1.

(Points: 1)  
Dickens Light, an unregulated monopolist, determines the price it will charge by

a. finding the point on the marginal revenue curve that corresponds to the level of output.

  b. finding the point on the marginal cost curve that corresponds to the level of output.

c. finding the point on the demand curve that corresponds to the level of output.

d. finding the point on the average total cost curve that corresponds to the level of output.

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2.
(Points: 1)  
The extent to which a monopolist can exercise market power is limited by

a. the income elasticity of demand.

  b. the ease with which consumers can substitute other products for the monopolist's product.

c. the price elasticity of supply.

d. the costs of producing the product and the technology that is available.

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3.
(Points: 1)  
For a monopoly to be a natural monopoly

a. the long-run average cost curve must continue to increase until it hits the market demand curve.

b. there must be constant returns to scale up to the size of the total market.
 

c. maximum economies of scale must be realised at an output that is more than half of total demand in
the market.

d. initial economies of scale must be realised at a scale that is small relative to the market.

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4.
(Points: 1)  
A perfectly elastic demand curve implies that ceteris paribus

a. a firm can raise its price and not lose all its customers.

b. the price a firm charges is irrelevant since it will sell the same amount regardless of the price
 
charged.

c. a firm can sell more by lowering its price.

d. if a firm raises its price even a bit above the market price, it will sell nothing.

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5.
(Points: 1)  
Which ONE of the following applies to a profit-maximising monopoly but not to a profit-maximising perfectly
competitive firm?

a. The most profitable output is where marginal cost equals marginal revenue.

b. Marginal revenue is not equal to average revenue.

 

c. Average revenue is equal to marginal cost.

d. Average revenue equals price.

e. Marginal cost equals average cost at the output where the latter is at the minimum.

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6.
(Points: 1)  
  A firm in a perfectly competitive market has no control over price because

a. the government imposes price ceilings on the products produced in perfectly competitive industries.

b. every firm's product is a perfect substitute for every other firm's product, and there is a very large
number of firms in the industry.

c. there is free entry and exit from the industry.

 d. the market demand for products produced in perfectly competitive industries is perfectly elastic.

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7.
(Points: 1)  
Assume that the wool industry is a perfectly competitive industry. The market demand curve for wool is
________ and each individual wool producer's demand curve is ________.

a. horizontal, downward sloping

 
b. downward sloping, horizontal

c. horizontal, horizontal

d. downward sloping, downward sloping

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8.
(Points: 1)  
Stereo Wall Ltd has a monopoly over the installation of large domestic video wall systems. If Stereo Wall
Ltd's total revenue from installing 10 wall systems is £83,000 and its total revenue from installing 11 wall
systems is £88,000 what is the marginal revenue of the eleventh wall system?

a. £8,000

 
b. £88,000

c. £83,000

d. £5,000

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9.
(Points: 1)  
  Suppose we know that a monopolist is maximising its profits. Which of the following is a correct inference?
The monopolist has

a. set price equal to its average cost.

b. equated marginal revenue and marginal cost.

 c. maximised the difference between marginal revenue and marginal cost.

d. maximised its total revenue.

e. produced at some point on the inelastic part of its demand curve.

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10.
(Points: 1)  
It would be inefficient to break up a

a. strategic resource monopoly.

 
b. patent monopoly.

c. profit-maximising monopoly.

d. natural monopoly.