is generally considered to be the Sherman Antitrust Act of 1890.

Correct Answer
verified

The pure monopolist who is nondiscriminating must decrease price on all units of a product sold in order to sell additional units.This explains why:

Correct Answer
verified

Which does not necessarily apply to a pure monopoly?

Correct Answer
verified

In the short run,a monopolist's profits:

Correct Answer
verified

A price-discriminating pure monopolist will attempt to charge each buyer (or group of buyers) :

Correct Answer
verified

On the graph above,what is the profit-maximizing level of output for a pure monopolist?

Correct Answer
verified

If a pure monopolist can engage in price discrimination:

Correct Answer
verified

The classic example of a private,unregulated monopoly is:

Correct Answer
verified

If a price-discriminating monopolist sells the same product in two markets but charges a higher price in market X and a lower price in market Y,the pricing difference indicates that demand is:

Correct Answer
verified

A nondiscriminating monopolist will find that marginal revenue:

Correct Answer
verified

Exam 8: Pure Monopoly

Correct AnswerverifiedShow Answer

Equilibrium for the monopolist occurs where P > MR > MC > Average total cost.

Correct AnswerverifiedShow Answer

Refer to the above graph.The profit-maximizing monopolist shown sets its output at:

Correct AnswerverifiedShow Answer

Refer to the above graph.Consider a monopolist in short-run equilibrium.This monopolist:

Correct AnswerverifiedShow Answer

In many large U.S.cities,taxicabs operate as near monopolies because of:

Correct AnswerverifiedShow Answer

The general view of economists is that a pure monopoly will not be technologically progressive.

Correct AnswerverifiedShow Answer

In a monopoly,price is less than minimum average total cost.

Correct AnswerverifiedShow Answer

Patents and licenses are barriers to entry.

Correct AnswerverifiedShow Answer

A barrier to entry that significantly contributes to the establishment of a monopoly would be:

Correct AnswerverifiedShow Answer

Laws and government actions designed to prevent monopoly and promote competition are the focus of:

Correct AnswerverifiedShow Answer

The cornerstone of antitrust policy in the United States is generally considered to be the Sherman Antitrust Act of 1890.

Correct AnswerverifiedShow Answer

The pure monopolist who is nondiscriminating must decrease price on all units of a product sold in order to sell additional units.This explains why:

Correct AnswerverifiedShow Answer

Which does not necessarily apply to a pure monopoly?

Correct AnswerverifiedShow Answer

In the short run,a monopolist's profits:

Correct AnswerverifiedShow Answer

A price-discriminating pure monopolist will attempt to charge each buyer (or group of buyers) :

Correct AnswerverifiedShow Answer

On the graph above,what is the profit-maximizing level of output for a pure monopolist?

Correct AnswerverifiedShow Answer

If a pure monopolist can engage in price discrimination:

Correct AnswerverifiedShow Answer

The classic example of a private,unregulated monopoly is:

Correct AnswerverifiedShow Answer

If a price-discriminating monopolist sells the same product in two markets but charges a higher price in market X and a lower price in market Y,the pricing difference indicates that demand is:

Correct AnswerverifiedShow Answer

A nondiscriminating monopolist will find that marginal revenue:

Correct AnswerverifiedShow Answer

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