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Chapter 9 Quiz

Multiple Choice
Identify the letter of the choice that best completes the statement or answers the question.
 

1. 
Which of the following is true of monopoly?
a.
There are no barriers to entry.
b.
The firm is a price taker.
c.
There are no close substitutes for the product being produced.
d.
There are many firms in the industry.
e.
The firm faces a horizontal demand curve.
 

2. 
Which of the following is not considered a barrier to entry?
a.
patents
b.
government licenses
c.
economies of scale
d.
diseconomies of scale
e.
control over essential resources
 

3. 
Natural monopolies form when
a.
small firms merge to form larger firms
b.
one firm has control over the entire supply of a basic input required to produce the product
c.
one firm's monopoly position is created and enforced by the government
d.
one firm receives patent protection for certain basic production processes
e.
long-run average cost declines as a firm expands output
 

4. 
De Beers Consolidated Mines has monopoly power
a.
because of economies of scale
b.
through its control over key patents
c.
through its control of an essential resource
d.
through government-imposed barriers to entry
e.
because of its reputation for supplying high-quality diamonds
 

5. 
The demand curve faced by a firm with a patent on a marketable product
a.
is horizontal
b.
is vertical
c.
slopes upward
d.
slopes downward
e.
is nonexistent
 

6. 
For a nondiscriminating monopolist, marginal revenue is
a.
equal to price
b.
greater than price
c.
less than price
d.
represented by a horizontal curve
e.
equal to average revenue
 
 
chapter_9_quiz_files/i0080000.jpg
 

7. 
The nondiscriminating monopolist in Exhibit 0142 will produce where
a.
MR = 0
b.
MR = MC
c.
MC < MR
d.
MC = ATC
e.
D = MC
 

8. 
Optimal output and price for the nondiscriminating monopolist in Exhibit 0142 are
a.
90 and $18
b.
1,500 and $24
c.
1,700 and $22
d.
1,100 and $28
e.
1,500 and $22
 

9. 
The total revenue for the nondiscriminating monopolist at its profit-maximizing quantity in Exhibit 0142 is
a.
$16,200
b.
$36,000
c.
$39,600
d.
$30,800
e.
$31,000
 

10. 
The total cost for the nondiscriminating monopolist at its profit-maximizing quantity in Exhibit 0142
a.
is $16,500
b.
is $24,200
c.
is $16,200
d.
is $19,800
e.
cannot be determined, as no fixed costs are given
 

11. 
The nondiscriminating monopolist at its profit-maximizing quantity in Exhibit 0142 is making a profit of
a.
$6,200
b.
$13,320
c.
$11,000
d.
$15,200
e.
$0
 

12. 
For a monopolist, there is no supply curve because
a.
the supply curve is the same as the marginal cost curve
b.
the monopolist does not maximize profit
c.
the quantity supplied is independent of marginal cost
d.
the quantity supplied is independent of demand
e.
there is no unique relationship between price and quantity supplied
 

13. 
A profit-maximizing monopolist produces an output level that is allocatively inefficient because
a.
price is greater than marginal cost
b.
price is less than marginal cost
c.
marginal revenue is greater than marginal cost
d.
marginal revenue is less than marginal cost
e.
consumers wish to purchase all that is produced
 

14. 
Compared to a perfectly competitive market, a monopoly tends to produce
a.
more output and charge a higher price
b.
the same amount of output, but charge a higher price
c.
less output and charge a higher price
d.
less output and charge the same price
e.
less output and charge a lower price
 

15. 
Which of the following would not be considered price discrimination?
a.
setting separate rates for residential and commercial uses of electricity
b.
giving a senior citizen discount at restaurants
c.
renting recently released videos at a higher price than the old classic videos
d.
giving children a discount at the movies
e.
giving students a discount on ski lift tickets
 



 
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