Multiple Choice

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Multiple Choice

Multiple Choice
This activity contains 20 questions.

The XYZ Company is a monopolist in the market for a new IQ-enhancing pill. The demand for the pill is Q = 2000 (1/2)P. XYZ's marginal revenue function is
MR = 2000 (1/4)P. MR = 4000 2Q. MR = 2000 (1/4)Q. MR = 4000 4Q.

The total cost function for a monopolist is TC = 100 + 4Q2 . If the demand for the monopolist's output can be expressed as P = 50 Q, what level of output maximizes the monopolist's output?
5 units 10 units 8.33 units 5.55 units

The total cost function for a monopolist is TC = 100 + 4Q2 . If the demand for the monopolist's output can be expressed as P = 50 Q, then maximum profit is equal to
25. -100. -25. 100.

Assuming a stable demand curve, if a profit maximizing monopolist suddenly discovers that MR > MC, it will respond by
increasing output and lowering price. increasing both output and price. decreasing both output and price. decreasing output and lowering price.

The supply curve for a monopolist

is the same as the demand curve. does not exist. is its marginal cost curve above average variable cost.

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is its marginal revenue curve.

The total cost function for a monopolist is TC = 100 + 4Q2 . If the demand for the monopolist's output can be expressed as P = 120 2Q, the deadweight loss to society of this monopoly is equal to
8. 500. 4. 2.

The total cost function for a monopolist is TC = 100 + 4Q2 . If the demand for the monopolist's output can be expressed as P = 120 2Q, rent-seeking expenditures to capture the monopoly would be
500. 2. 4. 1,000.

The amount of resources that firms devote toward rent-seeking activity is a function of
economies of scale. the level of consumer surplus generated by the monopolist. the potential monopolist's profit. the deadweight loss to society.

The price elasticity of demand for a monopolist's output is 3. If the monopolist produces its output at a marginal cost of $5 per unit, what price will it charge?
$7.50 $15 $10 $5

A monopolist retailer sets the price of its output simply by charging consumers twice what it paid. Such behavior is profit maximizing provided that the price elasticity of demand is
-2. -1. -1/2. -3.

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A monopolist operates 2 plants. At plant A, MC = QA , and at plant B, MC = 2QB. If the demand for the monopolist's output is P = 800 1Q, then how much is produced at each plant?
300 units at each plant. 200 units at plant A and 100 units at plant B. 100 units at plant A and 200 units at plant B. 150 units at each plant.

If a multiplant monopolist maximizes profit by producing twice as much output at plant A than at plant B, we can be sure that
the marginal cost at plant A is half of that at plant B. the marginal cost at plant A is equal to that at plant B. the marginal cost at plant A is twice that at plant B. more information is needed.

The Lerner Index of monopoly power increases when

demand becomes more price elastic. marginal cost increases. demand becomes more price inelastic. fixed costs increase.

Suppose the total cost function for a monopolist is TC = 100 + 4Q2. If the demand for the monopolist's output can be expressed as P = 120 2Q, the Lerner Index of monopoly power is equal to
0.25. 0.20. 4. 5.

Last year, the price elasticity of demand for a monopolist's output was 2. This year, the price elasticity of demand for the same monopolist's output is 4. From last year to this year, the monopoly power of this firm has
More information is required. remained the same. decreased. increased.

Which one of the following firms is definitely a natural monopolist?

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TC=10Q2 TC =10Q1/2 TC = 10Q Q2 + Q3. TC=10Q

For a newly developed product, demand can be represented as P = 100 100Q and long-run total cost equals TC =10Q 2Q2 + Q3 . Is the market for this product currently a natural monopoly?
No, because the AC is U-shaped. More information is needed. Yes, but this would change if the demand curve shifts to the right. Yes, and it will be so for all levels of output.

Demand for water in a small town is P = 112 Q. The local monopoly water company has the following cost function: TC = 1000 + 2Q. If government regulators wish to maximize the output of water while guaranteeing a fair rate of return to the water company, then the price of water will be set at
57. 110. 102. 10.

The XYZ Computer Company is the sole purchaser of a certain type of memory chip. If the supply of chips is P = 10 + Q and XYZ's demand for chips is P = 100 Q, then what price will XYZ pay for these chips?
37.50 70 55 40

The XYZ Computer Company is the sole purchaser of a certain type of memory chip. If the supply of chips is P = 10 + Q and XYZ's demand for chips is P = 100 Q, then what is the deadweight loss to society of XYZ's monopsony power in the market for these chips?
450 112.50 225 56.25

Answer choices in this exercise appear in a different order each time the page is loaded.

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