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Chapter 09: Monopoly
level. In order to maximize profit it should:
a.
raise price and lower output.
b.
lower both price and output.
c.
raise both price and output.
d.
lower price and raise output.
e.
lower output but leave price unchanged.
72. For a monopolist that does not price discriminate, economic profit is maximized in the short run at a price of $140.
Marginal revenue at that output level is:
a.
equal to $140.
b.
greater than $140.
c.
less than $140.
d.
less than marginal cost.
e.
greater than average revenue.
73. The table below shows the demand schedule faced by a monopolist and the total cost incurred by it in producing each
output level. The profit-maximizing price for the monopolist is _____.
Table 9.5
Price ($)
Quantity
Total cost ($)
16
0
5.00
15
1
7.00
14
2
8.80
13
3
10.40
12
4
12.20
11
5
14.20
10
6
16.40
9
7
18.80
8
8
21.40
7
9
24.20
a.
$14
b.
$11
c.
$10
d.
$9
e.
$8
74. The table below shows the demand schedule faced by a monopolist and the total cost incurred by it in producing each
output level. The maximum profit earned by the monopolist is _____.
Table 9.5
Price ($)
Quantity
Total cost ($)
16
0
5.00
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Chapter 09: Monopoly
15
1
7.00
14
2
8.80
13
3
10.40
12
4
12.20
11
5
14.20
10
6
16.40
9
7
18.80
8
8
21.40
7
9
24.20
a.
$5
b.
$40.80
c.
$43.60
d.
$44.20
e.
$42.60
75. Irving R. Associates is granted a patent for a new product for which there are no close substitutes. Which of the
following conditions must be true at the profit-maximizing output produced by this firm?
a.
Price is equal to marginal cost.
b.
Average cost is less than marginal cost.
c.
Marginal revenue is equal to marginal cost.
d.
Marginal revenue is less than average variable cost.
e.
Price is greater than average revenue.
c
76. The profit-maximizing quantity for a monopolist that faces an upward-sloping marginal cost curve will:
a.
occur at the minimum point of the marginal cost curve.
b.
be less than the revenue-maximizing quantity.
c.
be equal to the revenue-maximizing quantity.
d.
occur along the unit elastic segment of the demand curve.
e.
occur along the inelastic segment of the demand curve.
77. A monopolist is said to have market power because:
a.
it faces an upward-sloping marginal cost curve.
b.
it faces a downward-sloping demand curve.
c.
it always earns positive profit both in the short run and the long run.
d.
it charges a fixed price for its products.
e.
it faces a high marginal cost of production.
78. The table below shows the price and output combinations at different output levels for a non price-discriminating
monopolist. The profit-maximizing output for this monopolist is _____.
Table 9.6
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Chapter 09: Monopoly
Quantity
Price ($)
Total Cost ($)
1
36
20
2
32
32
3
28
50
4
24
80
5
20
120
a.
1 unit
b.
2 units
c.
3 units
d.
4 units
e.
5 units
79. The table below shows the price and output combinations at different output levels for a non price-discriminating
monopolist. The profit-maximizing price charged by this monopolist is _____.
Table 9.6
Quantity
Price ($)
Total Cost ($)
1
36
20
2
32
32
3
28
50
4
24
80
5
20
120
a.
$36
b.
$32
c.
$28
d.
$24
e.
$20
80. The table below shows the price and output combinations at different output levels for a non price-discriminating
monopolist. The total profit earned by this monopolist at the profit-maximizing output is _____.
Table 9.6
Quantity
Price ($)
Total Cost ($)
1
36
20
2
32
32
3
28
50
4
24
80
5
20
120
a.
$16
b.
−$20
c.
$32
d.
$34
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Chapter 09: Monopoly
e.
–$16
81. The figure below shows the total cost and total revenue curves for a monopolist. The profit-maximizing output for the
monopolist is:
Figure 9.3
a.
1 unit
b.
2 units
c.
3 units
d.
4 units
e.
5 units
82. The figure below shows the total cost and total revenue curves for a monopolist. The profit-maximizing price charged
by the monopolist is:
Figure 9.3
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Chapter 09: Monopoly
a.
$70.
b.
$80.
c.
$23.33.
d.
$20.
e.
$40.
c
83. The figure below shows the total cost and total revenue curves for a monopolist. The total profit earned by the
monopolist at the profit-maximizing output is _____.
Figure 9.3
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Chapter 09: Monopoly
a.
$20
b.
$30
c.
$0
d.
$70
e.
$40
84. Which of the following is true of the profit earned by a monopolist?
a.
Profit is maximized where marginal cost equals marginal revenue.
b.
Normal profit is ensured where price is equal to average total cost.
c.
Normal profit is ensured where marginal cost exceeds average revenue.
d.
Profit is maximized along the inelastic portion of the demand curve.
e.
Economic profit is made where average variable cost equals marginal revenue.
85. The figure below shows the cost and revenue curves for a monopolist. Assume that the monopolist does not shut down
production in the short run. The profit-maximizing price and output for this non-price discriminating monopolist are:
Figure 9.4
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Chapter 09: Monopoly
a.
$4 and 7 units, respectively.
b.
$3.50 and 10 units, respectively.
c.
$2 and 7 units, respectively.
d.
$1 and 7 units, respectively.
e.
$1 and 10 units, respectively.
a
86. The figure below shows the cost and revenue curves for a monopolist. Assume that the marginal cost of production is
equal to the average total cost at the profit maximizing output level. The maximum profit for this monopolist if he does
not practice price discrimination is _____.
Figure 9.4
a.
$4
b.
$14
c.
$3.50
d.
$21
e.
$4
87. The figure below shows the cost and revenue curves for a monopolist. The maximum profit earned by the non–
discriminating monopolist is _____.
Figure 9.5
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Chapter 09: Monopoly
a.
$14
b.
−$8
c.
$0
d.
$46.62
e.
$54
a
88. The figure below shows the cost and revenue curves for a monopolist. The profit-maximizing output for this non–
discriminating monopolist is:
Figure 9.5
a.
0.
b.
7 units.
c.
10 units.
d.
more than 10 units.
e.
less than 7 units but more than 0.
89. The figure below shows the cost and revenue curves for a monopolist. The profit-maximizing price for a non–
discriminating monopolist is:
Figure 9.5
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Chapter 09: Monopoly
a.
0.
b.
$2.
c.
$4.60.
d.
$6.66.
e.
$8.66.
e
90. A profit-maximizing monopolist that produces in the short run will:
a.
choose the output level where marginal revenue exceeds marginal cost by the largest amount.
b.
increase output as long as the marginal revenue exceeds the marginal cost of producing that unit.
c.
choose the output level where average total cost is at its minimum.
d.
increase price as long as average revenue exceeds average total cost.
e.
choose the output level where average revenue exceeds average total cost by the largest amount.
91. If the marginal cost of production for a profit-maximizing monopolist increases suddenly in the short run, it will:
a.
lower price to expand revenue possibilities.
b.
restrict output to extract a higher price from customers.
c.
continue to charge the same price.
d.
increase plant size to lower marginal cost.
e.
decrease plant size to lower marginal cost.
92. Suppose a restaurant has a monopoly in a certain small town. Its rent, which is one of the several fixed costs it incurs
whether it sells food or not, has gone up. In the short run, the restaurant should:
a.
pay the higher rent and increase menu prices.
b.
pay the higher rent and leave menu prices unchanged.
c.
pay the higher rent and lower menu prices.
d.
open another restaurant in the same town.
e.
shut down.
93. Gilligan runs the only dry-cleaning business on a desert isle. If the cost of cleaning fluid falls, he can increase profit
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Chapter 09: Monopoly
by:
a.
accepting less dry-clean orders.
b.
charging the highest price he can.
c.
using less cleaning fluid.
d.
lowering price.
e.
charging a price that is equal to marginal cost.
94. The figure below shows the cost and revenue curves for a monopolist. The output level that maximizes profit for the
non-price discriminating monopolist is _____.
Figure 9.6
a.
700 units
b.
810 units
c.
884 units
d.
976 units
e.
1,000 units
95. The figure below shows the cost and revenue curves for a monopolist. The profit-maximizing price for the non–
discriminating monopolist is _____.
Figure 9.6
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Chapter 09: Monopoly
a.
$60
b.
$76
c.
$110
d.
$120
e.
$136
e
96. The figure below shows the cost and revenue curves for a monopolist. Total revenue earned by the monopolist by
producing the profit-maximizing output is:
Figure 9.6
a.
$95,200.
b.
$84,000.
c.
$79,000.
d.
$52,000.
e.
$42,000.
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Class:
Date:
Chapter 09: Monopoly
a
97. The figure below shows the cost and revenue curves for a monopolist. The total cost of producing the profit-
maximizing output for the monopolist is _____.
Figure 9.6
a.
$95,200
b.
$84,000
c.
$77,000
d.
$53,200
e.
$42,000
c
98. The figure below shows the cost and revenue curves for a monopolist. The maximum profit earned by the non–
discriminating monopolist is:
Figure 9.6
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Chapter 09: Monopoly
a.
$95,200.
b.
$84,000.
c.
$53,200.
d.
$42,000.
e.
$18,200.
e
99. The figure below shows the cost and revenue curves for a monopolist. If the monopolist does not price discriminate
among its customers, the total amount consumers will spend on its profit-maximizing output is _____.
Figure 9.6
a.
$95,200
b.
$84,000
c.
$79,000
d.
$53,200
e.
$42,000
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Class:
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Chapter 09: Monopoly
a
100. The figure below shows the cost and revenue curves for a monopolist. If the monopolist chooses to produce 1,000
units and does not discriminate among its customers, its total profit will be _____.
Figure 9.6
a.
$0
b.
$104,000
c.
$212,000
d.
maximized
e.
negative
a
101. Suppose the marginal cost for the 1,000th unit of a monopolist’s output is $40, marginal revenue is $30, the average
variable cost of producing 1,000 units is $30, and the average total cost is $50. In order to maximize profit or minimize
loss in the short run, the firm should:
a.
shut down.
b.
continue to produce 1,000 units.
c.
produce fewer than 1,000 units but still operate.
d.
produce more than 1,000 units.
e.
increase its plant size to gain economies of scale.
c
102. A monopolist is likely to overcome a short-run economic loss in the long run by:
a.
allowing other firms to enter the market.
b.
employing lesser number of inputs.
c.
increasing the price of its output.
d.
advertising for its product.
e.
reducing its total output.
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Chapter 09: Monopoly
103. McDonald’s makes its unique McRib sandwich “available for a limited time only,” usually in the fall. Such a strategy
is likely to:
a.
increase its marginal value to the consumer.
b.
decrease its average cost of production.
c.
restrict the entry of competitors in the long run.
d.
decrease its demand.
e.
result in a short-run economic loss.
104. If the marginal cost curve shifts upward, a profit-maximizing monopolist that does not practice price discrimination
is likely to respond in the short run by:
a.
raising price and increasing output.
b.
raising price and decreasing output.
c.
keeping price constant and increasing output.
d.
reducing price and increasing output.
e.
shutting down.
105. The figure below shows the cost and revenue curves for a monopolist. The profit-maximizing level of output and
price for the monopolist are:
Figure 9.7
a.
f units and $a.
b.
g units and $c.
c.
f units and $b.
d.
f units and $d.
e.
f units and $e.
106. The figure below shows the cost and revenue curves for a monopolist. Total revenue earned by the monopolist for
the profit-maximizing output is:
Figure 9.7