AP Econ, Ch 26, Test Answers

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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


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