ECON 201 Final Study Guide
Questions and Answers 100% Pass
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 - ✔✔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. - ✔✔a. can choose any price
along the market curve
The market demand curve and the demand curve faced by a monopoly are:
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,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 - ✔✔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 - ✔✔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
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, d. Bost's profit would rise to $510 by increasing output 1 unit - ✔✔c. Bost's profit would
rise to $505 by increasing output 1 unit
Generally, we expect monopolies to (blank) output when demand for their product
rises.
Select one:
a. double
b. not change
c. decrease
d. increase - ✔✔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 - ✔✔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?
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Questions and Answers 100% Pass
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 - ✔✔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. - ✔✔a. can choose any price
along the market curve
The market demand curve and the demand curve faced by a monopoly are:
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,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 - ✔✔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 - ✔✔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
EMILY CHARLENE © 2025, ALL RIGHTS RESERVED 2
, d. Bost's profit would rise to $510 by increasing output 1 unit - ✔✔c. Bost's profit would
rise to $505 by increasing output 1 unit
Generally, we expect monopolies to (blank) output when demand for their product
rises.
Select one:
a. double
b. not change
c. decrease
d. increase - ✔✔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 - ✔✔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?
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