Question 1

For a monopoly,when the price effect outweighs the quantity effect of increased production:

Accepted Answer

A)  total revenues will increase.
B)  the demand must be price inelastic.
C)  marginal revenue must be increasing.
D)  All of these statements are true.E) A) and B)
F) A) and C)

Question 2

Most U.S.firms face:

Accepted Answer

A)  perfect competition.
B)  some degree of competition.
C)  market power resting in a few large firms in every industry.
D)  no competition at all.E) B) and D)
F) None of the above

Question 3

An essential characteristic of a monopoly is:

Accepted Answer

A)  the good must have no close substitutes.
B)  there can only be a few sellers in the market.
C)  only one buyer must exist.
D)  many buyers must exist.E) None of the above
F) All of the above

Question 4

The loss of the profit motive by a publicly owned natural monopoly could:

Accepted Answer

A)  reduce the motivation to improve efficiency.
B)  increase the motivation to improve efficiency.
C)  increase the incentive to provide better service.
D)  increase the incentive to lower costs.E) B) and C)
F) All of the above

Question 5

Perfect price discrimination:

Accepted Answer

A)  allows each customer to pay exactly what they are willing and able to pay.
B)  maximizes consumer surplus.
C)  is not efficient.
D)  minimizes producer surplus.E) A) and B)
F) B) and C)

Question 6

If an inefficient public monopoly cannot provide a service at a price that sufficient numbers of people are willing to pay:

Accepted Answer

A)  it can remain in operation by covering its losses with revenue from taxes.
B)  it must shut down and leave the industry in the long run.
C)  it should expand operations until demand is satisfied.
D)  it will seek out more efficiencies.E) B) and C)
F) B) and D)

Question 7

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

Accepted Answer

A)  the creation of regulation may be too difficult.
B)  political mishandling may make the situation even worse.
C)  the regulation of monopolies may not be able to be managed effectively.
D)  All of these statements are true.E) None of the above
F) C) and D)

Question 8

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 negative profits.
B)  should cut back production to increase profits.
C)  is maximizing revenue.
D)  is maximizing profits.E) A) and B)
F) A) and C)

Question 9

One of the reasons why monopolies exist is:

Accepted Answer

A)  there are barriers to entry into the market.
B)  there is easy entry and exit into and out of the market.
C)  the goods sold are highly inaccessible to buyers.
D)  geographical differences.E) None of the above
F) All of the above

Question 10

The monopolist chooses to produce:

Accepted Answer

A)  where marginal cost equals marginal revenue.
B)  at a lower quantity than the perfectly competitive firm.
C)  at an inefficient outcome.
D)  All of these statements are true.E) A) and C)
F) All of the above

Question 11

For a monopoly,when marginal revenue is zero:

Accepted Answer

A)  profits are maximized.
B)  total revenue is maximized.
C)  marginal revenue is minimized.
D)  marginal costs are minimized.E) All of the above
F) A) and D)

Question 12

When government owns a natural monopoly,it:

Accepted Answer

A)  still creates deadweight loss.
B)  sets price above marginal cost.
C)  recognizes setting price equal to marginal cost would cause the enterprise to incur losses.
D)  All of these statements are true.E) B) and D)
F) All of the above

Question 13

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.E) A) and D)
F) B) and D)

Question 14

This table represents the revenues faced by a monopolist. th unit. B) increases,then decreases as output increases. 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)  is negative after the 6th unit.
B)  increases,then decreases as output increases.
C)  increases as output increases.
D)  decreases,then increases after the 6th unit.E) A) and D)
F) A) and C)

Question 15

With a monopolist's outcome,producer 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) C) and D)
F) A) and D)

Question 16

DeBeers was able to profit the most from the diamond market by selling:

Accepted Answer

A)  a lot of diamonds at low prices.
B)  few diamonds at high prices.
C)  a lot of diamonds at high prices.
D)  a few diamonds at low prices.E) B) and C)
F) A) and B)

Question 17

The government uses the antitrust laws in place:

Accepted Answer

A)  to prevent all mergers that would create market power.
B)  ineffectively because the laws are outdated.
C)  increasingly over time,as market power is getting more concentrated.
D)  None of these statements is true.E) None of the above
F) B) and D)

Question 18

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

Accepted Answer

A)  Railroad
B)  Oil
C)  Aluminum
D)  All of these industries have been affected by the Sherman Act.E) B) and D)
F) All of the above

Question 19

For markets operating at quantities lower than the equilibrium price and quantity for a perfectly competitive market:

Accepted Answer

A)  the outcome is efficient.
B)  total surplus is increased.
C)  consumer surplus is always increased.
D)  None of these statements is true.E) All of the above
F) B) and C)

Question 20

One barrier to entry into a monopolist market is:

Accepted Answer

A)  the ownership of a key resource or input.
B)  too many competitors already in the market.
C)  high input costs.
D)  few buyers.E) All of the above
F) C) and D)

Exam 14: Monopoly

For a monopoly,when the price effect outweighs the quantity effect of increased production:

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Antitrust activities can cause inefficiencies by:

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An essential characteristic of a monopoly is:

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The government uses the antitrust laws in place:

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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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For markets operating at quantities lower than the equilibrium price and quantity for a perfectly competitive market:

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One barrier to entry into a monopolist market is:

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Most U.S.firms face:

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DeBeers was able to profit the most from the diamond market by selling:

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If an inefficient public monopoly cannot provide a service at a price that sufficient numbers of people are willing to pay:

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When government owns a natural monopoly,it:

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Perfect price discrimination:

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

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The monopolist chooses to produce:

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With a monopolist's outcome,producer surplus 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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The loss of the profit motive by a publicly owned natural monopoly could:

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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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For a monopoly,when marginal revenue is zero:

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One of the reasons why monopolies exist is:

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