question
When the demand curve is downward sloping, marginal revenue is A) equal to price. B) equal to average revenue. C) less than price. D) more than price.
answer
C
question
Which of the following is NOT true regarding monopoly? A) Monopoly is the sole producer in the market. B) Monopoly price is determined from the demand curve. C) Monopolist can charge as high a price as it likes. D) Monopoly demand curve is downward sloping
answer
C
question
Which of the following is true at the output level where P=MC? A) The monopolist is maximizing profit. B) The monopolist is not maximizing profit and should increase output. C) The monopolist is not maximizing profit and should decrease output. D) The monopolist is earning a positive profit.
answer
C
question
Compared to the equilibrium price and quantity sold in a competitive market, a monopolist will charge a __________ price and sell a __________ quantity. A) higher; larger B) lower; larger C) higher; smaller D) lower; smaller E) none of these
answer
C
question
Assume that a profit maximizing monopolist is producing a quantity such that marginal revenue exceeds marginal cost. We can conclude that the A) firm is maximizing profit. B) firmʹs output is smaller than the profit maximizing quantity. C) firmʹs output is larger than the profit maximizing quantity. D) firmʹs output does not maximize profit, but we cannot conclude whether the output is too large or too small.
answer
B
question
To find the profit maximizing level of output, a firm finds the output level where A) price equals marginal cost. B) marginal revenue and average total cost. C) price equals marginal revenue. D) all of the above E) none of the above
answer
E
question
As the manager of a firm you calculate the marginal revenue is $152 and marginal cost is $200. You should A) expand output. B) do nothing without information about your fixed costs. C) reduce output until marginal revenue equals marginal cost. D) expand output until marginal revenue equals zero. E) reduce output beyond the level where marginal revenue equals zero
answer
C
question
Suppose that a firm can produce its output at either of two plants. If profits are maximized, which of the following statements is true? A) The marginal cost at the first plant must equal marginal revenue. B) The marginal cost at the second plant must equal marginal revenue. C) The marginal cost at the two plants must be equal. D) all of the above E) none of the above
answer
D
question
The monopolist has no supply curve because A) the quantity supplied at any particular price depends on the monopolistʹs demand curve. B) the monopolistʹs marginal cost curve changes considerably over time. C) the relationship between price and quantity depends on both marginal cost and average cost. D) there is a single seller in the market. E) although there is only a single seller at the current price, it is impossible to know how many sellers would be in the market at higher prices.
answer
A
question
When a per unit tax is imposed on the sale of a product of a monopolist, the resulting price increase will A) always be less than the tax. B) always be more than the tax. C) always be less than if a similar tax were imposed on firms in a competitive market. D) not always be less than the tax.
answer
D
question
The monopoly supply curve is the A) same as the competitive market supply curve. B) portion of marginal costs curve where marginal costs exceed the minimum value of average variable costs. C) result of market power and production costs. D) none of the above
answer
D
question
For a monopolist, changes in demand will lead to changes in A) price with no change in output. B) output with no change in price. C) both price and quantity. D) any of the above can be true
answer
C
question
Use the following two statements to answer this question: I. For a monopolist, at every output level, average revenue is equal to price. II. For a monopolist, at every output level, marginal revenue is equal to price. A) Both I and II are true. B) I is true, and II is false. C) I is false, and II is true. D) Both I and II are false. E) Statements I and II could either be true or false depending upon demand.
answer
B
question
Which of the following is NOT true for monopoly? A) The profit maximizing output is the one at which marginal revenue and marginal cost are equal. B) Average revenue equals price. C) The profit maximizing output is the one at which the difference between total revenue and total cost is largest. D) The monopolistʹs demand curve is the same as the market demand curve. E) At the profit maximizing output, price equals marginal cost.
answer
E
question
If a monopolist sets her output such that marginal revenue, marginal cost and average total cost are equal, economic profit must be: A) negative. B) positive. C) zero. D) indeterminate from the given information.
answer
B
question
A monopolist has equated marginal revenue to zero. The firm has: A) maximized profit. B) maximized revenue. C) minimized cost. D) minimized profit.
answer
B
question
A monopolist has determined that at the current level of output the price elasticity of demand is -0.15. Which of the following statements is true? A) The firm should cut output. B) This is typical for a monopolist; output should not be altered. C) The firm should increase output. D) None of the above is necessarily correct.
answer
A
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