Question 1

The table shown represents the revenues faced by a monopolist.

What is the firm's average revenue for five units?

Accepted Answer

A)  $600
B)  $300
C)  $3,000
D)  $120E) A) and B)
F) All of the above

Question 2

The government uses antitrust laws:

Accepted Answer

A)  to prevent all mergers that would create market power.
B)  ineffectively, because the laws in place are outdated.
C)  increasingly over time, as market power grows more concentrated.
D)  to break up and prevent monopoly power in markets.E) None of the above
F) A) and B)

Question 3

Public policies designed to mitigate the effects of monopolies are:

Accepted Answer

A)  highly debated.
B)  well-defined and accepted.
C)  highly effective.
D)  proven to increase benefits more than they increase costs.E) A) and D)
F) None of the above

Question 4

Price discrimination:

Accepted Answer

A)  can benefit consumers with a lower willingness to pay as compared to other consumers in the market.
B)  can be a successful strategy for any firm in a competitive market.
C)  tends to decrease the profits of the competitive firm.
D)  is more successful if one consumer can resell the product to another.E) A) and D)
F) B) and C)

Question 5

A monopoly is a firm that:

Accepted Answer

A)  is the sole producer of a good or service with no close substitutes.
B)  is the sole producer of a good or service with many close substitutes.
C)  is the producer of a good or service with just a few large competitors.
D)  produces a good or service that is identical to many others sold in the market.E) A) and D)
F) A) and C)

Question 6

For a monopoly, when the price effect outweighs the quantity effect of increased production:

Accepted Answer

A)  total revenue will increase.
B)  demand must be price inelastic.
C)  marginal revenue must be increasing.
D)  All of these are true.E) A) and B)
F) A) and C)

Question 7

The graph shown represents the cost and revenue curves faced by a monopoly.  Which of the following statements is true?The outcome in a monopoly market would be Q1, P1.The outcome in a perfectly competitive market would be Q2, P2.The efficient outcome is Q2, P2.

Accepted Answer

A)  I and II only
B)  I only
C)  II and III only
D)  I, II, and IIIE) A) and C)
F) All of the above

Question 8

At the price a monopolist sets, it will sell:

Accepted Answer

A)  as much as it wants.
B)  as much as consumers are willing to buy.
C)  more than a firm in a perfectly competitive market would sell.
D)  less than the quantity demanded to encourage scarcity.E) A) and B)
F) A) and C)

Question 9

The government protects intellectual property rights because they:

Accepted Answer

A)  incentivize companies to decrease production.
B)  encourage research and development.
C)  increase total surplus for society.
D)  benefit only producers in a society.E) All of the above
F) C) and D)

Question 10

One way the government can introduce competition into a monopoly industry is to:

Accepted Answer

A)  break it up along different stages of the production process.
B)  split it vertically.
C)  split it horizontally.
D)  All of these are true.E) None of the above
F) A) and B)

Question 11

The most a monopolist can sell at any given price is:

Accepted Answer

A)  the amount that the monopolist alone can supply.
B)  the amount consumers are willing to buy at that price.
C)  constrained by the availability of inputs.
D)  less than it could sell in a perfectly competitive market.E) C) and D)
F) B) and C)

Question 12

A perfect monopoly:

Accepted Answer

A)  refers to a single seller.
B)  can extract all consumer surplus from a market.
C)  controls 90 to 100 percent of the market for a product.
D)  would produce efficient outcomes.E) All of the above
F) None of the above

Question 13

For a monopoly producing at any output level greater than one, the average revenue curve:

Accepted Answer

A)  is the same as the demand curve.
B)  lies above the demand curve.
C)  lies below the demand curve.
D)  can be negative.E) B) and C)
F) All of the above

Question 14

Which of the following statements describes how a monopolist's cost curves compare to those of a perfectly competitive firm?

Accepted Answer

A)  The monopolist's marginal cost curve is downward sloping, while the perfectly competitive firm's is flat.
B)  The monopolist's average total cost curve is not necessarily minimized where it crosses the marginal cost curve.
C)  The monopolist's average variable cost curve in not identical to the marginal cost curve, as it is for a perfectly competitive firm.
D)  The shape of the cost curves are the same for a firm regardless of market structure.E) B) and C)
F) A) and D)

Question 15

Natural monopolies:

Accepted Answer

A)  are the only monopolies that are efficient.
B)  can capture the lowest production costs possible for the industry.
C)  are always protected by government policies.
D)  generally earn zero accounting profits due to government regulations.E) A) and C)
F) A) and B)

Question 16

The table shown represents the revenues faced by a monopolist.

The average revenue for this firm:

Accepted Answer

A)  decreases as output increases.
B)  increases as output increases.
C)  remains constant regardless of the level of output.
D)  is maximized when total revenue is maximized.E) All of the above
F) B) and D)

Question 17

The monopolist is always constrained by:

Accepted Answer

A)  the amount consumers are willing to buy at any given price.
B)  high fixed costs.
C)  barriers to entry.
D)  government regulation.E) A) and D)
F) A) and C)

Question 18

For a monopolist, average revenue:

Accepted Answer

A)  is always equal to price.
B)  equals price only at the profit maximizing quantity.
C)  is always zero at the profit maximizing quantity.
D)  is maximized when total revenues are maximized.E) A) and B)
F) A) and C)

Question 19

Producing any quantity of output greater than the point where the marginal revenue and marginal cost curves intersect leads to:

Accepted Answer

A)  marginal revenue that is lower than marginal cost.
B)  the maximization of profits.
C)  average total cost that is equal to average variable cost.
D)  marginal revenue that is higher than marginal cost.E) B) and C)
F) A) and B)

Question 20

All of the following are reasons a government might choose to protect monopoly rights in an industry except:

Accepted Answer

A)  to act in the public's interest.
B)  to benefit insiders.
C)  to encourage innovation.
D)  to increase consumer surplus beyond what is achieved through competition.E) A) and C)
F) B) and C)

Exam 14: Monopoly

A monopoly is a firm that:

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Which of the following statements describes how a monopolist's cost curves compare to those of a perfectly competitive firm?

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The table shown represents the revenues faced by a monopolist. The average revenue for this firm:

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A perfect monopoly:

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Price discrimination:

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The government protects intellectual property rights because they:

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For a monopoly, when the price effect outweighs the quantity effect of increased production:

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For a monopolist, average revenue:

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Public policies designed to mitigate the effects of monopolies are:

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The government uses antitrust laws:

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Producing any quantity of output greater than the point where the marginal revenue and marginal cost curves intersect leads to:

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At the price a monopolist sets, it will sell:

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All of the following are reasons a government might choose to protect monopoly rights in an industry except:

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The most a monopolist can sell at any given price is:

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The monopolist is always constrained by:

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The graph shown represents the cost and revenue curves faced by a monopoly. Which of the following statements is true?The outcome in a monopoly market would be Q1, P1.The outcome in a perfectly competitive market would be Q2, P2.The efficient outcome is Q2, P2.

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For a monopoly producing at any output level greater than one, the average revenue curve:

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Natural monopolies:

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One way the government can introduce competition into a monopoly industry is to:

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The table shown represents the revenues faced by a monopolist. What is the firm's average revenue for five units?

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