Question 1

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

Accepted Answer

A)  MR is higher than MC.
B)  ATC is lower than AVC.
C)  MC is higher than ATC.
D)  None of these statements is true.E) All of the above
F) B) and C)

Question 2

The Sherman Antitrust Act:

Accepted Answer

A)  was actively used by President Roosevelt in the early 20th century.
B)  no longer applies to business practices today.
C)  was passed in 1800.
D)  All of these statements are true.E) All of the above
F) A) and B)

Question 3

For a monopoly,a negative marginal revenue implies:

Accepted Answer

A)  the price effect is larger than the quantity effect.
B)  total revenues are increasing.
C)  that the demand is price elastic.
D)  All of these statements are true.E) A) and D)
F) B) and D)

Question 4

This graph shows the cost and revenue curves faced by a monopoly. 
According to the graph shown,if Q2 units are being produced,this monopolist:

Accepted Answer

A)  is earning positive economic profits.
B)  is earning negative economic profits.
C)  is earning zero economic profits.
D)  may be earning zero accounting profits.E) B) and C)
F) None of the above

Question 5

This graph shows the cost and revenue curves faced by a monopoly. 
According to the graph shown,if Q2 units are being produced,this monopolist:

Accepted Answer

A)  is not maximizing profits.
B)  is producing where marginal costs are less than marginal revenue.
C)  is earning negative profits.
D)  should increase production.E) A) and B)
F) None of the above

Question 6

A natural monopolist that sets prices equal to marginal cost will:

Accepted Answer

A)  incur losses.
B)  have zero profit.
C)  still make a positive economic profit.
D)  be government owned.E) A) and C)
F) All of the above

Question 7

The most a monopolist can sell at any given price is:

Accepted Answer

A)  the amount he alone can supply the market with.
B)  the amount demanders are willing to buy at that price.
C)  constrained by the availability of inputs.
D)  less than if it were a perfectly competitive market.E) B) and C)
F) All of the above

Question 8

One barrier to entry into a monopoly market is:

Accepted Answer

A)  very large fixed costs relative to variable costs.
B)  the existence of large economies of scale.
C)  the high cost of required infrastructure for an industry.
D)  All of these statements are true.E) B) and C)
F) A) and D)

Question 9

Public policy responses to a monopoly:

Accepted Answer

A)  aim to break up existing monopolies.
B)  always have more costs than benefits to society.
C)  always have more benefits than costs to society.
D)  never benefit society in the end.E) A) and B)
F) A) and C)

Question 10

Protecting intellectual property rights:

Accepted Answer

A)  encourages research and development.
B)  gives incentive to innovate.
C)  can reduce total surplus for society.
D)  All of these statements are true.E) C) and D)
F) B) and D)

Question 11

When government agencies become privatized:

Accepted Answer

A)  they are sold to private companies.
B)  stock is created and sold to the public.
C)  private stock is sold to private households.
D)  they are rarely regulated.E) None of the above
F) B) and C)

Question 12

At any price the monopolist sets,it can sell:

Accepted Answer

A)  as many as it wants.
B)  as many as demanders are willing to buy.
C)  more than a perfectly competitive market would sell.
D)  less than quantity demanded to keep the item rare.E) B) and C)
F) A) and B)

Question 13

One reason DeBeers has lost some of its monopoly power is:

Accepted Answer

A)  government regulations.
B)  competition from Canadian and Russian diamond mines.
C)  pressure from consumers.
D)  All of these statements are true.E) A) and B)
F) All of the above

Question 14

This graph shows the cost and revenue curves faced by a monopoly. 
According the graph shown,the profit-maximizing decision of the monopolist would be:

Accepted Answer

A)  Q1,P1.
B)  Q1,P3.
C)  Q2,P2.
D)  This monopolist should not enter the market.E) B) and C)
F) A) and D)

Question 15

In theory,placing a price control on a natural monopoly should:

Accepted Answer

A)  have the same outcome as public ownership.
B)  create zero economic profits for the company.
C)  reduce deadweight loss as much as possible.
D)  All of these statements are true.E) A) and D)
F) A) and B)

Question 16

When government owns a natural monopoly,it can:

Accepted Answer

A)  create the perfectly competitive outcome.
B)  provide an efficient outcome.
C)  sustain losses.
D)  rid the industry of deadweight loss.E) A) and D)
F) B) and D)

Question 17

For a monopolist,the price effect:

Accepted Answer

A)  is the increase in revenues from selling a greater quantity at a lower price.
B)  is always outweighed by the quantity effect.
C)  is the decrease in revenues from selling a greater quantity at a lower price.
D)  always outweighs the quantity effect.E) None of the above
F) A) and D)

Question 18

This graph shows the cost and revenue curves faced by a monopoly. 
According to the graph shown,if Q1 units are being produced,this monopolist:

Accepted Answer

A)  should increase production.
B)  should charge P0 to maximize profits.
C)  should charge P1 to maximize profits.
D)  should charge P3 to maximize profits.E) All of the above
F) C) and D)

Question 19

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

Accepted Answer

A)  lies below the demand curve.
B)  lies above the marginal revenue curve.
C)  is the same as the marginal revenue curve.
D)  lies above the demand curve.E) A) and D)
F) All of the above

Question 20

Some argue that the best response to monopolies is no response at all,because:

Accepted Answer

A)  they are too powerful to be dealt with effectively.
B)  no one can ever decide which monopolies to regulate.
C)  the creation of regulation may be too difficult.
D)  left unchecked,all monopolies eventually shut down.E) None of the above
F) A) and D)

Exam 14: Monopoly

The Sherman Antitrust Act:

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This graph shows the cost and revenue curves faced by a monopoly. According to the graph shown,if Q2 units are being produced,this monopolist:

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Public policy responses to a monopoly:

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

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This graph shows the cost and revenue curves faced by a monopoly. According to the graph shown,if Q1 units are being produced,this monopolist:

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For a monopolist,the price effect:

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Some argue that the best response to monopolies is no response at all,because:

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One barrier to entry into a monopoly market is:

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For a monopoly,a negative marginal revenue implies:

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When government owns a natural monopoly,it can:

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Protecting intellectual property rights:

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In theory,placing a price control on a natural monopoly should:

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At any price the monopolist sets,it can sell:

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The most a monopolist can sell at any given price is:

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This graph shows the cost and revenue curves faced by a monopoly. According to the graph shown,if Q2 units are being produced,this monopolist:

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This graph shows the cost and revenue curves faced by a monopoly. According the graph shown,the profit-maximizing decision of the monopolist would be:

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When government agencies become privatized:

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A natural monopolist that sets prices equal to marginal cost will:

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

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One reason DeBeers has lost some of its monopoly power is:

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