Question 1

Suppose that the only maker of a particular type of horse hair clothing exits the industry because demand is too low.The correct analysis of this situation is that

Accepted Answer

A)  the producer's decision is irrational, since monopolies are not limited by the demand curve
B)  the producer's decision is irrational, since monopolies never go out of business
C)  the producer's decision is irrational, since it could simply raise the price
D)  the price received by the producer was lower than the marginal cost in the long run
E)  the price received by the producer was lower than the average total cost in the long runF) A) and C)
G) B) and D)

Question 2

A monopolist has complete control over both price and quantity of output.

Accepted Answer

A) True 
 B)False

Question 3

Price discrimination will occur whenever a firm faces a downward-sloping demand curve.

Accepted Answer

A) True 
 B)False

Question 4

Average revenue, demand, and price are all depicted by the same curve for a monopoly.

Accepted Answer

A) True 
 B)False

Question 5

Exhibit 9-2  In Exhibit 9-2, the average revenue of the fourth unit is

Accepted Answer

A)  $12
B)  $3
C)  $4
D)  -$4
E)  $0F) A) and E)
G) C) and D)

Question 6

The supply curve for a monopolist

Accepted Answer

A)  is its marginal cost curve
B)  is vertical because there are no close substitutes for its product
C)  is horizontal because there are no close substitutes for its product
D)  slopes upward
E)  does not existF) C) and D)
G) A) and D)

Question 7

The practice of charging different prices to different consumers of the same product is called

Accepted Answer

A)  monopolistic pricing
B)  unit pricing
C)  price discrimination
D)  elasticity pricing
E)  marginal cost pricingF) A) and E)
G) C) and D)

Question 8

Exhibit 9-18  The firm in Exhibit 9-18, the monopolist who charges the same price to all customers, will produce how many units of output?

Accepted Answer

A)  1 unit
B)  2 units
C)  3 units
D)  4 units
E)  5 unitsF) C) and E)
G) C) and D)

Question 9

Unlike firms in a perfectly competitive industry, monopolists have control over

Accepted Answer

A)  the price they charge for the product
B)  the quantity of output they produce
C)  the prices they pay for resources
D)  the quantities of various resources which are used
E)  improvements in technologyF) A) and D)
G) B) and D)

Question 10

Jewelers are willing to hold large inventories of diamonds

Accepted Answer

A)  because the demand for diamonds is large and growing
B)  because that minimizes the fixed cost of producing diamond jewelry
C)  because, given De Beers' control of the market, they are confident that the price of diamonds will not plummet rapidly
D)  because, given De Beers' control of the market, they are confident that the price of diamonds will rise rapidly
E)  because that is what their customers expect them to doF) B) and D)
G) A) and E)

Question 11

With perfect price discrimination, each consumer is charged the marginal value of each unit consumed.

Accepted Answer

A) True 
 B)False

Question 12

Exhibit 9-3  The total cost for the firm in Exhibit 9-3, a monopolist that maximizes profit while charging all customers the same price, is

Accepted Answer

A)  $3, 300
B)  $3, 400
C)  $2, 808
D)  $2, 340
E)  $1, 638F) A) and B)
G) A) and C)

Question 13

Exhibit 9-3  At the profit-maximizing output for the firm in Exhibit 9-3, the single price monopolist will charge _____ per unit of output.

Accepted Answer

A)  $30
B)  $24
C)  $22
D)  $20
E)  $10F) C) and D)
G) B) and E)

Question 14

Exhibit 9-4  What is the revenue-maximizing output for the monopolist represented in Exhibit 9-4, assuming it does not price discriminate?

Accepted Answer

A)  0 units
B)  2 units
C)  3 units
D)  4 units
E)  5 unitsF) D) and E)
G) C) and E)

Question 15

Exhibit 9-5  The total revenue for the nondiscriminating monopolist at its profit-maximizing quantity in Exhibit 9-5 is

Accepted Answer

A)  $16, 200
B)  $36, 000
C)  $39, 600
D)  $30, 800
E)  $31, 000F) D) and E)
G) A) and E)

Question 16

A profit-maximizing monopolist never produces along the __________ portion of the demand curve because marginal revenue is __________ there.

Accepted Answer

A)  elastic; positive
B)  elastic; negative
C)  inelastic; negative
D)  inelastic; positive
E)  inelastic; zeroF) C) and D)
G) A) and B)

Question 17

On a graph, to determine the price a profit-maximizing monopolist would charge, find the quantity at which MC and MR intersect and read up to the demand curve.

Accepted Answer

A) True 
 B)False

Question 18

Exhibit 9-11  If the monopolist in Exhibit 9-11 chooses to produce 1, 000 units and does not price discriminate, its profit will be

Accepted Answer

A)  $0
B)  $104, 000
C)  $212, 000
D)  maximized
E)  negativeF) None of the above
G) C) and E)

Question 19

Perfectly competitive firms and monopolist firms both maximize profit where

Accepted Answer

A)  price equals marginal cost
B)  total revenue is maximized
C)  average total cost is minimized
D)  marginal cost equals marginal revenue
E)  price is as high as possibleF) B) and C)
G) A) and B)

Question 20

A monopolist has no supply curve because

Accepted Answer

A)  as demand changes, each output level can be consistent with more than one profit-maximizing price
B)  monopolists tend to restrict output
C)  monopolists have no marginal cost curve
D)  monopolists can charge any price they want
E)  as demand changes, the firm's profit-maximizing choice of output may changeF) None of the above
G) B) and D)

Exam 9: A--Monopoly

Price discrimination will occur whenever a firm faces a downward-sloping demand curve.

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Exhibit 9-4 What is the revenue-maximizing output for the monopolist represented in Exhibit 9-4, assuming it does not price discriminate?

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Jewelers are willing to hold large inventories of diamonds

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The practice of charging different prices to different consumers of the same product is called

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Exhibit 9-11 If the monopolist in Exhibit 9-11 chooses to produce 1, 000 units and does not price discriminate, its profit will be

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Exhibit 9-3 The total cost for the firm in Exhibit 9-3, a monopolist that maximizes profit while charging all customers the same price, is

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The supply curve for a monopolist

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Exhibit 9-18 The firm in Exhibit 9-18, the monopolist who charges the same price to all customers, will produce how many units of output?

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Exhibit 9-3 At the profit-maximizing output for the firm in Exhibit 9-3, the single price monopolist will charge _____ per unit of output.

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Perfectly competitive firms and monopolist firms both maximize profit where

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A monopolist has complete control over both price and quantity of output.

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Average revenue, demand, and price are all depicted by the same curve for a monopoly.

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Suppose that the only maker of a particular type of horse hair clothing exits the industry because demand is too low.The correct analysis of this situation is that

Correct AnswerverifiedShow Answer

Unlike firms in a perfectly competitive industry, monopolists have control over

Correct AnswerverifiedShow Answer

A monopolist has no supply curve because

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With perfect price discrimination, each consumer is charged the marginal value of each unit consumed.

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Exhibit 9-5 The total revenue for the nondiscriminating monopolist at its profit-maximizing quantity in Exhibit 9-5 is

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A profit-maximizing monopolist never produces along the __________ portion of the demand curve because marginal revenue is __________ there.

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Exhibit 9-2 In Exhibit 9-2, the average revenue of the fourth unit is

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On a graph, to determine the price a profit-maximizing monopolist would charge, find the quantity at which MC and MR intersect and read up to the demand curve.

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A profit-maximizing monopolist never produces along the portion of the demand curve because marginal revenue is there.

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