Question 1

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 should:

Accepted Answer

A)   increase production.
B)   charge P0 to maximize profits.
C)   charge P1 to maximize profits.
D)   charge P3 to maximize profits.

Question 2

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

Accepted Answer

A)   Tobacco
B)   Fishing
C)   Trucking
D)   Coal

Question 3

At any price the monopolist sets,it will 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.

Question 4

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.

Question 5

For a monopoly,for all units greater than one,the marginal revenue curve:

Accepted Answer

A)   lies above the demand curve.
B)   lies below the average revenue curve.
C)   cannot be negative.
D)   All of these statements are true.

Question 6

Public policy responses to monopolies:

Accepted Answer

A)   could 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.

Question 7

The monopolist faces a:

Accepted Answer

A)   perfectly elastic demand curve.
B)   downward sloping demand curve.
C)   perfectly inelastic demand curve.
D)   perfectly elastic supply curve.

Question 8

For a monopoly,marginal revenue for all units greater than 1:

Accepted Answer

A)   is always less than the price.
B)   cannot be negative.
C)   is zero when total profits are maximized.
D)   is always greater than marginal cost.

Question 9

In general,with a monopolist's outcome,total 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.

Question 10

When a monopolist chooses the level of output where marginal cost equals marginal revenue:

Accepted Answer

A)   profits are maximized.
B)   price is set at marginal revenue.
C)   price is equal to average total costs.
D)   total revenue is maximized.

Question 11

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.

Question 12

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.

Question 13

The regulation of natural monopolies:

Accepted Answer

A)   typically takes the form of setting a maximum price that can be charged.
B)   always causes the industry to operate at a loss.
C)   eliminates deadweight loss.
D)   is common in the tobacco industry.

Question 14

Antitrust activities can cause inefficiencies by:

Accepted Answer

A)   breaking up a natural monopoly.
B)   creating many small firms that cannot capture available economies of scale.
C)   Both of these statements are true.
D)   Neither of these statements is true.

Question 15

Perfect price discrimination:

Accepted Answer

A)   eliminates all consumer surplus.
B)   maximizes producer surplus.
C)   creates no deadweight loss.
D)   All of these statements are true.

Question 16

One of the key reasons why monopolies exist is:

Accepted Answer

A)   there is easy entry and exit into and out of the market.
B)   the goods sold are highly inaccessible to buyers.
C)   there are barriers to entry into the market.
D)   geographical differences.

Question 17

The public policies designed to mitigate the effects of monopolies are:

Accepted Answer

A)   highly debated issues.
B)   well-defined and accepted.
C)   highly effective.
D)   proven to increase benefits more than increase costs.

Question 18

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.

Question 19

This table represents the revenues faced by a monopolist. th unit. C)  increases as output increases. D)  decreases, then increases after the 6th unit." class="answers-bank-image d-inline" rel="preload" > Using the information in the table shown,the marginal revenue:

Accepted Answer

A)   increases, then decreases as output increases.
B)   is negative after the 6th unit.
C)   increases as output increases.
D)   decreases, then increases after the 6th unit.

Question 20

To avoid subsidies,the government should cap the price for natural monopolies at their:

Accepted Answer

A)   marginal cost.
B)   average total cost.
C)   average variable cost.
D)   fixed cost.

Exam 14: Monopoly

Perfect price discrimination:

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One barrier to entry into a monopoly market is:

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

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The public policies designed to mitigate the effects of monopolies are:

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Public policy responses to monopolies:

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The regulation of natural monopolies:

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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 should:

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One of the key reasons why monopolies exist is:

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For a monopoly,for all units greater than one,the marginal revenue curve:

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To avoid subsidies,the government should cap the price for natural monopolies at their:

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

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This table represents the revenues faced by a monopolist. Using the information in the table shown,the marginal revenue:

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When a monopolist chooses the level of output where marginal cost equals marginal revenue:

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

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In general,with a monopolist's outcome,total surplus is:

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At any price the monopolist sets,it will sell:

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For a monopoly,marginal revenue for all units greater than 1:

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Antitrust activities can cause inefficiencies by:

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When government agencies become privatized:

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The monopolist faces a:

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