Q1. Assume a profit maximizing monopoly has a positive marginal cost. Then A. The firm must set a price in the elastic part of the demand curve. B. The firm must set a price in the inelastic part of the demand curve. C. The firm must set price where the demand curve has unitary elasticity. D. The demand curve might be elastic or inelastic at the solution, depending on circumstances.

Q2. Suppose P = 100 - 2Q and MC = 0, the a profit- maximizing monopoly produces A. at the point where E = -1. B. at the elastic portion of the demand curve. C. at the inelastic portion of the demand curve. D. cannot be determined because MC = 0. E. None of the above.

Q3. When a competitive market is dominated by a monopolist A. monopolist gain > consumers' loss. B. monopolist gain < consumer loss. C. monopolist gain = consumers loss. D. Consumer loss = DWL E. Producer gain = DWL.

Q4. Suppose a monopoly faces demand given by P = 24 - Q and has a cost function given by C = 10 + 4Q. Which of the following statements is true. A. At the monopoly solution P = 14 and MR = 4. B. At the monopoly solution consumer surplus is 50. C. At the monopoly solution profits equal 90. D. All of the above. E. None of the above.

Q5. Suppose a monopoly faces demand given by P = 24 - Q and has a cost function given by C = 10 + 4Q. If is cost function changes to C = 10 + 8Q, which of the following statements is true. A. Price mark up (that is P - MC) does not change. B. PS increases. C. DWL increases. D. Price mark up decreases.