test_3_micro - TEST 3 MAX. GRADE: 150 points Choose only 40...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
TEST 3 MAX. GRADE: 150 points Choose only 40 questions. Each question 3.75 points. 1. Which of the following is NOT a characteristic of a monopoly? A. There is only one seller. B. A monopolist is a price-taker. C. There exist barriers to entry. D. A monopolist's sales revenue is constrained by the market demand. Answer: B 2. Which of the following is an example of a barrier to entry? A. A firm is open for business only at certain hours of the day, and has its doors locked at other times. B. The government grants licenses to taxicab drivers, without which it is illegal to operate a taxicab. C. A newspaper sells advertising space to businesses. D. lack of a Web site Answer: B 3. A monopoly may arise due to: A. a patent. B. net work externalities. C. large economies of scale. D. all of the above Answer: D 4. The demand curve that a monopolist faces is: A. the market demand curve. B. the same as the demand curve that faces a perfectly competitive firm. C. not affected by changes in the prices of other goods. D. generally flatter than the demand curve that faces a perfectly competitive firm. Answer: A 5. When a monopolist sells two units of output its total revenues are $100. When the monopolist sells three units of output, its price per unit is $35. The monopolist's marginal revenue from selling the third unit of output is: A. $5. B. $33.33. C. $35. D. $105. Answer: A
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
6. How do monopoly prices and quantities produced differ from perfectly competitive outcomes, all other things equal? A. Monopoly prices and quantities are both lower than competitive outcomes. B. Monopoly prices and quantities are both higher than competitive outcomes. C. Monopoly prices are lower than competitive prices but monopoly quantities are higher than competitive quantities. D. Monopoly prices are higher than competitive prices but monopoly quantities are lower than competitive quantities. Answer: D 7. A monopolist maximizes profits by setting the quantity where: A. marginal revenue equal to marginal cost. B. marginal revenue greater than marginal cost. C. marginal revenue less than marginal cost. D. total revenue as high as possible. Answer: A 8. Suppose that Figure 10.5 shows a monopolist's demand curve, marginal revenue, and its cost. At the profit maximizing output level and price, the consumer surplus would be: A. $2,450. B. $1,225. C. $612.5. D. $262.5. Answer: C
Background image of page 2
9. Suppose that Figure 10.5 shows an industry's market demand, its marginal revenue, and the production costs of a representative firm. If the industry was perfectly competitive, the consumer surplus would be: A. $2,450. B. $1,225. C. $612.5. D. $262.5. Answer: A 10. Refer to Figure 10.5. The deadweight loss associated with the monopoly would be: A. $787.5. B. $612.5.
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 03/30/2012 for the course ECON 2302 taught by Professor Love during the Fall '08 term at Lone Star College.

Page1 / 11

test_3_micro - TEST 3 MAX. GRADE: 150 points Choose only 40...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online