CHAPTER 24 QUIZ

A. by charging a lower price to consumers whose demand is more elastic.

A monopolist engages in price discrimination A. by charging a lower price to consumers whose demand is more elastic. B. by charging a higher price to consumers whose demand is more elastic. C. by charging a higher price when marginal cost is lower. D. by charging the same price to all consumers.

D. a single supplier of a good or service for which there is no close substitute.

A monopolist is defined as A. a large​ firm, making substantial​ profits, that is able to make other firms do what it wants. B. a firm with annual sales over​ $10 million. C. a producer of a good or service that is expensive to​ produce, requiring large amounts of capital equipment. D. a single supplier of a good or service for which there is no close substitute.

C. MR​ = MC.

A monopoly will maximize profits at the level of output at which A. MR​ = AFC. B. MC​ = P. C. MR​ = MC. D. MC​ = ATC.

B. 60 cents and an output of​ 30,000 newspapers per day.

According to the figure at​ right, the profit maximizing​ price-output combination for the monopolist is a price of A. 45 cents and an output of​ 45,000 newspapers per day. B. 60 cents and an output of​ 30,000 newspapers per day. C. 50 cents and an output of​ 40,000 newspapers per day. D. 30 cents and an output of​ 30,000 newspapers per day.

C. the shape of the demand curve each faces.

An important difference between a perfectly competitive firm and a monopolist is A. a monopolist normally produces a​ service, while a perfect competitor normally produces a good. B. the size of the firms. C. the shape of the demand curve each faces. D. the goals of the owners of the firms.

D. marginal revenue and marginal cost in each of the two markets.

A​ price-discriminating monopolist with two markets will equate A. average revenue and marginal revenue between the two markets. B. price and marginal revenue in each of the two markets. C. the prices of two markets. D. marginal revenue and marginal cost in each of the two markets.

D. they restrict output and raise prices.

Monopolies are discouraged in the United States because A. they can produce at lower cost in the short run. B. they are more efficient than other industries. C. they hire too few workers for their production volumes. D. they restrict output and raise prices.

D. selling a product at different​ prices, with the price difference being unrelated to differences in marginal cost.

Price discrimination refers to A. charging the same prices to all consumers but selling them different quantities. B. a deliberate effort on the part of a monopoly producer to confuse consumers. C. selling a product at different prices according to the differences in marginal cost of providing it to different consumers. D. selling a product at different​ prices, with the price difference being unrelated to differences in marginal cost.

B. slopes downward.

The demand curve faced by the monopolist A. is perfectly elastic. B. slopes downward. C. slopes upward. D. is perfectly inelastic.

A. Control of a vital resource by one producer

Which of the following can be a barrier to​ entry, closing a market to new​ firms? A. Control of a vital resource by one producer B. An elastic industry demand curve C. Diseconomies of scale D. Ease of obtaining capital financing

C. MR​ < P

Which of the following conditions is true for a​ monopolist? A. MR​ = P B. MR​ < AVC C. MR​ < P D. MR​ = AFC

C. The market price of the product is too high.

Which of the following is NOT a barrier to entry that would allow a monopolist to keep potential competitors out of its​ market? A. The firm has government authorization to be a monopoly. B. The firm has a patent on the good or control over some resource required for the production of the good. C. The market price of the product is too high. D. Significant economies of scale exist.

C. If there are substantial economies of​ scale, price may be lower and output greater under monopoly than under perfect competition.

Which of the following is a TRUE statement about monopoly and perfect​ competition? A. If there are substantial economies of​ scale, price may be lower and output greater under monopoly than under perfect​ competition, and price may be below marginal cost instead of equal to marginal cost. B. Because costs do not depend on market​ structure, price is usually higher and output is always lower under monopoly than perfect competition. C. If there are substantial economies of​ scale, price may be lower and output greater under monopoly than under perfect competition. D. Price is always higher and output higher under monopoly than under perfect competition.

D. The monopolist produces only goods of highest quality.

Which of the following regarding a monopolist is​ INCORRECT? A. There are barriers to entry that allow monopoly. B. The monopolist constitutes the entire industry. C. The monopolist is a single supplier of a good or service. D. The monopolist produces only goods of highest quality.

A. The value that society places on the last unit produced in a monopoly is greater than its cost.

Which of the following statements is true about the price that a monopolist​ charges? A. The value that society places on the last unit produced in a monopoly is greater than its cost. B. The price is the same as the price that would be charged if there was perfect competition. C. Too much of the good is being produced in a competitive market and not enough is being produced in a monopoly. Due to the way that prices are set. D. The difference between the price charged by a monopolist and a perfect competitor is due to differences in costs.

C. decrease output and increase price.

In the figure at​ right, if the firm is producing at Q3 and charging a price of P3​, it should A. not change output or price. B. increase output and decrease price. C. decrease output and increase price. D. shut down.

C. only in perfectly competitive markets.

Profits can be maximized by equating MR​ = MC​ = Price, A. only in monopoly markets. B. only with government price controls. C. only in perfectly competitive markets. D. only in discriminating monopoly markets.

152

Refer to the above table. Given the demand and cost​ schedules, what are the maximized economic profits for this​ monopolist? A. ​$122 B. ​$150 C. ​$152 D. ​$220

D. ​$3

Refer to the above table. Given the demand and cost​ schedules, what is the profitminus−maximizing price for this​ monopolist? A. ​$7 B. ​$4 C. ​$6 D. ​$3

C. 20

Refer to the table at right. Given the demand and cost​ schedules, what is the profit maximizing quantity for this​ monopolist? A. 15 B. 25 C. 20 D. 30

D. increase output and decrease price.

Suppose a​ monopolist's costs and revenues are as​ follows: ATC​ = $50; MC​ = $40; MR​ = $45; P​ = $55. The firm should A. decrease output and increase price. B. shut down. C. not change output or price. D. increase output and decrease price.

A. the difference between total revenues and total costs is the greatest.

The​ price-output combination that maximizes profits for a monopolist occurs at the point where A. the difference between total revenues and total costs is the greatest. B. total revenues and total costs are equal. C. total revenues are the greatest. D. the elasticity of demand equals one.

D. Q1 units of output and a price of P1.

The​ profit-maximizing price and quantity established by the unregulated monopolist in the figure at right are A. Q1 units of output and a price of P5. B. Q4 units of output and a price of P4. C. Q3 units of output and a price of P3. D. Q1 units of output and a price of P1.

D. All of the above

Which of the following are barriers to​ entry? A. Economies of scale B. Control of resources C. Patents and copyrights D. All of the above

B. one single producer

Which of the following is a characteristic of a monopoly​ market? A. The firm is a price taker. B. one single producer C. easy entry D. many suppliers of similar products

D. Typically there are numerous very close substitutes for the product of a monopolist.

Which of the following statements is​ FALSE? A. The marginal revenue earned by a monopolist will always be less than the​ product's price. B. For a​ profit-maximizing monopolist, marginal revenue equals marginal cost. C. An​ unregulated, profit-maximizing monopolist will not operate in the inelastic portion of the demand curve. D. Typically there are numerous very close substitutes for the product of a monopolist.

C. ​long-run economic profits must be zero.

If there are no barriers to entry into an​ industry, A. ​short-run and​ long-run profits must still be positive. B. both​ short-run and​ long-run economic profits must be zero. C. ​long-run economic profits must be zero. D. ​short-run economic profits must be zero.

C. ​less; higher

Compared to perfect​ competition, a monopoly will produce​ ________ output, and charge a​ ________ price. A. ​less; lower B. ​more; lower C. ​less; higher D. ​more; higher

C. price exceeds marginal cost.

For a monopolist that is maximizing​ profits, its A. price equals marginal revenue. B. marginal revenue exceeds price. C. price exceeds marginal cost. D. price equals average total cost.

B. an upward sloping marginal cost curve.

For price discrimination to​ exist, all of the following are necessary EXCEPT A. an identifiable group of buyers with different elasticities of demand. B. an upward sloping marginal cost curve. C. there can be no resale of the product. D. a downward sloping demand curve.

B. less than average revenue since price must be lowered to sell additional units.

For the​ monopolist, marginal revenue is A. equal to price. B. less than average revenue since price must be lowered to sell additional units. C. not a consideration in the​ firm's pricing. D. greater than price.

B. ​$89.

If a firm sells 10 units of output at​ $100 per unit and 11 units of output when price is reduced to​ $99, its marginal revenue for the last unit sold is ㅇㅇㅇㅇㅇㅇㅇㅇㅇㅇㅇ어려워 어어어어어 A. ​$10. B. ​$89. C. ​$109. D. ​$1.

D. reduce output if it wants to maximize profits.

If a monopolist is producing the quantity at which price equals marginal​ cost, it should A. reduce price and keep output unchanged if it wants to maximize profits. B. increase output if it wants to maximize profits. C. continue to produce this amount if it wants to maximize profits. D. reduce output if it wants to maximize profits.

A. it must reduce its​ price, so its marginal revenue is less than its price.

If a monopolist wishes to increase its output and quantity​ sold, A. it must reduce its​ price, so its marginal revenue is less than its price. B. it must raise its​ price, so its marginal revenue is less than its price. C. it must raise its​ price, so its marginal revenue is greater than its price. D. it must reduce its​ price, so its marginal revenue is greater than its price.