Market Structures_Monopoly and Monopolistic Competition (22/25)

Question 1

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All of the following are characteristics of a monopoly market except which one?

Select one:

a single seller in the market

no close substitutes to the good produced in the market

the firm is a price-taker

an insurmountable barrier to entry exists

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Question 2

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For ________ units a monopoly produces, the price is ________ than the marginal revenue.

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some; greater

all; greater

some; less

all; less

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Question 3

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All of the following are true regarding a monopolist's marginal revenue except which one?

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It is less than the price for all units produced.

It is horizontal.

It is downward sloping.

It is equal to the change in total revenue resulting from a change in quantity sold.

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Question 4

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To maximize profit, a monopolist must ________.

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produce the quantity that sets marginal revenue equal to marginal cost

produce the quantity that makes the marginal revenue exceed the marginal cost

produce the quantity that makes the difference between marginal revenue and marginal cost negative

produce the quantity that makes the difference between marginal revenue and marginal cost positive

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Question 5

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A monopolist creates a deadweight loss by producing a quantity that is ________ the efficient quantity.

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more than

equal to

exactly double

less than

Question 6

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If Sweet Dreams creates a new insomnia drug, the managers of Sweet Dreams are most likely to obtain which of the following to prevent another firm from copying their drug's formula?

Select one:

trademark

patent

trade secret

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Question 7

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The duck that is used to advertise AFLAC's insurance is an example of a ________.

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patent

trademark

trade secret

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Question 8

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All of the following are barriers to entry except which one?

Select one:

control of an essential raw material

patents

the presence of a natural monopoly in the market

a deadweight loss

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Question 9

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Quantity

Price

400

180

380

185

360

200

340

225

320

260

300

305

280

360

260

425

240

500

220

585

100

200

680

110

180

785

The above table shows the quantity demanded at varying prices and the corresponding marginal cost of production for a monopoly firm.

Refer to the table above. What is the monopolist's total revenue from producing 40 units of output?

Select one:

$12,800

$10,200

$300

$260

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Question 10

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Quantity

Price

400

180

380

185

360

200

340

225

320

260

300

305

280

360

260

425

240

500

220

585

100

200

680

110

180

785

The above table shows the quantity demanded at varying prices and the corresponding marginal cost of production for a monopoly firm.

Refer to the table above. If the monopoly produces 40 units, charges the corresponding price of $320, and its average total cost to produce the 40 units is $206, what is their profit or loss?

Select one:

$56,000

$12,600

-$4,560

$4,560

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Question 11

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The smaller the price elasticity of demand, the ________ the profit-maximizing price and the ________ the markup.

Select one:

lower; smaller

higher; larger

lower; larger

higher; smaller

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Question 12

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At the profit-maximizing quantity, the price elasticity of demand is 2.5. What is the markup?

Select one:

1.32

1.67

0.71

2.57

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Question 13

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All of the following are characteristics of monopolistic competition except which one?

Select one:

no barriers to entry

firms produce differentiated products

many sellers

barriers to entry

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Question 14

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If a monopolistically competitive firm is producing 1,200 units of output and the marginal revenue from producing the 1,200th unit of output is $5 and the marginal cost is $4.50, which of the following is true?

Select one:

The firm should decrease production to maximize profit.

The difference between marginal revenue and marginal cost (MR - MC) at the 1,200th unit is negative.

The firm maximizing profit.

The firm should increase production to maximize profit.

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Question 15

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All of the following are characteristics of monopolistic competition except which one?

Select one:

few sellers

many sellers

firms produce differentiated products

no barriers to entry

Question 11

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The smaller the price elasticity of demand, the ________ the profit-maximizing price and the ________ the markup.

Select one:

lower; smaller

higher; larger

lower; larger

higher; smaller

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Question 12

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At the profit-maximizing quantity, the price elasticity of demand is 2.5. What is the markup?

Select one:

1.32

1.67

0.71

2.57

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Question 13

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All of the following are characteristics of monopolistic competition except which one?

Select one:

no barriers to entry

firms produce differentiated products

many sellers

barriers to entry

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Question 14

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Select one:

The firm should decrease production to maximize profit.

The difference between marginal revenue and marginal cost (MR - MC) at the 1,200th unit is negative.

The firm maximizing profit.

The firm should increase production to maximize profit.

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Question 15

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All of the following are characteristics of monopolistic competition except which one?

Select one:

few sellers

many sellers

firms produce differentiated products

no barriers to entry

Question 16

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Monopolistically competitive firms ________ earn profits in the long run due to ________.

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cannot; barriers to entry

cannot; no barriers to entry

can; barriers to entry

can; no barriers to entry

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Question 17

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In the long run, a monopolistically competitive firm produces where its ________ is tangent to its ________.

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marginal cost; marginal revenue curve

average total cost; demand curve

marginal cost; demand curve

average total cost; marginal revenue curve

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Question 18

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Monopolistically competitive firms have some market power because ________.

Select one:

there are no barriers to entry

each firm cannot set their own price

there are perfect substitutes for each firm's product

each firm produces a differentiated product

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Question 19

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A monopolistically competitive firm's demand curve is ________.

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horizontal

upward sloping

vertical

downward sloping

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Question 20

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The demand curve for the monopolistically competitive firm makes the ________ lie ________ the demand curve.

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marginal cost curve; above

marginal cost curve; below

marginal revenue curve; below

marginal revenue curve; above

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Question 21

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Managers of firms with market power prefer a price elasticity of demand equal to ________ compared to ________.

Select one:

3.3; 3.2

4.0; 3.5

1.3; 1.2

1.2; 1.3

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Question 22

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A price elasticity of demand equal to ________ allows a greater markup than a price elasticity of demand equal to ________.

Select one:

2.3; 2.1

1.6; 1.8

1.1; 1.08

3.1; 2.3

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Question 23

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Managers of firms with market power should be cautious not to ________ when they are earning ________ economic profit.

Select one:

mark up their product; negative

mark up their product; positive

overexpand; negative

overexpand; positive

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Question 24

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An insurmountable barrier to entry can enable a firm to produce a quantity at which its ________ exceeds its ________ in the long run.

Select one:

average total cost; price

marginal cost; price

price; average total cost

marginal cost; marginal revenue

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Question 25

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You are the manager of Happy Avocados, the dominant firm in the ready-made guacamole market. At your current production level, your marginal cost is $0.60 and you have estimated that your price elasticity of demand is between 1.1 and 1.2. What range of prices should you charge to maximize your profit?

Select one:

The range between $5.60 and $6.60.

The range between $3.60 and $6.60.

The range between $4.60 and $5.60.

The range between $3.11 and $6.12

5 years ago

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