MBA 505 Chapter 9 Quiz
1. Which of the following would most likely not be an industry where a natural monopoly would arise?
a.  Aircraft manufacturing
b.  Shipbuilding
c.  Electrical generation
d.  Furniture making
e.  Space exploration
2.  A local monopoly refers to a
a.  firm that operates only locally.
b.  firm that sells its products in one location.
c.  location that has only one firm.
d.  firm that has no competitors or substitutes for its goods in a geographic area.
e.  firm that has few competitors or substitutes for its goods in a geographic area.
3. Which of the following statements concerning monopolies is true?
a.  All U.S. government laws that affect monopolies are designed to increase competition.
b.  The products in monopoly industries are very close substitutes.
c.  A monopoly can arise due to large diseconomies of scale.
d.  Automobile producers are often said to be natural monopolies.
e.  The Federal Reserve System is a monopoly supplier of U.S. currency.
4.  If a firm is a price maker
a.  the government dictates the price.
b.  the firm is such a small part of the market it cannot influence the price.
c.  only the firm can determine the price.
d.  the firm must advertise to sell more of its product.
e.  the only real decision the firm makes is whether to advertise.
5. The monopolist
a.  sells a homogeneous product.
b.  faces a perfectly elastic demand curve.
c.  is a sole proprietor.
d.  is a price taker.
e.  is the sole seller of a product for which there are no close substitutes.
6. Which of the following is  not  true for a monopoly firm?
a.  Price equals average revenue.
b.  Marginal revenue equals average revenue.
c.  Price equals demand.
d.  Average revenue equals demand.
e.  Price is always greater than marginal revenue.
7. Which of the following describes one of the differences in profit-maximizing behavior between monopoly and perfect competition?
a.  A monopolist produces more and charges the same price as a perfect competitor.
b.  A monopolist produces more and charges a higher price than a perfect competitor.
c.  A monopolist produces less and charges the same price as a perfect competitor.
d.  A monopolist produces less and charges a lower price than a perfect competitor.
e.  A monopolist produces less and charges a higher price than a perfect competitor.
8. When a profit-maximizing monopolist produces an output where marginal revenue is less than marginal cost, the firm is
a.  producing too little.
b.  producing too much.
c.  making a profit.
d.  taking a loss.
e.  breaking even.
9. Price discrimination is best described as a monopolist
a.  selling a product at one price and a perfectly competitive firm selling an identical product at another price.
b.  charging buyers an excessive price for the product.
c.  charging different customers different prices when the costs of producing the good for the two consumer groups are not different.
d.  selling a product for different prices during two different periods of time.
e.  charging different prices to different customers.
10. A price-discriminating monopolist
a.  produces quality products only.
b.  does not sell products to minority groups.
c.  must have a very large operation.
d.  sells the same product in different markets at different prices.
e.  would not engage in dumping.
Answers
1d, 2d, 3e, 4c, 5e, 6b, 7e, 8b, 9e, 10d.