AP Econ, Ch 26, Test Answers
If a firm sells 10 units of output at
$89
According to the figure above, what are the profits of the firm if its produces 50,000
-$7,500 per day
Which of the following statements is FALSE?
The profit-maximizing monopolist will always charge
Which of the following is NOT a barrier to entry
U.S. antitrust legisation
If the price elasticity of demand for U.S. automobiles is higher
a higher price for autos in the U.S. than in Europe
A monopolist is correctly defined as
a single supplier of a good or service for where
The monopolist's marginal revenue is less than
additional units can only be sold if the price
When the marginal cost of the monopolist increases, there will be
an increase in price but a decrease in quantity
A firm typically achieves its position as a monopolist
barriers to entry
A monopolist can earn profits in the long run because
barriers to entry prevent new frims from
In order for a firm to
barriers to market entry
If different markets for a product produced by a monopolist
be able to make higher profits
An association of producers that fix common
cartel
Which of the following is NOT a restriction the government imposes to keep
cartels
With price discrimination a monopolist will
charge a lower price to a consumers whose demand is more elastic
A price discriminating monopolist wil
charge higher prices to consumers who desire a product more
Which of the following can be a barrier to entry
control of vital resources
The profit maximizing behavior of a monopoly is different from that of a
control the desired price or level of output to maximize profits,
A monopolist sells a homogeneous good in several distinct submarkets,
customers in the markets with more elastic demand will pay lower prices than
In the figure above, if the firm is producing at Q3
decrease output and increase price
The price elasticity of demand for a good produced by a monopolist
does not equal zero because there will always be
If a government imposes high enough tariffs,
domestic producers will have monopoly power
The demand curve a monopolist faces is
downward sloping
In maximizing economic profit, the monopolist will
equate marginal revenue to marginal cost
A monopolist finds
equating marginal revenue and marginal cost
In order to price discriminate, a firm must
face a downward-sloping demand curve
Which of the following is NOT a necessary condition for price discrimination?
having a constant marginal cost
The monopolist's demand curve is
identical with the industry demand curve
Economies of scale can
inhibit the entry of new firms
A monopolist faces a demand curve that
is downward sloping
For a firm facing a downward sloping demand curve,
is greater at higher prices than at lower prices
The demand curve faced by the pure monopolist
is the market demand curve
If a firm is price discriminating,
it has market power
A monopoly will look for opportunities
leads to greater profits
Compared to competitive firms,
less elastic
For the monopolist, marginal revenue is
less than average revenue since price must
If there are no barriers to entry
long-run economic profits must be zero
Which of the following would NOT be a barrier
low cost of obtaining initial capital
To sell more units, a monopolist must
lower price
A monopolist's marginal revenue curve is
lower than product price
To sell one more unit of a good,
lower the price on all units
a price discriminating monopolist will equate
marginal revenue and marginal cost in each market
Under monopoly,
too few resources are used by the monopoly
A price discriminating firm will charge more to the customers who
want the product relatively more than other customers
If the figure above accurately portrays the market conditions for
will be forced to go out of business in the long run
Which of the following is NOT a necessary condition for a firm
The firm must be a price-taker
Which of the following is NOT necessary in order
The marginal cost of providing the same good to different
The profit maximizing price and quantity established by
Q1 units of output and a price of P1
Which of the following is NOT a barrier to entry that would allow
The market price of the product is too high
Which of the following statements concerning the monopolist is FALSE
The monopolist will charge the highest price
For a monopolist who is maximizing profits,
price exceeds marginal cost
Compared to the efficient competitive industry result, the monopolist will
produce less output and charge a higher price
A patent on a product gives a firm
protection
Economists criticize monopolies because monopolies
restrict output and raise prices compared to
Price discrimination is the
selling a given product at more than one price when the price difference is unrelated
Price differentiation refers to
selling a product at different prices according
A monopolist will not be able to make a positive profit at any price-output
the average total cost curve 9s everywhere above the demand curve
A profit-maximizing monopolist will make zero profits when
the average total cost curve is tangent to the demand cruve
The conclusion that monopoly results in lower output and higher price
the costs of production are the same whether the industry
The price-output combination that maximizes profits for a monopolist occurs at the point where
the difference between total revenues and total costs is the greatest
A firm can be the sole supplier of a good and still not be a monopoly if
the firm is not making excessive profits
.the demand curve facing a monopolist will be more elastic
the greater the number
The demand curve a monopolist faces is
the industry demand curve
The major difference between a monopolist
the monopolist's marginal revenue curve lies below its demand curve
Conclusions about the misallocation of resources
the monopolization of a perfectly competitive indsutry
Which of the following will make price discrimination difficult for a monopolist
the possibility of resale of the product
For a monopolist, the marginal revenue gained
the price at which the extra unit is sold minus the loss in revenue in which
An important difference between a perfect competitor and a monopolist is
the shape of the demand curve each faces
A natural monopoly usually arises wen
there are large economies of scale relative to the industry's demand
According to the figure above, the maximum profit the monopolist can make is
$1,500 per day
Suppose that a monopolist sells 10,000 units of output at
$220,000
Assuming marginal revenue equals $5 and average total cost
$5
In the figure above, at the firm's profit-maximizing level of output
0P1 AQ1
A patent provides legal protection for
17 years
According to the figure above, the profit-maximizing price-output combination for the monopolist is a price of
60 cents and an output of
According to the figure above, the profit-maximizing price for the monopolist is
A
Which of the following statements is FALSE
A monopolist may have very close substitutes
In the figure above, the difference between the competitive industry price and that of the monopolist is
AB
According to the figure above, when the monopolist maximizes profits,
AKOD
A monopolist will not earn any economic profits
ATC lies above the demand curve
In the figure above, the monopolist's profit-maximizing output level is
C
Which of the following is TRUE?
Charging all customers the same price
Which of the following is not an example of price discrimination
Gasoline stations
In the figure above, if the firm is producing Q1
Increase output and decrease price
According to the figure above, the profit-maximizing output for the monopolist is
K
The monopolist will choose the price and output
MC equals MR
In equilibrium,
MR=MC
To maximize profits,
MR=MC
Which of the following statements is TRUE
Monopolists raise the price and restrict production
In the figure above, the total cost of producing
P2 BQ1
In the figure above, marginal cost and marginal revenue are equal at output level
Q1
If government regulations
new firms are discouraged from entering the market
Monopoly producers are faced with
no competitive producers
In the figure above, if the firm is producing Q2
not change output or price
Suppose a monopolist's costs and revenues are as follows: ATC = $45.00
not change output or price
Profits can be maximized by equating Mr=MC=Price
only in competitive markets
Establishing different prices for similar products
price differentiation
If the Japanese,
price discrimination