Chapter 24 Monopoly (Microeconomics)

Refer to Exhibit 9-8. Assuming that total fixed costs are $80, the average variable cost of producing 6 units of output equal
a. $16.00
b. $9.00
c. $12.00
d. There is not enough information given to answer this question
e. $10.67

A monopoly may exist because
a. government has refused to grant a public franchise.
b. one firm has the exclusive ownership of a scarce resource.
c. the firm is so large and is currently experiencing such vast diseconomies of scale that it can out-compete all newcomers.
d. a and b
e. a, b, and c

Which of the following is an assumption of the theory of monopoly?
a. the product has a number of close substitutes.
b. there are extremely high barriers to entry.
c. there are many sellers.
d. the product is of extremely high quality.

Public franchises, patents, and government licenses are examples of _______ barriers to entry.
a. social
b. geographical
c. cultural
d. legal

a single-priced monopolist
a. must lower price on all previous units to sell an additional unit
b. is a price taker
c. finds that its marginal revenue and price are the same for the first unit of the good it sells
d. necessarily faces a perfectly inelastic demand curve
e. a and c

to engage in price discrimination, it is necessary that
a. a seller be a price searcher
b. there be no arbitrage
c. a seller incur different costs for servicing different customers
d. a and b
e. all of the above

A right granted to a firm by government that permits the firm to provide a particular good or service and excludes others from doing the same is called
a. a comparative advantage
b. a public franchise
c. an economy of scale
d. a natural monopoly

Which of the following statements is false?
a. A price searcher must lower price to sell an additional unit of its product.
b. A price searcher, like a price taker, produces that quantity of output for which marginal revenue equals marginal cost.
c. For a price searcher, price is greater than marginal revenue for all units except the first.
d. For a price searcher, price equals marginal revenue for all units except the first.

X-inneficiency results from
a. rent seeking behavior
b. the lack of competitive pressure
c. third-degree price discrimination
d. first-degree price discrimination
e. none of the above

A seller that has the ability to control to some degree the price of the product it sells is called a price
a. searcher
b. taker
c. breaker
d. twister

If economies of scale are so pronounced in an industry that only one firm can survive in the industry this firm is called a(n) _______ monopoly.
a. financial
b. structured
c. independent
d. natural

Refer to Exhibit 9-10. The single-price monopolist earns profits equal to what area?
a. ABGH
b. ABCD
c. DCE
d. HGCD
e. GCF

Refer to Exhibit 9-4. The profit-maximizing single-price monopolist will produce
a. 5 units
b. 4 units
c. 6 units
d. 3 units

Refer to Exhibit 9-4. What dollar amounts go in blanks (S) and (T), respectively?
a. $50 and $60
b. $50 and $40
c. $10 and -$10
d. $10 and $20

Refer to exhibit 9-10. The single-price monopolist will produce which quantity of output?
a. Q2
b. Q3
c. Q1
d. Q4
e. none of these answers