Question 1

In the long run, a monopoly

Accepted Answer

A)  will always earn zero economic profits. 
B)  may earn positive economic profits due to entry barriers. 
C)  will never exit the industry. 
D)  will yield an efficient outcome. 
A)  will always earn zero economic profits. 
B)  may earn positive economic profits due to entry barriers. 
C)  will never exit the industry. 
D)  will yield an efficient outcome.

Question 2

Verizon has a monopoly over local telephone service. If Verizon is producing where marginal revenue is greater than marginal cost, the firm

Accepted Answer

A)  could increase profits by reducing output. 
B)  could increase profits by increasing output. 
C)  is maximizing profits. 
D)  must be earning zero profit. 
A)  could increase profits by reducing output. 
B)  could increase profits by increasing output. 
C)  is maximizing profits. 
D)  must be earning zero profit.

Question 3

Monopolists attempt to capture producer surplus in the form of profits by using price discrimination.

Accepted Answer

A) True 
 B)False

Question 4

Refer to the information provided in Table 13.3 below to answer the question(s) that follow.
Table 13.3
 $$\begin{array} { | c | c | } 
\hline \text { Price } ( \$ ) & \text { Quantity } \
\hline 4.00 & 100 \
\hline 3.50 & 200 \
\hline 3.00 & 300 \
\hline 2.50 & 400 \
\hline 2.00 & 500 \
\hline 1.50 & 600 \
\hline 1.00 & 700 \
\hline
\end{array}$$
-Refer to Table 13.3. If a monopoly faces the demand schedule given in the table and has a constant marginal and average cost of $1 per unit of providing the product, what is the most the monopoly would expend in rent-seeking activity?

Accepted Answer

A)  $300 
B)  $600 
C)  $900 
D)  $1,000 
A)  $300 
B)  $600 
C)  $900 
D)  $1,000

Question 5

Refer to the information provided in Figure 13.6 below to answer the question that follows.   Figure 13.6
-Refer to Figure 13.6. The ________ for the Memory Company's high school yearbook is $16.

Accepted Answer

A)  average total cost 
B)  marginal cost 
C)  profit-maximizing price 
D)  marginal revenue 
A)  average total cost 
B)  marginal cost 
C)  profit-maximizing price 
D)  marginal revenue

Question 6

A profit-maximizing monopolist will always raise output if marginal revenue exceeds marginal cost.

Accepted Answer

A) True 
 B)False

Question 7

Refer to the information provided in Figure 13.3 below to answer the question(s) that follow.   Figure 13.3
-Refer to Figure 13.3. This firm's marginal revenue will be negative at

Accepted Answer

A)  $6. 
B)  $14. 
C)  all prices. 
D)  prices between $8 and $12. 
A)  $6. 
B)  $14. 
C)  all prices. 
D)  prices between $8 and $12.

Question 8

Refer to Scenario 13.2 below to answer the question(s) that follow.
SCENARIO 13.2: The government of Stratospheria is currently inviting investors to bid for the exclusive right to provide cable television service to its residents. The market demand for this service is P=55-0.01Q, where Q is the number of households that would subscribe to the cable service and P is the monthly fee charged to the subscribers. The associated marginal revenue curve is MR=55-0.02Q. Fun Cable Company is interested in bidding for the right to provide cable service in Stratospheria. It has a constant average and marginal cost of $5 for providing cable service to each household.
-Refer to Scenario 13.2. If Fun Cable Company were to be awarded the exclusive right to provide cable service in Stratospheria, what price would it charge per household per month?

Accepted Answer

A)  $5.00 
B)  $27.50 
C)  $30.00 
D)  $55.00 
A)  $5.00 
B)  $27.50 
C)  $30.00 
D)  $55.00

Question 9

Refer to the information provided in Figure 13.9 below to answer the question(s) that follow.   Figure 13.9
-Refer to Figure 13.9. If this industry was originally perfectly competitive and becomes monopolized, the amount of consumer surplus transferred to Ohio Edison in the form of profits is

Accepted Answer

A)  FGBE. 
B)  BEC. 
C)  FGBC. 
D)  FABE. 
A)  FGBE. 
B)  BEC. 
C)  FGBC. 
D)  FABE.

Question 10

Charging different prices to different buyers for different products is called price discrimination.

Accepted Answer

A) True 
 B)False

Question 11

Refer to the information provided in Figure 13.2 below to answer the question(s) that follow.   Figure 13.2
-Refer to Figure 13.2. The firm's ________ will be maximized at a price of $5.

Accepted Answer

A)  profit 
B)  marginal revenue 
C)  total revenue 
D)  marginal cost 
A)  profit 
B)  marginal revenue 
C)  total revenue 
D)  marginal cost

Question 12

Voss Calculator Company has a monopoly on the sale of graphing calculators. If it sells two of these calculators its total revenue is $500, and if it sells three calculators its total revenue is $700. The marginal revenue of the third calculator sold is

Accepted Answer

A)  $100. 
B)  $150. 
C)  $200. 
D)  $700. 
A)  $100. 
B)  $150. 
C)  $200. 
D)  $700.

Question 13

One of the administrative bodies responsible for initiating actions on behalf of the U.S. government against individuals or companies violating antitrust laws is the

Accepted Answer

A)  Federal Trade Commission. 
B)  Interstate Commerce Commission. 
C)  Federal Utility Commission. 
D)  Department of the Interior. 
A)  Federal Trade Commission. 
B)  Interstate Commerce Commission. 
C)  Federal Utility Commission. 
D)  Department of the Interior.

Question 14

Which of the following is not an example of price discrimination?

Accepted Answer

A)  airlines charging lower prices to travelers who stay over a Saturday night 
B)  student discounts at movie theaters 
C)  back-to-school sales 
D)  discounted coffee for senior citizens at restaurants 
A)  airlines charging lower prices to travelers who stay over a Saturday night 
B)  student discounts at movie theaters 
C)  back-to-school sales 
D)  discounted coffee for senior citizens at restaurants

Question 15

Refer to the information provided in Table 13.4 below to answer the question(s) that follow.
Table 13.4
 $$\begin{array} { | c | c | } 
\hline \text { Price (\$) } & \text { Quantity } \
\hline 20.00 & 1 \
\hline 18.00 & 2 \
\hline 16.00 & 3 \
\hline 14.00 & 4 \
\hline 12.00 & 5 \
\hline 10.00 & 6 \
\hline 8.00 & 7 \
\hline
\end{array}$$
-Refer to Table 13.4. If a monopoly faces the demand schedule given in the table and has a constant marginal and average cost of $12 per unit of providing the product, then the monopoly maximizes its profits by charging ________ per unit and selling ________ units of output.

Accepted Answer

A)  $12; 5 
B)  $14; 4 
C)  $10; 6 
D)  $16; 3 
A)  $12; 5 
B)  $14; 4 
C)  $10; 6 
D)  $16; 3

Question 16

The XYZ Computer Company has a monopoly over the production of a specialized color printer. The XYZ Computer Company will find it profitable to reduce output as long as marginal revenue

Accepted Answer

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

Question 17

Refer to the information provided in Figure 13.11 below to answer the question(s) that follow.   Figure 13.11
-Refer to Figure 13.11. Suppose a monopolist faces the demand and costs in the figure and is able to perfectly price discriminate. What is the economic welfare loss from having a monopoly instead of a perfectly competitive industry supplying widgets?

Accepted Answer

A)  $0 
B)  $4,000 
C)  $16,000 
D)  Indeterminate from the given information. 
A)  $0 
B)  $4,000 
C)  $16,000 
D)  Indeterminate from the given information.

Question 18

Due to the network externalities in the game console market, we would expect this market to

Accepted Answer

A)  overproduce game consoles. 
B)  be highly concentrated. 
C)  be efficient. 
D)  be serviced by a natural monopoly. 
A)  overproduce game consoles. 
B)  be highly concentrated. 
C)  be efficient. 
D)  be serviced by a natural monopoly.

Question 19

A monopoly is an industry with

Accepted Answer

A)  a single firm in which the entry of new firms is blocked. 
B)  a small number of firms each large enough to impact the market price of its output. 
C)  many firms each able to differentiate their product. 
D)  many firms each too small to impact the market price of its output. 
A)  a single firm in which the entry of new firms is blocked. 
B)  a small number of firms each large enough to impact the market price of its output. 
C)  many firms each able to differentiate their product. 
D)  many firms each too small to impact the market price of its output.

Question 20

Relative to a profit-maximizing monopolized industry that is producing 8,000 units of output at a price of $10 per unit, a competitively organized industry under the same circumstances would produce ________ units of output and charge a price of ________ per unit.

Accepted Answer

A)  8,000; $10 
B)  less than 8,000; less than $10 
C)  more than 8,000; less than $10 
D)  less than 8,000; more than $10 
A)  8,000; $10 
B)  less than 8,000; less than $10 
C)  more than 8,000; less than $10 
D)  less than 8,000; more than $10

In the long run, a monopoly

Verizon has a monopoly over local telephone service. If Verizon is producing where marginal revenue is greater than marginal cost, the firm

Monopolists attempt to capture producer surplus in the form of profits by using price discrimination.

Refer to the information provided in Figure 13.6 below to answer the question that follows. Figure 13.6 -Refer to Figure 13.6. The ________ for the Memory Company's high school yearbook is $16.

A profit-maximizing monopolist will always raise output if marginal revenue exceeds marginal cost.

Refer to the information provided in Figure 13.3 below to answer the question(s) that follow. Figure 13.3 -Refer to Figure 13.3. This firm's marginal revenue will be negative at

Refer to the information provided in Figure 13.9 below to answer the question(s) that follow. Figure 13.9 -Refer to Figure 13.9. If this industry was originally perfectly competitive and becomes monopolized, the amount of consumer surplus transferred to Ohio Edison in the form of profits is

Charging different prices to different buyers for different products is called price discrimination.

Refer to the information provided in Figure 13.2 below to answer the question(s) that follow. Figure 13.2 -Refer to Figure 13.2. The firm's ________ will be maximized at a price of $5.

Voss Calculator Company has a monopoly on the sale of graphing calculators. If it sells two of these calculators its total revenue is $500, and if it sells three calculators its total revenue is $700. The marginal revenue of the third calculator sold is

One of the administrative bodies responsible for initiating actions on behalf of the U.S. government against individuals or companies violating antitrust laws is the

Which of the following is not an example of price discrimination?

The XYZ Computer Company has a monopoly over the production of a specialized color printer. The XYZ Computer Company will find it profitable to reduce output as long as marginal revenue

Due to the network externalities in the game console market, we would expect this market to

A monopoly is an industry with

Relative to a profit-maximizing monopolized industry that is producing 8,000 units of output at a price of $10 per unit, a competitively organized industry under the same circumstances would produce units of output and charge a price of per unit.

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand, Supply, and Market Equilibrium

Demand and Supply Applications

Elasticity

Household Behavior and Consumer Choice

The Production Process: the Behavior of Profit-Maximizing Firms

Short-Run Costs and Output Decisions

Long-Run Costs and Output Decisions

Input Demand: the Labor and Land Markets

Input Demand: the Capital Market and the Investment Decision

General Equilibrium and the Efficiency of Perfect Competition

Oligopoly

Monopolistic Competition

Externalities, Public Goods, and Common Resources

Uncertainty and Asymmetric Information

Income Distribution and Poverty

Public Finance: the Economics of Taxation

International Trade, Comparative Advantage, and Protectionism

Economic Growth in Developing Economies

Critical Thinking About Research

Filters

Exam 13: Monopoly and Antitrust Policy

In the long run, a monopoly

Verizon has a monopoly over local telephone service. If Verizon is producing where marginal revenue is greater than marginal cost, the firm

Monopolists attempt to capture producer surplus in the form of profits by using price discrimination.

Refer to the information provided in Figure 13.6 below to answer the question that follows. Figure 13.6 -Refer to Figure 13.6. The ________ for the Memory Company's high school yearbook is $16.

A profit-maximizing monopolist will always raise output if marginal revenue exceeds marginal cost.

Refer to the information provided in Figure 13.3 below to answer the question(s) that follow. Figure 13.3 -Refer to Figure 13.3. This firm's marginal revenue will be negative at

Refer to the information provided in Figure 13.9 below to answer the question(s) that follow. Figure 13.9 -Refer to Figure 13.9. If this industry was originally perfectly competitive and becomes monopolized, the amount of consumer surplus transferred to Ohio Edison in the form of profits is

Charging different prices to different buyers for different products is called price discrimination.

Refer to the information provided in Figure 13.2 below to answer the question(s) that follow. Figure 13.2 -Refer to Figure 13.2. The firm's ________ will be maximized at a price of $5.

Voss Calculator Company has a monopoly on the sale of graphing calculators. If it sells two of these calculators its total revenue is $500, and if it sells three calculators its total revenue is $700. The marginal revenue of the third calculator sold is

One of the administrative bodies responsible for initiating actions on behalf of the U.S. government against individuals or companies violating antitrust laws is the

Which of the following is not an example of price discrimination?

The XYZ Computer Company has a monopoly over the production of a specialized color printer. The XYZ Computer Company will find it profitable to reduce output as long as marginal revenue

Due to the network externalities in the game console market, we would expect this market to

A monopoly is an industry with

Relative to a profit-maximizing monopolized industry that is producing 8,000 units of output at a price of $10 per unit, a competitively organized industry under the same circumstances would produce ________ units of output and charge a price of ________ per unit.

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand, Supply, and Market Equilibrium

Demand and Supply Applications

Elasticity

Household Behavior and Consumer Choice

The Production Process: the Behavior of Profit-Maximizing Firms

Short-Run Costs and Output Decisions

Long-Run Costs and Output Decisions

Input Demand: the Labor and Land Markets

Input Demand: the Capital Market and the Investment Decision

General Equilibrium and the Efficiency of Perfect Competition

Oligopoly

Monopolistic Competition

Externalities, Public Goods, and Common Resources

Uncertainty and Asymmetric Information

Income Distribution and Poverty

Public Finance: the Economics of Taxation

International Trade, Comparative Advantage, and Protectionism

Economic Growth in Developing Economies

Critical Thinking About Research

Filters

Relative to a profit-maximizing monopolized industry that is producing 8,000 units of output at a price of $10 per unit, a competitively organized industry under the same circumstances would produce units of output and charge a price of per unit.