ECON 201 Final Study Guide Exam
Questions and answer 2026
The market demand curve and the demand curve faced by a monopoly are:
a. different, but we can't tell which is more elastic w/o more information
b. different in that the market demand curve is less elastic
c. different in that the market demand curve is more elastic
d. identical - ANSWER-d. identical
If the monopolist is operating in the elastic portion of its demand curve, then
a. an increase in price will decrease total revenues
b. an increase in price will leave total revenue unchanged
c. marginal revenue is negative
d. an increase in price will increase total revenues - ANSWER-a. an increase in price will
decrease total revenues
Assume that Bost, Incorporated sells game cartridges that can be used in a popular home video
system. Bost currently sells 300 cartridges per week and earns $500 in profit. Bost's production
manager calculates that the marginal cost of the next unit is $5, while marginal revenue for one
additional unit is $10. Based upon this info we would conclude that:
a. Insufficient information
b. Bost should reduce their output
c. Bost's profit would rise to $505 by increasing output 1 unit
d. Bost's profit would rise to $510 by increasing output 1 unit - ANSWER-c. Bost's profit would
rise to $505 by increasing output 1 unit
The marginal revenue curve of a monopolist lies below the demand curve because:
a. the marginal revenue curve coincides w/ the average revenue curve
b. the monopolist is a price taker
c. the monopolist must lower price on all units sold in order to sell additional units
d. the demand curve is unit elastic - ANSWER-c. the monopolist must lower price on all units
sold in order to sell additional units
A monopolist:
a. can choose any price along the market curve
b. takes the price of its product as given and produces as much output as possible
c. chooses the price of its product so as to maximize the number of sales
d. can choose any price it wants, regardless of demand. - ANSWER-a. can choose any price
along the market curve
Generally, we expect monopolies to (blank) output when demand for their product rises.
Select one:
a. double
b. not change
, c. decrease
d. increase - ANSWER-d. increase
Compared to a competitive industry, ceteris paribus, a monopoly
Select one:
a. restricts output and charges a higher price
b. sells the same amount of units but at a higher price
c. sells more units and charges a higher price
d. does not try to maximize profits as do firms in competitive industries - ANSWER-a. restricts
output and charges a higher price
Consider a monopolist that is currently maximizing profit by producing 10 units. Which of the
following statements is not true?
Select one:
a. price is greater than marginal cost
b. price is less than marginal cost
c. price is greater than marginal revenue
d. profit will fall if it decreases its production
e. profit will fall if it increases its production - ANSWER-b. price is less than marginal cost
To maximize profits, a monopolist will charge a price that is:
Select one:
a. insufficient information
b. greater than MC
c. less than MC
d. equal to MC - ANSWER-b. greater than MC
Suppose that a monopolist experiences an increase in the tax on its income. Which of the
following will tend to happen, assuming that no other changes arise?
Select one:
a. it will not change price because it is a price-taker
b. it will increase price
c. it will decrease price
d. it may or may not change price, but will certainly change its output - ANSWER-b. it will
increase price
If nominal GDP increases and the price index increases, then:
a. real GDP has decreased
b. real GDP has remained constant
c. we are not sure what happened to real GDP
d. real GDP has increased - ANSWER-c. we are not sure what happened to real GDP
In 2001, there were 10 units of A at $2 per unit and 10 units of B at $3 per unit. In 2002, there
were 20 units of A at $4 per unit and 5 units of B at $4 per unit. (Hint: make your own table).
Using 2001 as the base year, what is the inflation rate in 2002?
a. 100%
Questions and answer 2026
The market demand curve and the demand curve faced by a monopoly are:
a. different, but we can't tell which is more elastic w/o more information
b. different in that the market demand curve is less elastic
c. different in that the market demand curve is more elastic
d. identical - ANSWER-d. identical
If the monopolist is operating in the elastic portion of its demand curve, then
a. an increase in price will decrease total revenues
b. an increase in price will leave total revenue unchanged
c. marginal revenue is negative
d. an increase in price will increase total revenues - ANSWER-a. an increase in price will
decrease total revenues
Assume that Bost, Incorporated sells game cartridges that can be used in a popular home video
system. Bost currently sells 300 cartridges per week and earns $500 in profit. Bost's production
manager calculates that the marginal cost of the next unit is $5, while marginal revenue for one
additional unit is $10. Based upon this info we would conclude that:
a. Insufficient information
b. Bost should reduce their output
c. Bost's profit would rise to $505 by increasing output 1 unit
d. Bost's profit would rise to $510 by increasing output 1 unit - ANSWER-c. Bost's profit would
rise to $505 by increasing output 1 unit
The marginal revenue curve of a monopolist lies below the demand curve because:
a. the marginal revenue curve coincides w/ the average revenue curve
b. the monopolist is a price taker
c. the monopolist must lower price on all units sold in order to sell additional units
d. the demand curve is unit elastic - ANSWER-c. the monopolist must lower price on all units
sold in order to sell additional units
A monopolist:
a. can choose any price along the market curve
b. takes the price of its product as given and produces as much output as possible
c. chooses the price of its product so as to maximize the number of sales
d. can choose any price it wants, regardless of demand. - ANSWER-a. can choose any price
along the market curve
Generally, we expect monopolies to (blank) output when demand for their product rises.
Select one:
a. double
b. not change
, c. decrease
d. increase - ANSWER-d. increase
Compared to a competitive industry, ceteris paribus, a monopoly
Select one:
a. restricts output and charges a higher price
b. sells the same amount of units but at a higher price
c. sells more units and charges a higher price
d. does not try to maximize profits as do firms in competitive industries - ANSWER-a. restricts
output and charges a higher price
Consider a monopolist that is currently maximizing profit by producing 10 units. Which of the
following statements is not true?
Select one:
a. price is greater than marginal cost
b. price is less than marginal cost
c. price is greater than marginal revenue
d. profit will fall if it decreases its production
e. profit will fall if it increases its production - ANSWER-b. price is less than marginal cost
To maximize profits, a monopolist will charge a price that is:
Select one:
a. insufficient information
b. greater than MC
c. less than MC
d. equal to MC - ANSWER-b. greater than MC
Suppose that a monopolist experiences an increase in the tax on its income. Which of the
following will tend to happen, assuming that no other changes arise?
Select one:
a. it will not change price because it is a price-taker
b. it will increase price
c. it will decrease price
d. it may or may not change price, but will certainly change its output - ANSWER-b. it will
increase price
If nominal GDP increases and the price index increases, then:
a. real GDP has decreased
b. real GDP has remained constant
c. we are not sure what happened to real GDP
d. real GDP has increased - ANSWER-c. we are not sure what happened to real GDP
In 2001, there were 10 units of A at $2 per unit and 10 units of B at $3 per unit. In 2002, there
were 20 units of A at $4 per unit and 5 units of B at $4 per unit. (Hint: make your own table).
Using 2001 as the base year, what is the inflation rate in 2002?
a. 100%
