Chapter 12 Monopoly - Sample Questions MULTIPLE …

1 Chapter 12 Monopoly - Sample QuestionsMULTIPLE choice . Choose the one alternative that best completes the statement or answers the ) Unregulated monopoliesA) cannot change the market ) can influence the market quantity and ) cannot ) take the market price as )2) The following are key features of a Monopoly EXCEPTA) diseconomies of ) no close ) influence over )barriers to )3) Which of the following statements about a Monopoly is FALSE?A) A Monopoly is the only supplier of the ) Monopolies have no barriers to entry or ) The good produced by a Monopoly has no close ) None of the above; that is, all of the above answers are true statements about a )4) Which of the following is LEAST likely to be a Monopoly ?

2 A) the sole owner of an occupational licenseB) a pharmaceutical company with a patent on a drugC) a store in a large shopping mallD) the holder of a public franchise4)5) A public franchise isA) an exclusive right granted to an inventor of a ) a government issued license required to practice a ) a unique source of raw ) an exclusive right granted to a firm to supply a good or )6) Public franchises create monopolies by restrictingA) ) ) ) )7) A patent grantsA) a guarantee of quality to ) an exclusive right to an inventor of a ) the right to practice a ) control over a unique source or supply of raw )8) Patents create monopolies by restrictingA) ) ) ) )9) Patents are _____ barriers to entry and public franchises are _____ barriers to ) legal; legalB) legal; naturalC) natural; natural D) natural.

3 Legal9)110) A defining characteristic of a natural Monopoly is thatA) it exists because of legal barriers to ) it has no close ) its average total cost curve slopes downward as it intersects the demand ) its demand curve slopes )11) An industry in which one firm can supply the entire market at a lower price than two or morefirms can is called aA) legal ) single-price ) natural ) price-discriminating )12) Which of the following is true of a natural Monopoly ?A) The firm can supply the entire market at a lower cost than could two or more ) Its average total cost curve slopes upward as it intersects the demand ) The firm is not protected by any barrier to ) Economies of scale exist to only a very low level of )13) A market in which competition and entry are restricted by the granting of a public franchise,government license, patent, or copyright is called aA) price-discriminating ) single-price ) natural ) legal )14) A single-price Monopoly charges the same priceA)

4 Even if the demand curve ) to all ) even if its cost curves ) and the price equals the firm's marginal )15) All of the following are examples of price discrimination EXCEPTA) lower ticket prices for matinee )buy-one-get-one-free ) "early bird specials" at a ) "buy now, pay later" payment )16) Total revenue equalsA) total cost minus ) price times quantity ) marginal revenue times quantity ) the area between the demand curve and the marginal revenue )17) For a Monopoly , the industry demand curve is the firm'sA) profit ) marginal revenue ) supply ) demand )218) MonopolistsA) face downward sloping demand ) are price ) have no short-run fixed ) maximize revenue, not )19) The marginal revenue curve for a single-price monopolyA) lies below its demand ) is ) lies above its demand ) coincides with its demand )20) For a single-price Monopoly , marginal revenue is _____ when demand is elastic and is _____when demand is ) negative; positiveB) positive; positiveC) positive; negativeD) negative.

5 Negative20)21) If the price elasticity of demand is greater than 1, a Monopoly 'sA) marginal revenue is ) total revenue decreases when the firm lowers its ) marginal revenue is ) total revenue increases when the firm lowers its )22) If the price elasticity of demand is less than 1, a Monopoly 'sA) marginal revenue is ) total revenue decreases when the firm lowers its ) total revenue increases when the firm lowers its ) marginal revenue is )23) If the demand for its product is elastic, a Monopoly 'sA) total revenue is unchanged when the firm lowers its ) total revenue decreases when the firm lowers its ) marginal revenue is ) marginal revenue is )24) If the demand for its product is inelastic, a Monopoly 'sA) marginal revenue is ) total revenue is unchanged when the firm lowers its ) total revenue increases when the firm lowers its ) marginal revenue is equal to )25) A Monopoly firm expands its output and lowers its price.

6 The firm finds that its total revenue , the firm is producing in theA) inelastic range of its supply ) elastic range of its supply ) elastic range of its demand ) inelastic range of its demand )326) The figure above shows a Monopoly firm's demand curve. If the price and quantity of haircutsmove from point t to point r, the Monopoly 'sA) marginal revenue will ) total revenue will ) total revenue will remain the ) total revenue will )27) The figure above shows a Monopoly firm's demand curve. If the price and quantity of haircutsmove from point t to point u, the Monopoly 'sA) total revenue will remain the ) total revenue will ) marginal revenue will ) total revenue will )28) The figure above shows a Monopoly firm's demand curve.

7 At point tA) demand is ) demand is ) demand is unit ) total revenue is at a )29) The figure above shows a Monopoly firm's demand curve. The Monopoly 's total revenue is at itsmaximum when the firm produces at pointA) ) ) ) )30) The figure above shows a Monopoly firm's demand curve. The Monopoly 's total revenue is zero atpointA) ) ) ) )31) The figure above shows a Monopoly firm's demand curve. At point u in the figure, the demandfacing the Monopoly isA) less than the ) ) unit ) )432) An unregulated Monopoly willA) produce in the elastic range of its demand ) flood the market with goods to deter ) produce only where marginal revenue is ) produce in the inelastic range of its demand )33) An unregulated Monopoly finds that its marginal cost exceeds its marginal revenue.

8 In order toincrease its profit, the firm willA) lower its price and increase its ) raise its price and increase its ) raise its price and decrease its ) continue to produce this level of output because any change will lower its )34) The figure above shows a Monopoly 's total revenue and total cost curves. The Monopoly 'seconomic profit is positive if it produces betweenA) 0 and 20 ) 5 and 20 ) 0 and 15 ) 0 and 5 )35) The figure above shows a Monopoly 's total revenue and total cost curves. The Monopoly 'seconomic profit is zero if it producesA) 15 units of ) 5 or 20 units of ) 0 units of ) none of the above35)36) The figure above shows a Monopoly 's total revenue and total cost curves.

9 The Monopoly 'seconomic profit is maximized when it producesA) 5 units of ) 20 units of ) 0 units of ) 15 units of )537) The figure above shows a Monopoly 's total revenue and total cost curves. The Monopoly 's marginalrevenue equals its marginal cost when it producesA) 5 units of ) 15 units of ) 20 units of ) 0 units of )38) The Monopoly with the TR and TC curves shown in the figure above will produceA) 5 units of ) 20 units of ) 15 units of ) 0 units of )39) For the unregulated, single-price Monopoly shown in the figure above, when its profit ismaximized, output will beA) 4 units per year and the price will be $ ) 6 units per year and the price will be $ ) 4 units per year and the price will be $ )

10 None of the above answers is )40) The unregulated, single-price Monopoly shown in the figure above will produce where its demandA) equals its ATC ) is ) is ) equals its )41) The unregulated, single-price Monopoly shown in the figure above has a total economic profit ofA) $ ) $ ) $ ) $ )642) The unregulated, single-price Monopoly shown in the figure above will sellA) 50 ) 30 ) less than 30 ) 100 )43) An unregulated, single-price Monopoly is shown in the figure above. If fixed cost is $20, themonopoly's total costs when it is maximizing its profi