Question 1

A firm will attain more monopoly power as demand for its product becomes more elastic.

Accepted Answer

A) True 
 B)False

Question 2

The more inelastic the demand curve is for the monopolist's product, the higher the price is that can be charged for the good.

Accepted Answer

A) True 
 B)False

Question 3

Use the following to answer questions:
Figure: Maximum Willingness to Pay 
-(Figure: Maximum Willingness to Pay)  Refer to the figure. What is the maximum price that the consumer is willing to pay for 100 units?

Accepted Answer

A)   $100
B)   $80
C)   $75
D)   $90E) A) and C)
F) None of the above

Question 4

Explain how a profit-maximizing monopolist chooses level of output and the price of goods.

Accepted Answer

The profit-maximizing monopoli...

Question 5

A monopoly is able to increase the markup of price over marginal cost:

Accepted Answer

A)   when the demand is more price-elastic.
B)   when the demand is less price-elastic.
C)   when there is more marginal revenue per unit sold.
D)   at will regardless of price-elasticity.E) None of the above
F) B) and D)

Question 6

A monopolist will charge a higher markup when demand is more elastic.

Accepted Answer

A) True 
 B)False  False

Question 7

The Private Express Statutes, passed in 1792 and (in amended form)  still in effect today, contain federal civil and criminal laws relating to the delivery of mail. The Statutes grant monopoly powers to the U.S. Postal Service. Given the technology available today, the average effect of this monopoly on the price and quality of mail service in the populated parts of the United States is that the ______ because of the monopoly privilege of the USPS.

Accepted Answer

A)   price and quality of service are higher
B)   price and quality of service are lower
C)   price is higher and the quality of service is lower
D)   price is lower and the quality of service is higherE) C) and D)
F) A) and B)

Question 8

A monopoly that is unregulated always causes deadweight loss.

Accepted Answer

A) True 
 B)False  True

Question 9

When a single firm can supply the entire market at lower cost than two or more firms, we say that the industry is:

Accepted Answer

A)   profit maximizing.
B)   a natural monopoly.
C)   a bilateral monopoly.
D)   a natural competitor.E) A) and D)
F) A) and C)

Question 10

If a pharmaceutical company discovering a new drug is not granted a patent to retain its monopoly power on the drug,:

Accepted Answer

A)   innovation in the pharmaceutical industry will increase.
B)   the number of new drugs is likely to increase.
C)   more pharmaceutical companies will engage in discovering new drugs.
D)   research and development in discovering new drugs will decrease.E) None of the above
F) All of the above D

Question 11

A profit-maximizing monopolist chooses the output level where MR = MC and chooses the corresponding price from the marginal revenue curve.

Accepted Answer

A) True 
 B)False

Question 12

A consumer is ________ likely to be sensitive to price if the purchase ________ covered by insurance.

Accepted Answer

A)   more; is
B)   less; is
C)   less; is not
D)   None of the answers is correct.E) A) and C)
F) C) and D)

Question 13

How could a monopoly offer a lower price than a scenario of intense competition?

Accepted Answer

A)   only if the monopoly was natural
B)   only if the monopoly had a hard to duplicate input
C)   only if the monopoly had a patent
D)   only if the monopoly was backed by government protectionE) A) and D)
F) B) and C)

Question 14

Graphically, a firm's marginal revenue curve is:

Accepted Answer

A)   perfectly elastic and equal to their marginal cost curve.
B)   downward-sloping and equal to the market demand curve.
C)   downward-sloping, but with twice the slope of the market demand curve.
D)   perfectly elastic but lies underneath the market demand curve.E) A) and C)
F) A) and D)

Question 15

Deadweight loss is present in both competitive and monopoly markets.

Accepted Answer

A) True 
 B)False

Question 16

When any firm charges a higher price, fewer of its goods are sold.

Accepted Answer

A) True 
 B)False

Question 17

For a monopoly, marginal revenue is always greater than the price it charges for its good.

Accepted Answer

A) True 
 B)False

Question 18

Do monopolies always reduce social benefits?

Accepted Answer

A)   Yes, but only in the long run
B)   Yes, because they create short-term deadweight loss which deters innovation
C)   No, because monopolies can incentivize innovation
D)   No, because monopolies deter wasteful competitionE) B) and C)
F) A) and D)

Question 19

To maximize profit a monopoly firm increases output until marginal revenue exceeds the marginal cost.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is NOT a source of monopoly power?

Accepted Answer

A)   laws preventing entry of competitors
B)   economies of scale
C)   innovation
D)   inelastic demand for the productE) C) and D)
F) A) and B)

Exam 13: Monopoly

A firm will attain more monopoly power as demand for its product becomes more elastic.

Correct Answer
verified

The more inelastic the demand curve is for the monopolist's product, the higher the price is that can be charged for the good.

Correct Answer
verified

Use the following to answer questions: Figure: Maximum Willingness to Pay -(Figure: Maximum Willingness to Pay) Refer to the figure. What is the maximum price that the consumer is willing to pay for 100 units?

Correct Answer
verified

Explain how a profit-maximizing monopolist chooses level of output and the price of goods.

Correct Answer
verified
The profit-maximizing monopoli...
View Answer

A monopoly is able to increase the markup of price over marginal cost:

Correct Answer
verified

A monopolist will charge a higher markup when demand is more elastic.

Correct Answer
verified
False

Correct Answer
verified

A monopoly that is unregulated always causes deadweight loss.

Correct Answer
verified
True

When a single firm can supply the entire market at lower cost than two or more firms, we say that the industry is:

Correct Answer
verified

If a pharmaceutical company discovering a new drug is not granted a patent to retain its monopoly power on the drug,:

Correct Answer
verified
D

A profit-maximizing monopolist chooses the output level where MR = MC and chooses the corresponding price from the marginal revenue curve.

Correct Answer
verified

A consumer is likely to be sensitive to price if the purchase covered by insurance.

Correct Answer
verified

How could a monopoly offer a lower price than a scenario of intense competition?

Correct Answer
verified

Graphically, a firm's marginal revenue curve is:

Correct Answer
verified

Deadweight loss is present in both competitive and monopoly markets.

Correct Answer
verified

When any firm charges a higher price, fewer of its goods are sold.

Correct Answer
verified

For a monopoly, marginal revenue is always greater than the price it charges for its good.

Correct Answer
verified

Do monopolies always reduce social benefits?

Correct Answer
verified

To maximize profit a monopoly firm increases output until marginal revenue exceeds the marginal cost.

Correct Answer
verified

Which of the following is NOT a source of monopoly power?

Correct Answer
verified

Exam 13: Monopoly

A firm will attain more monopoly power as demand for its product becomes more elastic.

Correct AnswerverifiedShow Answer

The more inelastic the demand curve is for the monopolist's product, the higher the price is that can be charged for the good.

Correct AnswerverifiedShow Answer

Use the following to answer questions: Figure: Maximum Willingness to Pay -(Figure: Maximum Willingness to Pay) Refer to the figure. What is the maximum price that the consumer is willing to pay for 100 units?

Correct AnswerverifiedShow Answer

Explain how a profit-maximizing monopolist chooses level of output and the price of goods.

Correct AnswerverifiedThe profit-maximizing monopoli...View AnswerShow Answer

A monopoly is able to increase the markup of price over marginal cost:

Correct AnswerverifiedShow Answer

A monopolist will charge a higher markup when demand is more elastic.

Correct AnswerverifiedFalse

Correct AnswerverifiedShow Answer

A monopoly that is unregulated always causes deadweight loss.

Correct AnswerverifiedTrue

When a single firm can supply the entire market at lower cost than two or more firms, we say that the industry is:

Correct AnswerverifiedShow Answer

If a pharmaceutical company discovering a new drug is not granted a patent to retain its monopoly power on the drug,:

Correct AnswerverifiedD

A profit-maximizing monopolist chooses the output level where MR = MC and chooses the corresponding price from the marginal revenue curve.

Correct AnswerverifiedShow Answer

A consumer is ________ likely to be sensitive to price if the purchase ________ covered by insurance.

Correct AnswerverifiedShow Answer

How could a monopoly offer a lower price than a scenario of intense competition?

Correct AnswerverifiedShow Answer

Graphically, a firm's marginal revenue curve is:

Correct AnswerverifiedShow Answer

Deadweight loss is present in both competitive and monopoly markets.

Correct AnswerverifiedShow Answer

When any firm charges a higher price, fewer of its goods are sold.

Correct AnswerverifiedShow Answer

For a monopoly, marginal revenue is always greater than the price it charges for its good.

Correct AnswerverifiedShow Answer

Do monopolies always reduce social benefits?

Correct AnswerverifiedShow Answer

To maximize profit a monopoly firm increases output until marginal revenue exceeds the marginal cost.

Correct AnswerverifiedShow Answer

Which of the following is NOT a source of monopoly power?

Correct AnswerverifiedShow Answer

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Correct Answer
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Correct Answer
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The profit-maximizing monopoli...
View Answer

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False

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True

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D

Correct Answer
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A consumer is likely to be sensitive to price if the purchase covered by insurance.

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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