Question 1

Producer surplus in monopoly is smaller than it is in the same industry operating under perfect competition.

Accepted Answer

A) True 
 B)False

Question 2

When a monopolist practices price discrimination as opposed to setting a single price,the monopolist sells less but increases profits.

Accepted Answer

A) True 
 B)False

Question 3

Use the following to answer question:
Figure: Demand,Revenue,and Cost Curves  
-(Figure: Demand,Revenue,and Cost Curves)Use Figure: Demand,Revenue,and Cost Curves.Figglenuts-R-Us is a monopolist in the figglenut market.Figglenuts-R-Us will sell _____ figglenuts and set a price of _____ to maximize profits.

Accepted Answer

A) 70;$65 
B) 100;$50 
C) 120;$40 
D) 150;$46 
A) 70;$65 
B) 100;$50 
C) 120;$40 
D) 150;$46

Question 4

In the short run,a monopoly will stop producing if:

Accepted Answer

A) P  MR. 
D) P > ATC. 
A) P  MR. 
D) P > ATC.

Question 5

Use the following to answer question:
Figure: The Monopolist  
-(Scenario: Monopolist)Use Scenario: Monopolist.The deadweight loss from this monopolist's production is: Scenario: Monopolist
The demand curve for a monopolist is P = 75 - 0.5Q,and the monopolist's marginal cost curve is defined using the equation MC = 2Q.Assume also that ATC at the profit-maximizing level of production is equal to $12.50.

Accepted Answer

A) $31.25. 
B) $12.50. 
C) $0.00. 
D) $30.00. 
A) $31.25. 
B) $12.50. 
C) $0.00. 
D) $30.00.

Question 6

If the local phone company,a monopolist,perfectly price-discriminated,there would be a lower total surplus than if the company did not price discriminate.

Accepted Answer

A) True 
 B)False

Question 7

Use the following to answer question:  
-(Table: Prices and Demand)The New Orleans Saints have a monopoly on Saints logo hats.The marginal cost of producing a hat is $18.If the Saints increase the number of hats they sell from 4 to 5,marginal revenue is:

Accepted Answer

A) $20. 
B) $22. 
C) $8. 
D) $12. 
A) $20. 
B) $22. 
C) $8. 
D) $12.

Question 8

Use the following to answer question:
Figure: The Monopolist  
-(Figure: The Monopolist)Use Figure: The Monopolist.If this market became perfectly competitive,total market production in the long run would be _____ units and the market price would be _____.

Accepted Answer

A) Q1;P1 
B) Q2;P2 
C) Q3;P3 
D) Q2;P4 
A) Q1;P1 
B) Q2;P2 
C) Q3;P3 
D) Q2;P4

Question 9

A monopoly increases price by limiting the quantity supplied to a market.

Accepted Answer

A) True 
 B)False

Question 10

If a monopoly market structure is transformed into a perfectly competitive one,holding all else constant,price will _____ and output will _____.

Accepted Answer

A) fall;fall 
B) fall;increase 
C) increase;increase 
D) increase;fall 
A) fall;fall 
B) fall;increase 
C) increase;increase 
D) increase;fall

Question 11

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 $40.If the cable company practices perfect price discrimination,deadweight loss will be:

Accepted Answer

A) $180. 
B) $100. 
C) $40. 
D) $0. 
A) $180. 
B) $100. 
C) $40. 
D) $0.

Question 12

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 $40.If the cable company practices perfect price discrimination,then it will sell _____ subscriptions.

Accepted Answer

A) 10 
B) 8 
C) 6 
D) 0 
A) 10 
B) 8 
C) 6 
D) 0

Question 13

A monopoly responds to a decrease in marginal cost by _____ price and _____ output.

Accepted Answer

A) increasing;decreasing 
B) increasing;increasing 
C) decreasing;increasing 
D) decreasing;decreasing 
A) increasing;decreasing 
B) increasing;increasing 
C) decreasing;increasing 
D) decreasing;decreasing

Question 14

A disadvantage of public ownership of a monopoly is that publicly owned firms have relatively little incentive to keep costs low or offer high-quality products.

Accepted Answer

A) True 
 B)False

Question 15

Use the following to answer question:  
-(Table: Demand and Total Cost)Use Table: Demand and Total Cost.Lenoia runs a natural monopoly firm producing electricity for a small mountain village.The table shows Lenoia's demand and total cost of producing electricity.The profit-maximizing quantity of electricity for her to produce is _____ megawatts.

Accepted Answer

A) 2 
B) 3 
C) 4 
D) 5 
A) 2 
B) 3 
C) 4 
D) 5

Question 16

A monopolist who practices price discrimination can increase sales but can never increase profits above the level that would result from a single price being set (using the intersection of marginal revenue and marginal cost).

Accepted Answer

A) True 
 B)False

Question 17

A monopolist that charges each customer a different price based on the customer's individual willingness to pay is called a single-price monopolist.

Accepted Answer

A) True 
 B)False

Question 18

A natural monopoly has increasing returns to scale so that a large producer has a relatively low average total cost.

Accepted Answer

A) True 
 B)False

Question 19

Sadia wants to practice price discrimination in her bakery.Which strategy should Sadia NOT use?

Accepted Answer

A) discounts for people who buy a large volume of bread 
B) higher prices for people who buy bread on the day it is baked and lower prices for people who place advance orders 
C) an annual fee for customers who want to shop at a discount in her store 
D) the same price for all consumers for freshly baked goods 
A) discounts for people who buy a large volume of bread 
B) higher prices for people who buy bread on the day it is baked and lower prices for people who place advance orders 
C) an annual fee for customers who want to shop at a discount in her store 
D) the same price for all consumers for freshly baked goods

Question 20

Use the following to answer question:
Figure: The Monopolist  
-(Scenario: Monopolist)Use Scenario: Monopolist.The MR curve is: Scenario: Monopolist
The demand curve for a monopolist is P = 75 - 0.5Q,and the monopolist's marginal cost curve is defined using the equation MC = 2Q.Assume also that ATC at the profit-maximizing level of production is equal to $12.50.

Accepted Answer

A) MR = 150 - 0.5Q. 
B) MR = 75 - Q. 
C) MR = 150 - Q. 
D) MR = 225 - Q. 
A) MR = 150 - 0.5Q. 
B) MR = 75 - Q. 
C) MR = 150 - Q. 
D) MR = 225 - Q.

Producer surplus in monopoly is smaller than it is in the same industry operating under perfect competition.

When a monopolist practices price discrimination as opposed to setting a single price,the monopolist sells less but increases profits.

Use the following to answer question: Figure: Demand,Revenue,and Cost Curves -(Figure: Demand,Revenue,and Cost Curves)Use Figure: Demand,Revenue,and Cost Curves.Figglenuts-R-Us is a monopolist in the figglenut market.Figglenuts-R-Us will sell _ figglenuts and set a price of _ to maximize profits.

In the short run,a monopoly will stop producing if:

If the local phone company,a monopolist,perfectly price-discriminated,there would be a lower total surplus than if the company did not price discriminate.

Use the following to answer question: -(Table: Prices and Demand)The New Orleans Saints have a monopoly on Saints logo hats.The marginal cost of producing a hat is $18.If the Saints increase the number of hats they sell from 4 to 5,marginal revenue is:

Use the following to answer question: Figure: The Monopolist -(Figure: The Monopolist)Use Figure: The Monopolist.If this market became perfectly competitive,total market production in the long run would be _ units and the market price would be _.

A monopoly increases price by limiting the quantity supplied to a market.

If a monopoly market structure is transformed into a perfectly competitive one,holding all else constant,price will _ and output will _.

A monopoly responds to a decrease in marginal cost by _ price and _ output.

A disadvantage of public ownership of a monopoly is that publicly owned firms have relatively little incentive to keep costs low or offer high-quality products.

A monopolist who practices price discrimination can increase sales but can never increase profits above the level that would result from a single price being set (using the intersection of marginal revenue and marginal cost).

A monopolist that charges each customer a different price based on the customer's individual willingness to pay is called a single-price monopolist.

A natural monopoly has increasing returns to scale so that a large producer has a relatively low average total cost.

Sadia wants to practice price discrimination in her bakery.Which strategy should Sadia NOT use?

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

Producer surplus in monopoly is smaller than it is in the same industry operating under perfect competition.

When a monopolist practices price discrimination as opposed to setting a single price,the monopolist sells less but increases profits.

In the short run,a monopoly will stop producing if:

If the local phone company,a monopolist,perfectly price-discriminated,there would be a lower total surplus than if the company did not price discriminate.

Use the following to answer question: -(Table: Prices and Demand)The New Orleans Saints have a monopoly on Saints logo hats.The marginal cost of producing a hat is $18.If the Saints increase the number of hats they sell from 4 to 5,marginal revenue is:

Use the following to answer question: Figure: The Monopolist -(Figure: The Monopolist)Use Figure: The Monopolist.If this market became perfectly competitive,total market production in the long run would be _____ units and the market price would be _____.

A monopoly increases price by limiting the quantity supplied to a market.

If a monopoly market structure is transformed into a perfectly competitive one,holding all else constant,price will _____ and output will _____.

A monopoly responds to a decrease in marginal cost by _____ price and _____ output.

A disadvantage of public ownership of a monopoly is that publicly owned firms have relatively little incentive to keep costs low or offer high-quality products.

A monopolist who practices price discrimination can increase sales but can never increase profits above the level that would result from a single price being set (using the intersection of marginal revenue and marginal cost).

A monopolist that charges each customer a different price based on the customer's individual willingness to pay is called a single-price monopolist.

A natural monopoly has increasing returns to scale so that a large producer has a relatively low average total cost.

Sadia wants to practice price discrimination in her bakery.Which strategy should Sadia NOT use?

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

Use the following to answer question: Figure: The Monopolist -(Figure: The Monopolist)Use Figure: The Monopolist.If this market became perfectly competitive,total market production in the long run would be _ units and the market price would be _.

If a monopoly market structure is transformed into a perfectly competitive one,holding all else constant,price will _ and output will _.

A monopoly responds to a decrease in marginal cost by _ price and _ output.