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#### California state university ECON 300 Review Problem Set   Chapter 10 1) A monopoly is a seller of a product A) with many substitutes

###### Economics

California state university

ECON 300

Review Problem Set

Chapter 10

1) A monopoly is a seller of a product

A) with many substitutes.

B)  without a close substitute.

C) with a perfectly inelastic demand.

D) without a well-defined demand curve.

2) In a natural monopoly, throughout the range of market demand

A) marginal cost is above average total cost and pulls average total cost upward.

B) average total cost is above marginal cost and pulls marginal cost upward.

C) marginal cost is below average total cost and pulls average total cost downward.

D) there are diseconomies of scale.

3) To have a monopoly in an industry there must be

A) barriers to entry so high that no other firms can enter the industry.

B) a patent or copyright giving the firm exclusive rights to sell a product for 20 years.

C) an inelastic demand for the industry's product.

D) a public franchise, making the monopoly the exclusive legal provider of a good or service.

4) Which of the following statements applies to a monopolist but not to a perfectly competitive firm at their profit maximizing outputs?

A) Marginal revenue is less than price.

B) Marginal revenue equals marginal cost.

C) Price equals marginal cost.

D) Average revenue equals average cost.

5) If a monopolist's marginal revenue is \$35 per unit and its marginal cost is \$25, then

A) to maximize profit the firm should increase output.

B) to maximize profit the firm should decrease output.

C) to maximize profit the firm should continue to produce the output it is producing.

D) Not enough information is given to say what the firm should do to maximize profit.

6) If a monopolist's price is \$50 at 63 units of output and marginal revenue equals marginal cost and average total cost equals \$43, then the firm's total profit is

A) \$3,150.

B) \$2,709.

C) \$441.

D) \$7.

7) Refer to Figure 10-4. What is the profit-maximizing/loss-minimizing output level?

A) 600 units

B) 800 units

C) 940 units

D) 1,160 units

8) Refer to Figure 10-4. What is the price charged for the profit-maximizing output level?

A) \$13

B) \$21

C) \$27

D) \$34

9) Refer to Figure 10-4. What is the amount of the monopoly's total revenue?

A) \$21,600

B) \$20,400

C) \$19,740

D) \$7,800

10) Refer to Figure 10-4. What is the amount of the monopoly's total cost of production?

A) \$21,600

B) \$17,700

C) \$9,340

D) \$7,800

11) Refer to Figure 10-4. What is the amount of the monopoly's profit?

A) \$2,700

B) \$4,200

C) \$10,400

D) \$12,600

12) Refer to Figure 10-4. What is likely to happen to this monopoly in the long run?

A) New firms will enter the market to eliminate its profits.

B) It will expand its output to take advantage of economies of scale so as to further increase its profit.

C) As long as there are entry barriers, this firm will continue to enjoy economic profits.

D) It will be regulated by the government because of its excess profits.

13) Refer to Table 10-2. What is the profit-maximizing quantity and price for the monopolist?

A) Quantity = 8 cases, Price = \$9

B) Quantity = 7 cases, Price = \$10

C) Quantity = 9 cases, Price = \$8

D) Quantity = 10 cases, Price = \$7

14) Refer to Table 10-2. What is the amount of profit that the firm earns?

A) \$34.50

B) \$42

C) \$47

D) \$49

15) Refer to Figure 10-6. The profit-maximizing output and price for the monopolist are

A) output = 62; price = \$24.

B) output = 62; price = \$18.

C) output = 83; price = \$22.

D) output = 104; price = \$20.80.

16) Refer to Figure 10-6. The monopolist's total revenue is

A) \$1,116.

B) \$1,488.

C) \$1,726.40

D) \$1,826.

17) Refer to Figure 10-6. The monopolist's total cost is

A) \$1,116.

B) \$1,240.

C) \$1,660.

D) \$1,726.40.

18) Refer to Figure 10-6. The monopolist earns a profit of

A) \$0.

B) \$170.

C) \$248.

D) \$372.

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