Question 1

Compared to a perfectly competitive industry, a monopolist:
A.produces a large quantity.
B.charges a higher price.
C.increases consumer surplus.
D.earns less profit in the long run.

Accepted Answer

The answer of Compared to a perfectly competitive industry, a...

Question 2

A statement that best reflects an evaluation of monopoly firms is that:
A.they are economically inefficient.
B.they have little or no market power.
C.consumers are given more choices, lower costs, and higher quality.
D.competition should replace all monopolies.

Accepted Answer

The answer of A statement that best reflects an evaluation...

Question 3

Which of the following statements about monopoly equilibrium and perfectly competitive equilibrium is incorrect?
A.Price is greater than marginal cost in monopoly, and price equals marginal cost in perfect competition.
B.When a monopoly exists, the consumer surplus is less than if the market were perfectly competitive.
C.Monopoly output will be less than the output of a comparable perfectly competitive industry.
D.In the long run, economic profits are driven to zero in both a monopoly and a perfectly competitive market.

Accepted Answer

The answer of Which of the following statements about monopoly...

Question 4

Figure: Perfect Competition
   (Figure: Perfect Competition) Look at the figure Perfect Competition.In the figure, a perfect competitor will produce at: 
A.the intersection of marginal revenue and marginal cost.
B.the intersection of demand and marginal cost.
C.the intersection of demand and average total cost.
D.the intersection of marginal revenue and average total cost.

Accepted Answer

The answer of Figure: Perfect Competition
   (Figure: Perfect...

Question 5

Bob owns a trout farm with monopoly power in North Carolina.Bob's optimal output occurs where marginal revenue _.Because of monopoly power, Bob's supply curve
________.
A.equals marginal cost; does not exist
B.exceeds marginal cost; does not exist
C.equals marginal cost; is upward sloping
D.exceeds marginal cost; is perfectly inelastic

Accepted Answer

The answer of Bob owns a trout farm with monopoly...

Question 6

Figure: A Profit-Maximizing Monopoly Firm
   (Figure: A Profit-Maximizing Monopoly Firm) Look at the figure A Profit-Maximizing Monopoly Firm.This firm's profit per unit is: 
A.$5.
B.$13.
C.$14.
D.$20.

Accepted Answer

The answer of Figure: A Profit-Maximizing Monopoly Firm
  ...

Question 7

(Table: Demand and Total Cost) Look at the table Demand and Total Cost.Lenoia runs a natural monopoly producing electricity for a small mountain village.The table shows Lenoia's
demand and total cost of producing electricity.The price effect of increasing production from 3 megawatts to 4 megawatts is:
A.-$150.
B.$500.
C.$450.
D.-$50.

Accepted Answer

The answer of (Table: Demand and Total Cost) Look at...

Question 8

Which of the following is true?
A.A monopoly firm is a price-maker.
B.MR = P if the demand curve is downward sloping.
C.MR = MC is a profit-maximizing rule for firms in perfect competition only.
D.Monopolies tend to charge lower prices than perfectly competitive firms.

Accepted Answer

The answer of Which of the following is true?
A.A monopoly...

Question 9

In a monopoly in the long run:
A.economic profits will be eliminated by the entry of rival firms.
B.economic profits will be reduced but not eliminated entirely by the entry of rival firms.
C.entry by other firms will not occur.
D.social surplus is maximized.

Accepted Answer

The answer of In a monopoly in the long run:
A.economic...

Question 10

Figure: Short-Run Monopoly  (Figure: Short-Run Monopoly) Look at the figure Short-Run Monopoly.The marginal cost of producing the profit-maximizing quantity is cost:

Accepted Answer

The profit-maximizing quantity occurs where marginal revenue equals marginal cost, which is at point P in the figure. Therefore, the marginal cost of producing the profit-maximizing quantity is equal to the vertical distance from point P to the marginal cost curve, which is cost C.

Question 11

The profit-maximizing rule MR = MC is:
A.followed by a monopoly but not by a perfectly competitive firm.
B.followed by a perfectly competitive firm but not by a monopoly.
C.followed by all types of firms.
D.not followed by a monopoly because it would reduce economic profit to zero.

Accepted Answer

The profit-maximizing rule where Marginal Revenue (MR) equals Marginal Cost (MC) is followed by all types of firms, including both monopolies and perfectly competitive firms, as it is a fundamental principle for maximizing profits in economics.

Question 12

In the short run, a monopoly will stop producing if: A.P < ATC. B.P < AVC. C.P > MR. D.P > ATC.

Accepted Answer

A monopolist will continue to produce in the short run as long as price is greater than or equal to average variable cost (P >= AVC). If price falls below AVC, the firm cannot cover its variable costs and will shut down production. However, if price is above AVC but still below average total cost (P < ATC), the firm may continue to produce in the short run, but will be incurring losses. Therefore, B is the correct choice as it represents the minimum price necessary for the monopolist to continue production in the short run.

Question 13

(Table: Demand and Total Cost) Look at the table Demand and Total Cost.Lenoia runs a natural monopoly producing electricity for a small mountain village.The table shows Lenoia's demand and total cost of producing electricity.The marginal revenue of the fourth unit of production is:

Accepted Answer

To determine marginal revenue, we need to look at the change in total revenue from producing one additional unit. In this case, we can see that the total revenue for producing 3 units is $750, and the total revenue for producing 4 units is $1000. The change in total revenue is $250, which means that the marginal revenue for the fourth unit is $250. Therefore, the answer is B.

Question 14

(Table: Demand and Total Cost) Look at the table Demand and Total Cost.Lenoia runs a natural monopoly firm producing electricity for a small mountain village.The table shows Lenoia's demand and total cost of producing electricity.To maximize profits, Lenoia should charge a price of:

Accepted Answer

The answer of (Table: Demand and Total Cost) Look at...

Question 15

Figure: A Profit-Maximizing Monopoly Firm
(Figure: A Profit-Maximizing Monopoly Firm) Look at the figure A Profit-Maximizing Monopoly Firm.This firm's price per unit is:
A.$20.
B.$26.
C.$29.
D.$35.

Accepted Answer

The answer of Figure: A Profit-Maximizing Monopoly Firm
(Figure: A Profit-Maximizing...

Question 16

In perfect competition, the firm produces the output such that , and in monopoly, the
firm produces the output such that _.
A.P > MR = MC; P = MR = MC
B.P = MR = MC; P < MR = MC
C.P = MR = MC; P > MR = MC
D.P = MR = MC; P = MR = MC

Accepted Answer

In perfect competition, a firm produces where price (P) equals marginal revenue (MR) and marginal cost (MC), because the firm is a price taker. In a monopoly, the firm has market power, so it produces where marginal revenue equals marginal cost (MR = MC), but due to its pricing power, price (P) is greater than marginal revenue.

Question 17

Figure: A Profit-Maximizing Monopoly Firm
   (Figure: A Profit-Maximizing Monopoly Firm) Look at the figure A Profit-Maximizing Monopoly Firm.The firm in this figure will produce units of output per week. 
A.160
B.220
C.250
D.300

Accepted Answer

The answer of Figure: A Profit-Maximizing Monopoly Firm
  ...

Question 18

The monopoly firm's profit-maximizing price is:
A.given by the point on the ATC curve for the profit-maximizing quantity.
B.given by the point on the demand curve for the profit-maximizing quantity.
C.determined for the quantity of output where MR > MC by the greatest amount.
D.found where MR > MC at the monopolist's profit-maximizing quantity of output.

Accepted Answer

The answer of The monopoly firm's profit-maximizing price is:
A.given by...

Question 19

Figure: A Profit-Maximizing Monopoly Firm
   (Figure: A Profit-Maximizing Monopoly Firm) Look at the figure A Profit-Maximizing Monopoly Firm.This firm's cost per unit at its profit-maximizing quantity is: 
A.$8.
B.$15.
C.$16.
D.$18.

Accepted Answer

The answer of Figure: A Profit-Maximizing Monopoly Firm
  ...

Question 20

If a change in fixed cost raises average total cost above the demand curve:
A.price and output will remain unchanged.
B.more monopolies will enter.
C.the monopoly will go out of business.
D.marginal cost will be greater than marginal revenue.

Accepted Answer

The answer of If a change in fixed cost raises...

Quiz 13: Monopoly

Compared to a perfectly competitive industry, a monopolist: A.produces a large quantity. B.charges a higher price. C.increases consumer surplus. D.earns less profit in the long run.

A statement that best reflects an evaluation of monopoly firms is that: A.they are economically inefficient. B.they have little or no market power. C.consumers are given more choices, lower costs, and higher quality. D.competition should replace all monopolies.

Figure: A Profit-Maximizing Monopoly Firm (Figure: A Profit-Maximizing Monopoly Firm) Look at the figure A Profit-Maximizing Monopoly Firm.This firm's profit per unit is: A.$5. B.$13. C.$14. D.$20.

Which of the following is true? A.A monopoly firm is a price-maker. B.MR = P if the demand curve is downward sloping. C.MR = MC is a profit-maximizing rule for firms in perfect competition only. D.Monopolies tend to charge lower prices than perfectly competitive firms.

In a monopoly in the long run: A.economic profits will be eliminated by the entry of rival firms. B.economic profits will be reduced but not eliminated entirely by the entry of rival firms. C.entry by other firms will not occur. D.social surplus is maximized.

Figure: Short-Run Monopoly (Figure: Short-Run Monopoly) Look at the figure Short-Run Monopoly.The marginal cost of producing the profit-maximizing quantity is cost:

The profit-maximizing rule MR = MC is: A.followed by a monopoly but not by a perfectly competitive firm. B.followed by a perfectly competitive firm but not by a monopoly. C.followed by all types of firms. D.not followed by a monopoly because it would reduce economic profit to zero.

In the short run, a monopoly will stop producing if: A.P < ATC. B.P < AVC. C.P > MR. D.P > ATC.

(Table: Demand and Total Cost) Look at the table Demand and Total Cost.Lenoia runs a natural monopoly producing electricity for a small mountain village.The table shows Lenoia's demand and total cost of producing electricity.The marginal revenue of the fourth unit of production is:

(Table: Demand and Total Cost) Look at the table Demand and Total Cost.Lenoia runs a natural monopoly firm producing electricity for a small mountain village.The table shows Lenoia's demand and total cost of producing electricity.To maximize profits, Lenoia should charge a price of:

Figure: A Profit-Maximizing Monopoly Firm (Figure: A Profit-Maximizing Monopoly Firm) Look at the figure A Profit-Maximizing Monopoly Firm.This firm's price per unit is: A.$20. B.$26. C.$29. D.$35.

In perfect competition, the firm produces the output such that , and in monopoly, the firm produces the output such that _. A.P > MR = MC; P = MR = MC B.P = MR = MC; P < MR = MC C.P = MR = MC; P > MR = MC D.P = MR = MC; P = MR = MC

Figure: A Profit-Maximizing Monopoly Firm (Figure: A Profit-Maximizing Monopoly Firm) Look at the figure A Profit-Maximizing Monopoly Firm.The firm in this figure will produce units of output per week. A.160 B.220 C.250 D.300

Figure: A Profit-Maximizing Monopoly Firm (Figure: A Profit-Maximizing Monopoly Firm) Look at the figure A Profit-Maximizing Monopoly Firm.This firm's cost per unit at its profit-maximizing quantity is: A.$8. B.$15. C.$16. D.$18.

If a change in fixed cost raises average total cost above the demand curve: A.price and output will remain unchanged. B.more monopolies will enter. C.the monopoly will go out of business. D.marginal cost will be greater than marginal revenue.