1. Compared with a perfectively competitive market a monopoly is
a. it raises the market price above marginal cost and produces a smaller output.
b. it produces a greater output but charges a lower price.
c. it produces the same quantity while charging a higher price.
d. all surplus goes to the producer.
e. it leads to a smaller producer surplus but greater consumer surplus.
2. The demand curve of a monopolist typically
3. The ability of a firm to influence the market price of a good by influencing the total quantity of the good sold is known as
4. A monopoly is distinguished from a firm operating under any other market structure in the following way:
5. A single-price monopolist maximizes profit by producing an
a. its marginal revenue equals marginal cost equals the market price.
b. its marginal revenue exceeds marginal cost.
c. its marginal revenue equals marginal cost but is less than the market price.
d. its marginal revenue equals marginal cost but is greater than the market price.
e. its marginal revenue is less than marginal cost.
6. While firms in a perfectly competitive industry make zero
economic profit in the long run, a monopolist could make
b.an economic loss.
c.a declining economic profit.
d.an increasing economic profit.
e.also a zero economic profit.
7. You are the manager of a firm that sells its product in a competitive market at a price of $250. Your firm's cost function is C = 30 + 5Q2. The profit-maximizing output for your firm is
8. The amount of output that a firm decides to sell has no effect on the market price in a competitive industry because
9. Which of the following is true regarding a perfectly competitive firm?
10. A price-taking firm faces a
11. If a competitive firm produces an output where its average total cost is $40, and marginal revenue and marginal cost are $50, in the short run this firm
12. If current output is less than the profit-maximizing output, then the next unit produced
13. Which one of the following statements describes a market that is monopolistically competitive?
14. A market structure where a small number of firms compete occurs in
15. You are the manager of a monopoly that faces an inverse demand curve described by P = 528 - 12Q. Your costs are
C = 124 + 48Q. The profit-maximizing price is
16. Which one of the following is a potential source of monopoly power?
17. Which of the following is a correct representation of a profit-maximizing monopoly earning positive economic profits?
18. Which of the following is true regarding the long-run equilibrium relationship between price and costs in a perfectly competitive and monopolistically competitive industry?
19. The implication of the long-run equilibrium in the competitive industry is that
20. Monopoly, as compared to perfect competition (with a given cost structure), is predicted to result in
Q1) The answer is (a) as a monopolist produces according to a condition MR = MC that leads to a higher price than the marginal cost and a smaller quantity than competitive markets
Q2) The answer is (a) as for a monopolist to sell more, the prices must be lowered thus the demand curve slopes downward to the right
Q3) The answer is (b) market power is indeed the ability of the firm to be able to influence the price by making changes in the quantity sold.
Q4) The answer is (e) as monopolist is the only producer in the market, its demand curve is the same as the market demand curve (downward sloping unlike competition)
Get Answers For Free
Most questions answered within 1 hours.