ECON 300 EXAM 3 QUESTIONS AND
CORRECT ANSWERS WITH COMPLETE
SOLUTION | NEW 2026 UPDATE
Which of the following is the best measure of a firm's market power? -
ANSWERS D. the firm's ability to price above marginal cost
A monopolist's supply curve: - ANSWERS C. does not exist
If a firm has market power and marginal cost is constant relative to perfect
competition: - ANSWERS C. consumer surplus is lower, producer surplus is
higher, and total surplus is lower
In order to maximize profit, a monopolist: - ANSWERS B. produces the
quantity where marginal revenue equals marginal cost
If market demand is perfectly elastic, then a monopolist: - ANSWERS D. has no
market power
If the market demand equation is Q = 20 - 2P, the monopolist's marginal revenue
equation is: - ANSWERS B. MR = 10 - Q
If the total cost function of a monopolist is TC = 200 + 20Q, then the primary
barrier to entry that supports the firm's position is likely: - ANSWERS B.
natural monopoly
, If the government imposed a direct price regulation that did not allow a natural
monopoly with constant marginal cost to charge a price higher than under perfect
competition: - ANSWERS A. the regulation could cause the firm to shut down
production
If demand becomes more price elastic but the quantity demanded at the current
price does not change: - ANSWERS A. the price and quantity are unchanged in
perfect competition but different if the firms have market power.
If market demand is P = 1,000 - 5Q and a monopolist has a constant marginal cost
of $200, then the deadweight loss resulting from monopoly is: - ANSWERS A.
$16
If demand becomes more price elastic and marginal cost is constant, the gain in
producer surplus a firm receives from having market power: - ANSWERS B. is
smaller
If market demand is perfectly inelastic, then a monopolist: - ANSWERS C. has
the greatest possible amount of market power
The key feature of monopoly that drives the differences between it and other
market structures is that: - ANSWERS C. there are barriers to entry into the
market
A monopolist's percentage markup of price over marginal cost is higher when: -
ANSWERS D. market demand is less elastic
CORRECT ANSWERS WITH COMPLETE
SOLUTION | NEW 2026 UPDATE
Which of the following is the best measure of a firm's market power? -
ANSWERS D. the firm's ability to price above marginal cost
A monopolist's supply curve: - ANSWERS C. does not exist
If a firm has market power and marginal cost is constant relative to perfect
competition: - ANSWERS C. consumer surplus is lower, producer surplus is
higher, and total surplus is lower
In order to maximize profit, a monopolist: - ANSWERS B. produces the
quantity where marginal revenue equals marginal cost
If market demand is perfectly elastic, then a monopolist: - ANSWERS D. has no
market power
If the market demand equation is Q = 20 - 2P, the monopolist's marginal revenue
equation is: - ANSWERS B. MR = 10 - Q
If the total cost function of a monopolist is TC = 200 + 20Q, then the primary
barrier to entry that supports the firm's position is likely: - ANSWERS B.
natural monopoly
, If the government imposed a direct price regulation that did not allow a natural
monopoly with constant marginal cost to charge a price higher than under perfect
competition: - ANSWERS A. the regulation could cause the firm to shut down
production
If demand becomes more price elastic but the quantity demanded at the current
price does not change: - ANSWERS A. the price and quantity are unchanged in
perfect competition but different if the firms have market power.
If market demand is P = 1,000 - 5Q and a monopolist has a constant marginal cost
of $200, then the deadweight loss resulting from monopoly is: - ANSWERS A.
$16
If demand becomes more price elastic and marginal cost is constant, the gain in
producer surplus a firm receives from having market power: - ANSWERS B. is
smaller
If market demand is perfectly inelastic, then a monopolist: - ANSWERS C. has
the greatest possible amount of market power
The key feature of monopoly that drives the differences between it and other
market structures is that: - ANSWERS C. there are barriers to entry into the
market
A monopolist's percentage markup of price over marginal cost is higher when: -
ANSWERS D. market demand is less elastic
