Question 1

Economists assume maximizing efficiency over other goals:

Accepted Answer

A)  is a guiding principle of policy-making.
B)  is not necessarily the best approach.
C)  should never be followed.
D)  will not bring about the best outcome.E) A) and B)
F) A) and C) B

Question 2

With a monopolist's outcome,consumer surplus is:

Accepted Answer

A)  higher than that of a competitive market.
B)  lower than that of a competitive market.
C)  the same as that of a competitive market.
D)  Any of these is possible.E) B) and D)
F) None of the above

Question 3

The monopolist faces:

Accepted Answer

A)  a perfectly elastic demand curve.
B)  a downward sloping demand curve.
C)  a perfectly inelastic demand curve.
D)  The monopolist may face any of these demand curves.E) All of the above
F) C) and D)

Question 4

Predatory pricing is:

Accepted Answer

A)  temporarily slashing prices below cost to force competitors out of the market.
B)  an aggressive business move to maintain market power.
C)  used to discourage competitors.
D)  All of these statements are true.E) None of the above
F) All of the above

Question 5

A monopoly:

Accepted Answer

A)  is a price taker.
B)  often faces competition from several other firms producing close substitutes.
C)  restricts its output.
D)  sets a low price by controlling the level of output.E) A) and C)
F) A) and B)

Question 6

One barrier to entry into a monopoly market is:

Accepted Answer

A)  having a natural monopoly.
B)  ownership of a key resource.
C)  government intervention.
D)  All of these are barriers to entry.E) A) and B)
F) A) and C)

Question 7

The presence of a monopoly helps:

Accepted Answer

A)  producers.
B)  consumers.
C)  society overall.
D)  All of these are helped by a monopoly.E) C) and D)
F) B) and C)

Question 8

For a monopoly producing any output level greater than one,the marginal revenue curve:

Accepted Answer

A)  lies below the demand curve.
B)  lies above the average revenue curve.
C)  is minimized when total revenue is maximized.
D)  is the same as the demand curve.E) A) and D)
F) A) and B)

Question 9

When a monopolist increases output,total revenue:

Accepted Answer

A)  will increase if the price effect outweighs the quantity effect.
B)  will decrease if the quantity effect outweighs the price effect.
C)  will increase if the quantity effect outweighs the price effect.
D)  None of these statements is true.E) C) and D)
F) All of the above C

Question 10

This table represents the revenues faced by a monopolist. 
Using the information in the table shown,the average revenue for this firm:

Accepted Answer

A)  decreases as output increases.
B)  increases as output increases.
C)  remains constant regardless of level of output.
D)  is maximized when total revenue is maximized.E) A) and B)
F) A) and C)

Question 11

The practice of charging customers different prices for the same good is called:

Accepted Answer

A)  price discrimination.
B)  price marking.
C)  group discounting.
D)  customer discrimination.E) B) and C)
F) None of the above

Question 12

The monopolist's outcome happens at a:

Accepted Answer

A)  lower quantity than the perfectly competitive one.
B)  lower price than the perfectly competitive one.
C)  higher quantity than the perfectly competitive one.
D)  None of these statements is true.E) A) and D)
F) None of the above

Question 13

One way DeBeers managed to maintain control over the diamond industry was to:

Accepted Answer

A)  continue to be the sole diamond producer by buying all existing diamonds.
B)  create the illusion of no close substitutes through marketing.
C)  punish consumers who sought to store their wealth in diamonds.
D)  All of these statements are true.E) A) and D)
F) A) and C)

Question 14

The government has used the Sherman Act to break up monopolies in which of the following industries?

Accepted Answer

A)  Telecommunications
B)  Fishing
C)  Coal
D)  None of these industries has been affected by the Sherman Act.E) A) and B)
F) All of the above

Question 15

Price discrimination:

Accepted Answer

A)  benefits those groups with a lower willingness to pay than others.
B)  can be practiced by any firm with market power.
C)  increases the profits of the firm.
D)  All of these statements are true.E) B) and D)
F) None of the above

Question 16

Diamonds are expensive because:

Accepted Answer

A)  very few diamonds are discovered each year.
B)  the seller of most diamonds in the world restricts output.
C)  they are a symbol of luxury.
D)  they are a form of conspicuous consumption.E) A) and D)
F) A) and C)

Question 17

At any quantity of output above the intersection of the marginal revenue and marginal cost curves:

Accepted Answer

A)  MR is lower than MC.
B)  profits are not being maximized.
C)  ATC is higher than AVC.
D)  All of these statements are true.E) A) and B)
F) B) and C)

Question 18

Monopoly power is:

Accepted Answer

A)  unwelcome by all small businesses.
B)  welcomed by some small businesses.
C)  helpful in very large industries.
D)  helpful in very small industries.E) A) and C)
F) A) and B)

Question 19

When a perfectly competitive firm increases output,total revenue:

Accepted Answer

A)  increases,because there is no price effect.
B)  decreases,because there is no price effect.
C)  increases,because there is no quantity effect.
D)  decreases,because there is no quantity effect.E) A) and B)
F) A) and C)

Question 20

When government agencies become privatized:

Accepted Answer

A)  they are typically then regulated by the government.
B)  they are more likely to be inefficient.
C)  it is a sign they are "loser" industries.
D)  they rarely make a profit.E) A) and B)
F) None of the above A

Exam 14: Monopoly

Economists assume maximizing efficiency over other goals:

Correct AnswerverifiedB

With a monopolist's outcome,consumer surplus is:

Correct AnswerverifiedShow Answer

The monopolist faces:

Correct AnswerverifiedShow Answer

Predatory pricing is:

Correct AnswerverifiedShow Answer

A monopoly:

Correct AnswerverifiedShow Answer

One barrier to entry into a monopoly market is:

Correct AnswerverifiedShow Answer

The presence of a monopoly helps:

Correct AnswerverifiedShow Answer

For a monopoly producing any output level greater than one,the marginal revenue curve:

Correct AnswerverifiedShow Answer

When a monopolist increases output,total revenue:

Correct AnswerverifiedC

This table represents the revenues faced by a monopolist. Using the information in the table shown,the average revenue for this firm:

Correct AnswerverifiedShow Answer

The practice of charging customers different prices for the same good is called:

Correct AnswerverifiedShow Answer

The monopolist's outcome happens at a:

Correct AnswerverifiedShow Answer

One way DeBeers managed to maintain control over the diamond industry was to:

Correct AnswerverifiedShow Answer

The government has used the Sherman Act to break up monopolies in which of the following industries?

Correct AnswerverifiedShow Answer

Price discrimination:

Correct AnswerverifiedShow Answer

Diamonds are expensive because:

Correct AnswerverifiedShow Answer

At any quantity of output above the intersection of the marginal revenue and marginal cost curves:

Correct AnswerverifiedShow Answer

Monopoly power is:

Correct AnswerverifiedShow Answer

When a perfectly competitive firm increases output,total revenue:

Correct AnswerverifiedShow Answer

When government agencies become privatized:

Correct AnswerverifiedA

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B

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C

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A