Microeconomics9e(Parkin)

Chapter13Monopoly

1MonopolyandHowitArises

1)Amonopolyhastwokeyfeatures,whichare.

A)barrierstoentryandnoclosesubstitutes

B)franchisesandbarrierstoentry

C)barrierstoentryandclosesubstitutes

D)closesubstitutesandnobarrierstoentry

Answer:A

Topic:HowMonopolyArises

Skill:Recognition

AACSB:ReflectiveThinking

2)Amonopolyisbestdefinedasafirmthat

A)producesagoodorserviceforwhichnoclosesubstituteexistsandwhichisprotectedbya

barrierthatpreventsotherfirmsfromsellingthatgoodorservice.

B)purchasesitsresourcesfromonlyonesupplierbecauseofabarrierpreventingitfrombuying

fromothersuppliers.

C)producesagoodorserviceforwhichnoclosesubstituteexistsandthatsellsallitsoutputto

onebuyerbecausethereisbarrierpreventingotherbuyersfrompurchasingthegoodorservice.

D)cannotcontrolthepriceitsetsforitsgoodorservicebecausethereisbarrierthatpreventsthe

firmfromchangingtheprice.

Answer:A

Topic:HowMonopolyArises

Skill:Recognition

AACSB:ReflectiveThinking

3)ThefollowingarekeyfeaturesofamonopolyEXCEPT

A)themonopolyisprotectedbyabarriertoentry.

B)noclosesubstitutesexistforthegoodorservice.

C)themonopolyhasastronginfluenceoverthepriceofthegoodorservice.

D)themonopolyhasseverediseconomiesofscale.

Answer:D

Topic:HowMonopolyArises

Skill:Recognition

AACSB:ReflectiveThinking

4)WhichofthefollowingisNOTacharacteristicofamonopoly?

A)asinglefirm

B)noclosesubstitutesfortheproductproduced

C)barrierstoentry

D)easyentryandexit

Answer:D

Topic:HowMonopolyArises

Skill:Recognition

AACSB:ReflectiveThinking

5)Whichofthefollowingisacharacteristicofamonopoly?

A)afewsmallfirms

B)easyentryandexit

C)nobarrierstoentry

D)asinglefirminthemarket

Answer:D

Topic:HowMonopolyArises

Skill:Recognition

AACSB:ReflectiveThinking

6)Whichofthefollowingisacharacteristicofmonopoly?

A)Thefirmfacescompetitionfrommanyotherfirms.

B)Thefirmproducesaproductthathasmanyclosesubstitutes.

C)Therearebarrierstoenterthemarket.

D)Thefirm'sdemandcurveisperfectlyelastic.

Answer:C

Topic:HowMonopolyArises

Skill:Conceptual

AACSB:ReflectiveThinking

7)WhichofthefollowingstatementsaboutamonopolyisFALSE?

A)Monopolieshavenobarrierstoentryorexit.

B)Thegoodproducedbyamonopolyhasnoclosesubstitutes.

C)Amonopolyistheonlyproducerofthegood.

D)Noneoftheabove;thatis,alloftheaboveanswersaretruestatementsaboutamonopoly.

Answer:A

Topic:HowMonopolyArises

Skill:Conceptual

AACSB:ReflectiveThinking

8)Anexampleofamonopolyis

A)abigcityrestaurant.

B)thestockmarket.

C)theonlyveterinarianinanisolatedfarmcommunity.

D)alargehospitalinabigcity.

Answer:C

Topic:HowMonopolyArises

Skill:Conceptual

AACSB:ReflectiveThinking

9)Whichofthefollowingfirmsismostlikelytobeamonopoly?

A)localrestaurant

B)localdistributorofwater

C)localbookstore

D)clothingstore

Answer:B

Topic:HowMonopolyArises

Skill:Conceptual

AACSB:ReflectiveThinking

10)Anexampleofamonopolywouldbe

A)oneofmanyU.S.wheatfarmers.

B)oneofthefewU.S.automakers.

C)AT&Tlongdistancephoneservice.

D)thelocalwatercompany.

Answer:D

Topic:HowMonopolyArises

Skill:Conceptual

AACSB:ReflectiveThinking

11)WhichofthefollowingisLEASTlikelytobeamonopoly?

A)theholderofapublicfranchise

B)apharmaceuticalcompanywithapatentonadrug

C)astoreinalargeshoppingmall

D)theownerofanoccupationallicense

Answer:C

Topic:HowMonopolyArises

Skill:Conceptual

AACSB:ReflectiveThinking

12)Abarriertoentryis

A)anaturalorlegalimpedimentthatmakesitdifficultfornewfirmstoenteramarket.

B)anecessaryconditionforperfectcompetition.

C)theresultofhighlyelasticdemand.

D)abrickwallthatafirmplacesarounditscorporateheadquarters.

Answer:A

Topic:BarriersToEntry

Skill:Recognition

AACSB:ReflectiveThinking

13)Whennaturalorlegalforcesworktoprotectafirmfrompotentialcompetitors,themarketis

saidtohave.

A)non-competitivesupply

B)non-competitiveentry

C)barrierstoentry

D)restrictedcompetition

Answer:C

Topic:BarriersToEntry

Skill:Recognition

AACSB:ReflectiveThinking

14)Whichofthefollowingisabarriertoentryforamonopoly?

A)apatent

B)severediseconomiesofscale

C)closesubstitutesforthegoodorserviceexist

D)Alloftheaboveanswersarecorrect.

Answer:A

Topic:BarriersToEntry

Skill:Recognition

AACSB:ReflectiveThinking

15)Whichofthefollowingcancreateamonopoly?

I.highprices

II.publicfranchise

III.patent

IV.governmentlicense

A)IandII

B)IandIII

C)I,IIandIII

D)II,IIIandIV

Answer:D

Topic:BarriersToEntry

Skill:Recognition

AACSB:ReflectiveThinking

16)WhichofthefollowingisNOTabarriertoentryforamonopoly?

A)economiesofscalefortherelevantrangeofoutput

B)apatentontheproductbeingsold

C)theabilitytochargeapricethatisabovemarginalcost

D)receivingagovernmentauthorizedmonopoly

Answer:C

Topic:BarriersToEntry

Skill:Conceptual

AACSB:ReflectiveThinking

17)WhenDeBeersmonopolizedtheworld*sdiamondsupply,itwasabletodosobecauseit

A)hasagovernmentlicense.

B)isapublicfranchise.

C)ownsvirtuallyallofakeyresource.

D)isapricesetter.

Answer:C

Topic:BarriersToEntry

Skill:Recognition

AACSB:ReflectiveThinking

18)WhichofthefollowingisNOTalegalbarriertoentry?

A)publicfranchise

B)governmentlicense

C)patent

D)innovation

Answer:D

Topic:LegalBarrierstoEntry

Skill:Recognition

AACSB:ReflectiveThinking

19)Alegalmonopolyisdefinedasamarketwhere

A)onlyonelawyeroperates.

B)alegalbarriertoentryexists.

C)onlyonefirmcouldearnaprofit.

D)entryandexitarelegal.

Answer:B

Topic:LegalBarrierstoEntry

Skill:Recognition

AACSB:ReflectiveThinking

20)Apublicfranchiseis

A)anexclusiverightgrantedtoafirmtosupplyagoodorservice.

B)agovernmentissuedlicenserequiredtopracticeaprofession.

C)anexclusiverightgrantedtoaninventorofaproduct.

D)auniquesourceofrawmaterials.

Answer:A

Topic:LegalBarrierstoEntry

Skill:Recognition

AACSB:ReflectiveThinking

21)Amarketinwhichcompetitionandentryarerestrictedbythegrantingofapublicfranchise,

governmentlicense,patent,orcopyrightiscalleda

A)legalmonopoly.

B)naturalmonopoly.

C)single-pricemonopoly.

D)price-discriminatingmonopoly.

Answer:A

Topic:LegalBarrierstoEntry

Skill:Recognition

AACSB:ReflectiveThinking

22)Publicfranchisescreatemonopoliesbyrestricting

A)demand.

B)prices.

C)entry.

D)profit.

Answer:C

Topic:LegalBarrierstoEntry

Skill:Conceptual

AACSB:ReflectiveThinking

23)Grantingapublicfranchise.

A)createsalegalmonopoly

B)stimulatescompetitioninthearts

C)createsanaturalmonopoly

D)reducesprices

Answer:A

Topic:LegalBarrierstoEntry

Skill:Recognition

AACSB:ReflectiveThinking

24)Acopyrightcreatesamonopolybyrestricting.

A)thepricesthatcanbecharged

B)demandfortheproduct

C)entryintothemarket

D)thenumberofcreatorsandinventors

Answer:C

Topic:LegalBarrierstoEntry

Skill:Recognition

AACSB:ReflectiveThinking

25)Apatentcreatesamonopolybyrestricting.

A)demandfortheproduct

B)thenumberofcomplementsfortheproduct

C)theamountofadvertisingthatcanbeundertaken

D)entryintothemarket

Answer:D

Topic:LegalBarrierstoEntry

Skill:Recognition

AACSB:ReflectiveThinking

26)Patentsencourageinventionby

A)offeringsubsidiestoinventors.

B)offeringtaxbreakstoinventors.

C)preventingothersfromcopyinganinvention.

D)preventinginventorsfromworkingonthesameproject.

Answer:C

Topic:LegalBarrierstoEntry

Skill:Conceptual

AACSB:ReflectiveThinking

27)SupposeanewvaccineforLymediseaseisdevelopedbyMerck,alargedrugcompany.

Whichofthefollowingismostlikelytooccur?

A)Merckwillapplyforapatentonthevaccinethatgrantsitthemonopolyrightstothevaccine

formanyyears.

B)Merckwillhaveamonopolyonthisvaccinebecauseofeconomiesofscale.

C)Otherfirmswillquicklycopytheformulamakingthemarketforthevaccineperfectly

competitive.

D)Merckwillnottellanyoneaboutthisbreakthrough.

Answer:A

Topic:LegalBarrierstoEntry

Skill:Conceptual

AACSB:ReflectiveThinking

28)Patentsencourageinventionsbecausewithoutapatent

A)otherfirmscouldentertheinventor'smarketbyproducingthesameproduct.

B)nobodywoulddemandtheinventofsproduct.

C)theinventorwouldreceivenotaxbreaks.

D)allmarketswouldbepublicfranchises.

Answer:A

Topic:LegalBarrierstoEntry

Skill:Conceptual

AACSB:ReflectiveThinking

29)Ifthegovernmentgrantsafirmapublicfranchisetosupplycoal,amonopolyiscreatedby

A)anaturalbarriertoentry.

B)alegalbarriertoentry.

C)pricediscrimination.

D)Alloftheaboveanswersarecorrect.

Answer:B

Topic:LegalBarrierstoEntry

Skill:Conceptual

AACSB:ReflectiveThinking

30)Apatentgrants

A)aguaranteeofqualitytoconsumers.

B)therighttopracticeaprofession.

C)anexclusiverighttoaninventorofaproduct.

D)controloverauniquesourceorsupplyofrawmaterials.

Answer:C

Topic:LegalBarrierstoEntry

Skill:Recognition

AACSB:ReflectiveThinking

31)Patentscreatemonopoliesbyrestricting

A)demand.

B)prices.

C)entry.

D)profit.

Answer:C

Topic:LegalBarrierstoEntry

Skill:Conceptual

AACSB:ReflectiveThinking

32)Patentsarebarrierstoentryandpublicfranchisesarebarrierstoentry.

A)legal;legal

B)legal;natural

C)natural;legal

D)natural;natural

Answer:A

Topic:LegalBarrierstoEntry

Skill:Recognition

AACSB:ReflectiveThinking

33)Anindustryinwhichonefirmcansupplytheentiremarketatalowerpricethancantwoor

morefirmsiscalleda

A)legalmonopoly.

B)naturalmonopoly.

C)single-pricemonopoly.

D)price-discriminatingmonopoly.

Answer:B

Topic:NaturalMonopoly

Skill:Recognition

AACSB:ReflectiveThinking

34)Theexistenceofeconomiesofscalecreates.

A)anaturalmonopoly

B)agovernmentmonopoly

C)alegalmonopoly

D)amarketinwhichmanyfirmsmakeidenticalproducts

Answer:A

Topic:NaturalMonopoly

Skill:Recognition

AACSB:ReflectiveThinking

35)Naturalmonopoliesoccurwhenthereare

A)largediseconomiesofscale.

B)externaleconomies.

C)largeeconomiesofscale.

D)naturalresourcesinvolved.

Answer:C

Topic:NaturalMonopoly

Skill:Recognition

AACSB:ReflectiveThinking

36)Anaturalmonopolyisdefinedas

A)amarketinwhichcompetitionandentryarerestrictedbythegrantingofagovernment

license.

B)anindustryinwhichonefirmcansupplytheentiremarketatalowerpricethantwoormore

firms.

C)amarketinwhichcompetitionandentryarerestrictedbythegrantingofapatent.

D)anymarketwhereonefirmconstitutestheentireindustry.

Answer:B

Topic:NaturalMonopoly

Skill:Recognition

AACSB:ReflectiveThinking

37)IfonecableTVcompanycanserveitscustomersataloweraveragecostthancantwo

companies,thenthiscompanyis

A)anaturalmonopoly.

B)notamonopoly.

C)amonopoly,butnotanaturalmonopoly.

D)alegalmonopoly.

Answer:A

Topic:NaturalMonopoly

Skill:Conceptual

AACSB:ReflectiveThinking

38)Anaturalmonopoly

A)isnotprotectedbyanybarriertoentry.

B)existsbecauseoflegalbarrierstoentry.

C)isanindustryinwhicheconomiesofscaleexistatthelevelofoutputwherethemarket

demandcurveintersectsthelong-runaveragecostcurve.

D)isanindustrywheretwoormoresmallerfirmscansupplythemarketatalowercostthanone

bigfirmcould.

Answer:C

Topic:NaturalMonopoly

Skill:Recognition

AACSB:ReflectiveThinking

39)Whichofthefollowingistrueofanaturalmonopoly?

A)Itslong-runaveragecostcurveslopesupwardasitintersectsthedemandcurve.

B)Economiesofscaleexisttoonlyaverylowlevelofoutput.

C)Thefirmcansupplytheentiremarketatalowercostthancouldtwoormorefirms.

D)Thefirmisnotprotectedbyanybarriertoentry.

Answer:C

Topic:NaturalMonopoly

Skill:Conceptual

AACSB:ReflectiveThinking

40)Unregulatedmonopolies

A)takethemarketpriceasgiven.

B)cannotincorporate.

C)cannotchangethemarketquantity.

D)caninfluencethemarketquantityandprice.

Answer:D

Topic:MonopolyPrice-SettingStrategies

Skill:Recognition

AACSB:ReflectiveThinking

41)Asingle-pricemonopolychargesthesameprice

A)evenifthedemandcurveshifts.

B)evenifitscostcurvesshift.

C)toallcustomers.

D)atalltimesandthatpriceequalsthefirm'smarginalrevenue.

Answer:C

Topic:MonopolyPrice-SettingStrategies

Skill:Conceptual

AACSB:ReflectiveThinking

42)WhenDominantPizzaiswillingtosellapizzatoastudentwholiveson-campusatalower

pricethanitiswillingtoselltheidenticalpizzatoastudentwholivesablockawayfromthe

campus,thepizzafirmis.

A)practicingpricediscrimination

B)unfair

C)incurringalossonon-campussales

D)eliminatingallcompetition

Answer:A

Topic:MonopolyPrice-SettingStrategies

Skill:Conceptual

AACSB:ReflectiveThinking

43)Amonopolythatsellseveryunitofitsoutputatthesamepriceisa.

A)unit-pricemonopoly

B)legalmonopoly

C)naturalmonopoly

D)single-pricemonopoly

Answer:D

Topic:MonopolyPrice-SettingStrategies

Skill:Recognition

AACSB:ReflectiveThinking

44)AllofthefollowingareexamplesofpricediscriminationEXCEPT

A)buy-one-get-one-freeoffers.

B)"earlybirdspecials"atarestaurant.

C)lowerticketpricesformatineeperformances.

D)nbuynow,paylater"paymentoptions.

Answer:D

Topic:MonopolyPrice-SettingStrategies

Skill:Conceptual

AACSB:ReflectiveThinking

45)Firmsthatcanpricediscriminatebetweencustomersdosoto.

A)increaseconsumersurplus

B)increaseemployment

C)increasetheirprofit

D)decreasethequantitytheyproduce

Answer:C

Topic:PriceDiscrimination

Skill:Recognition

AACSB:ReflectiveThinking

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46)Giventhemarketdemandandcostdataintheabovefigure,theexistenceoftwofirmsequal

sizedfirmsproducingatotalof8millioncubicfeetofnaturalgasmeansthatthelong-run

averagecostofproducingnaturalgasis

A)10centspercubicfoot.

B)20centspercubicfoot.

C)30centspercubicfoot.

D)40centspercubicfoot.

Answer:B

Topic:NaturalMonopoly

Skill:Analytical

AACSB:AnalyticalSkills

47)Giventhemarketdemandandcostdataintheabovefigure,theexistenceofamonopolyfirm

producing8millioncubicfeetofnaturalgasmakesitpossibletoproducenaturalgasata

long-runaveragecostof

A)10centspercubicfoot.

B)20centspercubicfoot.

C)30centspercubicfoot.

D)40centspercubicfoot.

Answer:A

Topic:NaturalMonopoly

Skill:Analytical

AACSB:AnalyticalSkills

48)Asingle-pricemonopoly

A)chargesallconsumersthelowestpricethattheywanttopayforeachunitpurchased.

B)produceslessoutputthanitwouldifitcouldpricediscriminate.

C)eliminatesalltheconsumersurplus.

D)createsasmallerdeadweightlossthanitwouldifitcouldpricediscriminate.

Answer:B

Topic:StudyGuideQuestion,MonopolyPrice-SettingStrategies

Skill:Conceptual

AACSB:ReflectiveThinking

2ASingle-PriceMonopoly'sOutputandPriceDecision

1)Totalrevenueequals

A)marginalrevenuemultipliedbyquantitysold.

B)pricemultipliedbyquantitysold.

C)totalcostminusprofit.

D)theareabetweenthedemandcurveandthemarginalrevenuecurve.

Answer:B

Topic:PriceandMarginalRevenue

Skill:Conceptual

AACSB:ReflectiveThinking

2)Foramonopoly,theindustrydemandcurveisthefirm's

A)supplycurve.

B)marginalrevenuecurve.

C)demandcurve.

D)profitfunction.

Answer:C

Topic:PriceandMarginalRevenue

Skill:Conceptual

AACSB:ReflectiveThinking

3)Thedemandcurvefacingthemonopolistis

A)thesameasthemarketdemandcurve.

B)moreelasticthanthemarketdemandcurve.

C)lesselasticthanthemarketdemandcurve.

D)upwardsloping.

Answer:A

Topic:PriceandMarginalRevenue

Skill:Recognition

AACSB:ReflectiveThinking

4)Monopolists

A)maximizerevenue,notprofits.

B)havenoshort-runfixedcosts.

C)facedownwardslopingdemandcurves.

D)arepricetakers.

Answer:C

Topic:PriceandMarginalRevenue

Skill:Recognition

AACSB:ReflectiveThinking

5)Asingle-pricemonopolist'sdemandcurveis

A)itsmarginalrevenuecurve.

B)perfectlyelastic.

C)thesameasthemarketdemandcurve.

D)moreelasticthanthemarketdemandcurve.

Answer:C

Topic:PriceandMarginalRevenue

Skill:Recognition

AACSB:ReflectiveThinking

6)Forasingle-pricemonopoly,thedemandcurvelies

A)belowthemarginalrevenuecurve.

B)ontopofthemarginalrevenuecurve.

C)abovethemarginalrevenuecurve.

D)ontopofthetotalrevenuecurve.

Answer:C

Topic:PriceandMarginalRevenue

Skill:Recognition

AACSB:ReflectiveThinking

7)Themarginalrevenuecurveforasingle-pricemonopoly

A)liesbelowitsdemandcurve.

B)coincideswithitsdemandcurve.

C)liesaboveitsdemandcurve.

D)ishorizontal.

Answer:A

Topic:PriceandMarginalRevenue

Skill:Recognition

AACSB:ReflectiveThinking

8)Amonopoly

A)facesaperfectlyelasticdemandcurve.

B)doesnotneedtotakeaccountofdemandbecauseit'stheonlyseller.

C)raisesthepriceofitsproductbyincreasingthequantitysold.

D)raisesthepriceofitsproductbydecreasingthequantitysold.

Answer:D

Topic:PriceandMarginalRevenue

Skill:Recognition

AACSB:ReflectiveThinking

9)Themarginalrevenuecurveforasingle-pricemonopoly

A)ishorizontal.

B)isupwardsloping.

C)liesabovethemarketdemandcurve.

D)liesbelowthemarketdemandcurve.

Answer:D

Topic:PriceandMarginalRevenue

Skill:Recognition

AACSB:ReflectiveThinking

10)Amonopolist

A)cansellasmuchasitwantsatthechosenpricebecauseitistheonlyseller.

B)canincreasethepriceandthequantitysoldatthesametime.

C)canincreasethepriceonlyifitiswillingtodecreasethequantitysold.

D)isnotrestrictedbythelawofdemand.

Answer:C

Topic:PriceandMarginalRevenue

Skill:Recognition

AACSB:ReflectiveThinking

11)Forasingle-pricemonopolisttosellonemoreunitofagood,itmust

A)lowerthepriceonjustthelastunitsold.

B)lowerthepriceonallunitssold.

C)raisethepriceonjustthelastunitsold.

D)raisethepriceonallunitssold.

Answer:B

Topic:PriceandMarginalRevenue

Skill:Recognition

AACSB:ReflectiveThinking

12)Asingle-pricemonopolyischaracterizedbyamarginalrevenuecurvethatis

A)upwardsloping.

B)downwardsloping.

C)horizontal.

D)vertical.

Answer:B

Topic:PriceandMarginalRevenue

Skill:Conceptual

AACSB:ReflectiveThinking

13)Forasingle-pricemonopolist,priceismarginalrevenue.

A)lessthan

B)greaterthan

C)equalto

D)lessthanorequaltobutnevermorethan

Answer:B

Topic:PriceandMarginalRevenue

Skill:Recognition

AACSB:ReflectiveThinking

14)Marginalrevenueforasingle-pricemonopolistis

A)lessthanprice.

B)equaltoprice.

C)greaterthanprice.

D)equaltozeroforalllevelsofoutput.

Answer:A

Topic:PriceandMarginalRevenue

Skill:Recognition

AACSB:ReflectiveThinking

15)Asingle-pricemonopolist

A)setsitspricewhereitsdemandisinelastic.

B)canalwaysincreaseitsprofitsbyincreasingitsprice.

C)hasitsmarginalrevenuelessthanitsprice.

D)isguaranteedaneconomicprofit.

Answer:C

Topic:PriceandMarginalRevenue

Skill:Conceptual

AACSB:ReflectiveThinking

16)Whichofthefollowingisacharacteristicofasingle-pricemonopoly?

A)Thefirmisapricetaker.

B)Demandisperfectlyelastic.

C)Therearemanyclosesubstitutesfbrthefirm'sproduct.

D)Priceexceedsmarginalrevenue.

Answer:D

Topic:PriceandMarginalRevenue

Skill:Recognition

AACSB:ReflectiveThinking

17)Forasingle-pricemonopolist,marginalrevenue

A)equalsprice.

B)isgreaterthanprice.

C)islessthanprice.

D)couldbegreaterthan,equalto,orlessthanprice.

Answer:C

Topic:PriceandMarginalRevenue

Skill:Recognition

AACSB:ReflectiveThinking

18)Forasingle-pricemonopolist,marginalrevenueislessthanpricebecause

A)therevenuegainfromthelastunitsoldisoffsetbyarevenuelossontheunitsthatpreviously

hadbeensoldatahigherprice.

B)therevenuegainfromthelastunitsoldisoffsetbyfurthergainsinpriceonunitsnotsoldat

all.

C)totalrevenuealwaysdecreasesasoutputincreases.

D)thepricedoesnothavetobeloweredonallpreviousunitssold.

Answer:A

Topic:PriceandMarginalRevenue

Skill:Conceptual

AACSB:ReflectiveThinking

19)Whichofthefollowingistrueforasingle-pricemonopolist?

A)P>MR

B)P<MR

C)P=MR

D)P=elasticityofdemand

Answer:A

Topic:PriceandMarginalRevenue

Skill:Recognition

AACSB:ReflectiveThinking

20)Forasingle-pricemonopolist,

A)MR=P.

B)MR<P.

C)MRfirstincreasesandthendecreaseswiththequantitysold.

D)MRfirstdecreasesandthenincreaseswiththequantitysold.

Answer:B

Topic:PriceandMarginalRevenue

Skill:Recognition

AACSB:ReflectiveThinking

21)Amajordifferencebetweenasingle-pricemonopolistandaperfectlycompetitivefirmisthat

the

A)monopolistcanmaximizeprofitbysettingthepriceoftheoutputwheredemandisinelastic.

B)monopolistcanalwaysincreaseitsprofitsbyincreasingthepriceofitsoutput.

C)monopolistsmarginalrevenueislessthanprice.

D)monopolistisguaranteedtoearnaneconomicprofit.

Answer:C

Topic:PriceandMarginalRevenue

Skill:Conceptual

AACSB:ReflectiveThinking

22)Sue'sSurfboardsisthesolerenterofsurfboardsonBigWaveIsland.Suedoesnotprice

discriminate.ForSue'sSurfboards,thechangeintotalrevenuefromeachadditionalsurfboard

rentedisher

A)marginalrevenueandisequaltotherentalpriceofasurfboard.

B)marginalcostandisgreaterthantherentalpriceofasurfboard.

C)marginalrevenueandislessthantherentalpriceofasurfboard.

D)marginalcostandisconstantregardlessofhowmanysurfboardsarerented.

Answer:C

Topic:PriceandMarginalRevenue

Skill:Conceptual

AACSB:ReflectiveThinking

QuantityPrice

(units)(dollarsperunit)

416

514

612

23)Thetableabovegivesthedemandforamonopolistsoutput.Whatisthemarginalrevenueof

increasingproductionfrom4to5units?

A)$70

B)$16

C)$14

D)$6

Answer:D

Topic:PriceandMarginalRevenue

Skill:Analytical

AACSB:AnalyticalSkills

Price

Quantitydemanded

(dollarsper

(haircutsperday)

haircut)

550

1040

1530

2020

2510

300

24)Christy'sHaircuts,thesolesupplierofhaircutsinasmalltown,facesthedemandschedule

showninthetableabove.WhatisChristy'smarginalrevenuefromthe25thhaircut?

A)zero

B)$5.00

C)$17.50

D)$50.00

Answer:B

Topic:PriceandMarginalRevenue

Skill:Analytical

AACSB:AnalyticalSkills

25)Christy*sHaircuts,thesolesupplierofhaircutsinasmalltown,facesthedemandschedule

showninthetableabove.WhatisChristy'smarginalrevenuefromthe35thhaircut?

A)zero

B)-$5.00

C)$5.00

D)$12.50

Answer:B

Topic:PriceandMarginalRevenue

Skill:Analytical

AACSB:AnalyticalSkills

QuantityPrice

(units)(dollarsperunit)

18

27

36

45

54

63

26)Thetableabovegivesthedemandforamonopolistsoutput.Betweenwhichtwoquantitiesis

marginalrevenueequalto0?

A)4and5

B)3and4

C)2and3

D)1and2

Answer:A

Topic:PriceandMarginalRevenue

Skill:Analytical

AACSB:AnalyticalSkills

27)Thetableabovegivesthedemandforamonopolistsoutput.Betweenwhichtwoquantitiesis

demandelastic?

A)6and5

B)5and4

C)4and3

D)3and2

Answer:A

Topic:MarginalRevenueandElasticity

Skill:Analytical

AACSB:AnalyticalSkills

28)Thetableabovegivesthedemandfbramonopolistsoutput.Whatisthetotalrevenuein

when3unitsofoutputareproduced?

A)$21

B)$20

C)$18

D)$6

Answer:C

Topic:PriceandMarginalRevenue

Skill:Analytical

AACSB:AnalyticalSkills

29)Thetableabovegivesthedemandforamonopolistsoutput.Whatisthemarginalrevenue

whenoutputisincreasedfrom5to6units?

A)$18

B)$4

C)$3

D)-$2

Answer:D

Topic:PriceandMarginalRevenue

Skill:Analytical

AACSB:AnalyticalSkills

30)Thetableabovegivesthedemandforamonopolistsoutput.Whatisthemarginalrevenue

whenoutputisincreasedfrom2to3units?

A)$18

B)$4

C)$7

D)$6

Answer:B

Topic:PriceandMarginalRevenue

Skill:Analytical

AACSB:AnalyticalSkills

31)Forasingle-pricemonopoly,marginalrevenueiswhendemandiselasticandis

whendemandisinelastic.

A)negative;negative

B)negative;positive

C)positive;negative

D)positive;positive

Answer:C

Topic:MarginalRevenueandElasticity

Skill:Recognition

AACSB:ReflectiveThinking

32)Foramonopolist,ontheinelasticrangeofitsdemand,

A)marginalrevenueisnegative.

B)marginalrevenueispositive.

C)marginalrevenueisequaltozero.

D)totalrevenueismaximized.

Answer:A

Topic:MarginalRevenueandElast