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Chapter 22
Monopoly
Multiple Choice Questions
1. Which statement is false?
A. A monopoly is both a firm and an industry.

B. A monopoly is an imperfect competitor.
C. There are monopolies in the United States at the regional and local levels.
D. None of these statements are false.
2. The monopolist and the perfect competitor differ in that
A. they face different demand curves.

B. the monopolist does not always produce at an output in which MC = MR.
C. the monopolist is always a large firm.
D. the monopolist is more efficient.
A. The monopolist's demand and marginal revenue curves are two separate curves.
B. The monopolist can sell more output only by lowering price.
C. The monopolist produces at the minimum point of its ATC curve.
22-1
Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
4. Which statement is true?
A. The monopolist operates at the minimum point of its average total cost curve.
B. Once a monopoly is set up, it is impossible to dislodge it.
C. Monopolies are always large firms.
D. Price is always read off the demand curve.
5. Each of the following is a legal barrier to entry into an industry except
A. government licensing.
B. patents.
C. government franchising.
D. All of these choices are legal barriers.
6. Which one of these is not a natural monopoly?
A. A local electric company

B. A local natural gas company
C. A local cable TV company
D. All of these choices are examples of natural monopolies.
A. All monopolies are good.

B. All monopolies are bad.
C. Most natural monopolies are government regulated or government owned.
D. None of these statements are true.
22-2
A. Big business has a great deal of economic power but very little political power.
B. Big business has a great deal of political power but very little economic power.
C. Big business has a great deal of economic and political power.
D. Big business does not have much political or economic power.
A. The monopolist's most efficient output is its most profitable output as well.
B. The monopolist charges a higher price than the perfect competitor in the long run.
C. All monopolists have control over an essential resource.
10. Assume a downward-sloping straight-line demand curve that intersects the output axis at an
output of 6. At what output does the MR curve intersect the output axis?
A. 0
B. 3
C. 6
D. 9
E. 12
A. All monopolies are very large firms.

B. Most monopolists do not produce at an output in which MC = MR.
C. The monopolist's demand curve and MR curve are identical.
22-3
A. Natural monopolies can provide cheaper service as monopolies than could several
competing firms.
B. The two main justifications for monopoly are economies of scale and natural monopoly.
C. Economies of scale and high capital requirements are significant barriers to entry.
13. As a firm grows larger
A. economies of scale set in, then diseconomies of scale.

B. diseconomies of scale set in, then economies of scale.
C. economies of scale and diseconomies of scale set in at the same time.
D. neither economies of scale nor diseconomies of scale set in.
14. A firm can sell 22 units at $20, but to sell 23 units, the price is cut to $19. The marginal
revenue derived from selling the 23rd unit is
A. $9.
B. $3.
C. 0.
D. -$3.
A. Because they are the only seller in the industry, the monopolist does not have to lower their
price to sell more output.
B. Most firms in the United States are monopolies.
C. Unlike the perfect competitor, the monopolist does not necessarily produce at that output
where MC = MR.
22-4
16. When more substitutes become available, a monopolist has __________ power to raise price.
A. less
B. infinite
C. more
17. A monopolist operates at the minimum point of its ATC curve
A. only in the short run.

B. only in the long run.
C. in both the short run and the long run.
D. in neither the short run nor the long run.
18.
The marginal revenue that would be derived from producing the fourth unit of output is
A. $24.
B. $22.
C. $20.
D. $18.
22-5
19.
If marginal cost were $22, how many units of output would this firm produce?
A. 1
B. 2
C. 3
D. 4
20.
The marginal revenue that would be derived from producing a fifth unit of output is
A. $18.
B. $16.
C. $14.
D. $12.
22-6
21.
If the marginal cost were $14, output would be
A. 1.
B. 2.
C. 3.
D. 5
22.
If the marginal cost were $22, the firm would maximize its profit at _____ unit(s) of output.
A. 1
B. 2
C. 3
D. 4
23. When marginal cost is greater than marginal revenue, the monopolist can increase its profit or
minimize its loss by
A. expanding output.
B. reducing output.
C. lowering price.
D. producing where price = ATC.
22-7
24. If a monopolist's price were $8, it is likely that in equilibrium
A. MC = MR, and both are less than $8.

B. MC = MR, and both are more than $8.
C. MC = MR, and both are equal to $8.
D. None of the choices are correct.
25. A natural monopoly
A. has an average cost curve that reaches minimum possible average cost at a low level of
output.
B. has a marginal cost curve that is steeply upward sloping.
C. occurs when a single firm can supply the entire market demand for a product at a lower
average cost than would be possible if two or more firms supplied the market.
D. is usually allowed to choose its price so as to maximize profits in the United States.
A. All monopolies are large firms.

B. The monopolist produces a product similar to its competitors.
C. There is no such thing as a natural monopoly.
D. There are no close substitutes for a monopolist's product.
27. For a monopolist, the price of the product
A. always equals the marginal revenue.

B. is always less than the marginal revenue.
C. exceeds the marginal revenue.
D. always equals the marginal cost of the product.
22-8
28. The monopolistic firm's demand curve
A. is perfectly inelastic.
B. coincides with its marginal revenue curve.
C. is perfectly elastic.
D. is less elastic than a perfectly competitive firm's demand curve.
29. The monopolist's demand curve is ______ that of the perfect competitor; the monopolist's
marginal revenue curve is ______ that of the perfect competitor.
A. identical to; identical to

B. different from; different from
C. identical to; different from
D. different from; identical to
30.
The marginal revenue that would be derived from production of a third unit is
A. $17.
B. $19.
C. $21.
D. $23.
22-9
31.
If the marginal cost were $13, how many units of output would this firm produce?
A. 1
B. 2
C. 3
D. 4
32.
A. $9.
B. $11.
C. $13.
D. $15.
22-10
33.
A. 1.
B. 2.
C. 3.
D. 4.
34.
The marginal revenue that would be derived from the production of a second unit is
A. $17.
B. $19.
C. $21.
D. $23.
22-11
35.
If the firm is maximizing profits, it is producing ____ units of output and charging a price of
____.
A. OF; ON
B. OF; OL
C. OG; ON
D. OG; OM
22-12
36.
The profit-maximizing firm will be earning total revenue of
A. OFIN.
B. OFJM.
C. OFKL.
D. OGHM.
22-13
37.
If the firm is maximizing profits, total profit will be
A. LKJM.
B. NIKL.
C. MJKL.
D. OFKL.
38. If the government attempts to break up a natural monopoly to enforce competition in an

industry
A. the average cost of producing the good will increase.

B. the smallest firm will have a significant cost advantage over the larger, less efficient firms.
C. the average cost of producing the good will decrease.
D. the price paid by consumers will be expected to remain the same.
22-14
39. In the United States, natural monopolies
A. are easily converted to competitive industries.

B. are common in retailing.
C. are commonly regulated by governments.
D. are rarely regulated by governments.
40. A firm that has substantial monopoly power
A. confronts a perfectly-elastic demand curve.

B. can sell as much as it wants at the price it chooses.
C. can strongly influence the price that it charges for its output.
D. is one of only a few firms in the industry.
41. When looking at a monopolist's level of output, you can expect to find
A. average revenue greater than price.

B. price greater than marginal cost.
C. marginal cost greater than marginal revenue.
D. marginal revenue greater than price.
42. Patents function to
A. establish permanent monopolies.

B. temporarily protect monopoly power.
C. encourage firms to reduce output.
D. reduce monopoly power.
22-15
43. For a firm to be a natural monopoly, it should have
A. a special patent.
B. exclusive access to a copyright.
C. a cost curve that was continuously downward sloping to the right.
D. a monopoly on a natural resource.
E. a product so unique that no other firm could come close to producing it.
44. In late 2008, Wal-Mart agreed to settle 63 of the over 70 lawsuits filed against them across
the United States, paying out ____________ million.
A. less than $125

B. between $125 and $250
C. between $352 and $640
D. over $800
22-16
45.
If the firm is minimizing losses, it is producing ___ units of output and charging a price of ___.
A. OM; ON
B. OL; ON
C. OM; OF
D. OL; OF
22-17
46.
The loss-minimizing firm will be earning total revenue of
A. OMHG.
B. OLJF.
C. OMQN.
D. EKHG.
22-18
47.
If the firm is minimizing losses, total loss will be
A. OMKE.
B. EKQN.
C. NQHG.
D. FIHG.
22-19
48.
If this firm were a perfect competitor, at what output would it produce in the long run?
A. OP
B. OM
C. OL
22-20
49.
If this firm were a perfect competitor, what price would it charge in the long run?
A. OE
B. ON
C. OF
50. A monopoly firm selling moustache wax to vain men in a small town is currently maximizing
profits by charging a price of $5. It follows that the marginal cost of moustache wax
A. is greater than $5.

B. is equal to $5.
C. is less than $5.
D. None of these choices are true.
22-21
51. If a monopolist's marginal cost equals its marginal revenue
A. output should be raised.

B. output should be reduced.
C. production is at its most efficient level.
D. profits are maximized or losses are minimized.
52. If the monopolist can sell 10 units at a price of $7 and 11 units at a price of $6.50, the
marginal revenue of the 11th unit is
A. -$1.50.
B. 0.
C. $1.50.
D. $6.50.
53. Marginal revenue for a monopolist
A. decreases as price decreases because each unit of the good is being sold for a lower price.
B. increases as output increases because demand is inelastic.
C. is constant and equal to price.
D. increases as price decreases because more people are willing and able to purchase the
good at a lower price.
54. A firm can sell 14 units at $18, but to sell 15 units, the firm must cut the price to $17. The
marginal revenue derived from selling the 15th unit is
A. -$18.
B. 0.
C. $3.
D. $17.
22-22
55. If a monopoly firm can sell its eighth unit of output for a price of $175, it may expect to receive
a price __________ in order to sell more than eight units.
A. of more than $175

B. of $175
C. of less than $175
D. of $100
56. If total revenue is increasing as output is rising, then
A. marginal revenue must be equal to zero.

B. marginal revenue must be greater than zero.
C. marginal revenue must be less than zero.
D. price must be increasing.
57. A monopoly firm is different from a perfectly competitive firm in that
A. there are many substitutes for the monopolist's product, whereas there are no close
substitutes for the perfectly competitive firm's product.
B. the monopolist's demand curve is perfectly inelastic, whereas the perfectly competitive
firm's demand curve is perfectly elastic.
C. the monopolist can influence price in the market, whereas the perfectly competitive firm is
a price taker.
D. All of these choices are true.
58. A public utility would be an example of
A. a natural monopoly.
B. an unnatural monopoly.
C. an unregulated private monopoly.
D. a competitive monopoly.
22-23
59. Public utilities
A. are primarily regulated natural monopolies.

B. are competitive firms.
C. experience only insignificant economies of scale in production.
D. are seldom regulated.
60. Which of the following is NOT true about a monopoly?
A. The demand curve for a monopoly's product is perfectly elastic.

B. For any given quantity the price of the monopoly's product will exceed the marginal revenue
from that amount.
C. If the monopoly maximizes profit it will charge a price that exceeds marginal cost.
D. It must adjust output until marginal revenue equals marginal cost to maximize profit.
61. Natural monopolies are monopolies that are based on
A. patents.
B. control over a strategic natural resource.
C. extensive economies of scale in production.
D. copyrights.
62. When total revenue is at a maximum
A. average revenue is zero.

B. marginal revenue is zero.
C. price is at a maximum.
D. quantity sold is at a maximum.
22-24
63. An industry that realizes such large economies of scale in producing its product that single-
firm production of that good or service is most efficient is called a(n)
A. fixed cost monopoly.

B. patent monopoly.
C. economies of scale monopoly.
D. natural monopoly.
A. The monopolist's demand and marginal revenue curves are identical.

B. Your local phone company is a natural monopoly.
C. A monopoly can be a small firm.
65.
If profit-maximizing, this firm will charge a price of
A. $8.
B. $10.
C. $12.
D. $16.
22-25
66.
The profit-maximizing firm's output will be about
A. 450.
B. 500.
C. 550.
D. 625.
22-26
67.
The firm's maximum profit will be
A. $900.
B. $1,800.
C. $3,360.
D. $5,400.
22-27
68.
If the firm maximizes its profits, its marginal cost will be
A. $8.
B. $10.
C. $12.
D. $16.
22-28
69.
Assuming the monopolist shown in the graph adjusts output to maximize profits, it is
A. earning profits in the short-run.

B. having losses in the short-run.
C. earning profits in the long-run.
D. earning profits and could be in the short-run or long-run.
22-29
70.
The monopolist shown in the above graph
A. is making a profit.
B. is taking a loss.
C. is breaking even.
D. may be making a profit or breaking even.
22-30
71.
The profit-maximizing firm will operate at an output of ______.
A. OI
B. OJ
C. OK
D. OL
A. The monopolist usually operates at the minimum point of its ATC.

B. Nearly all monopolies are very large firms.
C. Most natural monopolies produce agricultural products or natural resources.
22-31
73.
22-32
74.
The profit-maximizing firm will operate at an output of
A. 0J.
B. 0K.
C. 0L.
D. 0M.
75. Monopoly profit
A. equals (price - ATC) times quantity sold.

B. equals price times quantity sold.
C. exists only in the short run.
D. exists because no entry barriers exist.
76. When an industry is a natural monopoly
A. the economies of scale in it are very great.

B. it would be most efficient to have several (or many) firms competing to supply the market.
C. it has a perfectly elastic industry demand curve.
D. the typical firm's marginal cost curve is everywhere above its average cost curve.
22-33
77. When maximizing profit, the perfect competitor ______ produces at the output at which MC =
MR; the monopolist ____ produces at the output at which MC = MR.
A. always; always
B. sometimes; sometimes
C. always; sometimes
D. sometimes; always
78. Assume that an industry is currently a monopoly. If the government breaks this monopoly up
into a large number of small, perfectly competitive firms, which of the following will occur?
A. Both price and industry output will increase.

B. Price will fall and industry output will increase.
C. Price will increase and industry output will decrease.
D. Both price and industry output will decrease.
A. Natural monopolies may occur in theory, but there are virtually no actual examples in
today's economy.
B. All forms of a monopoly are illegal in the United States.
C. Many public utilities are natural monopolies.
80. Which statement is true about monopolies?
A. They face the demand curve of the entire industry and provide the entire industry supply.
B. They do not face the demand curve of the entire industry.
C. They do not provide the entire industry supply.
D. None of these statements are true about monopolies.
22-34
81. Assume that at a given output a monopolist's marginal revenue is $25 and its marginal cost is
$18. If the monopolist increases output, then
A. price, marginal cost, and total profit will fall.

B. price will fall, marginal cost will rise, and total profit will rise.
C. price will rise, marginal cost will fall, and total profit will rise.
D. price, marginal cost, and total profit will rise.
A. Some monopolists are imperfect competitors.

B. Most monopolists are imperfect competitors.
C. All monopolists are imperfect competitors.
83. More than 50 years ago Americans were warned to "beware of the military-industrial complex"
by
A. General Douglas MacArthur.

B. President Dwight D. Eisenhower.
C. Vice President Richard Nixon.
D. President John F. Kennedy.
84. Decision making in the corporate hierarchy is a lot more spread out in _______ while CEOs are
much better paid in _______.
A. the United States than in Japan; the United States than in Japan
B. Japan than in the United States; Japan than in the United States
C. the United States than in Japan; Japan than in the United States
D. Japan than in the United States; the United States than in Japan
22-35
85. The corporate hierarchy is the most complex and over managed in
A. Japan.
B. South Korea.
C. France.
D. United States
86. A monopolist may make a profit

C. in both the short and long run.
D. in neither the short nor long run.
A. Since the monopolist is the only firm in the industry, its profit is calculated differently from
the way a perfect competitor would calculate profit.
B. The monopolist's demand curve and marginal revenue curve are the same line.
C. In the long run under monopoly, the most efficient output is the most profitable output.
D. A monopolist may lose money in the short-run.
A. One basis for monopoly is control over an essential resource.

C. Economies of being established is the same as economies of scale.
D. General Motors is a monopoly.
22-36
89. There are only two justifications for monopoly: ______________ and ______________.
A. economies of scale; natural monopolies

B. economies of scale; patents
C. natural monopolies; patents
D. imperfect competition; being established
90. A monopoly can be losing money in the ____________, but not in the ____________.
A. short run; short run

B. long run; long run
C. long run; short run
D. short run; long run
91. Which statement is the most accurate?
A. The monopolist produces at the minimum point of its average total cost curve.
B. The monopolist breaks even in the long run.
C. The monopolist faces the entire industry demand curve.
D. Nearly all monopolists are very large firms.
22-37
92.
This monopolist
A. is in the short run.

B. is in the long run.
C. may be in the short run or the long run.
22-38
93.
This monopolist
C. may be making a profit or taking a loss.
D. Is breaking even.
94. As output rises, the monopolist's marginal revenue
A. remains identical to price.

B. stays constant.
C. declines as quickly as price.
D. declines more quickly than price.
95. Which is the most accurate statement?
A. All monopolists are very large companies.

B. IBM is an example of a monopoly.
C. In order to maintain monopolies, there must be barriers to market entry.
D. Public utilities are examples of natural monopolies.
22-39
96. One advantage of ______________ is being able to set the industry standard.
A. being established
B. legal barriers
C. economies of scale
A. The monopolist produces at an output level that is less than peak efficiency.
B. The monopolist can sell more output only by raising price.
C. The monopolist's demand and marginal revenue curves are identical.
D. Price is read off the marginal revenue curve.
98. Which of the following is characteristic of a monopoly?
A. The absence of political power

B. Close substitute products
C. The ability to make an economic profit in the long run
D. Operating at peak efficiency
99. All of the following are barriers to entry except
A. required scale for innovation.

B. government deregulation.
C. economies of scale.
D. economies of being established.
22-40
100.Government licensing, patents, and government franchising are all examples of
A. economies of scale.
B. economies of being established.
C. legal barriers to entry.
D. control of an essential resource.
101.When marginal revenue is greater than marginal cost, the monopolist can increase its profit or
minimize its loss by
B. reducing output.
C. raising price.
22-41
102.
If the firm is maximizing profits or minimizing losses, it is producing _____ units of output and
charging a price of ______.
A. 50 units; $10
B. 50 units; $18.40
C. 60 units; $12
D. 60 units; $16.80
22-42
103.
The profit-maximizing firm will be earning a total revenue of about
A. $0.
B. $500.
C. $720.
D. $920.
22-43
104.
If the firm is maximizing profits, total profit will be approximately
A. -$150.
B. $500.
C. $270.
D. $600.
22-44
105.
A. 50 units
B. 60 units
C. 70 units
D. 75 units
22-45
106.
If this firm were a perfect competitor, at what price would it charge in the long run?
A. $8
B. $12
C. $18
D. $22
107.JoJo has a monopoly producing stringless yoyos. His company is called JoJo's Yoyos. As a
result of his monopoly position,
A. he is guaranteed a profit.
B. if he loses money in the short run, he will make money in the long run.
C. his average total costs will always be lower than the price he charges.
22-46
108.The monopolist and the perfect competitor are similar in that
A. both operate at the minimum of the ATC curve.

B. both have close substitutes.
C. both types of markets have no barriers to entry.
D. both produce at an output level where MC = MR.
109.An obstacle that prohibits new firms from entering an industry defines
B. barriers to entry.
C. monopoly power.
110.
This monopolist is
A. in the short run making a profit.

B. in the short run taking a loss.
C. in the long run making a profit.
D. in the long run making a loss.
22-47
111.
If the firm is maximizing profits or minimizing losses, it is producing ______ units of output and
charging a price of _______.
A. 280; $12.00
B. 280; $10.40
C. 200; $7.00
D. 200; $12.80
22-48
112.
The profit-maximizing (loss-minimizing) firm will be earning a total revenue of approximately
A. $1,400.
B. $2,560.
C. $3,200.
D. $3,560.
22-49
113.
If the firm is maximizing profits (minimizing losses), the total profit or loss will be
approximately
A. $0.
B. $280.
C. -$1,440.
D. -$280.
22-50
114.
If this firm were a perfect competitor, it would produce at _____ units of output and charging a
price of _______.
A. 200; $7.00.
B. 200; $12.80.
C. 280; $10.40.
D. 280; $12.00.
115.Firms that had virtual monopolies, that is control over at least 80 percent of industry
production, because of control over an essential resource include all of the following except
A. the DeBeers Diamond Company.

B. the International Nickel Company.
C. the Ford Motor Company.
D. the Standard Oil Company.
22-51
116.Which statement is false?
A. Once a monopoly is set up, it is possible to dislodge it.

B. Some monopolists have control over an essential resource.
C. Several competing firms can provide cheaper service than a natural monopoly.
D. As a firm grows larger, at first it realizes economies of scale, but eventually diseconomies
of scale set in.
117.The necessary condition(s) to realize economies of scale include
A. having the financial resources for the high capital costs.

B. having sufficient demand for the product.
C. both financial resources for the high capital costs and sufficient demand for the product.
118.
The marginal revenue that would be derived from production of the second unit would be
A. $20.
B. $18.
C. $16.
D. $14.
22-52
119.
A. 1
B. 2
C. 3
D. 4
120.
The marginal revenue that would be derived from producing a fourth unit of output is
A. $20.
B. $16.
C. $12.
D. $8.
22-53
121.
A. 1.
B. 2.
C. 3.
D. 4.
122.
The marginal revenue that would be derived from the production of the fifth unit is
A. $20.
B. $16.
C. $12.
D. $4.
123.The monopolist
A. is a perfect competitor.
B. has a horizontal demand curve.
C. produces where MC equals MR.
22-54
124.Which of the following is false?
A. The monopolist and perfect competitor both produce where MC equals MR.
B. A monopoly is a firm that produces all the output in an industry.
C. If a monopolist is losing money, it is in the long run.
D. Price is read off the demand curve for the monopolist.
125.Comparing the monopolist to the perfect competitor,
A. only the monopolist produces where MC equals MR.

B. both have downward-sloping demand curves.
C. only the perfect competitor will make an economic profit in the long run.
D. only the monopolist will make an economic profit in the long run.
126.Which of the following is true?
A. Monopolists never lose money regardless of short-run or long-run.

B. Monopolies can be overcome by market forces or by government action.
C. The most efficient output is found where MC and MR cross.
D. The automobile industry is an example of a monopoly.
127.The monopolist often charges its customers _______ prices and provides ________ service
than it would if it had competitors.
A. higher; better
B. higher; poorer
C. lower; better
D. lower; poorer
22-55
128.Which is the most accurate statement about Wal-Mart?
A. It proves the case that bigness is always bad.

B. It proves the case that bigness is always good.
C. Directly and indirectly it saves American consumers up to $100 billion a year.
D. It has used its monopoly power to force price increases.
129.Which statement is true about Wal-Mart?
A. It pays most of its employees very well.

B. It has forced many supermarkets out of business.
C. Unlike its competitors, it charges its suppliers for shelf space.
D. It is the third largest retailer in the U.S.
130.How does the ratio of CEO pay in the U.S. compare with that ratio in Japan?
A. It is much lower.
B. It is slightly lower.
C. It is slightly higher.
D. It is much higher.
131.Which of the following at one time were monopolies because they were the first to enter their
field?
A. Xerox
B. IBM
C. Microsoft
D. All of the choices are true.
22-56
132.Which of the following is NOT a characteristic of a monopoly?
A. A great deal of political power

B. No close substitute products
D. Operating at the lowest point on the ATC curve
133.All of the following at one time had control over an essential resource that served as a barrier
to entry except
A. DeBeer's Diamond Company.

B. Standard Oil Company.
C. International Nickel Company of Canada.
D. IBM.
134.When marginal revenue is equal to marginal cost, the monopolist
A. should increase output to maximize profits.

B. will maximize profits or minimize losses.
C. will produce where price = ATC.
22-57
135.
If the firm is maximizing profits or minimizing losses, it is producing _____ units of output and
charging a price of ______.
A. 40; $10.00
B. 40; $18.00
C. 50; $13.00
D. 55; $14.00
22-58
136.
The profit-maximizing firm will be earning total revenue of about
A. $720
B. $556.
C. $400.
D. $650.
22-59
137.
A. -$160.
B. $160.
C. -$4.
D. $10.
22-60
138.
A. 40 units
B. 50 units
C. 60 units
D. 70 units
22-61
139.
A. $10.10
B. $12.80
C. $14.20
D. $15.90
140.Matt has a monopoly producing glass baseball bats. His company is called Matt's Glass Bats.
As a result of his monopoly position
B. he will shatter his competition.
C. his average total costs will be lower than the price he charges.
D. he is not guaranteed of profit, because monopoly power alone will not lead to business
success.
22-62
141.The monopolist and the perfect competitor are similar in that
A. both operate at peak efficiency.

B. both can make a profit in the long run.
D. both try to maximize profits.
142.Which statement is true?
A. If the Metropolitan Opera had every opera star in the world under contract, it would be
considered a monopoly because it had control over an essential resource in its business.
B. There is no way to distinguish between the long run and the short-run if a monopoly is
making a profit.
C. Until the early 1960s, the National Football League had control of an essential resource,
star football players, and was therefore able to maintain its monopoly status until the
American Football League started drafting college stars in the early 1960s.
D. All of the statements are true.
143.
A. $30.
B. $27.
C. $24.
D. $21.
22-63
144.
A. 1
B. 2
C. 3
D. 4
145.
A. $30.
B. $24.
C. $21.
D. $12.
22-64
146.
A. 1.
B. 2.
C. 3.
D. 4.
147.
A. $24.
B. $21.
C. $12.
D. $6.
148.Which of the following is true?
A. Monopolists never lose money in the short-run or long-run.

B. Monopolies can only be overcome by government action.
C. Having a recognizable brand name is a barrier to entry that can preserve monopoly power.
D. Patents are granted to investors who have control over an essential resource.
22-65
Fill in the Blank Questions
149.A monopoly faces the entire ___________ schedule of an industry.
________________________________________
150.A monopolist is a single seller selling a(n) ___________ good or service.
________________________________________
151.Compared to the perfect competitor, the monopolist is ______ efficient and charges a ______
price.
________________________________________
152.In the United States the CEOs of our largest companies earn over _____ times the earnings of
their average employee.
________________________________________
153.Control of an essential resource and the economies of being established are _________ that
protect monopolies.
________________________________________
154.The profit-maximizing monopolist always selects that output at which ___________ is equal to
__________.
________________________________________
155.Large firms can take advantage of economies of ___________.
________________________________________
156.Rutgers University granted Coca-Cola a ___________ to sell its beverages on campus.
________________________________________
22-66
157.In order to sell additional units the monopolist must ___________ the price.
________________________________________
158.The monopolist faces the demand curve of ___________.
________________________________________
159.Legal barriers to entry into an industry include (1) _______ (2) _______ and (3) _______.
________________________________________
160.The market will limit monopoly power basically through the development of _________.
________________________________________
161.A _________ monopoly is regulated and can provide cheaper service than could several
competing firms.
________________________________________
162.Two objectives of the regulation of natural monopolies would be lower ______ and higher
_______.
________________________________________
163.One advantage of ____________ is being able to set the industry standard.
________________________________________
164.President Eisenhower warned us to "Beware of the ___________."
________________________________________
165.Large firms are able to lower their costs by taking advantage of ___________.
________________________________________
22-67
166.When firms get too big, ___________ set in.
________________________________________
167.Today, due to technological innovations, the rationale for natural monopoly for the electric
power and local telephone industries is _________.
________________________________________
168.New ________ has often undermined natural monopolies, such as in the case of competition
for local telephone service in some states.
________________________________________
169.An individual with a new idea for a product, such as someone who invents a new toy, will
often take their idea to large manufacturers who have the wherewithal to produce and market
their ideas. This barrier to entry is called _______________________.
________________________________________
170.Considering that there are over a half million doctors in the United States, it is still possible
for a doctor to have a __________ monopoly in her or his neighborhood.
________________________________________
171.The perfect competitor's demand and marginal revenue curves ______ identical; the
monopolist's demand and marginal revenue curves _______ identical.
________________________________________
172.Monopoly power ________ guarantee a profit for a producer because ________ may be too low
for the product.
________________________________________
22-68
173.In the 1950s, the National Football League (NFL) had a virtual monopoly because
_____________.
________________________________________
174.The QWERTY keyboard is an example of a company __________________.
________________________________________
175.The CEO compensation as a multiple of average employee compensation for 2000 in Japan
was _______ times.
________________________________________
176.In 1960, CEO compensation as a multiple of average employee compensation in the United
States was about _________ times.
________________________________________
177.Wal-Mart's full-time employees' average hourly wages that are about ____% lower than those
paid by competitors.
________________________________________
178.Wal-Mart imports $_______ billion a year of microwave ovens, TV's, DVD players, toys, shoes
apparel and other goods from _______.
________________________________________
Short Answer Questions
22-69
179.
Fill in the table.
180.
Draw a graph of the firm's demand, marginal revenue, marginal cost, and average total cost
curves.
22-70
181.
Calculate the firm's total profit.
182.
If the firm operated at optimum efficiency, how much would its output be?
22-71
183.
If the firm were a perfect competitor, how much would its price be in the long run?
184.
Fill in the table.
22-72
185.
curves.
186.
22-73
187.
188.
22-74
189.
Assume the firm is a profit-maximizing monopoly. Using the data in the graph, calculate the
firm's total profit.
22-75
190.
If the firm were a perfect competitor in the long run, how much would its output be?
22-76
191.
22-77
192.
Assume the firm is a profit-maximizing/loss-minimizing monopoly. Using the data in the graph
above, calculate the firm's total profit or loss.
22-78
193.
If the firm were a perfect competitor in the long run, how much would its price be?
22-79
194.
22-80
195.
Using the data in the graph above, calculate the firm's total profit.
22-81
196.
22-82
197.
22-83
198.(a) Fill in table. (b) Using your own piece of graph paper, draw a graph of the firm's demand,
marginal revenue, marginal cost, and average total cost curves. (c) Calculate the firm's total
profit. (d) If the firm operates at optimum efficiency, how much will its output be? (e) If the
firm were a perfect competitor, how much will its price be in the long run?
22-84
199.(a) Using the data from graph, calculate the firm's total profit. (b) If the firm operates at
optimum efficiency, how much will its output be? (c) If the firm were a perfect competitor,
how much will its price be in the long run?
22-85
200.(a) Using the data from graph, calculate the firm's total profit. (b) If the firm operates at
22-86
Chapter 22 Monopoly Answer Key
Multiple Choice Questions
A. A monopoly is both a firm and an industry.

B. A monopoly is an imperfect competitor.
C. There are monopolies in the United States at the regional and local levels.
AACSB: Reflective Thinking

Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 22-01 Analyze and discuss the graph of the monopolist.
2. The monopolist and the perfect competitor differ in that
A. they face different demand curves.

B. the monopolist does not always produce at an output in which MC = MR.
C. the monopolist is always a large firm.
D. the monopolist is more efficient.

Blooms: Remember
22-87
A. The monopolist's demand and marginal revenue curves are two separate curves.
B. The monopolist can sell more output only by lowering price.
C. The monopolist produces at the minimum point of its ATC curve.

Blooms: Remember
A. The monopolist operates at the minimum point of its average total cost curve.
B. Once a monopoly is set up, it is impossible to dislodge it.
C. Monopolies are always large firms.
D. Price is always read off the demand curve.

Blooms: Remember
5. Each of the following is a legal barrier to entry into an industry except
A. government licensing.
B. patents.
C. government franchising.
D. All of these choices are legal barriers.

Blooms: Remember
Learning Objective: 22-04 List and discuss the barriers to entry into a monopolized industry.
22-88
6. Which one of these is not a natural monopoly?
A. A local electric company

B. A local natural gas company
C. A local cable TV company
D. All of these choices are examples of natural monopolies.
AACSB: Analytic
Blooms: Analyze
Difficulty: 1 Easy
Learning Objective: 22-06 Explain how economies of scale and natural monopoly affect control of an industry.
A. All monopolies are good.

B. All monopolies are bad.
C. Most natural monopolies are government regulated or government owned.

Blooms: Remember
A. Big business has a great deal of economic power but very little political power.
B. Big business has a great deal of political power but very little economic power.
C. Big business has a great deal of economic and political power.
D. Big business does not have much political or economic power.

Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 22-07 Identify and discuss the factors that make bigness bad.
22-89
A. The monopolist's most efficient output is its most profitable output as well.
B. The monopolist charges a higher price than the perfect competitor in the long run.
C. All monopolists have control over an essential resource.

Blooms: Remember
10. Assume a downward-sloping straight-line demand curve that intersects the output axis at
an output of 6. At what output does the MR curve intersect the output axis?
A. 0
B. 3
C. 6
D. 9
E. 12

Blooms: Apply
Difficulty: 3 Hard
A. All monopolies are very large firms.

B. Most monopolists do not produce at an output in which MC = MR.
C. The monopolist's demand curve and MR curve are identical.

Blooms: Understand
22-90
A. Natural monopolies can provide cheaper service as monopolies than could several
competing firms.
B. The two main justifications for monopoly are economies of scale and natural monopoly.
C. Economies of scale and high capital requirements are significant barriers to entry.

Blooms: Remember
13. As a firm grows larger
A. economies of scale set in, then diseconomies of scale.

B. diseconomies of scale set in, then economies of scale.
C. economies of scale and diseconomies of scale set in at the same time.
D. neither economies of scale nor diseconomies of scale set in.

Blooms: Remember
14. A firm can sell 22 units at $20, but to sell 23 units, the price is cut to $19. The marginal
revenue derived from selling the 23rd unit is
A. $9.
B. $3.
C. 0.
D. -$3.
AACSB: Analytic
Blooms: Apply
Learning Objective: 22-02 Calculate the profit or loss of the monopolist.
22-91
A. Because they are the only seller in the industry, the monopolist does not have to lower
their price to sell more output.
B. Most firms in the United States are monopolies.
C. Unlike the perfect competitor, the monopolist does not necessarily produce at that
output where MC = MR.

Blooms: Remember
16. When more substitutes become available, a monopolist has __________ power to raise
price.
A. less
B. infinite
C. more

Blooms: Remember
17. A monopolist operates at the minimum point of its ATC curve

C. in both the short run and the long run.
D. in neither the short run nor the long run.

Blooms: Remember
Learning Objective: 22-03 Differentiate between the short run and the long run for the monopolist.
22-92
18.
The marginal revenue that would be derived from producing the fourth unit of output is
A. $24.
B. $22.
C. $20.
D. $18.
AACSB: Analytic
Blooms: Apply
19.
If marginal cost were $22, how many units of output would this firm produce?
A. 1
B. 2
C. 3
D. 4
AACSB: Analytic
Blooms: Apply
Difficulty: 3 Hard
22-93
20.
A. $18.
B. $16.
C. $14.
D. $12.
AACSB: Analytic
Blooms: Apply
21.
A. 1.
B. 2.
C. 3.
D. 5
AACSB: Analytic
Blooms: Apply
Difficulty: 3 Hard
22-94
22.
If the marginal cost were $22, the firm would maximize its profit at _____ unit(s) of output.
A. 1
B. 2
C. 3
D. 4
AACSB: Analytic
Blooms: Apply
Difficulty: 3 Hard
23. When marginal cost is greater than marginal revenue, the monopolist can increase its profit
or minimize its loss by
B. reducing output.
C. lowering price.

Blooms: Analyze
22-95
24. If a monopolist's price were $8, it is likely that in equilibrium
A. MC = MR, and both are less than $8.

B. MC = MR, and both are more than $8.
C. MC = MR, and both are equal to $8.

Blooms: Understand
25. A natural monopoly
A. has an average cost curve that reaches minimum possible average cost at a low level of
output.
B. has a marginal cost curve that is steeply upward sloping.
C. occurs when a single firm can supply the entire market demand for a product at a lower
average cost than would be possible if two or more firms supplied the market.
D. is usually allowed to choose its price so as to maximize profits in the United States.

Blooms: Remember
A. All monopolies are large firms.

B. The monopolist produces a product similar to its competitors.
C. There is no such thing as a natural monopoly.
D. There are no close substitutes for a monopolist's product.

Blooms: Remember
Difficulty: 1 Easy
22-96
27. For a monopolist, the price of the product
A. always equals the marginal revenue.

B. is always less than the marginal revenue.
C. exceeds the marginal revenue.
D. always equals the marginal cost of the product.

Blooms: Remember
28. The monopolistic firm's demand curve
A. is perfectly inelastic.
B. coincides with its marginal revenue curve.
C. is perfectly elastic.
D. is less elastic than a perfectly competitive firm's demand curve.

Blooms: Remember
Difficulty: 1 Easy
29. The monopolist's demand curve is ______ that of the perfect competitor; the monopolist's
marginal revenue curve is ______ that of the perfect competitor.
A. identical to; identical to

B. different from; different from
C. identical to; different from
D. different from; identical to

Blooms: Remember
Difficulty: 1 Easy
22-97
30.
The marginal revenue that would be derived from production of a third unit is
A. $17.
B. $19.
C. $21.
D. $23.
AACSB: Analytic
Blooms: Apply
31.
A. 1
B. 2
C. 3
D. 4
AACSB: Analytic
Blooms: Apply
Difficulty: 3 Hard
22-98
32.
A. $9.
B. $11.
C. $13.
D. $15.
AACSB: Analytic
Blooms: Apply
33.
A. 1.
B. 2.
C. 3.
D. 4.
AACSB: Analytic
Blooms: Apply
Difficulty: 3 Hard
22-99
34.
The marginal revenue that would be derived from the production of a second unit is
A. $17.
B. $19.
C. $21.
D. $23.
AACSB: Analytic
Blooms: Apply
22-100
35.
If the firm is maximizing profits, it is producing ____ units of output and charging a price of
____.
A. OF; ON
B. OF; OL
C. OG; ON
D. OG; OM
AACSB: Analytic
Blooms: Apply
22-101
36.
The profit-maximizing firm will be earning total revenue of
A. OFIN.
B. OFJM.
C. OFKL.
D. OGHM.
AACSB: Analytic
Blooms: Apply
Difficulty: 3 Hard
22-102
37.
A. LKJM.
B. NIKL.
C. MJKL.
D. OFKL.
AACSB: Analytic
Blooms: Apply
Difficulty: 3 Hard
38. If the government attempts to break up a natural monopoly to enforce competition in an

industry
A. the average cost of producing the good will increase.

B. the smallest firm will have a significant cost advantage over the larger, less efficient
firms.
C. the average cost of producing the good will decrease.
D. the price paid by consumers will be expected to remain the same.

Blooms: Understand
Difficulty: 3 Hard
22-103
39. In the United States, natural monopolies
A. are easily converted to competitive industries.

B. are common in retailing.
C. are commonly regulated by governments.
D. are rarely regulated by governments.

Blooms: Remember
40. A firm that has substantial monopoly power
A. confronts a perfectly-elastic demand curve.

B. can sell as much as it wants at the price it chooses.
C. can strongly influence the price that it charges for its output.
D. is one of only a few firms in the industry.

Blooms: Remember
41. When looking at a monopolist's level of output, you can expect to find
A. average revenue greater than price.

B. price greater than marginal cost.
C. marginal cost greater than marginal revenue.
D. marginal revenue greater than price.

Blooms: Remember
22-104
42. Patents function to
A. establish permanent monopolies.

B. temporarily protect monopoly power.
C. encourage firms to reduce output.
D. reduce monopoly power.

Blooms: Remember
Difficulty: 1 Easy
43. For a firm to be a natural monopoly, it should have
A. a special patent.
B. exclusive access to a copyright.
C. a cost curve that was continuously downward sloping to the right.
D. a monopoly on a natural resource.
E. a product so unique that no other firm could come close to producing it.

Blooms: Remember
Difficulty: 3 Hard
44. In late 2008, Wal-Mart agreed to settle 63 of the over 70 lawsuits filed against them across
the United States, paying out ____________ million.
A. less than $125

B. between $125 and $250
C. between $352 and $640
D. over $800

Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 22-08 List the pros and cons of allowing a Walmart supercenter to open in your community.
22-105
45.
If the firm is minimizing losses, it is producing ___ units of output and charging a price of
___.
A. OM; ON
B. OL; ON
C. OM; OF
D. OL; OF
AACSB: Analytic
Blooms: Apply
22-106
46.
The loss-minimizing firm will be earning total revenue of
A. OMHG.
B. OLJF.
C. OMQN.
D. EKHG.
AACSB: Analytic
Blooms: Apply
Difficulty: 3 Hard
22-107
47.
If the firm is minimizing losses, total loss will be
A. OMKE.
B. EKQN.
C. NQHG.
D. FIHG.
AACSB: Analytic
Blooms: Apply
Difficulty: 3 Hard
22-108
48.
A. OP
B. OM
C. OL
AACSB: Analytic
Blooms: Apply
22-109
49.
If this firm were a perfect competitor, what price would it charge in the long run?
A. OE
B. ON
C. OF
AACSB: Analytic
Blooms: Apply
50. A monopoly firm selling moustache wax to vain men in a small town is currently maximizing
profits by charging a price of $5. It follows that the marginal cost of moustache wax
A. is greater than $5.

B. is equal to $5.
C. is less than $5.
D. None of these choices are true.
AACSB: Analytic
Blooms: Apply
22-110
51. If a monopolist's marginal cost equals its marginal revenue
A. output should be raised.

B. output should be reduced.
C. production is at its most efficient level.
D. profits are maximized or losses are minimized.

Blooms: Remember
Difficulty: 1 Easy
52. If the monopolist can sell 10 units at a price of $7 and 11 units at a price of $6.50, the
marginal revenue of the 11th unit is
A. -$1.50.
B. 0.
C. $1.50.
D. $6.50.
AACSB: Analytic
Blooms: Apply
53. Marginal revenue for a monopolist
A. decreases as price decreases because each unit of the good is being sold for a lower
price.
B. increases as output increases because demand is inelastic.
C. is constant and equal to price.
D. increases as price decreases because more people are willing and able to purchase the
good at a lower price.

Blooms: Remember
22-111
54. A firm can sell 14 units at $18, but to sell 15 units, the firm must cut the price to $17. The
marginal revenue derived from selling the 15th unit is
A. -$18.
B. 0.
C. $3.
D. $17.
AACSB: Analytic
Blooms: Apply
55. If a monopoly firm can sell its eighth unit of output for a price of $175, it may expect to
receive a price __________ in order to sell more than eight units.
A. of more than $175

B. of $175
C. of less than $175
D. of $100
AACSB: Analytic
Blooms: Apply
56. If total revenue is increasing as output is rising, then
A. marginal revenue must be equal to zero.

B. marginal revenue must be greater than zero.
C. marginal revenue must be less than zero.
D. price must be increasing.

Blooms: Analyze
22-112
57. A monopoly firm is different from a perfectly competitive firm in that
A. there are many substitutes for the monopolist's product, whereas there are no close
substitutes for the perfectly competitive firm's product.
B. the monopolist's demand curve is perfectly inelastic, whereas the perfectly competitive
firm's demand curve is perfectly elastic.
C. the monopolist can influence price in the market, whereas the perfectly competitive firm
is a price taker.
D. All of these choices are true.

Blooms: Understand
Difficulty: 3 Hard
58. A public utility would be an example of
A. a natural monopoly.
B. an unnatural monopoly.
C. an unregulated private monopoly.
D. a competitive monopoly.

Blooms: Analyze
Difficulty: 1 Easy
59. Public utilities
A. are primarily regulated natural monopolies.

B. are competitive firms.
C. experience only insignificant economies of scale in production.
D. are seldom regulated.

Blooms: Remember
22-113
Difficulty: 1 Easy
60. Which of the following is NOT true about a monopoly?
A. The demand curve for a monopoly's product is perfectly elastic.

B. For any given quantity the price of the monopoly's product will exceed the marginal
revenue from that amount.
C. If the monopoly maximizes profit it will charge a price that exceeds marginal cost.
D. It must adjust output until marginal revenue equals marginal cost to maximize profit.

Blooms: Understand
61. Natural monopolies are monopolies that are based on
A. patents.
B. control over a strategic natural resource.
C. extensive economies of scale in production.
D. copyrights.

Blooms: Remember
Difficulty: 1 Easy
62. When total revenue is at a maximum
A. average revenue is zero.

B. marginal revenue is zero.
C. price is at a maximum.
D. quantity sold is at a maximum.

Blooms: Remember
22-114
63. An industry that realizes such large economies of scale in producing its product that single-
firm production of that good or service is most efficient is called a(n)
A. fixed cost monopoly.

B. patent monopoly.
C. economies of scale monopoly.

Blooms: Remember
Difficulty: 1 Easy
A. The monopolist's demand and marginal revenue curves are identical.

B. Your local phone company is a natural monopoly.
C. A monopoly can be a small firm.

Blooms: Remember
Difficulty: 1 Easy
22-115
65.
If profit-maximizing, this firm will charge a price of
A. $8.
B. $10.
C. $12.
D. $16.
AACSB: Analytic
Blooms: Apply
Difficulty: 1 Easy
22-116
66.
The profit-maximizing firm's output will be about
A. 450.
B. 500.
C. 550.
D. 625.
AACSB: Analytic
Blooms: Apply
Difficulty: 1 Easy
22-117
67.
The firm's maximum profit will be
A. $900.
B. $1,800.
C. $3,360.
D. $5,400.
AACSB: Analytic
Blooms: Apply
Difficulty: 3 Hard
22-118
68.
If the firm maximizes its profits, its marginal cost will be
A. $8.
B. $10.
C. $12.
D. $16.
AACSB: Analytic
Blooms: Apply
22-119
69.
Assuming the monopolist shown in the graph adjusts output to maximize profits, it is
A. earning profits in the short-run.

B. having losses in the short-run.
C. earning profits in the long-run.
D. earning profits and could be in the short-run or long-run.

Blooms: Understand
22-120
70.
AACSB: Analytic
Blooms: Apply
Difficulty: 1 Easy
22-121
71.
The profit-maximizing firm will operate at an output of ______.
A. OI
B. OJ
C. OK
D. OL
AACSB: Analytic
Blooms: Apply
Difficulty: 1 Easy
A. The monopolist usually operates at the minimum point of its ATC.

B. Nearly all monopolies are very large firms.
C. Most natural monopolies produce agricultural products or natural resources.

Blooms: Understand
22-122
73.
AACSB: Analytic
Blooms: Apply
Difficulty: 1 Easy
22-123
74.
The profit-maximizing firm will operate at an output of
A. 0J.
B. 0K.
C. 0L.
D. 0M.
AACSB: Analytic
Blooms: Apply
Difficulty: 1 Easy
75. Monopoly profit
A. equals (price - ATC) times quantity sold.

B. equals price times quantity sold.
C. exists only in the short run.
D. exists because no entry barriers exist.

Blooms: Remember
22-124
76. When an industry is a natural monopoly
A. the economies of scale in it are very great.

B. it would be most efficient to have several (or many) firms competing to supply the
market.
C. it has a perfectly elastic industry demand curve.
D. the typical firm's marginal cost curve is everywhere above its average cost curve.

Blooms: Remember
77. When maximizing profit, the perfect competitor ______ produces at the output at which MC
= MR; the monopolist ____ produces at the output at which MC = MR.
A. always; always
B. sometimes; sometimes
C. always; sometimes
D. sometimes; always

Blooms: Remember
78. Assume that an industry is currently a monopoly. If the government breaks this monopoly
up into a large number of small, perfectly competitive firms, which of the following will
occur?
A. Both price and industry output will increase.

B. Price will fall and industry output will increase.
C. Price will increase and industry output will decrease.
D. Both price and industry output will decrease.

Blooms: Analyze
22-125
A. Natural monopolies may occur in theory, but there are virtually no actual examples in
today's economy.
C. Many public utilities are natural monopolies.

Blooms: Remember
Difficulty: 1 Easy
80. Which statement is true about monopolies?
A. They face the demand curve of the entire industry and provide the entire industry
supply.
B. They do not face the demand curve of the entire industry.
C. They do not provide the entire industry supply.
D. None of these statements are true about monopolies.

Blooms: Remember
81. Assume that at a given output a monopolist's marginal revenue is $25 and its marginal cost
is $18. If the monopolist increases output, then
A. price, marginal cost, and total profit will fall.

B. price will fall, marginal cost will rise, and total profit will rise.
C. price will rise, marginal cost will fall, and total profit will rise.
D. price, marginal cost, and total profit will rise.

Blooms: Analyze
22-126
Difficulty: 3 Hard
A. Some monopolists are imperfect competitors.

B. Most monopolists are imperfect competitors.
C. All monopolists are imperfect competitors.

Blooms: Remember
Difficulty: 1 Easy
83. More than 50 years ago Americans were warned to "beware of the military-industrial
complex" by
A. General Douglas MacArthur.

B. President Dwight D. Eisenhower.
C. Vice President Richard Nixon.
D. President John F. Kennedy.

Blooms: Remember
Difficulty: 1 Easy
84. Decision making in the corporate hierarchy is a lot more spread out in _______ while CEOs
are much better paid in _______.
A. the United States than in Japan; the United States than in Japan
B. Japan than in the United States; Japan than in the United States
C. the United States than in Japan; Japan than in the United States
D. Japan than in the United States; the United States than in Japan

Blooms: Remember
22-127
Difficulty: 3 Hard
85. The corporate hierarchy is the most complex and over managed in
A. Japan.
B. South Korea.
C. France.
D. United States

Blooms: Remember
Difficulty: 1 Easy
86. A monopolist may make a profit

C. in both the short and long run.
D. in neither the short nor long run.

Blooms: Remember
A. Since the monopolist is the only firm in the industry, its profit is calculated differently
from the way a perfect competitor would calculate profit.
B. The monopolist's demand curve and marginal revenue curve are the same line.
C. In the long run under monopoly, the most efficient output is the most profitable output.
D. A monopolist may lose money in the short-run.

Blooms: Understand
22-128
A. One basis for monopoly is control over an essential resource.

C. Economies of being established is the same as economies of scale.
D. General Motors is a monopoly.

Blooms: Remember
89. There are only two justifications for monopoly: ______________ and ______________.
A. economies of scale; natural monopolies

B. economies of scale; patents
C. natural monopolies; patents
D. imperfect competition; being established

Blooms: Remember
Difficulty: 1 Easy
90. A monopoly can be losing money in the ____________, but not in the ____________.
A. short run; short run

B. long run; long run
C. long run; short run
D. short run; long run

Blooms: Remember
22-129
91. Which statement is the most accurate?
A. The monopolist produces at the minimum point of its average total cost curve.
B. The monopolist breaks even in the long run.
C. The monopolist faces the entire industry demand curve.
D. Nearly all monopolists are very large firms.

Blooms: Remember
92.
This monopolist
A. is in the short run.

B. is in the long run.
C. may be in the short run or the long run.
AACSB: Analytic
Blooms: Apply
22-130
93.
This monopolist
C. may be making a profit or taking a loss.
D. Is breaking even.
AACSB: Analytic
Blooms: Apply
Difficulty: 1 Easy
94. As output rises, the monopolist's marginal revenue
A. remains identical to price.

B. stays constant.
C. declines as quickly as price.
D. declines more quickly than price.

Blooms: Understand
22-131
95. Which is the most accurate statement?
A. All monopolists are very large companies.

B. IBM is an example of a monopoly.
C. In order to maintain monopolies, there must be barriers to market entry.
D. Public utilities are examples of natural monopolies.

Blooms: Remember
96. One advantage of ______________ is being able to set the industry standard.
A. being established
B. legal barriers
C. economies of scale

Blooms: Remember
Difficulty: 1 Easy
A. The monopolist produces at an output level that is less than peak efficiency.
B. The monopolist can sell more output only by raising price.
C. The monopolist's demand and marginal revenue curves are identical.
D. Price is read off the marginal revenue curve.

Blooms: Remember
22-132
98. Which of the following is characteristic of a monopoly?
A. The absence of political power

B. Close substitute products
D. Operating at peak efficiency

Blooms: Remember
Difficulty: 1 Easy
99. All of the following are barriers to entry except
A. required scale for innovation.

B. government deregulation.
C. economies of scale.
D. economies of being established.
AACSB: Analytic
Blooms: Analyze
Difficulty: 1 Easy
100. Government licensing, patents, and government franchising are all examples of
B. economies of being established.
C. legal barriers to entry.
D. control of an essential resource.
AACSB: Analytic
Blooms: Analyze
Difficulty: 1 Easy
22-133
101. When marginal revenue is greater than marginal cost, the monopolist can increase its profit
or minimize its loss by
B. reducing output.
C. raising price.

Blooms: Remember
102.
If the firm is maximizing profits or minimizing losses, it is producing _____ units of output
and charging a price of ______.
A. 50 units; $10
B. 50 units; $18.40
C. 60 units; $12
D. 60 units; $16.80
AACSB: Analytic
Blooms: Apply
22-134
103.
The profit-maximizing firm will be earning a total revenue of about
A. $0.
B. $500.
C. $720.
D. $920.
AACSB: Analytic
Blooms: Apply
22-135
104.
If the firm is maximizing profits, total profit will be approximately
A. -$150.
B. $500.
C. $270.
D. $600.
AACSB: Analytic
Blooms: Apply
22-136
105.
A. 50 units
B. 60 units
C. 70 units
D. 75 units
AACSB: Analytic
Blooms: Apply
22-137
106.
A. $8
B. $12
C. $18
D. $22
AACSB: Analytic
Blooms: Apply
107. JoJo has a monopoly producing stringless yoyos. His company is called JoJo's Yoyos. As a
result of his monopoly position,
B. if he loses money in the short run, he will make money in the long run.
C. his average total costs will always be lower than the price he charges.

Blooms: Analyze
Difficulty: 1 Easy
22-138
108. The monopolist and the perfect competitor are similar in that
A. both operate at the minimum of the ATC curve.

B. both have close substitutes.
D. both produce at an output level where MC = MR.

Blooms: Remember
109. An obstacle that prohibits new firms from entering an industry defines
B. barriers to entry.
C. monopoly power.

Blooms: Remember
Difficulty: 1 Easy
22-139
110.
This monopolist is
A. in the short run making a profit.

B. in the short run taking a loss.
C. in the long run making a profit.
D. in the long run making a loss.
AACSB: Analytic
Blooms: Apply
22-140
111.
If the firm is maximizing profits or minimizing losses, it is producing ______ units of output
and charging a price of _______.
A. 280; $12.00
B. 280; $10.40
C. 200; $7.00
D. 200; $12.80
AACSB: Analytic
Blooms: Apply
22-141
112.
The profit-maximizing (loss-minimizing) firm will be earning a total revenue of

approximately
A. $1,400.
B. $2,560.
C. $3,200.
D. $3,560.
AACSB: Analytic
Blooms: Apply
22-142
113.
If the firm is maximizing profits (minimizing losses), the total profit or loss will be
approximately
A. $0.
B. $280.
C. -$1,440.
D. -$280.
AACSB: Analytic
Blooms: Apply
22-143
114.
If this firm were a perfect competitor, it would produce at _____ units of output and
charging a price of _______.
A. 200; $7.00.
B. 200; $12.80.
C. 280; $10.40.
D. 280; $12.00.
AACSB: Analytic
Blooms: Apply
115. Firms that had virtual monopolies, that is control over at least 80 percent of industry
production, because of control over an essential resource include all of the following
except
A. the DeBeers Diamond Company.

B. the International Nickel Company.
C. the Ford Motor Company.
D. the Standard Oil Company.

Blooms: Apply
22-144
A. Once a monopoly is set up, it is possible to dislodge it.

B. Some monopolists have control over an essential resource.
C. Several competing firms can provide cheaper service than a natural monopoly.
D. As a firm grows larger, at first it realizes economies of scale, but eventually
diseconomies of scale set in.

Blooms: Remember
117. The necessary condition(s) to realize economies of scale include
A. having the financial resources for the high capital costs.

B. having sufficient demand for the product.
C. both financial resources for the high capital costs and sufficient demand for the
product.

Blooms: Understand
22-145
118.
A. $20.
B. $18.
C. $16.
D. $14.
AACSB: Analytic
Blooms: Apply
119.
A. 1
B. 2
C. 3
D. 4
AACSB: Analytic
Blooms: Apply
Difficulty: 3 Hard
22-146
120.
A. $20.
B. $16.
C. $12.
D. $8.
AACSB: Analytic
Blooms: Apply
121.
A. 1.
B. 2.
C. 3.
D. 4.
AACSB: Analytic
Blooms: Apply
Difficulty: 3 Hard
22-147
122.
A. $20.
B. $16.
C. $12.
D. $4.
AACSB: Analytic
Blooms: Apply
123. The monopolist
A. is a perfect competitor.
B. has a horizontal demand curve.
C. produces where MC equals MR.

Blooms: Remember
124. Which of the following is false?
A. The monopolist and perfect competitor both produce where MC equals MR.
B. A monopoly is a firm that produces all the output in an industry.
C. If a monopolist is losing money, it is in the long run.
D. Price is read off the demand curve for the monopolist.
22-148
Blooms: Understand
125. Comparing the monopolist to the perfect competitor,
A. only the monopolist produces where MC equals MR.

B. both have downward-sloping demand curves.
C. only the perfect competitor will make an economic profit in the long run.
D. only the monopolist will make an economic profit in the long run.

Blooms: Remember
126. Which of the following is true?
A. Monopolists never lose money regardless of short-run or long-run.

B. Monopolies can be overcome by market forces or by government action.
C. The most efficient output is found where MC and MR cross.
D. The automobile industry is an example of a monopoly.

Blooms: Remember
Learning Objective: 22-05 List and discuss the limits to monopoly power.
127. The monopolist often charges its customers _______ prices and provides ________ service
than it would if it had competitors.
A. higher; better
B. higher; poorer
C. lower; better
D. lower; poorer

Blooms: Understand
Difficulty: 1 Easy
22-149
128. Which is the most accurate statement about Wal-Mart?
A. It proves the case that bigness is always bad.

B. It proves the case that bigness is always good.
C. Directly and indirectly it saves American consumers up to $100 billion a year.
D. It has used its monopoly power to force price increases.

Blooms: Remember
129. Which statement is true about Wal-Mart?
A. It pays most of its employees very well.

B. It has forced many supermarkets out of business.
C. Unlike its competitors, it charges its suppliers for shelf space.
D. It is the third largest retailer in the U.S.

Blooms: Remember
Difficulty: 1 Easy
130. How does the ratio of CEO pay in the U.S. compare with that ratio in Japan?
A. It is much lower.
B. It is slightly lower.
C. It is slightly higher.
D. It is much higher.

Blooms: Remember
Difficulty: 1 Easy
22-150
131. Which of the following at one time were monopolies because they were the first to enter
their field?
A. Xerox
B. IBM
C. Microsoft
D. All of the choices are true.

Blooms: Apply
Difficulty: 1 Easy
132. Which of the following is NOT a characteristic of a monopoly?
A. A great deal of political power

B. No close substitute products
D. Operating at the lowest point on the ATC curve

Blooms: Remember
Difficulty: 1 Easy
133. All of the following at one time had control over an essential resource that served as a
barrier to entry except
A. DeBeer's Diamond Company.

B. Standard Oil Company.
C. International Nickel Company of Canada.
D. IBM.

Blooms: Remember
Difficulty: 1 Easy
22-151
134. When marginal revenue is equal to marginal cost, the monopolist
A. should increase output to maximize profits.

B. will maximize profits or minimize losses.
C. will produce where price = ATC.

Blooms: Remember
Difficulty: 1 Easy
135.
If the firm is maximizing profits or minimizing losses, it is producing _____ units of output
and charging a price of ______.
A. 40; $10.00
B. 40; $18.00
C. 50; $13.00
D. 55; $14.00
AACSB: Analytic
Blooms: Apply
22-152
136.
The profit-maximizing firm will be earning total revenue of about
A. $720
B. $556.
C. $400.
D. $650.
AACSB: Analytic
Blooms: Apply
22-153
137.
A. -$160.
B. $160.
C. -$4.
D. $10.
AACSB: Analytic
Blooms: Apply
22-154
138.
A. 40 units
B. 50 units
C. 60 units
D. 70 units
AACSB: Analytic
Blooms: Apply
22-155
139.
A. $10.10
B. $12.80
C. $14.20
D. $15.90
AACSB: Analytic
Blooms: Apply
140. Matt has a monopoly producing glass baseball bats. His company is called Matt's Glass
Bats. As a result of his monopoly position
B. he will shatter his competition.
C. his average total costs will be lower than the price he charges.
D. he is not guaranteed of profit, because monopoly power alone will not lead to business
success.

Blooms: Analyze
Difficulty: 1 Easy
22-156
141. The monopolist and the perfect competitor are similar in that
A. both operate at peak efficiency.

B. both can make a profit in the long run.
D. both try to maximize profits.

Blooms: Remember
A. If the Metropolitan Opera had every opera star in the world under contract, it would be
considered a monopoly because it had control over an essential resource in its
business.
B. There is no way to distinguish between the long run and the short-run if a monopoly is
making a profit.
C. Until the early 1960s, the National Football League had control of an essential resource,
star football players, and was therefore able to maintain its monopoly status until the
American Football League started drafting college stars in the early 1960s.
D. All of the statements are true.

Blooms: Analyze
22-157
143.
A. $30.
B. $27.
C. $24.
D. $21.
AACSB: Analytic
Blooms: Apply
144.
A. 1
B. 2
C. 3
D. 4
AACSB: Analytic
Blooms: Apply
Difficulty: 3 Hard
22-158
145.
A. $30.
B. $24.
C. $21.
D. $12.
AACSB: Analytic
Blooms: Apply
146.
A. 1.
B. 2.
C. 3.
D. 4.
AACSB: Analytic
Blooms: Apply
Difficulty: 3 Hard
22-159
147.
A. $24.
B. $21.
C. $12.
D. $6.
AACSB: Analytic
Blooms: Apply
148. Which of the following is true?
A. Monopolists never lose money in the short-run or long-run.

B. Monopolies can only be overcome by government action.
C. Having a recognizable brand name is a barrier to entry that can preserve monopoly
power.
D. Patents are granted to investors who have control over an essential resource.

Blooms: Remember
Fill in the Blank Questions
22-160
149. A monopoly faces the entire ___________ schedule of an industry.
demand

Blooms: Remember
150. A monopolist is a single seller selling a(n) ___________ good or service.
unique (or single)

Blooms: Remember
Difficulty: 1 Easy
151. Compared to the perfect competitor, the monopolist is ______ efficient and charges a
______ price.
less; higher

Blooms: Remember
152. In the United States the CEOs of our largest companies earn over _____ times the earnings
of their average employee.
300 (or 300 - 400)

Blooms: Remember
Difficulty: 3 Hard
22-161
153. Control of an essential resource and the economies of being established are _________ that
protect monopolies.
barriers to entry

Blooms: Remember
154. The profit-maximizing monopolist always selects that output at which ___________ is equal
to __________.
MR; MC

Blooms: Remember
Difficulty: 1 Easy
155. Large firms can take advantage of economies of ___________.
scale

Blooms: Remember
Difficulty: 1 Easy
156. Rutgers University granted Coca-Cola a ___________ to sell its beverages on campus.
franchise; contract; monopoly
AACSB: Analytic
Blooms: Analyze
157. In order to sell additional units the monopolist must ___________ the price.
lower
22-162
Blooms: Remember
Difficulty: 1 Easy
158. The monopolist faces the demand curve of ___________.
the industry

Blooms: Remember
Difficulty: 1 Easy
159. Legal barriers to entry into an industry include (1) _______ (2) _______ and (3) _______.
patents; licenses; franchises
AACSB: Analytic
Blooms: Remember
Difficulty: 3 Hard
160. The market will limit monopoly power basically through the development of _________.
substitutes

Blooms: Remember
Learning Objective: 22-05 List and discuss the limits to monopoly power.
161. A _________ monopoly is regulated and can provide cheaper service than could several
competing firms.
natural

Blooms: Remember
22-163
162. Two objectives of the regulation of natural monopolies would be lower ______ and higher
_______.
price; output

Blooms: Remember
163. One advantage of ____________ is being able to set the industry standard.
being established

Blooms: Remember
Difficulty: 1 Easy
164. President Eisenhower warned us to "Beware of the ___________."
military-industrial complex

Blooms: Remember
165. Large firms are able to lower their costs by taking advantage of ___________.
economies of scale

Blooms: Understand
166. When firms get too big, ___________ set in.
diseconomies of scale

Blooms: Understand
22-164
167. Today, due to technological innovations, the rationale for natural monopoly for the electric
power and local telephone industries is _________.
disappearing

Blooms: Remember
168. New ________ has often undermined natural monopolies, such as in the case of
competition for local telephone service in some states.
technology

Blooms: Remember
169. An individual with a new idea for a product, such as someone who invents a new toy, will
often take their idea to large manufacturers who have the wherewithal to produce and
market their ideas. This barrier to entry is called _______________________.
required scale for innovation

Blooms: Apply
Difficulty: 1 Easy
170. Considering that there are over a half million doctors in the United States, it is still possible
for a doctor to have a __________ monopoly in her or his neighborhood.
local

Blooms: Apply
Difficulty: 1 Easy
22-165
171. The perfect competitor's demand and marginal revenue curves ______ identical; the
monopolist's demand and marginal revenue curves _______ identical.
are; are not

Blooms: Remember
Difficulty: 1 Easy
172. Monopoly power ________ guarantee a profit for a producer because ________ may be too
low for the product.
does not; demand

Blooms: Remember
173. In the 1950s, the National Football League (NFL) had a virtual monopoly because
_____________.
it had control over an essential resource

Blooms: Apply
174. The QWERTY keyboard is an example of a company __________________.
setting the industry standard

Blooms: Remember
22-166
175. The CEO compensation as a multiple of average employee compensation for 2000 in Japan
was _______ times.
10

Blooms: Remember
176. In 1960, CEO compensation as a multiple of average employee compensation in the United
States was about _________ times.
40 to 50

Blooms: Remember
177. Wal-Mart's full-time employees' average hourly wages that are about ____% lower than
those paid by competitors.
30

Blooms: Remember
Difficulty: 3 Hard
178. Wal-Mart imports $_______ billion a year of microwave ovens, TV's, DVD players, toys,
shoes apparel and other goods from _______.
20; China

Blooms: Remember
22-167
Short Answer Questions
179.
Fill in the table.
AACSB: Analytic
Blooms: Apply
22-168
180.
curves.
AACSB: Analytic
Blooms: Apply
22-169
181.
Total Profit = (price - ATC) × output

= ($13 - $11.95) × 5
= $1.05 × 5
= $5.25
AACSB: Analytic
Blooms: Apply
182.
5.7
AACSB: Analytic
Blooms: Apply
22-170
183.
$11.75
AACSB: Analytic
Blooms: Apply
184.
Fill in the table.
AACSB: Analytic
Blooms: Apply
22-171
185.
curves.
AACSB: Analytic
Blooms: Apply
22-172
186.
$25
AACSB: Analytic
Blooms: Apply
Difficulty: 3 Hard
187.
5.5 units
AACSB: Analytic
Blooms: Apply
Difficulty: 3 Hard
22-173
188.
$27.90
AACSB: Analytic
Blooms: Apply
Difficulty: 3 Hard
22-174
189.
Assume the firm is a profit-maximizing monopoly. Using the data in the graph, calculate the
firm's total profit.
Total profit = (price - ATC) × output

= ($16.00 - $8.00) × 140
= $8.00 × 140
= $1,120.00
AACSB: Analytic
Blooms: Apply
22-175
190.
110
AACSB: Analytic
Blooms: Apply
22-176
191.
$7.00
AACSB: Analytic
Blooms: Apply
22-177
192.
Assume the firm is a profit-maximizing/loss-minimizing monopoly. Using the data in the

graph above, calculate the firm's total profit or loss.

= ($120 - $150) × 1,100
= -$30 × 1,100
= -$33,000
AACSB: Analytic
Blooms: Apply
22-178
193.
$130
AACSB: Analytic
Blooms: Apply
22-179
194.
1500
AACSB: Analytic
Blooms: Apply
22-180
195.
Using the data in the graph above, calculate the firm's total profit.

= ($53.80 - $42.30) × 395
= $11.50 × 395
= $4,542.50
AACSB: Analytic
Blooms: Apply
22-181
196.
$42
AACSB: Analytic
Blooms: Apply
22-182
197.
345
AACSB: Analytic
Blooms: Apply
22-183
198. (a) Fill in table. (b) Using your own piece of graph paper, draw a graph of the firm's
demand, marginal revenue, marginal cost, and average total cost curves. (c) Calculate the
firm's total profit. (d) If the firm operates at optimum efficiency, how much will its output
be? (e) If the firm were a perfect competitor, how much will its price be in the long run?
(a)
(b)
(c) There are two ways to calculate total profit:
22-184
(1) Total Profit = Total Revenue - Total Cost
= $90 - $53
= $37
(2) Total Profit = (Price - ATC) × Output
= ($18 - $10.60) × 5
= $7.40 × 5
= $37
(d) 5.05; (e) $10.58
AACSB: Analytic
Blooms: Apply
22-185
199. (a) Using the data from graph, calculate the firm's total profit. (b) If the firm operates at
(a) Total Profit = (Price - ATC) × Output

= ($168 - $147) × 11.8
= $20 × 11.8
= $247.80
(b) 11.1; (c) $146.50
AACSB: Analytic
Blooms: Apply
22-186
200. (a) Using the data from graph, calculate the firm's total profit. (b) If the firm operates at
(a) Total Profit = (Price - ATC) × Output

= ($111.25 - $98.25) × 700
= $13 × 700
= $9,100
(b) 625; (c) $97.50
AACSB: Analytic
Blooms: Apply
22-187
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a little—and it took away my breath."
He knelt there, gazing upon her with an intensity which she felt she
could hardly bear. In the stillness each of them, in fancy, was back in the
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"I shall be all right—I'm quite, perfectly strong," she eagerly assured
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It seemed that he was unable to speak. To hide his emotion he turned

from her, and began to collect the coins and put them back in the pretty
silver-mounted purse.
"I suppose," he asked presently, speaking with his back to her, "that you
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"I remember there were four—no, five—pieces of gold, and about a

pound's worth of silver."
"Then I think I have got most of it." Still kneeling with his back to her,
he opened the central division of the purse to put the gold inside it.
Something lay there, safely shut in. It was a slender silver chain with half a
broken sixpence attached to it by a ring.
Feelings such as he could not name shook the young man from head to
foot. In his male selfishness, or not realizing what the girl was suffering, he
turned round upon her, swift and keen, an angry glitter in his eyes because
of the tears in his heart.
"I had better throw this away, had I not?" said he.
"Throw what away?" faltered Rona in surprise, and then in an instant

realized what he had found. And again she blushed—blushed furiously—
the stain of her former emotion having hardly faded from her cheeks. She
turned away her head to hide the mingled feeling in her face. She was
desperately hurt, she was ashamed, she was indignant ... she was something
else too. What was it?
She knew not. There was no name for the strange force which shook
her, as she managed to reply.
"Certainly not. Put it back where you found it."
There was a suggestion of his having pried unwarrantably into her

purse's secret compartment.
"Let me give it to one of the children in the village," he said, in a low

voice, urgently. "As long as you keep it you are acting a lie; you are
acknowledging my claim. If I throw it away you are free."
She managed to speak at last. "I do acknowledge your claim. It is you

who have renounced me. Denzil said there could be nothing binding
between us until you and he had met—face to face."
She spoke with difficulty, with anguish, with a curious intensity. "It is
you who will not listen," she said, "who have settled that we are to be ... as
we are. I am perfectly miserable."
She stopped abruptly. If she died for it, Felix should not see her cry.
He knelt before her, the broken coin in his hand. "I am a brute," he said.
"Oh, what a brute I am! And you are in pain! Forgive me!"
He hastily replaced the little token, fastened her purse, and handed it to
her.
"Let me help you up," he said, stooping over her, with a voice most
different from the hard, flippant tones he had used hitherto.
She looked up bravely. "I am——" she began, but broke off. She was
not feeling well enough to have things out with him. "Yes, I fear I must hold
on to you," she admitted. She grasped his arm with both hands, and so drew
herself slowly to her feet.
"I can walk," she said firmly, "if I may hold on tight."
"As tight as you like," he replied. "Shall I—might I—carry you?"

"I don't think I could bear it," she replied, and then, seeing a double
meaning in her own words, "I mean"—hastily—"that I have hurt myself,
and could not bear to be touched."
"I would touch you gently."
"Yes," she answered, low. "I know you would. I remember that you did.
I remember—very well."
He answered absently, as they moved slowly along together. "How it all

comes back!" He stopped, gazing round. "What is it, just here, that brings
the wharf and the Thames, and everything, flashing back like a snap-shot on
my mind?"
They were standing just beside a rick of newly-cut steppe grass. "The
scent of the hay," she whispered.
With a touch of her hand she urged him on. He said no more. No further
word passed his lips until they reached the rest-house.
CHAPTER XXVII
TWO IN THE CAMPAGNA

All alone, thou and I, in the desert,
In the land all forgotten of God.
—HENRY KINGSLEY.
Aunt Bee had insisted upon supplying Veronica, when she started upon
her perilous enterprise in the wilderness, with all kinds of medicaments; and
she was able to assure Felix that she had Pommade Divine to apply to her
bruises. He made her bed up for her with an ingenious arrangement of
cushions, and, when he had hung a lamp up inside, under the tilt, and
lowered a curtain between them, she had a little private chamber to herself,
where she could safely investigate the extent of her hurt.
There was a bruise and some swelling, and no doubt the pain had been
sharper on account of the mischief done two years ago in her far more
perilous fall. But as far as she could tell, it was merely external; and when
she was snugly curled up among her pillows it gave her little discomfort.
Her ensuing wakefulness was not due to pain, but to a disturbance of
feeling which took long to subside to a point which would allow of her
sleeping.
The fine air, however, came to her help, and now that she was used to it,
the motion of the carriage also lulled her. She slept, and soundly, until past
seven o'clock next morning.
On this day the weather, which had been fine from the first, became
absolutely perfect. From sunrise to sunset no cloud appeared upon the face
of the blue heavens; yet it was not too sultry. A tiny zephyr blew with
seductive sweetness, and the late heavy rain prevented there being too much
dust.
It was a day charged with oppressive silence between the traveling pair.
Until last night Felix had been the one to hold off—Rona had been wistfully
anxious to be friends. But now her coldness redoubled his own. She was as
reluctant to speak as he, and what she said was more frozen. In truth, her
own thoughts, her own emotions, were a greater puzzle to herself than they
could be to anyone else.
She hardly dared look at Felix, except when she felt sure that his back
was turned. But once, while they were eating their breakfast, she surprised
his eyes upon her, and with an intentness which made her positively faint.
She shuddered, with a kind of agony which was half bliss. Had she known
it, her beauty that radiant day was enough to make a strong man weak.
The warm color of her hair, the rose stain upon her cheeks, and the new,
strange light within her eyes, made her perilously attractive. They were
young together, in so fair a world! Ah, if the barrier might but be swept
away, so that they could talk heart to heart!
His questions as to her health, and whether her injury had prevented her
sleeping, were miserably constrained, and her replies but just escaped the
charge of rudeness.
They ate, almost in silence, and as soon as they started again, he lay
down to sleep, upon the couch where she had rested all night, and which
was still fragrant with a memory of her, in some hardly perceptible
perfume.
Again it was long, very long, before the young man's eyes closed; and
then he fell so soundly asleep, that he exceeded his usual six hours, and it
was past four o'clock when at last he awoke.
That evening they came to a forest. It is the only one upon the route;
and it makes a grateful change from the endless waste of treeless steppe.
Felix had been awake for the past hour, seated with his chin propped
upon his hands, gazing before him with white face and glittering eyes.
It was now within two hours of sunset, and the rose-colored rays from
the west burnt in among the foliage of the graceful birches, till they seemed
like trees of silver and gold, seen in vision. One of the horses of their troika
had been going badly for some time; and when they were in among the
trees the driver turned to Felix and said something to him.
Felix turned to Rona, who, since he awoke, had been deeply immersed
in her book, and said, in a manner which suggested an apology for
addressing her, "The man thinks that unless we rest the horse a bit, it will
not make the next stage. Do you mind stopping for an hour in this wood?
We could eat our supper while we wait."
"Of course not. It is lovely," she said.
He gave an order, they stopped, and he helped her down—with great

care to avoid shaking her. Then he turned to the driver, and gave his help in
unspanning and rubbing down the ailing horse. Rona stood a while
watching, then, turning, roamed away a little distance into the fairy wood.
It was indeed like an enchanted land. The Siberian stag-horn moss

curled and furled itself about the roots of delicate fern, and the slanting sun-
rays gilded it with effulgence indescribable. She sat down upon the warm,
fragrant couch it made. The passion of sadness which too much beauty
brings mixed with the feelings in her distracted heart. She had played both
brothers false. She had said she loved Denzil—and she did not. She had
said she did not love Felix—and she did!—Ah, she did!
She could not stop to ask why. She knew that it was so. She had not
loved him, but now she did—now she knew what love was.
She felt herself near to breaking down, and, remembering the way in
which she had given way and wept on the day of the picnic at Newark
Abbey ruins, she fought to keep herself from tears.
But the long strain of the journey, the shock of her accident the evening
before, and the strange influence of the desert place, all combined to
overcome her control. She was obliged to weep, the tears flooded her eyes
and streamed down her cheeks, and for a while there was nothing for it but
to give way.
Her surrender was short—a few minutes only; but her little
handkerchief was soaked through and through. The knowledge that she
must very soon go back and face Felix with a composed aspect, availed to
call her to order speedily.
Just as her sobs began to die down, she heard his distant voice calling
her through the wood.
It sounded very far away; she must have strayed farther from the path
than she had been aware of. She must reply, or Felix would continue to
advance, and find her with those tell-tale stains upon her face. She rose to
her feet and cried back an answer—"Coming!"
Then she looked round in distress. Close to where she had lain a tiny
brook rippled through the wood. She knelt down by it, held her
handkerchief in it, and bathed her hot eyes repeatedly in its comforting
coolness. Then she washed her hands also, passed her pocket comb through
her locks, and slowly took her way back to the road she had left.
There was the povosska, and the driver munching at a plateful of

supper. There was the cloth spread beneath a huge oak tree—but no Felix.
However, as she appeared, he dashed out from a thicket, disturbance plainly
written on his face. "Oh, there you are! I was afraid you had been too far,"
he said.
She shook her head, smiling, and they sat down to eat.
She tried valiantly to swallow the food he had so carefully laid out, but
her throat seemed half closed, with a great lump which prevented appetite.
He watched her. He saw the heavy lids, hardly able to lift themselves above
the tear-dimmed eyes. He knew that she must have been weeping in
solitude, unconsoled. He was pierced with the thought of his own
selfishness. Here she was, all alone. The man she loved—the man to whom
she journeyed through such difficulties—was ill. Her heart was full of
anxiety; he had filled it, too, with self-reproach. He loathed himself. What
had she done that he could fairly resent? Was it the action of anyone but a
mad boy to ask a girl of sixteen, who had only seen him two or three times,
to remain faithful to his memory? And if there was one thing more certain
than another, it was that Denzil was blameless. He had never known the girl
to be pledged in any way. He had not known who Felix was; he had
believed him her brother. He, Felix, was responsible for the false position in
which these two had been placed; he had invented the brother and sister
fiction, and for his own selfish reasons. Yet, in his pride and revengeful
anger, he was making her suffer desperately—he knew it. But he would beg
her to forgive him.
As soon as they had finished supper—but she hardly ate anything—he

said, "Let us stroll in among these trees. It is a relief to move one's limbs
after the confinement of that old povosska."
Rona wavered. It were better for her not to walk with this man, not to be
on terms with him. But something in her drove her on—made it impossible
to refuse. She assented mutely. They passed together in among the silver
trunks. The sun was dropping low. The clear call of a flight of herons came
to them—and they saw the birds wheeling in the faint blue air above them.
They reached a pool, starred with water strawberry, and, with a common
impulse, they stood still upon its verge.
"Rona!" said the young man, hoarsely.
It was the first time he had uttered her name. The sound of his voice
was low and strained. It raised feelings inexplicable in the girl's confused
mind and newly-awakened heart.
She had an impulse that to listen would be dangerous; that she ought to
avoid anything like a confidence from him. Yet a power much stronger than
she held her there mute and waiting—waiting for the words from his lips.
She did not speak; her eyes were raised for a moment to his, full of such
unhappiness as he could hardly bear to see. But he knew that the look
conveyed permission to continue. "I want," he said, under his breath, "to tell
you I am ashamed of myself. I have been behaving like an unforgiving
brute. I know I have made you unhappy; and you have enough to bear
without that. Forgive me, will you? I'm—I'm beastly sorry."
She made no reply; she was wholly unable to speak.
"Of course," he began again, "I can see that you have been crying. And I
can't stand it. So let us have it out, shall we? I know I was wrong, that time,
when I clutched at your love, like a starving man at a loaf of bread. I had no
right. It was unjustifiable. But like all men, I only thought of myself. I did
want you so."
There was silence, except for the chirp of a sedge-warbler.
"And now," said Rona, half choking—"and now—you don't?"
He turned towards her in sharp surprise. "What do you mean?" he said.

"You are engaged to Denzil." He stood there looking at her, until she
thought his eyes would burn her. "How can I have any claim, when you
have decided in his favor?"
She turned away, for her face was quivering. "I could not bear it," she
faltered lamely, "unless I felt sure you would be—happy."
"Thank you," said Felix, ironically. "If I am not I can always go back,
you know, to the point from whence you and I started."
In the pang which darted through her at this allusion she turned from
him, and, in fear of a breakdown, leant against a birch tree trunk to hide her
face. "Oh! Felix!" she sobbed, "Felix—don't!"
He was very white. It tore his heart to see her grief. The faint perfume
of her handkerchief or her clothes came to him on the evening air, as to-day
it had bewildered his senses when he lay in the povosska. She was saying
something—something incredible—among her sobs. "You should not have
written; you should have come to me. How could I tell until I had seen you?
I did not know."
He caught his breath. "What are you saying?" he asked, huskily.
Something in his voice warned her. She checked her tears with a great
effort. "Help me!" she craved. "Help me to be true to one of you! I have
been false to you; but Denzil is different! He has loved me so long—he has
done so much for me. Oh, I know what you did—everything! But, after all,
we barely knew each other.... While I feel as if I belong to him and Aunt
Bee! They have been home, love, everything ... you see, I could not betray
him after all he has been through!"
He felt the blood rush to his forehead. "Are you asking me to stand on
one side, and owning in the same breath that you love me best?" he said,
through his teeth.
She held her breath. This was putting the thing plainly. Yet it was the
truth. It made her angry to hear it. It goaded her on to fight yet.
"You only thought you loved me," she brought out, vehemently. "You
had not seen me, you did not know me ... and there is a Russian girl—Nadia
Stepanovna...."
He took her by the shoulders, gently, but with firmness, turning her
round so as to face him; still she held her handkerchief to her eyes. "Rona,
do you really believe that?"
She took away the handkerchief, and lifted her wet lashes; and she felt
as though her soul were drowning in the mysterious compulsion of his look.
For a space all strength left her. She was drained of power. This young man
was her master; his claim could not be denied....
Still holding her with one hand, he slipped the other down inside his
collar, and drew out a chain, with his half sixpence strung upon it. "Look
here," he said. "Since I first saw you there has been no other thought in
me."
"Oh!" the words seemed forced from her. "Oh, if I had been great
enough to be loyal too!"
"No, no," he said, hastily, "that was my part. I to be loyal, the queen to
reward or not, as she would. But if she will"—he held both her hands—"if
she will, then nobody on earth—not Denzil, nor any other man..."
He was drawing her nearer, and how sweet, as well as how easy, to yield
to that pressure, to feel the clasp of his arms about her, to rest in the
knowledge that love had come to her indeed! But that must not be; and she
collected all her strength to tell him so.
"David!" Somehow that name came to her lips when she would appeal
to him. "Have pity, wait—Oh, I must say something to you...."
He saw, by the prayer in her eyes, by the urgency of her voice, that she
was in earnest, and he held himself in check with an effort.
"Help me," she faltered, "to be faithful to my word. I did promise—just

before he started for Siberia, I did tell him I would be—his wife. You saved
me once ... save me again! This time from myself. I am so tossed about, I
can hardly see what I ought to do. But I am not free—you see that, don't
you? I am bound; I—we—we ought not to do this. Have pity on me, be
good to me, be my brother till we reach our journey's end!"
He drew a long breath, and passed a shaking hand over his knocking
temples. But she had, in her desperate fear, touched the right note with him.
She was in his power. For two more days they must fare together; and she
appealed to him for forbearance. To that appeal he could not turn deaf ears.
"It's a puzzle," he said, heavily; "and I don't see the rights of it. But
don't be afraid of me, Rona. I—I am to be trusted. I would give my life for
you. Make yourself easy; I promise not to distress you."
And as she lifted to him her quivering face, her suffused eyes, and her
mouth just touched by a smile of complete trust, he knew that he was taking
the very course that would make her love him more than ever.
"I must just say this," he muttered. "You ought not to marry him until he
—knows."
She winced; but she stood firm.
"I shall tell him—as soon as I can," she replied, tremulously.
CHAPTER XXVIII
THE PRIMROSE PATH

Ye are not bound! The soul of things is sweet,
The Heart of being is celestial rest,
Stronger than woe is will: that which was good
Doth pass to better—best.
—EDWIN ARNOLD.
The shadows of that same exquisite evening fell very softly across the
walled-in pleasance at Nicolashof. Dinner was over, and the Governor sat
upon the terrace with his cigarette, and Vronsky as his companion. From
within the drawing-room, which was but faintly lighted, came the sound of
Nadia's singing. Miss Forester played, and the two men—Denzil Vanston
within, and Vronsky without—listened spellbound to the magic of that
mysteriously appealing voice.
The evening was untroubled even by a breath of wind. The tops of the
forest trees, visible beyond the garden bowers, were motionless in the warm
air. The hues of the sky were such as must have been seen to be imagined.
Denzil sat with a kind of helplessness in his whole attitude, his eyes
devouring the girl who sang to him.
He had been in a pitiable condition when the kindness of Stepan

Stepanovitch had carried him off to the luxurious simplicity of Nicolashof,
and the unforeseen seductions of the life there. Fresh from his lonely
journey, his heart full of sensations to which he had till then been a stranger,
torn with anxiety respecting the fate of his brother, and uncertain as to the
extent of the danger with which the reappearance of her uncle menaced
Rona—he had been in dire need of sympathy.
He found himself received with a cordiality for whose charm he had

been utterly unprepared. The change from foreign ways, discomfort,
loneliness, and sickness, to the delightful atmosphere of sympathy, and the
perfect comfort of a well-regulated household, modeled upon the English
standard, was astounding, and its effects much greater than could have been
foreseen.
In truth, his own frame of mind at this crisis of his history was a sealed
mystery to himself.
Rona had touched in him springs of feeling of a kind different from
anything in his previous experience. She had—all unconsciously—called
these sensations into being; but she had not satisfied them. This last fact, so
all-important, his intelligence did not recognize, though his physical instinct
knew it well enough.
To his passion there had been, in Veronica Leigh, no response. No pulse

in her had thrilled in concert with his own. This he felt, without knowing it.
He had quitted England with a fierce desire unsatisfied.
And, all unknown to both of them, Nadia was bestowing what Rona had
withheld.
This girl was very woman to her finger-tips. No intellectual education

had trained her in the ways that Rona had gone. She lived in a world of
emotions, with no actual knowledge of life.
The dream of her youth had always been to be English. She loved Miss
Forester better than anyone else in the world. She absorbed the literature,
the customs, of her beloved land. She read English novels, and longed to
come in contact with an English gentleman.
It was not surprising that, when she met Denzil, she should idealize him.
In his quiet manner, his pleasant appearance, his outwardly calm

bearing, she thought she perceived all the greatness, the depth, of the
English character. She saw him through a haze of rosy dreams, just as he
saw her in a circle of mystic light. Each was to the other a perfectly new
type, with all the fascination of the unknown.
She had fancied herself in love with Felix, and had been thrown back
upon herself in much the same manner as Denzil.
The feeling with which she inspired the bewildered young man was
entirely mutual. Each to the other was the central figure of a romance in real
life.
Everything in the circumstances of their association conspired to make
the dream perfect. They were isolated from all the world. Each formed for
the other the paramount interest of the moment.
Nadia differed essentially from the girls he knew in England. Her

physical beauty appealed to his own thin blood with a force that shook him.
The witchery of her voice, the splendor of her eyes, the atmosphere of
mystery which seemed to radiate from her, acted like a narcotic upon his
enfeebled system. For days past he had lived, steeped in a dream whose
awakening he simply refused to picture. Just as Felix and Rona, in the
forest, were longing that the journey might never end, so the blameless
Denzil, who had lived so many years in the prosaic groove of a country
gentleman of quiet habits and few tastes, was positively yearning that he
might remain forever, slowly convalescing within the magic walls of that
romantic inclosure where the outside world could be so completely
forgotten that it might never have existed.
The notion that Miss Rawson and Rona, the two links with his own
steady-going everyday life, were traveling to him, and must arrive in two or
three days, was a notion which he put from him. He could not—would not
think. He was steeped to the lips in a fairy tale, which he would read on to
the end. He did not say this, even in his own heart. He was conscious of
nothing of the kind. He drifted, like one floating out upon a warm current,
carrying him away, whither he neither knew nor cared.
Outside upon the terrace the Governor took his cigar from his mouth,
and said to Vronsky, "Your Felix assures me that in England those whom he
calls the county gentlefolk are equal in their own eyes with us of the
aristocracy in Russia."
"I believe that is true," said Vronsky, with a huge sigh.
After some minutes' musing:
"Life in Russia is uncertain for us of the upper classes," pursued Stepan

Stepanovitch, who seemed to be thinking aloud. "I have an idea that my
child would be happier in a country so secure as your England. If she were
to decide to love an Englishman—I am not sure that I should say no to her.
He has means, this Vanston—hein?"
"He is not what they in England call very rich," said Vronsky. "But he
has enough to be very comfortable, and will have more when his aunt dies,
I believe." He was glad that Nadia's father could not see his face as he
answered these torturing questions. "But I am not sure that this young man's
affections are free," he said, making his voice sound calm with great
difficulty. "I understand from Felix that his brother has cut him out in the
love of the young girl to whom he, Felix, was betrothed."
"So?" said the Governor, in astonishment. "He does not seem to me like
a man who would do such things."
"There was some misunderstanding. What do I know?" said Vronsky,

wearily.
The Governor moved slightly upon his chair, so as to look into the
drawing-room. Nadia had left the piano, and was sitting upon a sofa, very
much in the shadow. Denzil had left his big chair, and was seated beside
her.
Her father lowered his voice almost to a whisper. "I have never seen her
so with anyone else," he confided. "He is unlike any man she has met—a
different type, as you say. She does not care for the men of her own country.
By St. Isaac! it would not be a bad thing. It would not do to frighten her; but
of course I realize that if I am proscribed, I shall be taken off sooner or later.
And I tell you the truth, her brothers are extravagant. I shall not have much
power to leave her well dowered, when my pay from this province ceases.
You think her attractive, Vronsky, my friend—hein?"
The tears were running down Vronsky's face in the darkness as he

answered, "Yes, I do."
"Well," said the Governor, "then I do not interfere. As to the other girl,
this can, perhaps, be arranged. In England that is so, is it not? They do
break betrothals, and think no shame of those that do so. Felix should be
back in a few days now. He cannot be far behind the ladies upon the road."
Vronsky drew a deep breath. His heart was full of rage. His Felix had
been jilted for this little straw puppet—this man who did not know his own
mind for a month together! He thought of the long months during which
Felix had been exposed to the charms of Nadia. During all that time his
allegiance to the girl in England had never wavered. And now this little
sneak came, having gained the one woman, and succumbed without a
struggle to the charm of the other.
The two upon the sofa rose and passed together out of the room, and
away into the starlit garden.
"I hope," said the Governor, "that you will not be hurt if I express my
strong desire that the two English ladies should be my guests here. I do not
mean to disparage your own well-known hospitality."
Vronsky growled. "He had no right to send for them—what are English
ladies to do here at the world's end?" he muttered. "He is as selfish as
false"—but the final words were in his beard, and the Governor did not
catch them.
"He was, however, very ill for a few days," he remarked.
"If he had died it would have simplified matters," said Vronsky, brutally.
The Governor looked slightly hurt. "You do not then think highly of
him?"
"I? Oh, I know very little of him. It was plucky of him to come out here
after his brother. He was quite sure, when he arrived, that his brother was
dead. But he wanted to see the corpse, actually."
This speech, in the ears of the man who heard it, sounded like absolute
nonsense, but Vronsky had been nervy and uncertain in his temper ever
since Felix disappeared, and he was pardoned.
"Ah, well," said Stepan Stepanovitch. "A few days more will decide all.
But it would please me well that Nadia Stepanovna should be the wife of an
Englishman, if he is a man of position."
CHAPTER XXIX
A DOUBLE DILEMMA
—Blame or praise
What was the use then? Time would tell,
And the end declare what man for you,
What woman for me was the choice of God.
—ROBERT BROWNING.
In the bright sunshine the povosska sped on towards Savlinsky.
They sat together, the man and the girl, staring out upon a formless
future.
They no longer read. But neither did they talk. What could be said
between them?
Minute after minute, mile after mile. The road stretched before and
behind, mocking them with a false suggestion of being endless. If but it
were! If but it were! If this could go on forever—this closeness of
undisturbed companionship!
Rona felt a kind of resentment against that cruelty of fate which seems
to blind a young girl to her own feelings until it is too late. She recalled her
sober fondness for Denzil, her eager clutching at any arrangement which
would secure to her the continuance of her happy life. And the shock of
repulsion which had seized her when some new feeling leaped to life in her
at the touch of the man's lips in leave-taking, and she knew that she not only
did not share his feeling, but that it excited in her the most complete
distaste.
While, for this other, whom she had denied, whom she had forgotten,
whom she had feared ... the intoxication of joy which she experienced in the
mere fact of being there, side by side with him, would break in upon all her
rueful thoughts, and shake her with a great emotion that had no resemblance
to anything she had previously known. Scorning herself, she remembered
that she had actually flinched from the idea of going out to Siberia, to
banishment, to live with him. She gazed around, at the boundless, free,
rolling country, that seemed but just wide enough to contain her love, her
joy in his company. Banishment! Life here with him would be the garden of
Eden!
Yet she had bound herself hand and foot. She had appealed to Denzil to
save her from Felix. It was done, and to this she must stand, if he wished it.
There must be no drawing back. Her very soul sickened at the thought of
the pain she must inflict, did she confess to him that she did not love him,
and never could love him, but that she could and did love another.
No, she could not, must not, do it. What, after all, was love? A mere
emotion. She would go back with Denzil to England, and never see Felix
again. The profound trouble which she now experienced would grow to be
only a memory. Surely there lay the path of her duty. Perhaps, after all, it
had been better had her leap for freedom landed her lifeless upon the
railway lines at Deptford.
The reflections of Felix were even more somber. He knew Denzil. He

knew him well, in and out. He felt sure that he would not release Rona.
The reasons for his refusal would be of the highest character. He would
be quite sure that no good girl could ever be happy with a convicted felon,
with a man with such a record as his unfortunate brother. He would deem
her fancy for Felix a passing phase, and would carry her off, working upon
her gratitude, using the claims he had upon her—and marry her to himself
as soon as it could be done with decency, in order the sooner to efface the
image of Felix from her heart.
And, after all, would not this be best? He looked longingly upon the
grave profile of the girl beside him. He noted the fastidious curve of her
mouth, the depth of expression in her eyes. Was it for him to imprison such
a creature in Siberia?
What a mistress she would make for Normansgrave!
No. There was no chance of Denzil's giving her back. Her life was
fixed. She was not his, she never had been, never would be. He had only
these few minutes in which to realize her, these few minutes of agony and
futile regret.
Was it not all absurd? Suddenly his heart rose up within him and
shouted, and his passion mocked his sense of right and justice. Why bring
her back to the man who would part them forever? She preferred him—he
knew it. Why not tell the driver to turn his horses' heads, and dash away
together into the unknown?
He felt the blood rush to his head, his heart began to beat with great
slow thumps.
How much money had he? Enough to keep them for some weeks. He
could communicate secretly with Vronsky, and tell him where they were,
and as soon as Denzil had departed bring her back to Savlinsky.
That was surely the true way to cut the knot. Let him have courage, and
take what was his own.
He breathed fast and with difficulty.
"Rona!" he said, in a whisper.
She started from her own sad, absorbed meditations. She turned her
eyes to him, with a dumb appeal in them for mercy. There was something
so sorrowful in the look that it acted like fire upon his senses.
"I can't—I can't!" he said, under his breath. "It's too hard. I can't let you
go. I shall tell him to turn the horses, and we will go away—together."
She looked at him, all the blood in her body rushing to her heart. They
were sitting side by side, but not close together. Now her body seemed to
lean towards him; her eyes were alight, her lips parted slightly. But a look
of mortal fear clouded the eagerness of her sweet face. She raised her hands
with a pitiful gesture of entreaty.
"Oh, hush, don't! No, Felix, no, I trust you. You can't——"
She broke off with a gulping sob, snatching her handkerchief to her
mouth lest the driver should hear, and turn his keen black eyes upon her
weakness and misery. But the driver was gazing along the road ahead, his
eyes shaded. Something had attracted his attention. Felix was too absorbed
to notice. He did not speak, but he leant towards her, one clenched hand
upon the seat between them, and relentlessly held her eyes with his own.
His teeth were set. He knew she could not hold out for long if he set his will
upon it.
"You said," she voiced, almost inaudibly—"you said—that I might trust

you."
"Yes," he answered, in the same tone. "Will you? Trust me altogether?

For always?"
The driver dropped his hand, and, making a violent motion along the
road, pointed, shouting something in an excited way.
The movement, the unexpected shout, snapped the hypnotizing

influence. Rona, startled, uttered a low cry. Felix gazed ahead as the driver
bade him, and saw a mounted man approaching.
Even at that distance he was able to recognize Vronsky's ungraceful

form. His moment was over. He let his head drop upon his breast, defeated.
Vronsky came on, feeling very shy. Two English ladies were under that
hood, and he hardly knew how to meet them. He felt so severely himself
towards Denzil, towards his selfish cowardice in sending for his
womenkind to undertake so fatiguing a journey, that his attitude was one of
abject apology. Then, as he drew nearer, he saw a handkerchief waved. The
povosska drew up, and his own adored Felix leaped lightly to earth and ran
forward.

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Multiple Choice Questions

1. Which statement is false?

A. A monopoly is both a firm and an industry.

2. The monopolist and the perfect competitor differ in that

A. they face different demand curves.

3. Which statement is false?

5. Each of the following is a legal barrier to entry into an industry except

6. Which one of these is not a natural monopoly?

A. A local electric company

7. Which statement is true?

A. All monopolies are good.

9. Which statement is true?

11. Which statement is true?

A. All monopolies are very large firms.

13. As a firm grows larger

A. economies of scale set in, then diseconomies of scale.

15. Which statement is true?

17. A monopolist operates at the minimum point of its ATC curve

A. only in the short run.

If the marginal cost were $14, output would be

A. MC = MR, and both are less than $8.

25. A natural monopoly

26. Which statement is true?

A. All monopolies are large firms.

27. For a monopolist, the price of the product

A. always equals the marginal revenue.

A. identical to; identical to

If the marginal cost were $21, output would be

The profit-maximizing firm will be earning total revenue of

If the firm is maximizing profits, total profit will be

38. If the government attempts to break up a natural monopoly to enforce competition in an

A. the average cost of producing the good will increase.

A. are easily converted to competitive industries.

40. A firm that has substantial monopoly power

A. confronts a perfectly-elastic demand curve.

A. average revenue greater than price.

42. Patents function to

A. establish permanent monopolies.

A. less than $125

The loss-minimizing firm will be earning total revenue of

If the firm is minimizing losses, total loss will be

A. is greater than $5.

A. output should be raised.

53. Marginal revenue for a monopolist

A. of more than $175

56. If total revenue is increasing as output is rising, then

A. marginal revenue must be equal to zero.

57. A monopoly firm is different from a perfectly competitive firm in that

58. A public utility would be an example of

A. are primarily regulated natural monopolies.

60. Which of the following is NOT true about a monopoly?

A. The demand curve for a monopoly's product is perfectly elastic.

61. Natural monopolies are monopolies that are based on

62. When total revenue is at a maximum

A. average revenue is zero.