Question 1

The Lerner Index is derived from the profit-maximizing condition of a firm.

Accepted Answer

A) True 
 B)False

Question 2

When the marginal revenue curve cuts the horizontal axis,

Accepted Answer

A)  demand is relatively elastic.
B)  demand is relatively inelastic.
C)  demand is perfectly elastic.
D)  demand is unitary elastic.E) A) and C)
F) B) and D)

Question 3

Market power guarantees profit.

Accepted Answer

A)  True, which is why firm's locate as far away from each other as possible.
B)  False, market power guarantees price greater than marginal cost.
C)  True, market power guarantees price greater than average cost.
D)  False, market power guarantees price equal to average cost.E) None of the above
F) C) and D)

Question 4

Which of the following DOES NOT contribute to the market power of a firm?

Accepted Answer

A)  number of available substitutes
B)  the color of the product
C)  legal protections
D)  the number of firms in the marketE) B) and C)
F) A) and C)

Question 5

In spring 2008, the U.S. Congress proposed to tax oil companies because of their near-monopoly status. This could have the unintended consequence of

Accepted Answer

A)  increasing the equilibrium price by more than the tax.
B)  destroying the oil companies and leaving the United States without oil.
C)  increasing the profit of the best oil company.
D)  decreasing the power of the U.S. Congress.E) B) and C)
F) C) and D)

Question 6

The government prefers an ad valorem tax to a specific tax that reduces the monopoly output by the same amount because

Accepted Answer

A)  consumers are not harmed by the ad valorem tax.
B)  the monopoly prefers the ad valorem tax.
C)  consumers prefer the ad valorem tax.
D)  the ad valorem tax transfers more revenue from the monopoly to the government.E) C) and D)
F) All of the above

Question 7

If the inverse demand curve a monopoly faces is p = 100 - 2Q, and MC is constant at 16, then profit maximization is achieved when the monopoly sets price equal to

Accepted Answer

A)  16.
B)  21.
C)  25.
D)  58.E) A) and B)
F) All of the above

Exam 11: Monopoly

Market power guarantees profit.

Correct Answer
verified

In spring 2008, the U.S. Congress proposed to tax oil companies because of their near-monopoly status. This could have the unintended consequence of

Correct Answer
verified

Which of the following DOES NOT contribute to the market power of a firm?

Correct Answer
verified

If the inverse demand curve a monopoly faces is p = 100 - 2Q, and MC is constant at 16, then profit maximization is achieved when the monopoly sets price equal to

Correct Answer
verified

The government prefers an ad valorem tax to a specific tax that reduces the monopoly output by the same amount because

Correct Answer
verified

When the marginal revenue curve cuts the horizontal axis,

Correct Answer
verified

The Lerner Index is derived from the profit-maximizing condition of a firm.

Correct Answer
verified

Exam 11: Monopoly

Market power guarantees profit.

Correct AnswerverifiedShow Answer

In spring 2008, the U.S. Congress proposed to tax oil companies because of their near-monopoly status. This could have the unintended consequence of

Correct AnswerverifiedShow Answer

Which of the following DOES NOT contribute to the market power of a firm?

Correct AnswerverifiedShow Answer

If the inverse demand curve a monopoly faces is p = 100 - 2Q, and MC is constant at 16, then profit maximization is achieved when the monopoly sets price equal to

Correct AnswerverifiedShow Answer

The government prefers an ad valorem tax to a specific tax that reduces the monopoly output by the same amount because

Correct AnswerverifiedShow Answer

When the marginal revenue curve cuts the horizontal axis,

Correct AnswerverifiedShow Answer

The Lerner Index is derived from the profit-maximizing condition of a firm.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified