Week 6 Quiz Review Question Preview (ID: 22221)


This Quiz Review Should Help You Study For The Week 6 Quiz Over The Monopoly Market Structure. The Questions In This Review Are Very Close To Those On Your Quiz. Remember, This Site Does Not Have Graphing Capabilities, So Be Sure To Review Your Graphs! TEACHERS: click here for quick copy question ID numbers.

Which of the following is a characteristic of the Monopoly market structure?
a) This market has easy entry and exit.
b) Firms in this market structure are price takers.
c) There is a lot of non-price competition (advertising) in this market structure.
d) The product produced has no close substitutes.

If a firm is operating in a Monopoly market structure . . .
a) The firm is a price taker.
b) There are many close substitutes for the firm's product.
c) There will be no advertising in the market structure.
d) Entry into this market will be blocked.

Which of the following is NOT a barrier to entry in the Monopoly market structure?
a) The price taking ability of the firm.
b) Ownership of a key resource.
c) Patents and licenses.
d) Economies of scale.

A Monopoly will emerge and thrive when:
a) There are large economies of scale.
b) The Average Total Cost curve is U-shaped.
c) Demand for the firm's product is perfectly elastic.
d) Capital costs make up only a small portion of the Total Costs.

If we look at the shape of the Pure Monopoly's demand curve, we would expect it to be:
a) Upward Sloping
b) Downward Sloping
c) Vertical
d) Horizontal

If we were looking at the Demand and Marginal Revenue Curves, we would expect:
a) The curves to make an X.
b) Both curves to be downward sloping with Marginal Revenue falling below demand on all but the first point.
c) Both curves to be downward sloping with Marginal Revenue above demand on all but the first point.
d) Marginal Revenue to equal Demand and both to be horizontal at the market price.

At the profit maximizing level of output in a Monopoly:
a) Price will be greater than Average Revenue.
b) Total Revenue will be greater than Total Cost
c) Price will be greater than Marginal Cost.
d) Average Total Cost will equal Marginal Cost.

Let's suppose that a Monopolist is operating where Marginal Revenue is $18 and Marginal Cost is $20. In order to maximize profit, the Monopolist should:
a) Reduce production and increase price.
b) Reduce production and decease price.
c) Increase production and increase price.
d) Increase production and decrease price.

A profit maximizing monopolist charges:
a) Any price they want to because they are the only producer of the good.
b) The price consistent with Marginal Cost = Demand.
c) The price consistent with Total Cost = Demand.
d) The price consistent with Marginal Cost = Marginal Revenue.

In the monopolistic firm, the quantity of output that maximizes profits is set by Marginal Revenue = Marginal cost. What is the price set by?
a) The Demand curve.
b) The Supply curve.
c) Where Marginal Cost and Marginal Revenue meet.
d) Where Marginal Cost equals Demand

The firm earns economic profits whenever:
a) Marginal Revenue exceeds Marginal Cost.
b) Price is greater than Average Variable Costs.
c) Average Revenue exceeds Average Total Costs.
d) Average Revenue exceeds Average Variable Costs.

The Monopolist's supply curve is:
a) Nonexistent.
b) The portion of the Marginal Cost curve above Average Variable Cost.
c) The portion of the Marginal Cost curve above Average Fixed Cost.
d) The portion of the Marginal Cost curve above Average Total Cost.

A profit maximizing Monopolist should shut down in the short run if:
a) The price it receives is less than Average Total Cost.
b) The price it receives is less than Average Fixed Cost.
c) The price it receives is less than Average Variable Cost.
d) The price it receives is less than Marginal Cost.

If a profit maximizing Monopolist were to implement a ground breaking technology that reduced their costs,
a) The firm would produce more and charge more.
b) The firm would produce less and charge more.
c) The firm would produce more and charge less.
d) The firm would not change its price or production level.

Monopolists are allocatively inefficient because:
a) Price is greater than the minimum of Average Total Cost.
b) They produce where Marginal Revenue is greater than Marginal Cost.
c) They make their decisions independently of the beliefs and desires of consumers.
d) They produce a quantity where the marginal benefit to society of producing more would be less than the marginal cost.

If we compare a monopolist to a purely competitive firm,
a) The monopolist will charge more and produce less.
b) The monopolist will charge more and produce more.
c) The monopolist will advertise bringing about an increase in marginal cost.
d) The monopolist will charge more and produce the same amount.

A Monopolist who does not engage in price discrimination is usually:
a) Productively and allocatively inefficient.
b) Productively and allocatively efficient.
c) Productively inefficient and allocatively efficient.
d) Productively efficient and allocatively inefficient.

If a Monopolist is producing 500 units with a market price of $10 and a marginal cost of $8, we would expect a purely competitive firm producing under the same situation to:
a) Produce less than 500 units with a price less than $10/
b) Produce less than 500 units with a price greater than $10
c) Produce more than 500 units with a price less than $10.
d) Produce more than 500 units with a price greater than $10.

X-inefficiency results when:
a) Wolverine blows a gasket.
b) Purely Competitive firms implement the latest and greatest technology to cut costs.
c) Firms maximize per unit profits as opposed to total profits.
d) Large barriers to entry prevent competition and result in little incentive for firms to upgrade technology and lower costs.

Whether or not it pays off to price discrimination depends on:
a) Managers have the ability to give group discounts without senior management approval.
b) If the consumers can be grouped into different price categories based on their elasticity.
c) The company doesn't mind being charged in anti-trust lawsuits.
d) If the sellers have different costs.

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