Question 1

If a company is the sole U.S.producer of good X,the market may still be contestable because of all but which one of the following?

Accepted Answer

A)  Foreign producers can provide good X to the U.S.market.
B)  Many domestic firms can potentially begin production of good X.
C)  New technology may threaten to make good X obsolete.
D)  The presence of a government franchise.

Question 2

Which of the following is true about the output level where marginal revenue equals marginal cost?

Accepted Answer

A)  Economic profits are equal to zero.
B)  The firm should increase its output.
C)  The firm is maximizing profit.
D)  The firm should reduce its output.

Question 3

Assume a monopoly confronts the same costs and demand as a competitive industry.In this case,the monopolist produces

Accepted Answer

A)  The same output and charges the same price as the competitive industry.
B)  More output and charges a higher price than the competitive industry.
C)  Less output and charges a lower price than the competitive industry.
D)  Less output and charges a higher price than the competitive industry.

Question 4

Price discrimination does not allow a producer to

Accepted Answer

A)  Obtain greater total revenue.
B)  Charge both higher and lower prices.
C)  Obtain higher profits.
D)  Designate a point above the market demand curve as the new equilibrium.

Question 5

In Figure 24.1,total revenue is represented by the area

Accepted Answer

A)  ABFE.
B)  CDFE.
C)  ABGHE.
D)  ABDC.

Question 6

Which of the following is a barrier to entry into a monopoly market?

Accepted Answer

A)  Economic profits for the monopolist.
B)  Economies of scale.
C)  A large number of firms in the industry.
D)  Production of a homogeneous product.

Question 7

Table 24.1 Monopoly Costs and Revenue
  Quantity  Price  Total Cost 1$500$4002$450$6503$400$9504$350$1,3005$300$1,700\begin{array} { | c | c | c | } \hline 	ext { Quantity } & 	ext { Price } & 	ext { Total Cost } \\hline 1 & \$ 500 & \$ 400 \\hline 2 & \$ 450 & \$ 650 \\hline 3 & \$ 400 & \$ 950 \\hline 4 & \$ 350 & \$ 1,300 \\hline 5 & \$ 300 & \$ 1,700 \\hline\end{array} Quantity 12345​ Price $500$450$400$350$300​ Total Cost $400$650$950$1,300$1,700​​  In Table 24.1,using the profit maximization rule,a monopolist will charge a price of

Accepted Answer

A)  $500.
B)  $400.
C)  $350.
D)  $300.

Question 8

Which of the following is likely to be a monopolist?

Accepted Answer

A)  A drug firm that has a patent granting it the exclusive right to produce a drug.
B)  A large firm like GM,which has a substantial portion of the car market.
C)  The Boeing Company,which is one of the largest producers of airplanes.
D)  An Indonesian restaurant in a large city.

Question 9

It is possible for a monopolist to earn an economic loss.

Accepted Answer

A) True 
 B)False

Question 10

Price-discriminating firms that sell in two markets will charge higher prices in the market,ceteris paribus,

Accepted Answer

A)  With a higher positive cross-price elasticity of demand with respect to substitutes.
B)  With the more price-inelastic demand.
C)  With the more income-elastic demand.
D)  With lower incomes.

Question 11

All of the following are limitations on the market power of a monopoly except

Accepted Answer

A)  The elasticity of demand.
B)  The inability of a firm to control demand.
C)  The ability of a company to control the quantity supplied.
D)  The demand curve.

Question 12

Which of the following prohibits exclusive dealing?

Accepted Answer

A)  The Sherman Act.
B)  The Clayton Act.
C)  The Federal Trade Commission Act.
D)  Case decisions,such as those for AT&T and IBM.

Question 13

Which of the following is the same for monopoly and competition under the same cost and demand conditions?

Accepted Answer

A)  The amount of output that is produced.
B)  Economic profits.
C)  The goal of maximizing profits.
D)  Efficiency of production at the profit-maximizing output.

Question 14

If a firm can change market prices by altering its output,then it

Accepted Answer

A)  Has market power.
B)  Faces a flat demand curve.
C)  Is a price taker.
D)  Engages in marginal cost pricing.

Question 15

Table 24.1 Monopoly Costs and Revenue
  Quantity  Price  Total Cost 1$500$4002$450$6503$400$9504$350$1,3005$300$1,700\begin{array} { | c | c | c | } \hline 	ext { Quantity } & 	ext { Price } & 	ext { Total Cost } \\hline 1 & \$ 500 & \$ 400 \\hline 2 & \$ 450 & \$ 650 \\hline 3 & \$ 400 & \$ 950 \\hline 4 & \$ 350 & \$ 1,300 \\hline 5 & \$ 300 & \$ 1,700 \\hline\end{array} Quantity 12345​ Price $500$450$400$350$300​ Total Cost $400$650$950$1,300$1,700​​  In Table 24.1,the maximum profit that can be achieved is

Accepted Answer

A)  -$200.
B)  $100.
C)  $250.
D)  $500.

Question 16

In a contestable market,

Accepted Answer

A)  An imperfectly competitive industry does not face any potential competition when profits increase.
B)  There are economies of scale that heighten competition.
C)  Barriers to entry and long-run economic profits are low.
D)  Many firms compete in producing a standardized product.

Question 17

A monopoly

Accepted Answer

A)  Maximizes profits at the output level where P = MC.
B)  Is one of many sellers in a given market.
C)  Charges higher prices than competitive firms,ceteris paribus.
D)  Maximizes profits at the output level where P = MR.

Question 18

A barrier to entry is

Accepted Answer

A)  A law established by the government to protect new industries.
B)  A commitment on the part of big business to allow smaller companies to compete.
C)  An obstacle that prevents additional workers from entering an industry,such as a union.
D)  An obstacle that makes it difficult for new firms to enter a market.

Question 19

The World View article titled "Russia's Sable Monopoly Persists" provides evidence that Russia experienced

Accepted Answer

A)  Barriers to entry.
B)  Economies of scale.
C)  Negative economic profit.
D)  Price discrimination.

Question 20

In Figure 24.2,total profit at the profit-maximizing rate of output is

Accepted Answer

A)  $16.00.
B)  $5.50.
C)  $6.00.
D)  $22.00.

Exam 24: Monopoly

Correct Answer
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Which of the following is the same for monopoly and competition under the same cost and demand conditions?

Correct Answer
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Correct Answer
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Which of the following is a barrier to entry into a monopoly market?

Correct Answer
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Which of the following is likely to be a monopolist?

Correct Answer
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Which of the following prohibits exclusive dealing?

Correct Answer
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Which of the following is true about the output level where marginal revenue equals marginal cost?

Correct Answer
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A monopoly

Correct Answer
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If a company is the sole U.S.producer of good X,the market may still be contestable because of all but which one of the following?

Correct Answer
verified

In Figure 24.2,total profit at the profit-maximizing rate of output is

Correct Answer
verified

The World View article titled "Russia's Sable Monopoly Persists" provides evidence that Russia experienced

Correct Answer
verified

A barrier to entry is

Correct Answer
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If a firm can change market prices by altering its output,then it

Correct Answer
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Price discrimination does not allow a producer to

Correct Answer
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In a contestable market,

Correct Answer
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Price-discriminating firms that sell in two markets will charge higher prices in the market,ceteris paribus,

Correct Answer
verified

In Figure 24.1,total revenue is represented by the area

Correct Answer
verified

All of the following are limitations on the market power of a monopoly except

Correct Answer
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It is possible for a monopolist to earn an economic loss.

Correct Answer
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Assume a monopoly confronts the same costs and demand as a competitive industry.In this case,the monopolist produces

Correct Answer
verified

Exam 24: Monopoly

Correct AnswerverifiedShow Answer

Which of the following is the same for monopoly and competition under the same cost and demand conditions?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is a barrier to entry into a monopoly market?

Correct AnswerverifiedShow Answer

Which of the following is likely to be a monopolist?

Correct AnswerverifiedShow Answer

Which of the following prohibits exclusive dealing?

Correct AnswerverifiedShow Answer

Which of the following is true about the output level where marginal revenue equals marginal cost?

Correct AnswerverifiedShow Answer

A monopoly

Correct AnswerverifiedShow Answer

If a company is the sole U.S.producer of good X,the market may still be contestable because of all but which one of the following?

Correct AnswerverifiedShow Answer

In Figure 24.2,total profit at the profit-maximizing rate of output is

Correct AnswerverifiedShow Answer

The World View article titled "Russia's Sable Monopoly Persists" provides evidence that Russia experienced

Correct AnswerverifiedShow Answer

A barrier to entry is

Correct AnswerverifiedShow Answer

If a firm can change market prices by altering its output,then it

Correct AnswerverifiedShow Answer

Price discrimination does not allow a producer to

Correct AnswerverifiedShow Answer

In a contestable market,

Correct AnswerverifiedShow Answer

Price-discriminating firms that sell in two markets will charge higher prices in the market,ceteris paribus,

Correct AnswerverifiedShow Answer

In Figure 24.1,total revenue is represented by the area

Correct AnswerverifiedShow Answer

All of the following are limitations on the market power of a monopoly except

Correct AnswerverifiedShow Answer

It is possible for a monopolist to earn an economic loss.

Correct AnswerverifiedShow Answer

Assume a monopoly confronts the same costs and demand as a competitive industry.In this case,the monopolist produces

Correct AnswerverifiedShow Answer

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