1. Which of the following statements about a monopoly is false?

a. A monopoly firm has the ability to choose among many combinations of price and output.
b. Being a price maker, rather than a price taker, a monopoly firm inevitably earns a positive economic profit (that is, the difference between its total revenue and the sum of its explicit and implicit costs is always positive).
c. When a monopoly firm maximizes economic profit, it is not necessarily producing at minimum average total cost.
d. A monopoly firm never charges the highest possible price it could set.
e. To maximize profit, a monopoly firm chooses an output volume at which price exceeds marginal cost.

Table 11.1

Price (dollars/unit)	Quantity Demanded (units per week)	Total Revenue (dollars per week)	Marginal Revenue (dollars per unit)
6	0		--
5		50
4		80
3		150
2	80
1	100
0	150

2. Consider Table 11.1. It provides selected information about a monopoly. Which of the following statements about this firm is correct?

a. The missing entries in the second column are 10, 20, and 50.
b. The missing entries in the third column are 0, 160, 100, and 0.
c. The missing entries in the last column are +50, +30, +70, +10, -60, and -100.
d. Only (a) and (b).
e. All of the above statements are correct.

3. Consider Figure 11.1. It contains relevant data for a monopoly firm. Which of the following statements about this firm is correct?

a. The monopolist maximizes profit by charging the highest possible price.
b. The monopolist maximizes profit by producing a quantity, such as 0I, that corresponds to the intersection, here at H, of the demand and marginal cost curves.
c. The monopolist maximizes profit by producing a quantity, such as 0G, that corresponds to the intersection, here at F, of the marginal revenue and marginal cost curves.
d. The monopolist maximizes total revenue by producing a quantity, such as 0I, that corresponds to the intersection, here at H of the demand and marginal cost curves.
e. The monopolist maximizes total revenue by producing a quantity, such as 0G, that corresponds to the intersection, here at F, of the marginal revenue and marginal cost curves.

4. Consider Figure 11.1. It contains relevant data for a monopoly firm. Which of the following statements about this firm is correct?

a. The maximum profit that this monopoly can earn equals BEFD.
b. The maximum profit that this monopoly can earn equals 0DFG.
c. The maximum profit that this monopoly can earn equals 0CHI.
d. The maximum profit that this monopoly can earn equals EHF.
e. The maximum profit that this monopoly can earn cannot be determined from the information contained in this graph.

5. Consider Figure 11.2. It contains relevant data for a monopoly firm. Which of the following statements about this firm is correct?

a. When maximizing its profit, this firm produces output quantity 0G.
b. When maximizing its profit, this firm charges price 0B = GE.
c. When maximizing its profit, this firm incurs total cost of 0BEG.
d. The size of this firm's maximum profit equals zero.
e. All of the above statements are correct.

6. Consider Figure 11.2. It contains relevant data for a monopoly firm. Which of the following statements about this firm is correct?

a. When maximizing its profit, this firm's total cost equals 0DFG.
b. When maximizing its profit, this firm's total variable cost equals 0DFG.
c. When maximizing its profit, this firm's total fixed cost equals DBEF.
d. This graph contains insufficient information to allow us to break down total cost into its variable and fixed components.
e. When maximizing its profit, this firm's total revenue equals 0AJ.

7. Consider Figure 11.3. It contains relevant data for a monopoly firm. Which of the following statements about this firm is correct?

a. When producing the profit-maximizing output quantity, this firm is earning a positive economic profit of CB = FE per unit.
b. When producing the profit-maximizing output quantity, this firm is incurring a total fixed cost of 0D = HG.
c. When producing the profit-maximizing output quantity, this firm is incurring a total variable cost of DC = GF.
d. When producing the profit-maximizing output quantity, this firm is incurring a total cost of 0C = HF.
e. All of the above statements are correct.

8. Consider Figure 11.3. It contains relevant data for a monopoly firm. Which of the following statements about this firm is correct?

a. As this graph clearly shows, a monopoly firm is guaranteed positive economic profit, such as area BEFC here.
b. As this graph clearly shows, a monopoly firm rips off its customers by charging the highest possible price.
c. As this graph clearly shows, a monopoly firm rips off its customers by selling them less than they want.
d. As this graph clearly shows, a monopoly firm's price exceeds its marginal cost.
e. None of the above.

9. Consider Figure 11.4. It contains relevant data for a monopoly firm. Which of the following statements about this firm is correct?

a. The firm's supply curve is the rising arm of its marginal cost curve, reaching from minimum average variable cost to J, M, and beyond.
b. The ever-decreasing distance between ATC and AVC as output rises reflects the continual decline of average fixed cost as output rises.
c. This firm would maximize its economic profit if it produced output 0N and thereby minimized ATC.
d. At its profit maximum, this firm's average total cost is MN.
e. Both (c) and (d).

10. Consider Figure 11.4. It contains relevant data for a monopoly firm. Which of the following statements about this firm is correct?

a. In the short run, this firm is incurring a loss equal to AEFB.
b. If this firm shut down at once, to escape the loss noted in (a), its loss would be even larger (and equal to AEGC).
c. Both (a) and (b).
d. By pure accident, this firm's marginal cost curve intersects its ATC curve at its minimum M.
e. When it produces its profit-maximizing output quantity, this firm incurs a total variable cost of AEGC.

11. Consider Figure 11.5. It contains relevant data for a monopolistic competitor. Which of the following statements about this firm is correct?

a. The firm maximizes profit by charging the highest possible price.
b. The firm maximizes profit by producing a quantity, such as 0J, that corresponds to the intersection, here at I, of the demand and marginal cost curves.
c. The firm maximizes profit by producing a quantity, such as 0H, that corresponds to the intersection, here at G, of the marginal revenue and marginal cost curves.
d. The firm maximizes total revenue by producing a quantity, such as 0J, that corresponds to the intersection, here at I, of the demand and marginal cost curves.
e. The firm maximizes total revenue by producing a quantity, such as 0H, that corresponds to the intersection, here at G, of the marginal revenue and marginal cost curves.

12. Consider Figure 11.5. It contains relevant data for a monopolistic competitor. Which of the following statements about this firm is correct?

a. The maximum profit that this firm can earn equals BEGD.
b. The maximum profit that this firm can earn equals 0DGH.
c. The maximum profit that this firm can earn equals 0CIJ.
d. The maximum profit that this firm can earn equals EIG.
e. The maximum profit that this firm can earn equals BEFC, but only in the short run.

Table 11.2

Output Quantity	Total Revenue	Marginal Revenue
0
200
500		$3
	$3,000

13. Consider Table 11.2. It contains selected data for a perfectly competitive firm. Which of the following statements about it is correct?

a. From top to bottom, the missing entries in the middle column are $0, $400, $1,500.
b. From top to bottom, the missing entries in the middle column are $0, $600, $1,500.
c. From top to bottom, the missing entries in the last column are $1, $2, $4.
d. The missing entry in the first column is 800.
e. None of the above; there is insufficient information here.

14. In order to maximize its profit, a perfectly competitive firm is well advised

a. to produce an output quantity at which MR = MC, provided P > ATC.
b. to produce nothing at all, provided P < AVC.
c. to produce an output quantity at which MR = MC, provided ATC > P > AVC.
d. to incur short run losses as long as ATC > P > AVC.
e. to do all of the above.

15. Consider Figure 11.6. It pictures three cost curves of a perfectly competitive producer of apples. It also pictures a variety of possible market prices, ranging from $1.10 per bushel to $4.90 per bushel. We assume that the firm wants to maximize profit. Under the circumstances, which of the following statements is correct?

a. If the market price is $4.90 per bushel, this firm produces 54,000 bushels/year.
b. If the market price is $4.90 per bushel, this firm's marginal revenue curve is the horizontal line going through b and f.
c. If the market price is $4.90 per bushel, this firm's total revenue equals $264,600 per year.
d. If the market price is $4.90 per bushel and points g and m correspond to $4.00 and $2.40 per bushel, respectively, this firm's total fixed cost equals $86,400 per year.
e. All of the above.

16. Consider Figure 11.6. It pictures three cost curves of a perfectly competitive producer of apples. It also pictures a variety of possible market prices, ranging from $1.10 per bushel to $4.90 per bushel. We assume that the firm wants to maximize profit. Under the circumstances, which of the following statements is correct?

a. If the market price is $4.90/bu. and assuming point g corresponds to $4.00/bu., this firm's economic profit equals $48,600/year.
b. If the market price is $4.90/bu. and assuming point g corresponds to $4.00/bu., this firm's total cost equals $200,000/year.
c. If the market price is $4.90/bu. and assuming point m corresponds to $2.40/bu., this firm's total variable cost equals $150,000/year.
d. If the market price is $4.90/bu. and assuming points g and m correspond to $4.00/bu. and $2.40/bu., respectively, this firm's total fixed cost equals $50,000/year.
e. All of the above.

17. Consider Figure 11.6. It pictures three cost curves of a perfectly competitive producer of apples. It also pictures a variety of possible market prices, ranging from $1.10 per bushel to $4.90 per bushel. We assume that the firm wants to maximize profit. Under the circumstances, which of the following statements is correct?

a. To maximize profit, this firm should produce an output volume that minimizes marginal cost, as at point o.
b. To maximize profit, this firm should produce an output volume that minimizes average variable cost, as at point j.
c. To maximize profit, this firm should produce an output volume that minimizes average total cost, as at point e.
d. If the market price is $4.90/bu., we know that a 54,000- bushel output volume maximizes profit because MR > MC if output is less (which argues for greater production) and MR < MC if output is more (which argues for smaller production).
e. None of the above.

18. Consider Figure 11.6. It pictures three cost curves of a perfectly competitive producer of apples. It also pictures a variety of possible market prices, ranging from $1.10 per bushel to $4.90 per bushel. We assume that the firm wants to maximize profit. Under the circumstances, which of the following statements is correct?

a. If the market price is $3.90 per bushel, this firm produces 50,000 bushels/year.
b. If the market price is $3.90 per bushel, this firm's economic profit is zero.
c. If the market price is $3.90 per bushel and points g and m correspond to $4.00 and $2.40 per bushel, respectively, this firm's total fixed cost equals $86,400 per year.
d. All of the above.
e. None of the above.

19. Consider Figure 11.6. It pictures three cost curves of a perfectly competitive producer of apples. It also pictures a variety of possible market prices, ranging from $1.10 per bushel to $4.90 per bushel. We assume that the firm wants to maximize profit. Under the circumstances, which of the following statements is correct?

a. If the market price is $3.10 per bushel, this firm produces 54,000 bushels/year.
b. If the market price is $3.10 per bushel, this firm's economic profit is zero.
c. If the market price is $3.10 per bushel and points g and m correspond to $4.00 and $2.40 per bushel, respectively, this firm's total fixed cost equals $86,400 per year.
d. If the market price is $3.10 per bushel, this firm shuts down operations at once.
e. If the market price is $3.10 per bushel, this firm incurs a loss of dk times 46,000 bushels/year.

20. Consider Figure 11.6. It pictures three cost curves of a perfectly competitive producer of apples. It also pictures a variety of possible market prices, ranging from $1.10 per bushel to $4.90 per bushel. We assume that the firm wants to maximize profit. Under the circumstances, which of the following statements is correct?

a. If the market price is $1.10 per bushel, this firm may produce 24,000 bushels/year.
b. If the market price is $1.10 per bushel, this firm may produce 18,000 bushels/year.
c. If the market price is $1.10 per bushel, this firm may produce 13,000 bushels/year.
d. If the market price is $1.10 per bushel, this firm will produce nothing at all.
e. None of the above.