Unit 6 AP Econ

1. Which of the following is a source of monopoly power?

• Scarcity

• Elastic of demand

• Barriers to entry

• Low profits

• Free markets

A monopolists demand curve is necessarily

• The same as the market demand curve

• The same as it’s marginal revenue curve

• Upward sloping

• perfectly elastic

• Perfectly inelastic

3. A single-price monopolist's marginal revenue is

• Equal to its price

• Less than it’s price

• Greater than its price

• Negative when it maximizes revenues

• zero when it maximizes profits

4. Assuming a linear downward-sloping demand curve, as a monopoly firm sells additional units of output, its marginal revenue will

• In crease at an increasing rate

• Increase at first, then decrease

• Decrease at first, then increase

• Decrease continually

• Remain constant

5. If SteveR Incorporated is a monopolistic producer of diamonds, the firm's demand curve is downward sloping because

• the number of diamonds SteveR Incorporated offers for sale affects the price of diamonds

• marginal revenue is negative throughout the range of the demand curve

• marginal revenue is positive throughout the range of the demand curve

• the diamond industry consists of a few firms selling similar diamonds

• The demands for diamonds is inelastic

If the government imposes a per-unit tax on the output of a monopoly with a downward-sloping demand curve, the burden of the tax will be

• Borne entirely by consumers

• Borne entirely by the monopolist

• Borne entirely by the government

• Shared by the monopolist and the government

• Shared by consumers and the monopolist

7. The profit-maximizing combination of output and price for this single-price monopoly is

• (A) Q1 and P1

• (B) Q1 and P2

• Q1 and P4

• Q2 and P3

• Q3 and P2

Which of the following is necessarily true at a monopolist’s profit-maximizing level of output?

• (A) Marginal revenue is equal to marginal cost, but greater than price.

• (B) Marginal revenue is equal to marginal cost, but less than price.

• (C) Marginal revenue is equal to both marginal cost and price.

• (D) Average total cost is minimized.

• (E) Average variable cost is minimized.

9. Assuming this firm is maximizing profit, total revenue is equal to

• (A) area P1P2KL

• (B) area P1P3JL

• (C) area 0P3JQ1

• (D) area 0P2KQ1

• (E) area JLM

10. For the firm shown in this graph, the short-run, profit-maximizing strategy would be to set output at

• (B) Q1, price at P3, and earn an economic profit

• (C) Q1, price at P3, and earn only a normal profit

• (D) Q2, price at P2, and earn an economic profit

• (E) Q2, price at P2, and earn only a normal profit