l. The following are key features of a monopoly EXCEPT A) diseconomies of scale. B) no close substitutes. C) inuence over price. D) barriers to entry. 2. 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. 3. Patents create monopolies by restricting A) prices. B) prot. C) entry. D) demand. 4. Total revenue equals A) the area between the demand curve and the marginal revenue curve. B) teILal cost minus profit. C) marginal revenue times quantity sold. D) price times quantity sold. 5. Monopolists A) face downward sloping demand curves. B) are price takers. C) have no short-run xed costs. D) maximize revenue, not prots. 6. The marginal revenue curve for a single-price monopoly A) is horizontal B) lies below its demand curve. C) lies above its demand curve. . \\ D) coincides with its demand curve. 24., v II v V _ u " V' "' w '31 - T L!) U - Answer Question 7 to l 1 with the aid of the following diagram: N O _| 0 Total revenue and total cost (dollars per day) u o O 5 10 'I 5 20 25 30 Quantity (units per day) I 7. The gure above shows a monopoly's total revenue and total cost curves. The monopoly's economic prot is positive if it produces between A) 0 and 5 units. B) 0 and 15 units. C) 5 and 20 units. D) 0 and 20 units. 8. The gure above shows a monopoly's total revenue and total cost curves. The monopoly's economic prot is zero ifit produces A) 0 units of output. B) 15 units of output. C) 20 units of output. D) 5 or 20 units of output. 9. The gure above shows a monopoly's total revenue and total cost curves. The monopoly's economic prot is maximized when it produces A) 0 unit of output. B) 5 units of output. C) 15 units of output. D) 20 units of output. ,7 , _, ,\\_ . f 10. The gure above shows a monopoly's total revenue and total cost curves. The monopoly's marginal revenue equals its marginal cost when it produces A) 0 unit of output. B) 5. units of output. C) 15 units of output. D) 20 units of output. I l. The monopoly with the TR and TC curves shown in the gure above will produce A) 5 units of output. B) 20 units of output. C) 15 units of output. D) 0 units of output. Answer Question 12 with the aid of the following diagram: w on N 0) Price and costs (dollars per plzza) .- M 0 12 19 24 Answer Question 12 with the aid of the following diagram: 38 Price and costs (dollars per pizza) 26 MC 12 MR D 0 12 19 24 Quantity (thousands of pizzas per year) 12. La Bella Pizza is the only pizza place on Pepper Island. The figure above shows La Bella Pizza's demand curve, marginal revenue curve, and marginal cost curve. At La Bella Pizza's profit-maximizing output, its annual total revenue is A) $168,000. B) $336,000. C) $312,000. D) $624,000. 13. A monopolistically competitive firm has power to set the price of its product because A) no; there are no barriers to entry B) some; there are barriers to entry C) some; of product differentiation D) no; of product differentiation 14. In monopolistic competition, firms can earn an economic profit in A) the short run but not in the long run. B) the short run and in the long run. C) the long run but not in the short run. D) neither the long run nor the short run 888 DD F4 F5 F G F7 FaKONjcWODQx/a/NTAwMZE1NjAwMzk0/details 9.0 GR NO DHABAC 15. If the market served by a monopolistically competitive industry expands, a likely result in the long run will be A) a higher ratio of price to average cost. B) a larger number of firms producing a similar product. C) less elastic demand curves facing each firm. D) a transition from monopolistic competition to oligopoly. 16. In oligopolistic markets, A) there are many firms. B) there are only a few firms. C) there are no barriers to entry. D) all firms are price takers. 17. One difference between oligopoly and monopolistic competition is that A) a monopolistically competitive industry has fewer firins. B) fewer firms compete in oligopoly than in monopolistic competition. C) in monopolistic competition, the products are identical. D) monopolistic competition has barriers to entry 18. A monopolistically competitive firm is like a perfectly competitive firm insofar as both A) have horizontal MR curves. B) can earn no economic profit in the long run. C) are protected by high barriers to entry. D) have negatively sloping demand curves. 19. If the concentration ratio (in percentage) of an industry's total sales that is controlled by the top 4 largest firm is greater than 40%, then this industry is most likely to be a A) Perfect competition. B) Monopoly. C) Monopolistic competition. D) Oligopoly 20. If the concentration ratio (in percentage) of an industry's total sales that is controlled by the top 4 largest 5 is most likely to be a Page 1 6 then indu + A) Perfect competition.Test 4 X + OTKONjcWODQx/a/NTAwMzE1NjAwMzkO/details 9.0 K NO D HAQAC A) Perfect competition. B) Monopoly. C) Monopolistic competition. D) Oligopoly 20. If the concentration ratio (in percentage) of an industry's total sales that is controlled by the top 4 largest firm is less than 40%, then this industry is most likely to be a A) Perfect competition. B) Monopoly. C) Monopolistic competition. D) Oligopoly * * * * * * * * * END OF SECTION A * * * * * * * * * Section B (60 marks) 1. The diagram below represents a Monopoly firm in equilibrium. Monopoly 1 Price Page 6 + 2 MacBook AirNjcWODQx/a/NTAwMzE1NjAwMzk0/details It * G A 1. The diagram below represents a Monopoly firm in equilibrium. Monopoly Price 1 2 AR 3 Q1 Quantity (a) Copy the above diagram into your answer book. (i) Clearly label each of the lines numbered 1 to 3. (ii) The above firm produces Q1. Show on your diagram: . the price the firm will charge for Q1. (use label P1) . the average cost of producing this output. (use label C1) (15 marks) (b) Explain each of the following barriers to entry and illustrate your answer with an example in each case: Patents and Copyrights . Legal Monopolies . Economies of Scale (45 marks) (Total: 60 marks) * * * * * * * * * END OF TEST 3 * * * * * *** *