11.Whenamonopolistincreasestheamountofoutputthatitproducesandsells,thepriceofitsoutput
a.staysthesame.
b.increases.
c.decreases.
d.mayincreaseordecreasedependingonthepriceelasticityofdemand.
12.A monopoly firmis aprice
a.takerandhasnosupplycurve.
b.makerandhasnosupplycurve
c.takerandhasanupward-slopingsupplycurve.
d.makerandhasanupward-slopingsupplycurve.
13.Monopoliesusetheirmarketpowerto
a.chargepricesthatequalminimumaveragetotalcost.
b.increasethequantitysoldastheyincreaseprice.
c.chargeapricethatishigherthanmarginalcost.
d.dumpexcesssuppliesoftheirproductonthemarket.
14.Monopolyfirmshave
a.downward-slopingdemandcurves,sotheycansellasmuchoutputastheydesireatthemarketprice.
b.downward-slopingdemandcurves,sotheycansellonlythespecificprice-quantitycombinationsthatlieonthedemandcurve.
c.horizontaldemandcurves,sotheycansellasmuchoutputastheydesireatthemarketprice.
d.horizontaldemandcurves,sotheycansellonlyalimitedquantityofoutputateachprice.
15.Whichofthefollowingisnotcorrect?
a.Thedemandcurvefacingacompetitivefirmisperfectlyelastic.
b.Thedemandcurvefacingamonopolististhemarketdemandcurve.
c.Amonopolistcanchargeanypriceandsellanyquantitythatitchooses.
d.Amonopolistcanalterthemarketpricebyadjustingthequantitythatitproduces.
16.Whichofthefollowingstatementsiscorrect?
a.Thedemandcurvefacingacompetitivefirmishorizontal,asisthedemandcurvefacingamonopolist.
b.Thedemandcurvefacingacompetitivefirmisdownwardsloping,whereasthedemandcurvefacingamonopolistishorizontal.
c.Thedemandcurvefacingacompetitivefirmishorizontal,whereasthedemandcurvefacingamonopolistisdownwardsloping.
d.Thedemandcurvefacingacompetitivefirmisdownwardsloping,asisthedemandcurvefacingamonopolist.
17.Theprofit-maximizationproblemforamonopolistdiffersfromthatofacompetitivefirminwhichofthefollowingways?
a.Acompetitivefirmmaximizesprofitatthepointwheremarginalrevenueequalsmarginalcost;amonopolistmaximizesprofitatthepointwheremarginalrevenueexceedsmarginalcost.
b.Acompetitivefirmmaximizesprofitatthepointwhereaveragerevenueequalsmarginalcost;amonopolistmaximizesprofitatthepointwhereaveragerevenueexceedsmarginalcost.
c.Foracompetitivefirm,marginalrevenueattheprofit-maximizinglevelofoutputisequaltomarginalrevenueatallotherlevelsofoutput;foramonopolist,marginalrevenueattheprofit-maximizinglevelofoutputissmallerthanitisforlargerlevelsofoutput.
d.Foraprofit-maximizingcompetitivefirm,thinkingatthemarginismuchmoreimportantthanitisforaprofit-maximizingmonopolist.
18.Competitivefirmsdifferfrommonopoliesinwhichofthefollowingways?
(i)Competitivefirmsdonothavetoworryaboutthepriceeffectloweringtheirtotalrevenue.
(ii)Marginalrevenueforacompetitivefirmequalsprice,whilemarginalrevenueforamonopolyislessthanthepriceitisabletocharge.
(iii)Monopoliesmustlowertheirpriceinordertosellmoreoftheirproduct,whilecompetitivefirmsdonot.
a.(i)and(ii)only
b.(ii)and(iii)only
c.(i)and(iii)only
d.(i),(ii),and(iii)
19.Whichofthefollowingisnotadifferencebetweenmonopoliesandperfectlycompetitivemarkets?
a.Monopoliescanearnprofitsinthelongrunwhileperfectlycompetitivefirmsbreakeven.
b.Monopolieschargeapricehigherthanmarginalcostwhileperfectlycompetitivefirmschargeapriceequaltomarginalcost.
c.Monopolieschoosetoproducethequantityatwhichmarginalrevenueequalsmarginalcostwhileperfectlycompetitivefirmsdonot.
d.Monopoliesfacedownwardslopingdemandcurveswhileperfectlycompetitivefirmsfacehorizontaldemandcurves.
20.Competitivefirmshave
a.downward-slopingdemandcurves,andtheycansellasmuchoutputastheydesireatthemarketprice.
b.downward-slopingdemandcurves,andtheycansellonlyalimitedquantityofoutputateachprice.
c.horizontaldemandcurves,andtheycansellasmuchoutputastheydesireatthemarketprice.
d.horizontaldemandcurves,andtheycansellonlyalimitedquantityofoutputateachprice.
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