Monopoly Sample Questions

AP MicroeconomicsMr. Bordelon

Quantity (Megawatts) Price per Megawatt Total Cost

1 $550 $1,000

2 500 1,075

3 450 1,200

4 400 1,375

5 350 1,600

6 300 1,875

7 250 2,200

8 200 2,575

Lenoia runs a natural monopoly producing electricity for a small mountain village. The table shows Lenoia’s demand and total cost of producing electricity. The price effect of increasing production from 3 to 4 megawatts is:a.-$150.b.$500.c.$450.d.-$50.e.-$400.

Quantity (Megawatts) Price per Megawatt Total Cost

1 $550 $1,000

2 500 1,075

3 450 1,200

4 400 1,375

5 350 1,600

6 300 1,875

7 250 2,200

8 200 2,575

Lenoia runs a natural monopoly producing electricity for a small mountain village. The table shows Lenoia’s demand and total cost of producing electricity. The price effect of increasing production from 3 to 4 megawatts is:a.-$150.b.$500.c.$450.d.-$50.e.-$400.

Assume there are no fixed costs and AC = MC. In the figure, at the profit-maximizing quantity of production for the monopolist, total revenue is _____, total cost is _____, and profit is _____.a. $600; $200; $400b. $1,600; $3,200; $1,600c. $4,800; $3,200; $1,600d. $4,800; $1,600; $3,200e. $1,600; $800; $800

Assume there are no fixed costs and AC = MC. In the figure, at the profit-maximizing quantity of production for the monopolist, total revenue is _____, total cost is _____, and profit is _____.a. $600; $200; $400b. $1,600; $3,200; $1,600c. $4,800; $3,200; $1,600d. $4,800; $1,600; $3,200e. $1,600; $800; $800

The profit-maximizing firm in this figure will produce _____ units of output per week.a. 160b. 220c. 250d. 300e. 0

The profit-maximizing firm in this figure will produce _____ units of output per week.a. 160b. 220c. 250d. 300e. 0

This profit-maximizing monopoly firm’s cost per unit at its profit-maximizing quantity is:a.$8.b.$15.c.$16.d.$18.e.$35.

This profit-maximizing monopoly firm’s cost per unit at its profit-maximizing quantity is:a.$8.b.$15.c.$16.d.$18.e.$35.

This profit-maximizing monopoly firm’s price per unit is:a.$20.b.$26.c.$29.d.$35.e.$16.

This profit-maximizing monopoly firm’s price per unit is:a.$20.b.$26.c.$29.d.$35.e.$16.

This profit-maximizing monopoly firm’s profit per unit is:a.$5.b.$13.c.$14.d.$20.e.$2.

This profit-maximizing monopoly firm’s profit per unit is:a.$5.b.$13.c.$14.d.$20.e.$2.

A natural monopoly exists when:a.a few firms collude to make one large firm.b.economies of scale provide large cost advantages to having one firm produce the industry’s output.c.firms naturally maximize profit regardless of market structure.d.firms enter the industry as a result of profit incentives.e.government creates a natural barrier to entry for other firms.

A natural monopoly exists when:a.a few firms collude to make one large firm.b.economies of scale provide large cost advantages to having one firm produce the industry’s output.c.firms naturally maximize profit regardless of market structure.d.firms enter the industry as a result of profit incentives.e.government creates a natural barrier to entry for other firms.

In the figure, the natural monopoly:a. would incur an economic profit if regulated to produce where price

is less than marginal cost.b. would incur an economic profit if regulated to charge a price equal

to average total cost.c. creates more consumer surplus if regulated to produce either

where price equals marginal cost or price equals average total cost.d. creates more consumer surplus if regulated to produce where

price is above the average total cost.e. eliminates consumer surplus if regulated to produce where price is

above average total cost.

In the figure, the natural monopoly:a. would incur an economic profit if regulated to produce where price

is less than marginal cost.b. would incur an economic profit if regulated to charge a price equal

to average total cost.c. creates more consumer surplus if regulated to produce either

where price equals marginal cost or price equals average total cost.d. creates more consumer surplus if regulated to produce where

price is above the average total cost.e. eliminates consumer surplus if regulated to produce where price is

above average total cost.