question
Market power exists if a firm can alter:
answer
the market price
question
Which of the following firms is likely to have the greatest market power?
answer
the sole producer of the latest computer microchip technology
question
The total quantities of a good that people are willing and able to buy at alternative prices defines:
answer
market demand
question
Which of the following is true about market demand?
answer
it is downward sloping
question
The demand curve for an individual monopolist:
answer
is the same as the market demand curve
question
A patent:
answer
is a government grant of exclusive ownership of an innovation
question
If the entire output of a market is produced by a single seller, the firm:
answer
is a monopoly
question
Which of the following is NOT TRUE for a monopoly?
answer
it is a price taker
question
Which of the following is NOT a characteristic of a monopoly?
answer
differentiated product
question
For a monopolist, the demand curve facing the firm is:
answer
the same as the market demand curve
question
The change in total revenue that results from a one-unit increase in quantity sold is:
answer
marginal revenue
question
For a monopolist, marginal revenue is:
answer
always less than price, after the first unit
question
In order to sell one additional unit of output, a profit-maximizing monopolist must:
answer
reduce the price of all units sold
question
Which of the following is true for a monopolist?
answer
profit is maximized where marginal cost equals marginal revenue
question
Which of the following do a monopolist and a competitive firm have in common?
answer
profit-maximization rule
question
A monopolist sets its price:
answer
at the rate of output where marginal revenue equals marginal cost
question
In terms of pricing, which of the following is not true for a monopolist?
answer
in the long-run economic profit is impossible
question
Which of the following is TRUE for a monopoly?
answer
the demand curve indicates the highest price consumers are willing to pay for the rate of output
question
Total profit can be calculated as:
answer
the difference between price and average total cost multiplied by the quantity sold
question
For a monopoly in long-run equilibrium, economic profits are likely to be:
answer
greater than zero
question
If the market price is $65, MC - $35, MR = $35 and ATC = $39, the monopolist will:
answer
operate at a profit
question
Why do monopolies experience diminishing marginal returns as they increase output?
answer
monopolies must lower the price in order to increase quantity demanded
question
How do monopolists set the output level and price for their products?
answer
output at MR = MC; price on demand curve
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