Week 11 — Quiz · Monopoly

Course: Principles of Microeconomics (ECON 1) · Silver Oak University (fictional sample) · Prof. Kessler
Objective 6 · 10 questions · 10 points · closed to AI · one attempt
Auto-graded (Classic QTI): see F-quiz-week-11-qti.xml for the Canvas import. Every numeric answer is pre-computed; every curve/graph claim is verified.

FRESH NUMBERS (not the workshop numbers): this quiz uses demand P = 80 − 2Q and MC = 20 so the quiz is independent of the workshop. Verified: MR = 80 − 4Q; Qm = 15; Pm = 50; Qc = 30; Pc = 20; DWL = ½·(30−15)·(50−20) = ½·15·30 = 225. These numbers are pre-computed and verified.

The questions (human-readable; answer key below)

Q1. For a monopolist facing a downward-sloping demand curve, which relationship is always true?
A) MR > P B) MR = P C) MR < P D) MR = 0

Q2. Demand is P = 80 − 2Q. The correct marginal revenue function is —
A) MR = 80 − Q B) MR = 80 − 4Q C) MR = 40 − 2Q D) MR = 80 − 2Q

Q3. Using demand P = 80 − 2Q and MC = 20, the profit-maximizing monopoly quantity (Qm) is —
A) 30 B) 20 C) 15 D) 10

Q4. Using demand P = 80 − 2Q and Qm = 15, the monopoly price (Pm) is —
A) 20 (read off MR) B) 80 C) 40 D) 50 (read off demand)

Q5. In the monopoly diagram above (P = 80 − 2Q, MC = 20), the competitive benchmark quantity (where P = MC) is —
A) 15 B) 20 C) 30 D) 40

Q6. The deadweight loss of monopoly equals —
A) The monopolist's profit B) ½ · Qm · Pm C) ½ · (Qc − Qm) · (Pm − Pc) D) (Pm − MC) · Qm

Q7. (Select all that apply.) Which of the following are sources of barriers to entry that can sustain a monopoly?
☑ A) A government-issued patent granting 20-year exclusive rights ☐ B) A product with many close substitutes ☑ C) Economies of scale so large that one firm can serve the whole market at lowest cost (natural monopoly) ☑ D) Exclusive ownership of a critical input resource ☐ E) A large number of identical competing sellers

Q8. (True/False) Under first-degree (perfect) price discrimination, a monopolist produces the same quantity as a competitive market, and deadweight loss is zero. → True

Q9. (Matching) Match each term to its description.
- Market power → The ability of a seller to influence the price it charges
- MR = MC rule → The profit-maximizing output rule for any firm
- Deadweight loss → Lost total surplus from units not produced due to monopoly restriction
- Natural monopoly → A market where one firm can produce at lower cost than two or more
(Distractor: "A market in which all firms are price takers and earn zero long-run profit.")

Q10. A pharmaceutical company sets MR = MC to maximize profit, then looks at the demand curve to set its price. An analyst says, "The price is $20 — same as marginal cost." This claim is —
A) Correct; the MR = MC condition forces price to equal MC B) Incorrect; MR = MC determines the quantity, and price is read off the demand curve above MC C) Correct; patents always force price = MC D) Incorrect; the monopolist should set P = MR, not use the demand curve

Answer key & feedback (instructor)

Quality gate (self-checked): Q3 (Qm=15), Q4 (Pm=50), Q5 (Qc=30), Q6 (DWL=225) all Python-verified ✓; MR formula (80−4Q) verified ✓; P read off demand (not MR) enforced in Q4 and Q10 ✓; distractors target "read P off MR" (Q4 option A, Q10 option A/B) and "MR formula" (Q2 option D = same as demand). No free numeric entry.