Question 1

Exhibit 9-18  The firm in Exhibit 9-18, who charges the same price to all customers, will incur how much cost?

Accepted Answer

A)  somewhere between $0 and $30
B)  somewhere between $30 and $45
C)  somewhere between $45 and $60
D)  somewhere between $60 and $75
E)  cannot tell from the information availableF) All of the above
G) D) and E)

Question 2

Suppose that a price-discriminating monopolist divides its market into two segments.The firm will charge the lower price in the market segment where consumers

Accepted Answer

A)  have relatively less elastic demand
B)  have relatively more elastic demand
C)  attach a higher marginal value to each unit of the good
D)  have perfectly inelastic demand
E)  attach higher average value to units of the goodF) A) and E)
G) A) and D)

Question 3

Exhibit 9-11  In Exhibit 9-11, the level of output that would achieve allocative efficiency is

Accepted Answer

A)  700 units
B)  810 units
C)  884 units
D)  976 units
E)  1, 000 unitsF) A) and B)
G) A) and C)

Question 4

Exhibit 9-7  In Exhibit 9-7, what is the profit-maximizing price for a monopolist that does not price discriminate?

Accepted Answer

A)  $36
B)  $32
C)  $28
D)  $24
E)  $20F) A) and B)
G) C) and D)

Question 5

In the short run, how will a profit-maximizing monopolist react if its marginal cost suddenly increases? It will

Accepted Answer

A)  lower price to expand revenue possibilities
B)  restrict output to extract a higher price from customers
C)  maintain the current price if profit is still positive
D)  increase plant size to lower marginal cost
E)  decrease plant size to lower marginal costF) A) and E)
G) B) and C)

Question 6

Exhibit 9-2  Between which quantities in Exhibit 9-2 is demand unit elastic?

Accepted Answer

A)  1 and 2
B)  2 and 3
C)  3 and 4
D)  4 and 5
E)  5 and 6F) B) and C)
G) B) and E)

Question 7

Exhibit 9-8  Consider Exhibit 9-8.What is the profit-maximizing price?

Accepted Answer

A)  $70
B)  $80
C)  $23.33
D)  $20
E)  it is impossible to determine price because only information on total revenue is givenF) None of the above
G) A) and E)

Question 8

Nondiscriminating monopoly is similar to perfect competition in that

Accepted Answer

A)  they have the same level of barriers to entry
B)  they have a similar number of firms in the industry
C)  the demand curve facing the firm is perfectly elastic for both
D)  price equals marginal revenue for both
E)  price equals average revenue for bothF) C) and D)
G) All of the above

Question 9

Unlike perfectly competitive firms, monopolists can

Accepted Answer

A)  earn positive short-run economic profit even if price is less than average variable cost at all rates of output
B)  sell any quantity of output at any price they choose
C)  earn long-run economic profits
D)  reduce the sales of other firms in the industry through advertising
E)  face a perfectly elastic demand curveF) None of the above
G) A) and E)

Question 10

What is the relationship between price elasticity of demand and the monopolist's revenue?

Accepted Answer

A)  marginal revenue is maximized where demand is unit elastic.
B)  average revenue is maximized where demand is unit elastic.
C)  marginal revenue is negative where demand is inelastic.
D)  average revenue is negative where demand is inelastic.
E)  marginal revenue is lowest where demand is unit elastic.F) A) and B)
G) B) and C)

Question 11

A monopolist's supply curve is the portion of its marginal cost curve above average variable cost.

Accepted Answer

A) True 
 B)False

Question 12

Exhibit 9-11  Total cost for the profit-maximizing (nondiscriminating) monopoly in Exhibit 9-11 will be

Accepted Answer

A)  $95, 200
B)  $84, 000
C)  $77, 000
D)  $53, 200
E)  $42, 000F) D) and E)
G) A) and C)

Question 13

For a nondiscriminating monopolist, which of the following statements is true?

Accepted Answer

A)  Unlike a firm in perfect competition, a monopolist produces where MR > MC.
B)  The monopolist's marginal revenue curve is the same as its demand curve.
C)  The monopolist will always produce in the inelastic range of its demand curve.
D)  The monopolist does not have a supply curve.
E)  The monopolist produces where MR < MC.F) A) and B)
G) B) and E)

Question 14

Irving R.Associates is granted a patent for a new product for which there are no close substitutes.Which of the following must be true at the profit-maximizing quantity?

Accepted Answer

A)  Price is equal to marginal cost.
B)  Average revenue is equal to marginal cost.
C)  Marginal revenue is positive.
D)  Marginal revenue is less than marginal cost.
E)  Price is greater than average revenue.F) C) and D)
G) None of the above

Question 15

Which of the following falsely describes a nondiscriminating monopolist at profit maximization?

Accepted Answer

A)  Price is greater than marginal cost.
B)  Economic profit is always positive.
C)  Marginal revenue is equal to marginal cost.
D)  Marginal revenue will typically be less than price.
E)  Average total cost will not be at a minimum.F) All of the above
G) B) and E)

Question 16

Exhibit 9-5  Optimal output and price for the nondiscriminating monopolist in Exhibit 9-5 are

Accepted Answer

A)  90 and $18
B)  1, 500 and $24
C)  1, 700 and $22
D)  1, 100 and $28
E)  1, 500 and $22F) C) and E)
G) A) and B)

Question 17

U.S.patent laws establish property rights for inventors of new products

Accepted Answer

A)  forever
B)  until a superior invention comes along
C)  for 3 years
D)  for 10 years
E)  for 20 yearsF) C) and D)
G) C) and E)

Question 18

Exhibit 9-7  In Exhibit 9-7, how much profit is the monopoly earning at the profit-maximizing quantity?

Accepted Answer

A)  $16
B)  -$20
C)  $32
D)  $34
E)  -$16F) None of the above
G) B) and C)

Question 19

Negative marginal revenue means that

Accepted Answer

A)  the firm is maximizing its economic profit
B)  the firm is maximizing its total revenue
C)  total revenue is increasing at an increasing rate as output increases
D)  total revenue is increasing at a decreasing rate as output increases
E)  total revenue is decreasing as output increasesF) A) and D)
G) C) and E)

Question 20

Which of the following statements is true of a monopolist?

Accepted Answer

A)  The firm charges the highest possible price.
B)  The firm always earns a profit.
C)  The firm might earn a profit in the long run.
D)  The firm generates a larger consumer surplus than a perfectly competitive firm.
E)  The firm is more production efficient than a perfectly competitive firm.F) A) and D)
G) D) and E)

Exam 9: A--Monopoly

Exhibit 9-11 In Exhibit 9-11, the level of output that would achieve allocative efficiency is

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For a nondiscriminating monopolist, which of the following statements is true?

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Irving R.Associates is granted a patent for a new product for which there are no close substitutes.Which of the following must be true at the profit-maximizing quantity?

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Which of the following falsely describes a nondiscriminating monopolist at profit maximization?

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Unlike perfectly competitive firms, monopolists can

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Which of the following statements is true of a monopolist?

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Exhibit 9-8 Consider Exhibit 9-8.What is the profit-maximizing price?

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Exhibit 9-7 In Exhibit 9-7, what is the profit-maximizing price for a monopolist that does not price discriminate?

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Nondiscriminating monopoly is similar to perfect competition in that

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Negative marginal revenue means that

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Exhibit 9-7 In Exhibit 9-7, how much profit is the monopoly earning at the profit-maximizing quantity?

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Exhibit 9-5 Optimal output and price for the nondiscriminating monopolist in Exhibit 9-5 are

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Exhibit 9-18 The firm in Exhibit 9-18, who charges the same price to all customers, will incur how much cost?

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U.S.patent laws establish property rights for inventors of new products

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Exhibit 9-11 Total cost for the profit-maximizing (nondiscriminating) monopoly in Exhibit 9-11 will be

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A monopolist's supply curve is the portion of its marginal cost curve above average variable cost.

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Exhibit 9-2 Between which quantities in Exhibit 9-2 is demand unit elastic?

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In the short run, how will a profit-maximizing monopolist react if its marginal cost suddenly increases? It will

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Suppose that a price-discriminating monopolist divides its market into two segments.The firm will charge the lower price in the market segment where consumers

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What is the relationship between price elasticity of demand and the monopolist's revenue?

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