Chapter 17 - Monopoly

Quiz 12
1. A firm has market power
A. When it can profitably charge any price of its choosing
B. When it is characterized as a price taker
C. When it can profitably charge a price that is above its marginal cost
D. Only when it is the sole firm producing in a market
2. A monopoly market is
A. A market with many sellers
B. A market with a single seller
C. A market with a few sellers
D. B and C
3. An oligopoly market is
A. A market with many sellers
B. A market with a single seller
C. A market with a few sellers
D. B and C
4. Kate's Great Crete (KGC) is a local monopolist of ready-mix concrete. Its annual demand
function is
, where P is the price, in dollars, of a cubic yard of concrete
and Q is the number of cubic yards sold per year. What is KGC's inverse demand function?
A.
B.
C.
D.
5. Kate's Great Crete (KGC) is a local monopolist of ready-mix concrete. Its annual demand
function is
, where P is the price, in dollars, of a cubic yard of concrete
and Q is the number of cubic yards sold per year. What is KGC's marginal revenue function?
A.
B.
C.
D.

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Chapter 17 - Monopoly

6. Kate's Great Crete (KGC) is a local monopolist of ready-mix concrete. Its annual demand
function is
, where P is the price, in dollars, of a cubic yard of concrete
and Q is the number of cubic yards sold per year. What is KGC's marginal revenue when it
sells 5,000 cubic years of concrete per year?
A. $37.5
B. $25
C. $50
D. $0
7. Kate's Great Crete (KGC) is a local monopolist of ready-mix concrete. Its annual demand
function is
, where P is the price, in dollars, of a cubic yard of concrete
and Q is the number of cubic yards sold per year. What price does KGC charge per unit when
it sells 5,000 cubic years of concrete per year?
A. $12.5
B. $25
C. $37.5
D. $50
8. Kate's Great Crete (KGC) is a local monopolist of ready-mix concrete. Its annual demand
function is
, where P is the price, in dollars, of a cubic yard of concrete
and Q is the number of cubic yards sold per year. What is the difference between price and
marginal revenue when KGC sells 5,000 cubic years of concrete per year?
A. $12.5
B. $25
C. $37.5
D. $50
9. The more elastic is the demand for a product
A. The greater the difference between marginal revenue and price
B. The closer is marginal revenue to the price
C. The more a firm must reduce its price to increase its sales
D. A and C
10. When a monopolist maximizes its profit by selling a positive amount
A. Its marginal revenue must equal its marginal cost at that quantity
B. Its marginal revenue must exceed its marginal cost at that quantity
C. Its marginal revenue must be less than its marginal cost at that quantity
D. Its marginal revenue must be equal to zero

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Chapter 17 - Monopoly

11. Suppose Kate's Great Crete (KGC) has marginal costs of

, where Q is
the number of cubic yards of concrete it produces per year. In addition, it has a fixed cost of
$50,000 per year. KGC's demand function is
. What is the profit
maximizing sales quantity?
A. 20
B. 2,000
C. 8,000
D. 0
12. Suppose Kate's Great Crete (KGC) has marginal costs of
, where Q is
the number of cubic yards of concrete it produces per year. In addition, it has an fixed cost of
$50,000 per year. KGC's demand function is
. What is the profit
maximizing sales price?
A. $47.7
B. $30
C. $45
D. $50
13. Suppose Kate's Great Crete (KGC) has annual variable costs of
and marginal costs of
, where Q is the number of cubic yards of concrete
it produces per year. In addition, it has a fixed cost of $50,000 per year. KGC's demand
function is
A. $30,000
B. $90,000
C. $120,000
D. -$30,000

. What is KGC's profit at the profit maximizing sales price?

14. A firm's Lerner Index

A. Is the amount by which its price exceeds its marginal cost, expressed as a percentage
of its price
B. Is the amount by which its marginal cost exceeds its average cost
C. Is the amount by which its average cost exceeds its marginal cost
D. Is the value of its profit
14. A firm's markup over its marginal cost is greater
A. The more elastic is the demand curve
B. The less elastic is the demand curve
C. The lower its fixed costs
D. The lower its average costs

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