ECON 300 EXAM 3 QUESTIONS WITH
CORRECT ANSWERS GRADED A+ 2026
Which of the following is the best measure of a firm's market power? -Correct Answer
✔-D. the firm's ability to price above marginal cost
A monopolist's supply curve: -Correct Answer ✔-C. does not exist
If a firm has market power and marginal cost is constant relative to perfect competition:
-Correct Answer ✔-C. consumer surplus is lower, producer surplus is higher, and total
surplus is lower
In order to maximize profit, a monopolist: -Correct Answer ✔-B. produces the quantity
where marginal revenue equals marginal cost
If market demand is perfectly elastic, then a monopolist: -Correct Answer ✔-D. has no
market power
If the market demand equation is Q = 20 - 2P, the monopolist's marginal revenue
equation is: -Correct Answer ✔-B. MR = 10 - Q
If the total cost function of a monopolist is TC = 200 + 20Q, then the primary barrier to
entry that supports the firm's position is likely: -Correct Answer ✔-B. natural monopoly
, If the government imposed a direct price regulation that did not allow a natural
monopoly with constant marginal cost to charge a price higher than under perfect
competition: -Correct Answer ✔-A. the regulation could cause the firm to shut down
production
If demand becomes more price elastic but the quantity demanded at the current price
does not change: -Correct Answer ✔-A. the price and quantity are unchanged in perfect
competition but different if the firms have market power.
If market demand is P = 1,000 - 5Q and a monopolist has a constant marginal cost of
$200, then the deadweight loss resulting from monopoly is: -Correct Answer ✔-A. $16
If demand becomes more price elastic and marginal cost is constant, the gain in
producer surplus a firm receives from having market power: -Correct Answer ✔-B. is
smaller
If market demand is perfectly inelastic, then a monopolist: -Correct Answer ✔-C. has the
greatest possible amount of market power
The key feature of monopoly that drives the differences between it and other market
structures is that: -Correct Answer ✔-C. there are barriers to entry into the market
A monopolist's percentage markup of price over marginal cost is higher when: -Correct
Answer ✔-D. market demand is less elastic
A reduction in a monopolist's marginal cost will cause it to: -Correct Answer ✔-C.
decrease price and increase quantity
CORRECT ANSWERS GRADED A+ 2026
Which of the following is the best measure of a firm's market power? -Correct Answer
✔-D. the firm's ability to price above marginal cost
A monopolist's supply curve: -Correct Answer ✔-C. does not exist
If a firm has market power and marginal cost is constant relative to perfect competition:
-Correct Answer ✔-C. consumer surplus is lower, producer surplus is higher, and total
surplus is lower
In order to maximize profit, a monopolist: -Correct Answer ✔-B. produces the quantity
where marginal revenue equals marginal cost
If market demand is perfectly elastic, then a monopolist: -Correct Answer ✔-D. has no
market power
If the market demand equation is Q = 20 - 2P, the monopolist's marginal revenue
equation is: -Correct Answer ✔-B. MR = 10 - Q
If the total cost function of a monopolist is TC = 200 + 20Q, then the primary barrier to
entry that supports the firm's position is likely: -Correct Answer ✔-B. natural monopoly
, If the government imposed a direct price regulation that did not allow a natural
monopoly with constant marginal cost to charge a price higher than under perfect
competition: -Correct Answer ✔-A. the regulation could cause the firm to shut down
production
If demand becomes more price elastic but the quantity demanded at the current price
does not change: -Correct Answer ✔-A. the price and quantity are unchanged in perfect
competition but different if the firms have market power.
If market demand is P = 1,000 - 5Q and a monopolist has a constant marginal cost of
$200, then the deadweight loss resulting from monopoly is: -Correct Answer ✔-A. $16
If demand becomes more price elastic and marginal cost is constant, the gain in
producer surplus a firm receives from having market power: -Correct Answer ✔-B. is
smaller
If market demand is perfectly inelastic, then a monopolist: -Correct Answer ✔-C. has the
greatest possible amount of market power
The key feature of monopoly that drives the differences between it and other market
structures is that: -Correct Answer ✔-C. there are barriers to entry into the market
A monopolist's percentage markup of price over marginal cost is higher when: -Correct
Answer ✔-D. market demand is less elastic
A reduction in a monopolist's marginal cost will cause it to: -Correct Answer ✔-C.
decrease price and increase quantity
