Question 1

At a monopoly's profit-maximizing level of output:

Accepted Answer

A) marginal revenue equals marginal cost. 
B) marginal revenue is greater than marginal cost. 
C) marginal revenue is less than marginal cost. 
D) price is less than marginal cost. 
A) marginal revenue equals marginal cost. 
B) marginal revenue is greater than marginal cost. 
C) marginal revenue is less than marginal cost. 
D) price is less than marginal cost.

Question 2

Amtrak charges lower fares to students than to its other passengers.This pricing strategy increases Amtrak's profits.From this information,we can conclude that students must have a _____ demand for Amtrak train service than do other passengers.

Accepted Answer

A) more price-elastic 
B) lower 
C) greater 
D) less price-elastic 
A) more price-elastic 
B) lower 
C) greater 
D) less price-elastic

Question 3

After the first unit sold,the marginal revenue a monopolist receives from selling one more unit of a good is less than the price of that unit because of:

Accepted Answer

A) diminishing marginal returns. 
B) increasing marginal cost. 
C) a downward-sloping demand curve. 
D) declining average fixed cost. 
A) diminishing marginal returns. 
B) increasing marginal cost. 
C) a downward-sloping demand curve. 
D) declining average fixed cost.

Question 4

Use the following to answer question:
Figure: The Profit-Maximizing Output and Price  
-(Figure: The Profit-Maximizing Output and Price)Use Figure: The Profit-Maximizing Output and Price.Assume that there are no fixed costs and AC = MC = $200.If this were a perfectly competitive industry,producer surplus would be:

Accepted Answer

A) $0. 
B) $200. 
C) $1,600. 
D) $3,200. 
A) $0. 
B) $200. 
C) $1,600. 
D) $3,200.

Question 5

Use the following to answer question:
Figure: PPV  
-(Figure: PPV)Use Figure: PPV.The figure shows the demand and marginal revenue for a pay-per-view football game on cable TV.Assume that the marginal cost and average cost are a constant $20.If the cable company is a monopoly,how much total surplus is there when the monopolist maximizes profit?

Accepted Answer

A) $240 
B) $160 
C) $100 
D) $320 
A) $240 
B) $160 
C) $100 
D) $320

Question 6

Use the following to answer question:  
-(Table: Lunch)Use Table: Lunch.This table shows market demand for picnic lunches for people taking all-day rafting trips on the river.Joe has a firm providing this service,and his marginal cost and average cost for each lunch are a constant $4.If Joe is a monopolist,what is consumer surplus in the long run?

Accepted Answer

A) $45 
B) $90 
C) $180 
D) $360 
A) $45 
B) $90 
C) $180 
D) $360

Question 7

Suppose the price elasticity of demand for coffee at the Coffee Barn equals 1.71 for women and 0.55 for men.A successful price discrimination strategy would lead to _____ prices for men and _____ prices for women _____.

Accepted Answer

A) lower;lower;in any circumstances 
B) lower;higher;in any circumstances 
C) lower;higher;as long as men can't resell drinks to women 
D) higher;lower;as long as women can't resell drinks to men 
A) lower;lower;in any circumstances 
B) lower;higher;in any circumstances 
C) lower;higher;as long as men can't resell drinks to women 
D) higher;lower;as long as women can't resell drinks to men

Question 8

Price discrimination leads to a _____ price for consumers with a _____ demand.

Accepted Answer

A) higher;less elastic 
B) higher;more elastic 
C) higher;perfectly elastic 
D) lower;less elastic 
A) higher;less elastic 
B) higher;more elastic 
C) higher;perfectly elastic 
D) lower;less elastic

Question 9

Use the following to answer question:
Figure: PPV  
-(Figure: PPV)Use Figure: PPV.The figure shows the demand and marginal revenue for a pay-per-view football game on cable TV.Assume that the marginal cost and average cost are a constant $20.If the cable company is a monopoly,how much producer surplus is there when the monopolist maximizes profit?

Accepted Answer

A) $0 
B) $20 
C) $80 
D) $160 
A) $0 
B) $20 
C) $80 
D) $160

Question 10

An industry with a single producer that sells a single product with no substitutes is a:

Accepted Answer

A) perfectly competitive industry. 
B) monopoly. 
C) oligopoly. 
D) monopolistically competitive industry. 
A) perfectly competitive industry. 
B) monopoly. 
C) oligopoly. 
D) monopolistically competitive industry.

Question 11

Suppose that a profit-maximizing monopoly firm undergoes a substantial technological change that reduces its marginal and average total costs by $40.If in response to its reduction in cost the firm changes its price in a profit-maximizing way,then we can predict that its total economic profit will:

Accepted Answer

A) fall. 
B) remain unchanged. 
C) rise. 
D) It is not possible to make a determination from the information given. 
A) fall. 
B) remain unchanged. 
C) rise. 
D) It is not possible to make a determination from the information given.

Question 12

Airlines that engage in price discrimination charge higher prices to business travelers because their _____ is more _____ than that of other travelers.

Accepted Answer

A) demand;elastic 
B) demand;inelastic 
C) supply;elastic 
D) supply;inelastic 
A) demand;elastic 
B) demand;inelastic 
C) supply;elastic 
D) supply;inelastic

Question 13

When a monopolist practices price discrimination,compared with a single-price monopolist,producer surplus will:

Accepted Answer

A) remain the same. 
B) increase. 
C) decrease. 
D) increase initially and then return to its original level. 
A) remain the same. 
B) increase. 
C) decrease. 
D) increase initially and then return to its original level.

Question 14

In the short run,if a monopoly is forced to charge a price equal to marginal cost:

Accepted Answer

A) output will fall. 
B) the deadweight loss will decrease. 
C) consumer surplus will decrease. 
D) other firms will enter the industry. 
A) output will fall. 
B) the deadweight loss will decrease. 
C) consumer surplus will decrease. 
D) other firms will enter the industry.

Question 15

If the regulation of a monopoly results in a price equal to marginal cost but the price is below average total cost:

Accepted Answer

A) the firm can still make an economic profit. 
B) the firm will earn only a zero economic profit. 
C) efficiency in allocation will be less. 
D) the firm will need subsidies to stay in business. 
A) the firm can still make an economic profit. 
B) the firm will earn only a zero economic profit. 
C) efficiency in allocation will be less. 
D) the firm will need subsidies to stay in business.

Question 16

Conditions that keep new firms out of a monopoly market are:

Accepted Answer

A) barriers to entry. 
B) terms of sale. 
C) labor market stipulations. 
D) production controls. 
A) barriers to entry. 
B) terms of sale. 
C) labor market stipulations. 
D) production controls.

Question 17

An industry with a firm that is the only producer of a good or service for which there are no close substitutes and for which entry by potential rivals is prohibitively difficult is:

Accepted Answer

A) a duopoly. 
B) a monopoly. 
C) an oligopoly. 
D) perfect competition. 
A) a duopoly. 
B) a monopoly. 
C) an oligopoly. 
D) perfect competition.

Question 18

Use the following to answer question:  
-(Table: Lunch)Use Table: Lunch.This table shows market demand for picnic lunches for people taking all-day rafting trips on the river.Joe has a firm providing this service,and his marginal cost and average cost for each lunch are a constant $4.If Joe is one of many firms in a competitive industry,how many lunches will the market produce in the long run?

Accepted Answer

A) 0 
B) 20 
C) 40 
D) 60 
A) 0 
B) 20 
C) 40 
D) 60

Question 19

Use the following to answer question:
Figure: A Profit-Maximizing Monopoly Firm  
-(Figure: A Profit-Maximizing Monopoly Firm)Use Figure: A Profit-Maximizing Monopoly Firm.This firm's price per unit is:

Accepted Answer

A) $20. 
B) $25. 
C) $30. 
D) $35. 
A) $20. 
B) $25. 
C) $30. 
D) $35.

Question 20

Use the following to answer question:  
-(Table: Lunch)Use Table: figure Lunch.This table shows market demand for picnic lunches for people taking all-day rafting trips on the river.Suppose that the marginal cost and average cost of each lunch are a constant $4 for all firms in the market.What is deadweight loss in this market in the long run?

Accepted Answer

A) $0 
B) $4 
C) $180 
D) $360 
A) $0 
B) $4 
C) $180 
D) $360

At a monopoly's profit-maximizing level of output:

Amtrak charges lower fares to students than to its other passengers.This pricing strategy increases Amtrak's profits.From this information,we can conclude that students must have a _____ demand for Amtrak train service than do other passengers.

After the first unit sold,the marginal revenue a monopolist receives from selling one more unit of a good is less than the price of that unit because of:

Suppose the price elasticity of demand for coffee at the Coffee Barn equals 1.71 for women and 0.55 for men.A successful price discrimination strategy would lead to ___ prices for men and _ prices for women ___.

Price discrimination leads to a _ price for consumers with a _ demand.

An industry with a single producer that sells a single product with no substitutes is a:

Suppose that a profit-maximizing monopoly firm undergoes a substantial technological change that reduces its marginal and average total costs by $40.If in response to its reduction in cost the firm changes its price in a profit-maximizing way,then we can predict that its total economic profit will:

Airlines that engage in price discrimination charge higher prices to business travelers because their _ is more _ than that of other travelers.

When a monopolist practices price discrimination,compared with a single-price monopolist,producer surplus will:

In the short run,if a monopoly is forced to charge a price equal to marginal cost:

If the regulation of a monopoly results in a price equal to marginal cost but the price is below average total cost:

Conditions that keep new firms out of a monopoly market are:

An industry with a firm that is the only producer of a good or service for which there are no close substitutes and for which entry by potential rivals is prohibitively difficult is:

Use the following to answer question: Figure: A Profit-Maximizing Monopoly Firm -(Figure: A Profit-Maximizing Monopoly Firm)Use Figure: A Profit-Maximizing Monopoly Firm.This firm's price per unit is:

First Principles

Economic Models: Trade-Offs and Trade

Consumer and Producer Surplus

Supply and Demand

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals and Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods and Common Resources

The Economics of the Welfare State

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Graphs in Economics

Consumer Preferences and Consumer Choice

Filters

Exam 13: Monopoly

At a monopoly's profit-maximizing level of output:

Amtrak charges lower fares to students than to its other passengers.This pricing strategy increases Amtrak's profits.From this information,we can conclude that students must have a _____ demand for Amtrak train service than do other passengers.

After the first unit sold,the marginal revenue a monopolist receives from selling one more unit of a good is less than the price of that unit because of:

Suppose the price elasticity of demand for coffee at the Coffee Barn equals 1.71 for women and 0.55 for men.A successful price discrimination strategy would lead to _____ prices for men and _____ prices for women _____.

Price discrimination leads to a _____ price for consumers with a _____ demand.

An industry with a single producer that sells a single product with no substitutes is a:

Suppose that a profit-maximizing monopoly firm undergoes a substantial technological change that reduces its marginal and average total costs by $40.If in response to its reduction in cost the firm changes its price in a profit-maximizing way,then we can predict that its total economic profit will:

Airlines that engage in price discrimination charge higher prices to business travelers because their _____ is more _____ than that of other travelers.

When a monopolist practices price discrimination,compared with a single-price monopolist,producer surplus will:

In the short run,if a monopoly is forced to charge a price equal to marginal cost:

If the regulation of a monopoly results in a price equal to marginal cost but the price is below average total cost:

Conditions that keep new firms out of a monopoly market are:

An industry with a firm that is the only producer of a good or service for which there are no close substitutes and for which entry by potential rivals is prohibitively difficult is:

Use the following to answer question: Figure: A Profit-Maximizing Monopoly Firm -(Figure: A Profit-Maximizing Monopoly Firm)Use Figure: A Profit-Maximizing Monopoly Firm.This firm's price per unit is:

First Principles

Economic Models: Trade-Offs and Trade

Consumer and Producer Surplus

Supply and Demand

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals and Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods and Common Resources

The Economics of the Welfare State

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Graphs in Economics

Consumer Preferences and Consumer Choice

Filters

Suppose the price elasticity of demand for coffee at the Coffee Barn equals 1.71 for women and 0.55 for men.A successful price discrimination strategy would lead to ___ prices for men and _ prices for women ___.

Price discrimination leads to a _ price for consumers with a _ demand.

Airlines that engage in price discrimination charge higher prices to business travelers because their _ is more _ than that of other travelers.