Econ102: Chapter 15 Quiz

Which of the following is NOT considered a natural barrier? a. control of resources b. problems raising capital c. economies of scale d. licensing

d. licensing

Monopoly power measures the ability to set the ________ for a good. a. Price b. Output Level c. Quality d. Demand

a. Price

On the figure below, where does a monopoly operate to maximize profits? (Image of monopoly demand curve) a. Where MR = MC b. Where MR > MC c. Where MR < MC d. Either where MR > MC or MR < MC

a. Where MR = MC

Compared to perfect competition, monopoly results in (graph of perfect competition, looks like X and monopoly) a. fewer units produced and sold. b. more units produced and sold. c. the same number of units produced and sold. it d. it depends on the monopoly

a. fewer units produced and sold.

Assume that a monopolist faces the demand schedule given below, and a constant marginal cost of $2 for each unit of output. To maximize profits, this monopolist would produce ____ units of output and charge a price of ____ per unit. a. 1 units; $8 per unit b. 2 units; $5 per unit c. 3 units; $3 per unit d. 4 units; $1 per unit

b. 2 units; $5 per unit

A natural monopoly exists when a single seller experiences ____________ average total costs than any potential competitor. a. Higher b. Lower c. Equal d. Sometimes higher and sometimes lower

b. Lower

Compared to perfect competition, monopolies charge a. A lower price. b. a higher price. c. the same price. d. Whether higher or lower depends on the monopoly.

b. a higher price.

Over the long run, a monopolist a. cannot continue to make profits and will earn a loss b. can continue to make economic profits if it can maintain a monopoly and keep competitors from entering the market c. will not make a profit or a loss but will operate at zero economic profit

b. can continue to make economic profits if it can maintain a monopoly and keep competitors from entering the market

Assume that a monopolist faces the demand schedule given in the table below and a constant marginal cost of $50 for each unit of output. To maximize profits, the monopolist would produce ____ units of output at a price of ____ per unit. a. 5,000; $50 b. 4,000; $60 c. 3,000; $70 d. 2,000; $80

c. 3,000; $70

Which of the following conditions must be met for a single seller to become a monopolist? a. The firm must have something unique to sell. b. The firm must have a way to prevent potential competitors from entering the market. c. Both answers are true. d. Neither answer is true.

c. Both answer are true. (a. & b.)

The table provided below shows how to calculate a monopoly's total revenue and marginal revenue. As price falls, total revenue initially ____________ and then a. Increases, continues to increase b. Decreases, continues to decrease c. Increases, decreases d. Decreases, increases

c. Increases, decreases

Monopolies choose their profit maximizing: a. Output Level b. Price c. Output level and price d. Neither output level nor price

c. Output level and Price

Suppose that at the current level of production, the price of a monopolist's product is equal to $15 per unit. Marginal revenue is equal to $10 per unit, and marginal cost is equal to $15 per unit. This monopoly a. has maximized profit and should keep production the same. b. can increase its profit by producing and selling more units of its product. c. can increase its profit by producing and selling fewer units of its product. d. More information is needed to answer this question.

c. can increase its profit by producing and selling sewing units of its product

Monopolies lead to a. rent seeking. b. deadweight loss. c. an efficient outcome. d. Both rent seeking and deadweight loss are true.

d. Both rent seeking and deadweight loss are true.