1. To maximize profit, the monopolist increases output:
A. until it is using full manufacturing capacity.
B. until marginal cost is equal to marginal revenue.
C. to the same amount it would produce if the firm was competitive, but maximizes price.
D. as long as the marginal revenue curve is higher than the demand curve.
2. A firm with monopoly power is able to set a markup price that is:
A. lower than prices on similar goods sold by competitive firms.
B. the same as the prices on similar goods sold by competitive firms.
C. higher than prices on similar goods sold by competitive firms.
D. the maximum price a market participant will pay for similar goods.
3. Typical evidence for the existence of market power would be market prices:
A. below production costs.
B. equal to production costs.
C. above production costs.
D. varying with market supply and demand conditions.