Question : 16.3   Monopoly and Competition Compared 1) Assume someone organizes all farms : 1241240

16.3   Monopoly and Competition Compared

1) Assume someone organizes all farms in the nation into a monopoly. What is the monopoly’s marginal cost curve?

A) It is a horizontal line at the competitive industry’s price.

B) It is a vertical line at the formerly competitive industry’s quantity.

C) It is a vertical line at the monopoly’s chosen output level.

D) It is the formerly competitive industry’s supply curve.

E) It is the same as the formally competitive industry’s average total cost curve.

2) Assume someone organizes all farms in the nation into a single-price monopoly. What is the monopoly’s marginal revenue curve?

A) It is a horizontal line at the competitive industry’s price.

B) It is a line that lies below the new monopoly’s demand curve.

C) It is a vertical line at the monopoly’s chosen output level.

D) It is identical to the demand curve for the monopolist’s output.

E) It is a line that lies above the new monopoly’s demand curve.

3) Compared to a perfectly competitive industry, a single-price monopoly produces

A) more output.

B) less output.

C) the same output.

D) some amount that might be more, less, or the same depending on whether the monopoly’s marginal revenue curve lies above, below, or on its demand curve.

E) some amount that might be more, less, or the same depending on whether the monopoly’s marginal cost curve lies above, below, or on its marginal revenue curve.

4) Assume someone organizes all farms in the nation into a single-price monopoly. As a result, the amount of food produced

A) remains constant.

B) decreases.

C) increases.

D) might increase or decrease depending on whether the demand for food is elastic or inelastic.

E) might increase or decrease depending on whether the monopoly’s marginal revenue curve lies below or above its demand curve.

5) Compared to a perfectly competitive market, a single-price monopoly sets

A) a lower price.

B) the same price.

C) a higher price.

D) a price that might be higher, lower, or the same depending on whether the monopoly’s marginal revenue curve lies above, below, or on its demand curve.

E) a price that might be higher, lower, or the same depending on whether the monopoly’s marginal cost curve lies above, below, or on its marginal revenue curve.

6) Assume someone organizes all farms in the nation into a single-price monopoly. As a result, the price consumers pay for food

A) does not change, that is, it remains constant.

B) falls.

C) rises.

D) might rise or fall depending on whether the demand for food is elastic or inelastic.

E) might rise or fall depending on whether the monopoly’s marginal revenue curve lies above or below its demand curve.

7) If we compare a perfectly competitive market to a single-price monopoly with the same costs, the monopoly sells

A) the same quantity at a higher price.

B) a smaller quantity at a higher price.

C) a larger quantity at a lower price.

D) a larger quantity at a higher price.

E) a smaller quantity at the same price.

8) When compared to a perfectly competitive market, a single-price monopoly with the same costs produces ________ output and charges ________ price.

A) a larger; a lower

B) a smaller; a lower

C) the same; a higher

D) a smaller; a higher

E) a smaller; the same

9) A single-price monopoly transfers

A) consumer surplus to producers.

B) producer surplus to consumers.

C) economic profit to consumers.

D) economic profit to the government.

E) economic profit to deadweight loss.

10) Assume someone organizes all farms in the nation into a monopoly. As a result, consumer surplus will

A) not change.

B) increase.

C) decrease.

D) either increase, decrease, or not change depending if the monopoly’s marginal revenue curve lies below, above, or is the same as its demand curve.

E) None of the above answers is correct because the effect on consumer surplus depends on whether the monopoly is a single-price or a price-discriminating monopoly.