economics data bank

56. A monopolist's average revenue is always

a. equal to marginal revenue.

b. greater than the price of its product.

c. equal to the price of its product.

d. less than the price of its product.

57. If a profit-maximizing monopolist faces a downward-sloping market demand curve, its

a. average revenue is less than the price of the product.

b. average revenue is less than marginal revenue.

c. marginal revenue is less than the price of the product.

d. marginal revenue is greater than the price of the product.

58. When a monopolist increases the number of units it sells, there are two effects on revenue. They are the

a. demand effect and the supply effect.

b. competition effect and the cost effect.

c. competitive effect and the monopoly effect.

d. output effect and the price effect.

59. Which of the following statements is (are) true of monopolies?

a. Monopolies are constrained by market demand.

b. Monopolies benefit from barriers to entry.

c. Monopolies have the ability to set the prices of their products.

d. All of the above are correct.

60. For a monopolist, marginal revenue is

a. positive when the demand effect is greater than the supply effect.

b. positive when the monopoly effect is greater than the competitive effect.

c. negative when the price effect is greater than the output effect.

d. negative when the output effect is greater than the price effect.

61. A profit-maximizing monopolist will produce the level of output at which

a. average revenue is equal to average total cost.

b. average revenue is equal to marginal cost.

c. marginal revenue is equal to marginal cost.

d. total revenue is equal to opportunity cost.

62. For a profit-maximizing monopolist,

a. P > MR = MC.

b. P = MR = MC.

c. P > MR > MC.

d. MR < MC < P.

63. Because a monopolist is the sole producer in its market, it can necessarily alter the price of its good

(i) without affecting the quantity sold.

(ii) without affecting its average total cost.

(iii) by adjusting the quantity it supplies to the market.

a. (ii) only

b. (iii) only

c. (i) and (ii)

d. (i) and (iii)

64. Competitive firms have

a. downward-sloping demand curves and they can sell as much output as they desire at the market price.

b. downward-sloping demand curves and they can sell only a limited quantity of output at each price.

c. horizontal demand curves and they can sell as much output as they desire at the market price.

d. horizontal demand curves and they can sell only a limited quantity of output at each price.

65. Monopoly firms have

a. downward-sloping demand curves and they can sell as much output as they desire at the market price.

b. downward-sloping demand curves and they can sell only a limited quantity of output at each price.

c. horizontal demand curves and they can sell as much output as they desire at the market price.

d. horizontal demand curves and they can sell only a limited quantity of output at each price.

66. Because many good substitutes exist for a competitive firm’s product, the demand curve that it faces is

a. unit-elastic.

b. perfectly inelastic.

c. perfectly elastic.

d. inelastic only over a certain region.

67. When a monopolist decreases the price of its good, consumers

a. continue to buy the same amount.

b. buy more.

c. buy less.

d. may buy more or less, depending on the price elasticity of demand.

68. When a monopolist increases the amount of output that it produces and sells, the price of its output

a. stays the same.

b. increases.

c. decreases.

d. may increase or decrease depending on the price elasticity of demand.

69. When a monopolist increases the amount of output that it produces and sells, its average revenue

a. increases and its marginal revenue increases.

b. increases and its marginal revenue decreases.

c. decreases and its marginal revenue increases.

d. decreases and its marginal revenue decreases.

70. Which of the following is an impossible feat for a monopolist to accomplish?

a. control the price of its good

b. charge a higher price and continue to sell the same quantity

c. operate at a point on the upper half of the demand curve

d. All of the above are correct.