Question 1

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

Accepted Answer

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

Question 2

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

Accepted Answer

A)   the amount he alone can supply the market with.
B)   the amount demanders are willing to buy at that price.
C)   constrained by the availability of inputs.
D)   less than if it were a perfectly competitive market.E) A) and B)
F) A) and C)

Question 3

For a monopolist,the price effect:

Accepted Answer

A)   is the increase in revenues from selling a greater quantity at a lower price.
B)   is always outweighed by the quantity effect.
C)   is the decrease in revenues from selling a greater quantity at a lower price.
D)   always outweighs the quantity effect.E) A) and B)
F) A) and C)

Question 4

When the monopolist decides to supply a given amount to the market,it will:

Accepted Answer

A)   set the price equal to marginal cost.
B)   set the price higher than what demanders are willing to pay for that amount.
C)   only sell that amount if it charges what the demanders are willing to pay for that amount.
D)   set the price lower than the demand curve to create a perceived shortage.E) All of the above
F) A) and B)

Question 5

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

Accepted Answer

A)   break up the company along different stages of the production process.
B)   split it vertically.
C)   split it horizontally.
D)   All of these statements are true.E) A) and B)
F) A) and C)

Question 6

The monopolist's outcome happens at a:

Accepted Answer

A)   lower quantity than the perfectly competitive one.
B)   lower price than the perfectly competitive one.
C)   higher quantity than the perfectly competitive one.
D)   cost that is equal to a perfectly competitive one.E) B) and D)
F) A) and D)

Question 7

The monopolist and the perfectly competitive firm both choose to maximize profits by choosing the level of output where:

Accepted Answer

A)   MC equals MR and price is equal to minimum ATC.
B)   the two types of firms make their profit-maximizing decision differently.
C)   MC equals MR and price is equal to AR.
D)   MC equals AR and price is equal to minimum ATC.E) A) and B)
F) A) and C)

Question 8

An essential characteristic of a monopoly is:

Accepted Answer

A)   the good must have no close substitutes.
B)   there can only be a few sellers in the market.
C)   only one buyer must exist.
D)   many buyers must exist.E) A) and B)
F) All of the above

Question 9

The monopolist is able to enjoy profits in the long run because:

Accepted Answer

A)   the firm's price is set above its marginal costs.
B)   there is no threat of competition.
C)   the firm can charge a price higher than its average total costs in the long run.
D)   All of these statements are true.E) A) and B)
F) None of the above

Question 10

A monopoly:

Accepted Answer

A)   is a price taker.
B)   faces competition from other firms producing close substitutes.
C)   restricts its output.
D)   sets a low price by controlling the level of output.E) A) and C)
F) A) and B)

Question 11

This graph shows the cost and revenue curves faced by a monopoly.  According to the graph shown,if Q2 units are being produced,this monopolist:

Accepted Answer

A)   is earning negative economic profits.
B)   is earning positive economic profits.
C)   is earning zero economic profits.
D)   may be earning zero accounting profits.E) None of the above
F) B) and C)

Question 12

Which of the following was not an industry the government has used the Sherman Act to break up because it was a monopoly?

Accepted Answer

A)   Railroad
B)   Oil
C)   Aluminum
D)   TechnologyE) All of the above
F) C) and D)

Question 13

For a monopolist,total revenues will:

Accepted Answer

A)   increase and eventually decrease as output increases.
B)   decrease and eventually increase as output increases.
C)   always increase as output increases.
D)   always decrease as output increases.E) A) and B)
F) C) and D)

Question 14

Price discrimination exists:

Accepted Answer

A)   only in perfectly competitive markets.
B)   because sellers try to exploit differences in customers' willingness to pay.
C)   in all industries, regardless of market structure.
D)   only when demand is inelastic.E) A) and D)
F) A) and C)

Question 15

An example of a public policy response to a monopoly is:

Accepted Answer

A)   public admonishment.
B)   encouraging mergers.
C)   antitrust laws.
D)   All of these are examples.E) None of the above
F) A) and C)

Question 16

The existence of a monopoly:

Accepted Answer

A)   creates a gain of total surplus.
B)   benefits the consumer.
C)   benefits the monopolist.
D)   creates more consumer surplus.E) B) and C)
F) A) and D)

Question 17

Diamonds are expensive because:

Accepted Answer

A)   very few diamonds are discovered each year.
B)   the seller of most diamonds in the world restricts output.
C)   they are a symbol of luxury.
D)   they are a form of conspicuous consumption.E) C) and D)
F) None of the above

Question 18

For a monopolist,average revenues:

Accepted Answer

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

Question 19

The Sherman Antitrust Act:

Accepted Answer

A)   no longer applies to business practices today.
B)   was passed in 1800.
C)   was actively used by President Roosevelt in the early 20th century.
D)   All of these statements are true.E) A) and B)
F) B) and D)

Question 20

A monopoly:

Accepted Answer

A)   is constrained because its decisions cannot affect market price.
B)   is constrained by demand.
C)   faces a horizontal demand curve.
D)   is constantly threatened by the entry of new firms.E) B) and D)
F) A) and B)

Exam 14: Monopoly

A monopoly:

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An essential characteristic of a monopoly is:

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For a monopolist,total revenues will:

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An example of a public policy response to a monopoly is:

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For a monopolist,average revenues:

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

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For a monopolist,the price effect:

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Diamonds are expensive because:

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When the monopolist decides to supply a given amount to the market,it will:

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Price discrimination exists:

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This graph shows the cost and revenue curves faced by a monopoly. According to the graph shown,if Q2 units are being produced,this monopolist:

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

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The existence of a monopoly:

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The monopolist and the perfectly competitive firm both choose to maximize profits by choosing the level of output where:

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

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The monopolist's outcome happens at a:

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The Sherman Antitrust Act:

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Which of the following was not an industry the government has used the Sherman Act to break up because it was a monopoly?

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The monopolist is able to enjoy profits in the long run because:

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A monopoly:

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