Question 1

Suppose marginal cost is constant and equal to 50 and marginal revenue equals 100 - 10Q. A profit-maximizing monopolist will set quantity equal to:

Accepted Answer

A)   3.
B)   5.
C)   7.
D)   10.E) A) and B)
F) All of the above

Question 2

Refer to the graph shown. The firm's profit-maximizing price is:

Accepted Answer

A)   e.
B)   f.
C)   g.
D)   h.E) All of the above
F) B) and C)

Question 3

A monopolistically competitive firm faces a downward-sloping demand curve.

Accepted Answer

A) True 
 B)False

Question 4

If a monopolist increases sales from 10 to 11 by lowering its price from $40 to $38, its marginal revenue is:

Accepted Answer

A)   $2.
B)   $18.
C)   $400.
D)   $418.E) A) and D)
F) A) and C)

Question 5

Refer to the table shown, which shows the demand schedule for a product sold by a monopolist. Marginal revenue is positive:   Price d product($)  Quantity demanded per year $143$124$105$86$67\begin{array}{l}\begin{array} { | c | c | } \hline 	ext { Price d product(\$) }& 	ext { Quantity demanded per year }\ \hline \$ 14 & 3 \\hline \$ 12 & 4 \\hline \$ 10 & 5 \\hline \$ 8 & 6 \\hline \$ 6 & 7 \\hline\end{array}\end{array} Price d product($) $14$12$10$8$6​ Quantity demanded per year 34567​​​

Accepted Answer

A)   when price is $10.
B)   when price is above $10.
C)   when price is below $10.
D)   for every price. E) A) and D)
F) A) and C)

Question 6

Refer to the graph shown. If this monopolist produces 45 units of output per day, it will:

Accepted Answer

A)   be maximizing profit.
B)   charge a price that exceeds its marginal cost.
C)   be able to increase profit by producing less per day.
D)   be able to increase profit by producing more per day.E) All of the above
F) A) and B)

Question 7

A purpose of advertising is to make the:

Accepted Answer

A)   demand for one's product less inelastic.
B)   demand for one's product more inelastic.
C)   supply for one's product less elastic.
D)   market closer to perfectly competitive.E) B) and C)
F) A) and D)

Question 8

Refer to the graph shown. If hamburgers are produced by a pure monopoly firm that maximizes profit, the social cost of monopoly will be represented by the area:

Accepted Answer

A)   BFC.
B)   GFHJ.
C)   ABFG.
D)   ABCG.E) None of the above
F) A) and B)

Question 9

Platform businesses are firms that:

Accepted Answer

A)   facilitate interaction among people.
B)   produce platforms for producing goods.
C)   focus on freedom of speech.
D)   initiate international trade.E) None of the above
F) A) and B)

Question 10

Refer to the graph shown. Holding cost conditions constant, if the monopolistically competitive firm represented were suddenly to find itself in a perfectly competitive market, the long-run equilibrium price would adjust to:

Accepted Answer

A)   $4.
B)   $6.
C)   $7.
D)   $8.E) B) and C)
F) A) and D)

Question 11

Refer to the graph shown. An unregulated, profit-maximizing monopolist will charge a price of: 1 and produce Q1 units of output. B)  P2 and produce Q2 units of output. C)  P3 and produce Q3 units of output. D)  P3 and produce Q1 units of output." class="answers-bank-image d-inline" rel="preload" >

Accepted Answer

A)   P1 and produce Q1 units of output.
B)   P2 and produce Q2 units of output.
C)   P3 and produce Q3 units of output.
D)   P3 and produce Q1 units of output.E) B) and C)
F) A) and D)

Question 12

The difference between a monopolist and a monopolistic competitor is that:

Accepted Answer

A)   a monopolist equates marginal revenue and marginal cost whereas a monopolistic competitor equates price and marginal cost.
B)   the average total cost curve of a monopolistic competitor is tangent to the demand curve in long-run equilibrium, but the average total cost curve of a monopolist can be in a position below the price in long-run equilibrium.
C)   the average total cost curve of a monopolist is tangent to the demand curve in long-run equilibrium, but the average total cost curve of a monopolistic competitor can be in a position below the price in long-run equilibrium.
D)   the average total cost curve of a monopolist is tangent to the demand curve in long-run equilibrium, but the average total cost curve of a monopolistic competitor can be in a position above the price in long-run equilibrium.E) All of the above
F) B) and D)

Question 13

If a firm has a monopoly over the sale of camera drones and seeks to maximize profits, it:

Accepted Answer

A)   adjusts the price of the product until demand becomes perfectly inelastic.
B)   will set the price of the product equal to the marginal cost of production.
C)   will set the price of the product equal to the average total cost of production.
D)   will set the price of the product so that its marginal revenue equals its marginal cost.E) A) and B)
F) None of the above

Question 14

Under monopolistic competition, there are:

Accepted Answer

A)   few barriers to entry.
B)   only a small number of sellers in the market.
C)   significant barriers to entry.
D)   only a few buyers in the market.E) C) and D)
F) A) and B)

Question 15

Dynamic pricing allows a website to use the personal information collected on a customer, such as income or location, to individualize the price of a product for each customer. Economists consider this type of pricing an example of:

Accepted Answer

A)   consumer sovereignty.
B)   producer sovereignty.
C)   price discrimination.
D)   price gouging.E) None of the above
F) A) and B)

Question 16

Because a monopolistic competitor has some monopoly power, advertising to increase that monopoly power makes sense as long as:

Accepted Answer

A)   the marginal benefit of advertising is positive.
B)   the marginal cost of advertising is positive.
C)   the marginal benefit of advertising exceeds the marginal cost of advertising.
D)   the marginal cost of advertising exceeds the marginal benefit of advertising.E) B) and C)
F) A) and D)

Question 17

The demand curve for a monopolist differs from the demand curve faced by a competitive firm because the demand curve for:

Accepted Answer

A)   a competitive firm lies above its marginal revenue curve.
B)   a competitive firm is inelastic.
C)   a monopolist is the market demand curve.
D)   a monopolist lies below its marginal revenue curve.E) All of the above
F) B) and D)

Question 18

Marginal revenue is not equal to price for a monopolist because:

Accepted Answer

A)   the monopolist's demand curve is below its marginal revenue curve.
B)   total revenue increases as output increases.
C)   the monopolist sets price equal to marginal cost.
D)   the monopolist must lower the price of all units in order to sell more.E) A) and B)
F) B) and C)

Question 19

For a monopolist, the point where the marginal revenue curve intersects the horizontal axis is:

Accepted Answer

A)   one-fourth of the distance between the origin and the point where the demand curve intersects the horizontal axis.
B)   located at the same point where the demand curve intersects the horizontal axis, since for a monopolist, the demand curve and the marginal revenue curve overlap.
C)   one-half the distance between the origin and the point where the demand curve intersects the horizontal axis.
D)   unable to be determined without knowing the location of the marginal cost curve.E) B) and C)
F) None of the above

Question 20

As firms leave a monopolistically competitive industry that is sustaining economic losses:

Accepted Answer

A)   the demand curves facing the remaining firms in the industry shift to the right.
B)   the demand curves facing the remaining firms in the industry shift to the left.
C)   total quantity demanded increases for the industry.
D)   the market supply curve shifts to the right.E) None of the above
F) C) and D)

Exam 14: Monopoly and Monopolistic Competition

Refer to the graph shown. An unregulated, profit-maximizing monopolist will charge a price of:

Correct Answer
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Refer to the graph shown. If this monopolist produces 45 units of output per day, it will:

Correct Answer
verified

A purpose of advertising is to make the:

Correct Answer
verified

Suppose marginal cost is constant and equal to 50 and marginal revenue equals 100 - 10Q. A profit-maximizing monopolist will set quantity equal to:

Correct Answer
verified

Under monopolistic competition, there are:

Correct Answer
verified

A monopolistically competitive firm faces a downward-sloping demand curve.

Correct Answer
verified

Platform businesses are firms that:

Correct Answer
verified

The difference between a monopolist and a monopolistic competitor is that:

Correct Answer
verified

Dynamic pricing allows a website to use the personal information collected on a customer, such as income or location, to individualize the price of a product for each customer. Economists consider this type of pricing an example of:

Correct Answer
verified

Because a monopolistic competitor has some monopoly power, advertising to increase that monopoly power makes sense as long as:

Correct Answer
verified

Refer to the graph shown. Holding cost conditions constant, if the monopolistically competitive firm represented were suddenly to find itself in a perfectly competitive market, the long-run equilibrium price would adjust to:

Correct Answer
verified

Correct Answer
verified

The demand curve for a monopolist differs from the demand curve faced by a competitive firm because the demand curve for:

Correct Answer
verified

For a monopolist, the point where the marginal revenue curve intersects the horizontal axis is:

Correct Answer
verified

If a firm has a monopoly over the sale of camera drones and seeks to maximize profits, it:

Correct Answer
verified

Refer to the graph shown. If hamburgers are produced by a pure monopoly firm that maximizes profit, the social cost of monopoly will be represented by the area:

Correct Answer
verified

Marginal revenue is not equal to price for a monopolist because:

Correct Answer
verified

As firms leave a monopolistically competitive industry that is sustaining economic losses:

Correct Answer
verified

Refer to the graph shown. The firm's profit-maximizing price is:

Correct Answer
verified

If a monopolist increases sales from 10 to 11 by lowering its price from $40 to $38, its marginal revenue is:

Correct Answer
verified

Exam 14: Monopoly and Monopolistic Competition

Refer to the graph shown. An unregulated, profit-maximizing monopolist will charge a price of:

Correct AnswerverifiedShow Answer

Refer to the graph shown. If this monopolist produces 45 units of output per day, it will:

Correct AnswerverifiedShow Answer

A purpose of advertising is to make the:

Correct AnswerverifiedShow Answer

Suppose marginal cost is constant and equal to 50 and marginal revenue equals 100 - 10Q. A profit-maximizing monopolist will set quantity equal to:

Correct AnswerverifiedShow Answer

Under monopolistic competition, there are:

Correct AnswerverifiedShow Answer

A monopolistically competitive firm faces a downward-sloping demand curve.

Correct AnswerverifiedShow Answer

Platform businesses are firms that:

Correct AnswerverifiedShow Answer

The difference between a monopolist and a monopolistic competitor is that:

Correct AnswerverifiedShow Answer

Dynamic pricing allows a website to use the personal information collected on a customer, such as income or location, to individualize the price of a product for each customer. Economists consider this type of pricing an example of:

Correct AnswerverifiedShow Answer

Because a monopolistic competitor has some monopoly power, advertising to increase that monopoly power makes sense as long as:

Correct AnswerverifiedShow Answer

Refer to the graph shown. Holding cost conditions constant, if the monopolistically competitive firm represented were suddenly to find itself in a perfectly competitive market, the long-run equilibrium price would adjust to:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The demand curve for a monopolist differs from the demand curve faced by a competitive firm because the demand curve for:

Correct AnswerverifiedShow Answer

For a monopolist, the point where the marginal revenue curve intersects the horizontal axis is:

Correct AnswerverifiedShow Answer

If a firm has a monopoly over the sale of camera drones and seeks to maximize profits, it:

Correct AnswerverifiedShow Answer

Refer to the graph shown. If hamburgers are produced by a pure monopoly firm that maximizes profit, the social cost of monopoly will be represented by the area:

Correct AnswerverifiedShow Answer

Marginal revenue is not equal to price for a monopolist because:

Correct AnswerverifiedShow Answer

As firms leave a monopolistically competitive industry that is sustaining economic losses:

Correct AnswerverifiedShow Answer

Refer to the graph shown. The firm's profit-maximizing price is:

Correct AnswerverifiedShow Answer

If a monopolist increases sales from 10 to 11 by lowering its price from $40 to $38, its marginal revenue is:

Correct AnswerverifiedShow Answer

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