Principles of Economics International Edition 15th Edition – Test Bank

Principles of Economics International Edition 15th Edition – Test Bank

Chapter 7—Monopoly

MULTIPLE CHOICE

1. A market structure in which only one seller of a product exists is known as
a. a monopoly
b. monopolistic competition
c. an oligopoly
d. perfect competition

ANS: A PTS: 1

2. A firm that is a price maker can
a. limit output and raise prices
b. ignore the law of demand
c. ignore the elasticity of the demand for the product
d. both limit output and raise prices and ignore the elasticity of the demand for the product

ANS: A PTS: 1

3. The demand curve for a monopolist’s product is also the monopolist’s
a. total revenue curve
b. marginal revenue curve
c. average revenue curve
d. total profit curve

ANS: C PTS: 1

4. The degree of control over its output price that any seller has is limited by
a. the existence of actual competition in the market
b. the existence of potential competition from producers who might try to enter the market
c. the elasticity of the demand for the product
d. all of these

ANS: D PTS: 1

5. The maximum profit of a monopolist occurs
a. where AR equals MC
b. at the lowest point of the MC curve
c. where MR equals MC
d. at the widest gap between AR and MC

ANS: C PTS: 1

6. Which of the following is the best example of a monopoly in the United States?
a. the U.S. Postal Service
b. the aluminum industry
c. a government-regulated public utility
d. the automobile industry

ANS: C PTS: 1

7. The major characteristic of a monopoly is
a. the degree of control over price it can exercise
b. its ability to produce numerous products
c. its price elasticity of demand
d. its source of revenue

ANS: A PTS: 1

8. Which of the following is always true of monopolists?
a. they charge the highest possible price
b. they always earn high profits
c. they do not have to worry about demand
d. they charge a price higher than marginal cost

ANS: D PTS: 1