1. Suppose that a drug for treating cancer is cleared by the Food and Drug Administration and that the company is successful in obtaining a patent for its product. Which of the following is then true?
A) The method of producing the product would not be considered intellectual property.
B) The drug would have many close substitutes.
C) The patent holder has a monopoly.
D) The patent holder now faces barriers to entry.

2. When the number of substitutes increase, the demand curve for a monopolist will
A) become more inelastic.
B) not change.
C) become more elastic.
D) become steeper.

3. Which of the following is true of a perfectly competitive firm and a monopoly in the long run?
A) P = MR
B) MR = MC
C) P = MC
D) P = ATC

4. A barrier to entry is
A) a term used to explain why monopolies always make economic profits.
B) a restriction on starting a business.
C) the situation when the government produces a good instead of relying on private firms to produce the good.
D) a restriction on the profits that a monopoly can make.

5. Price differentiation is a situation in which
A) consumers' comparison-shop.
B) the demand curve is vertical.
C) there are different prices for the same product that are not due to differences in the marginal cost of providing the commodity to different groups of buyers.
D) there are different prices for similar products reflecting differences in the marginal cost of providing the commodities to different groups of buyers.

6. Which of the following is TRUE?
A) Charging all customers the same price when costs vary can actually be a case of price discrimination.
B) Price discrimination guarantees that the monopolist will make a profit.
C) Monopoly results in a higher quantity of output being sold compared with perfect competition.
D) Price discrimination occurs when there are differences in prices that reflect differences in marginal cost.

7. When consumers would have been willing to pay higher prices at various quantities consumed than the market clearing price, the differences are called
A) monopoly profits.
B) consumer surplus.
C) deadweight loss.
D) opportunity cost.

8. A monopolist would probably earn fewer profits if
A) the importance of specialized capital equipment in its production techniques increased.
B) tariffs on competing products were lowered.
C) the time length of patents increased.
D) environmental regulations increased that required the purchase of special capital equipment.

9. The monopolist determines the price and quantity combination that maximizes short-run profits by
A) finding the point at which marginal revenue and demand intersect. This gives the price and quantity that maximizes profits.
B) finding the quantity at which average revenue and average total cost are furthest apart.
C) determining the price by finding the highest price at which sales can be made and then using the demand curve to find the appropriate quantity.
D) finding the quantity at which marginal cost and marginal revenue are equal and then using the demand curve to find price.

10. A pure monopolist is selling 7 units at a price of $12. If the marginal revenue of the 8th unit is $4, then the price of the 8th unit is
A) $11.
B) greater than $12.
C) $4.
D) $10.

11. Which of the following is a TRUE statement about a monopoly?
A) As long as there are barriers to entry, a monopoly can always find some price-output combination that generates positive economic profits.
B) As long as the demand curve slopes down, a monopoly can always find some price-output combination that generates positive economic profits.
C) A monopoly must earn an above-normal profit to stay in business.
D) A monopoly does not necessarily earn positive economic profits.

12. Which of the following is NOT a condition for price discrimination to exist?
A) identification of buyers with differing elasticities
B) unpatented product or the service
C) downward sloping demand curve faced by the firm
D) ability to prevent the resale of the product or service

13. For a firm to become a monopoly in an industry,
A) the firm will engage in unfair practices to drive all competitors out of the market.
B) the firm must produce a faulty product.
C) barriers to entry must exist.
D) the firm must charge higher prices than its competitors.