Question 1

University financial aid can be viewed as a type of price discrimination.

Accepted Answer

A) True 
 B)False  True

Question 2

Figure 15-1  
-Refer to Figure 15-1. How much profit will this monopolist earn if it charges each consumer the same price?

Accepted Answer

$612.50

Question 3

Which of the following statements is not correct?

Accepted Answer

A) Consumers will likely benefit in the form of lower prices from buying a product made by a natural monopoly than if the market were served by several firms. 
B) Monopolists typically charge higher prices than competitive firms. 
C) Monopolists typically produce larger quantities of output than competitive firms. 
D) Consumers may benefit from monopolies if the firms invest their higher profits into something that benefits society such as medical research. 
A) Consumers will likely benefit in the form of lower prices from buying a product made by a natural monopoly than if the market were served by several firms. 
B) Monopolists typically charge higher prices than competitive firms. 
C) Monopolists typically produce larger quantities of output than competitive firms. 
D) Consumers may benefit from monopolies if the firms invest their higher profits into something that benefits society such as medical research. C

Question 4

Table 15-20
A monopolist faces the following demand curve:  
-Refer to Table 15-20. If a monopolist faces a constant marginal cost of $10, how much output should the firm produce in order to maximize profit?

Accepted Answer

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

Question 5

Table 15-1  
-Refer to Table 15-1. What is the marginal revenue for the monopolist for the sixth unit sold?

Accepted Answer

A) $3 
B) $5 
C) $11 
D) $17 
A) $3 
B) $5 
C) $11 
D) $17

Question 6

When a certain monopoly sets its price at $8 it sells 64 units. When the monopoly sets its price at $9 it sells 62 units. The marginal revenue for the firm over this range is

Accepted Answer

A) $18. 
B) $23. 
C) $46. 
D) $92. 
A) $18. 
B) $23. 
C) $46. 
D) $92.

Question 7

Monopolies are socially inefficient because the price they charge is

Accepted Answer

A) equal to marginal revenue. 
B) above marginal cost. 
C) equal to demand. 
D) above demand. 
A) equal to marginal revenue. 
B) above marginal cost. 
C) equal to demand. 
D) above demand.

Question 8

Table 15-6
A monopolist faces the following demand curve:  
-Refer to Table 15-6. Suppose the monopolist has total fixed costs equal to $5 and a variable cost equal to $4 per unit for all units produced. What is the total profit if she operates at her profit-maximizing price?

Accepted Answer

A) $1 
B) $7 
C) $9 
D) $11 
A) $1 
B) $7 
C) $9 
D) $11

Question 9

Table 15-18
A monopolist faces the following demand curve:   Suppose marginal cost is constant at $8 per unit.
-Refer to Table 15-18 The monopolist's profit-maximizing level of output is

Accepted Answer

A) 3 units. 
B) 4 units. 
C) 5 units. 
D) 6 units. 
A) 3 units. 
B) 4 units. 
C) 5 units. 
D) 6 units.

Question 10

Scenario 15-2
Consider a local, privately-owned electrical cooperative named Poweshiek Power Company (PPCo). PPCo has just completed a clean-coal-burning electrical power plant in Iowa. Currently, PPCo can meet the electricity needs of all residents in the county. In fact, its capacity far exceeds the needs of the county. After just a few years of operation, the shareholders of PPCo experienced incredibly high rates of return on their investment due to the profitability of the corporation.
-Refer to Scenario 15-2. Which of the following statements is most likely to be true? (i)
New entrants to the market know they will have a smaller market share than PPCo currently has.
(ii)
PPCo is a natural monopoly.
(iii)
PPCo would experience higher profits if it were government-run.

Accepted Answer

A) (i) and (ii) only 
B) (ii) and (iii) only 
C) (i) and (iii) only 
D) (i), (ii), and (iii) 
A) (i) and (ii) only 
B) (ii) and (iii) only 
C) (i) and (iii) only 
D) (i), (ii), and (iii)

Question 11

An industry is a natural monopoly when (i)
The government assists the firm in maintaining the monopoly.
(ii)
A single firm owns a key resource.(iii)
A single firm can supply a good or service to an entire market at a smaller cost than could two or more firms.

Accepted Answer

A) (ii) only 
B) (iii) only 
C) (i) and (ii) only 
D) (ii) and (iii) only 
A) (ii) only 
B) (iii) only 
C) (i) and (ii) only 
D) (ii) and (iii) only

Question 12

A monopolist's profit is equal to (Price - Marginal Cost) × Quantity.

Accepted Answer

A) True 
 B)False

Question 13

When a single firm can supply a product to an entire market at a lower cost than could two or more firms, the industry is called a

Accepted Answer

A) resource industry. 
B) exclusive industry. 
C) government monopoly. 
D) natural monopoly. 
A) resource industry. 
B) exclusive industry. 
C) government monopoly. 
D) natural monopoly.

Question 14

A movie theater can increase its profits through price discrimination by charging a higher price to adults and a lower price to children if it

Accepted Answer

A) can prevent children from buying the lower-priced tickets and selling them to adults. 
B) has some degree of monopoly pricing power. 
C) can easily distinguish between the two groups of customers. 
D) All of the above are correct. 
A) can prevent children from buying the lower-priced tickets and selling them to adults. 
B) has some degree of monopoly pricing power. 
C) can easily distinguish between the two groups of customers. 
D) All of the above are correct.

Question 15

A monopoly firm is a price

Accepted Answer

A) taker and has no supply curve. 
B) maker and has no supply curve 
C) taker and has an upward-sloping supply curve. 
D) maker and has an upward-sloping supply curve. 
A) taker and has no supply curve. 
B) maker and has no supply curve 
C) taker and has an upward-sloping supply curve. 
D) maker and has an upward-sloping supply curve.

Question 16

Figure 15-8  
-Refer to Figure 15-8. What area represents the total surplus lost due to monopoly pricing?

Accepted Answer

A) the rectangle (A-
C) *X 
B) the triangle 1/2[(A-
C) *(Y-X)] 
C) the triangle 1/2[(A-
B) *(Y-X)] 
D) the rectangle (A-
C) *X plus the triangle 1/2[(A-
C) *(Y-X)] 
A) the rectangle (A-
C) *X 
B) the triangle 1/2[(A-
C) *(Y-X)] 
C) the triangle 1/2[(A-
B) *(Y-X)] 
D) the rectangle (A-
C) *X plus the triangle 1/2[(A-
C) *(Y-X)]

Question 17

Scenario 15-3
A monopoly firm maximizes its profit by producing Q = 500 units of output. At that level of output, its marginal revenue is $30, its average revenue is $60, and its average total cost is $34.
-Refer to Scenario 15-3. The firm's profit-maximizing price is

Accepted Answer

A) $30. 
B) between $30 and $34. 
C) between $34 and $60. 
D) $60. 
A) $30. 
B) between $30 and $34. 
C) between $34 and $60. 
D) $60.

Question 18

Figure 15-5  
-Refer to Figure 15-5. A profit-maximizing monopoly's profit is equal to

Accepted Answer

A) P2 x Q3. 
B) (P2-P4) x Q3. 
C) (P2-P5) x Q3. 
D) (P1-P6) x Q1. 
A) P2 x Q3. 
B) (P2-P4) x Q3. 
C) (P2-P5) x Q3. 
D) (P1-P6) x Q1.

Question 19

Table 15-7
Sally owns the only shoe store in town. She has the following cost and revenue information.  
-Refer to Table 15-7. What is total profit at the profit-maximizing quantity?

Accepted Answer

A) $100 
B) $245 
C) $265 
D) $395 
A) $100 
B) $245 
C) $265 
D) $395

Question 20

For a monopoly, the socially efficient level of output occurs where

Accepted Answer

A) marginal revenue equals marginal cost. 
B) average revenue equals marginal cost. 
C) marginal revenue equals average total cost. 
D) average revenue equals average total cost. 
A) marginal revenue equals marginal cost. 
B) average revenue equals marginal cost. 
C) marginal revenue equals average total cost. 
D) average revenue equals average total cost.

Exam 15: Monopoly

University financial aid can be viewed as a type of price discrimination.

Figure 15-1 -Refer to Figure 15-1. How much profit will this monopolist earn if it charges each consumer the same price?

Which of the following statements is not correct?

Table 15-20 A monopolist faces the following demand curve: -Refer to Table 15-20. If a monopolist faces a constant marginal cost of $10, how much output should the firm produce in order to maximize profit?

Table 15-1 -Refer to Table 15-1. What is the marginal revenue for the monopolist for the sixth unit sold?

When a certain monopoly sets its price at $8 it sells 64 units. When the monopoly sets its price at $9 it sells 62 units. The marginal revenue for the firm over this range is

Monopolies are socially inefficient because the price they charge is

Table 15-6 A monopolist faces the following demand curve: -Refer to Table 15-6. Suppose the monopolist has total fixed costs equal to $5 and a variable cost equal to $4 per unit for all units produced. What is the total profit if she operates at her profit-maximizing price?

Table 15-18 A monopolist faces the following demand curve: Suppose marginal cost is constant at $8 per unit. -Refer to Table 15-18 The monopolist's profit-maximizing level of output is

An industry is a natural monopoly when (i) The government assists the firm in maintaining the monopoly. (ii) A single firm owns a key resource.(iii) A single firm can supply a good or service to an entire market at a smaller cost than could two or more firms.

A monopolist's profit is equal to (Price - Marginal Cost) × Quantity.

When a single firm can supply a product to an entire market at a lower cost than could two or more firms, the industry is called a

A movie theater can increase its profits through price discrimination by charging a higher price to adults and a lower price to children if it

A monopoly firm is a price

Figure 15-8 -Refer to Figure 15-8. What area represents the total surplus lost due to monopoly pricing?

Scenario 15-3 A monopoly firm maximizes its profit by producing Q = 500 units of output. At that level of output, its marginal revenue is $30, its average revenue is $60, and its average total cost is $34. -Refer to Scenario 15-3. The firm's profit-maximizing price is

Figure 15-5 -Refer to Figure 15-5. A profit-maximizing monopoly's profit is equal to

Table 15-7 Sally owns the only shoe store in town. She has the following cost and revenue information. -Refer to Table 15-7. What is total profit at the profit-maximizing quantity?

For a monopoly, the socially efficient level of output occurs where

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers in Microeconomics

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