CHAPTER 33
Monopoly, Power, Prices, and Profits
MULTIPLE CHOICE
357. A perfect monopoly occurs when
a. one person owns all of the property.
b. one firm or seller constitutes the entire industry.
c. one firm has absolute power over price in an industry.
d. one firm is the only buyer of a particular good.
358. If a monopolist wishes to sell a larger quantity then
a. he should leave price unchanged, since he can sell as much as he wants at the current
price.
b. he should raise price, since he is a monopolist.
c. he should lower price, in order to increase quantity demanded.
d. he should lower output in order to increase price.
359. Assume that Acme Anvil company is currently selling 100 anvils at a price of $5 each.
Cost per anvil is $4. What is total revenue?
a. $5
b. $500
c. $400
d. $100
360. Assume that Acme Anvil company sells 100 anvils at a price of $5 each. Cost per anvil is
$4. What is total profit?
a. $5
b. $500
c. $400
d. $100
361. Assume that Acme Anvil company sells 100 anvils at a price of $5 each. Cost per anvil is
$4. What is total cost?
a. $5
b. $500
c. $400
d. $100
362. The demand curve for the firm in a monopoly market is
a. upward sloping
b. downward sloping.
c. horizontal.
d. vertical.
363. The demand curve for a firm in a perfectly competitive market is
a. upward sloping
b. downward sloping.
c. horizontal.
d. vertical.
APPENDIX 33.1
Modification of Monopoly Analysis
MULTIPLE CHOICE
364. Which of the following would be an example of a protective tariff?
a. the government imposes a tax on imported toys containing lead paint in order to protect
American children.
b. the government imposes a tax on imported steel to protect domestic steel producers from
competition with lower prices imports.
c. the government imposes a tax on companies with high pollution levels in order to protect
the environment.
d. the government imposes a tax on imported goods made with forced labor or child labor in
order to protect American workers from competition with goods made under such
conditions.
365. A monopsony is
a. the only producer of televisions in Japan.
b. the only seller of a product in an industry.
c. the only buyer of a product in an industry.
d. the kind of music available before stereo.
366. A natural monopoly is
a. a monopoly in a natural resource industry.
b. a monopoly in which minimum average cost is not reached until production saturates the
market.
c. a monopoly in which minimum average cost occurs at any level of production.
d. a monopoly supplying a natural or organic product.
367.
a. the average cost curve is below average revenue.
b. the average revenue curve is below average cost.
c. the marginal cost curve intersects marginal revenue.
d. average revenue and marginal revenue are equal.