Chapter 10_1: Monopoly

Chapter 10_1: Monopoly; Time: 40 phút

Question 1: Unregulated monopolies
a. cannot change the market quantity.
b. can influence the market quantity and price.
c. cannot incorporate.
d. take the market price as given.

Question 2: The following are key features of a monopoly EXCEPT
a. diseconomies of scale.
b. no close substitutes.
c. influence over price.
d. barriers to entry.

Question 3: Which of the following statements about a monopoly is FALSE?
a. A monopoly is the only supplier of the good.
b. Monopolies have no barriers to entry or exit.
c. The good produced by a monopoly has no close substitutes.
d. None of the above; that is, all of the above answers are true statements about a monopoly.

Question 4: Which of the following is LEAST likely to be a monopoly?
a. the sole owner of an occupational license
b. a pharmaceutical company with a patent on a drug
c. a store in a large shopping mall
d. the holder of a public franchise

Question 5: A public franchise is
a. an exclusive right granted to an inventor of a product.
b. a government issued license required to practice a profession.
c. a unique source of raw materials.
d. an exclusive right granted to a firm to supply a good or service.

Question 6: Public franchises create monopolies by restricting
a. entry.
b. demand.
c. prices.
d. profit.

Question 7: A patent grants
a. a guarantee of quality to consumers.
b. an exclusive right to an inventor of a product.
c. the right to practice a profession.
d. control over a unique source or supply of raw materials.

Question 8: Patents create monopolies by restricting
a. prices.
b. profit.
c. entry.
d. demand.

Question 9: Patents are ________ barriers to entry and public franchises are ________ barriers to entry.
a. legal; legal
b. legal; natural
c. natural; natural
d. natural; legal

Question 10: A defining characteristic of a natural monopoly is that
a. it exists because of legal barriers to entry.
b. it has no close substitutes.
c. its average total cost curve slopes downward as it intersects the demand curve.
d. its demand curve slopes downward.

Question 11: An industry in which one firm can supply the entire market at a lower price than two or more firms can is called a
a. legal monopoly.
b. single-price monopoly.
c. natural monopoly.
d. price-discriminating monopoly.

Question 12: Which of the following is true of a natural monopoly?
a. The firm can supply the entire market at a lower cost than could two or more firms.
b. Its average total cost curve slopes upward as it intersects the demand curve.
c. The firm is not protected by any barrier to entry.
d. Economies of scale exist to only a very low level of output.

Question 13: A market in which competition and entry are restricted by the granting of a public franchise, government license, patent, or copyright is called a
a. price-discriminating monopoly.
b. single-price monopoly.
c. natural monopoly.
d. legal monopoly.

Question 14: A single-price monopoly charges the same price
a. even if the demand curve shifts.
b. to all customers.
c. even if its cost curves shift.
d. and the price equals the firm's marginal revenue.

Question 15: All of the following are examples of price discrimination EXCEPT
a. lower ticket prices for matinee performances.
b. buy-one-get-one-free offers.
c. “early bird specials” at a restaurant.
d. “buy now, pay later” payment options.

Question 16: Total revenue equals
a. total cost minus profit.
b. price times quantity sold.
c. marginal revenue times quantity sold.
d. the area between the demand curve and the marginal revenue curve.

Question 17: For a monopoly, the industry demand curve is the firm's
a. profit function.
b. marginal revenue curve.
c. supply curve.
d. demand curve.

Question 18: Monopolists
a. face downward sloping demand curves.
b. are price takers.
c. have no short-run fixed costs.
d. maximize revenue, not profits.

Question 19: The marginal revenue curve for a single-price monopoly
a. lies below its demand curve.
b. is horizontal.
c. lies above its demand curve.
d. coincides with its demand curve.

Question 20: For a single-price monopoly, marginal revenue is ________ when demand is elastic and is ________ when demand is inelastic.
a. negative; positive
b. positive; positive
c. positive; negative
d. negative; negative

Question 21: If the price elasticity of demand is greater than 1, a monopoly's
a. marginal revenue is zero.
b. total revenue decreases when the firm lowers its price.
c. marginal revenue is negative.
d. total revenue increases when the firm lowers its price.

Question 22: If the price elasticity of demand is less than 1, a monopoly's
a. marginal revenue is undefined.
b. total revenue decreases when the firm lowers its price.
c. total revenue increases when the firm lowers its price.
d. marginal revenue is zero.

Question 23: If the demand for its product is elastic, a monopoly's
a. total revenue is unchanged when the firm lowers its price.
b. total revenue decreases when the firm lowers its price.
c. marginal revenue is zero.
d. marginal revenue is positive.

Question 24: If the demand for its product is inelastic, a monopoly's
a. marginal revenue is negative.
b. total revenue is unchanged when the firm lowers its price.
c. total revenue increases when the firm lowers its price.
d. marginal revenue is equal to zero.

Question 25: A monopoly firm expands its output and lowers its price. The firm finds that its total revenue falls. Hence, the firm is producing in the
a. inelastic range of its supply curve.
b. elastic range of its supply curve.
c. elastic range of its demand curve.
d. inelastic range of its demand curve.


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