Question 1

When a firm has a natural monopoly, the firm's

Accepted Answer

A) marginal cost always exceeds its average total cost. 
B) total cost curve is horizontal. 
C) average total cost curve is downward sloping. 
D) marginal cost curve must lie above the firm's average total cost curve. 
A) marginal cost always exceeds its average total cost. 
B) total cost curve is horizontal. 
C) average total cost curve is downward sloping. 
D) marginal cost curve must lie above the firm's average total cost curve.

Question 2

​Since monopolists that practice price discrimination generally increase market output, compared to a monopoly that charges a single price, practicing price discrimination generally leads to a smaller deadweight loss.

Accepted Answer

A) True 
 B)False

Question 3

The supply curve for the monopolist

Accepted Answer

A) is horizontal. 
B) is vertical. 
C) is upward sloping. 
D) does not exist. 
A) is horizontal. 
B) is vertical. 
C) is upward sloping. 
D) does not exist.

Question 4

When the marginal revenue curve is drawn for a monopolist, the curve

Accepted Answer

A) ​is above the monopolist's demand curve initially and then falls below the demand curve. 
B) ​is above the monopolist's demand curve for all output levels. 
C) is equal to the monopolist's demand curve at all output levels. 
D) ​is below the monopolist's demand curve, beyond the initial unit produced. 
A) ​is above the monopolist's demand curve initially and then falls below the demand curve. 
B) ​is above the monopolist's demand curve for all output levels. 
C) is equal to the monopolist's demand curve at all output levels. 
D) ​is below the monopolist's demand curve, beyond the initial unit produced.

Question 5

Table 15-19
A monopolist faces the following demand curve:  
-Refer to Table 15-19. If a monopolist faces a constant marginal cost of $3, how much output should the firm produce?

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 6

Scenario 15-4
Suppose a monopolist has a demand curve that can be expressed as P=90-Q. The monopolist's marginal revenue curve can be expressed as MR=90-2Q. The monopolist has constant marginal costs and average total costs of $10.
-Refer to Scenario 15-4. The profit-maximizing monopolist will produce an output level of

Accepted Answer

A) 80 units. 
B) 40 units. 
C) 20 units. 
D) 10 units. 
A) 80 units. 
B) 40 units. 
C) 20 units. 
D) 10 units.

Question 7

Figure 15-7  
-Refer to Figure 15-7. A profit-maximizing monopolist would earn total revenues of

Accepted Answer

A) $81. 
B) $144. 
C) $225. 
D) $240. 
A) $81. 
B) $144. 
C) $225. 
D) $240.

Question 8

Which of the following is the preferred strategy for the government to follow to remedy the inefficient allocation of resources associated with monopolies?

Accepted Answer

A) preventing mergers through antitrust laws 
B) regulating the prices that monopolies can charge 
C) doing nothing 
D) None of the above strategies is preferred. Each is a viable strategy. 
A) preventing mergers through antitrust laws 
B) regulating the prices that monopolies can charge 
C) doing nothing 
D) None of the above strategies is preferred. Each is a viable strategy.

Question 9

Consider a profit-maximizing monopoly pricing under the following conditions. The profit-maximizing quantity is 40 units, the profit-maximizing price is $160, and the marginal cost of the 40th unit is $120. If the good were produced in a perfectly competitive market, the equilibrium quantity would be 50, and the equilibrium price would be $150. The demand curve and marginal cost curves are linear. What is the value of the deadweight loss created by the monopolist?

Accepted Answer

A) $40 
B) $100 
C) $200 
D) $400 
A) $40 
B) $100 
C) $200 
D) $400

Question 10

Most firms have

Accepted Answer

A) no monopoly pricing power. 
B) some monopoly pricing power. 
C) absolute monopoly pricing power. 
D) the ability to earn monopoly profits. 
A) no monopoly pricing power. 
B) some monopoly pricing power. 
C) absolute monopoly pricing power. 
D) the ability to earn monopoly profits.

Question 11

Suppose ABC Aluminum Inc. owns 80% of the world's bauxite, a mineral used in the production of aluminum. Which of the following reasons describes the fundamental barrier to entry for the aluminum industry?

Accepted Answer

A) monopoly resources 
B) government regulation 
C) the production process 
D) Both a and b are correct. 
A) monopoly resources 
B) government regulation 
C) the production process 
D) Both a and b are correct.

Question 12

Figure 15-7  
-Refer to Figure 15-7. A profit-maximizing monopolist would incur total costs of

Accepted Answer

A) $81. 
B) $120. 
C) $144. 
D) $240. 
A) $81. 
B) $120. 
C) $144. 
D) $240.

Question 13

A monopoly creates a deadweight loss to society because it produces less output than the socially efficient level.

Accepted Answer

A) True 
 B)False

Question 14

A monopoly firm can sell 150 units of output for $10 per unit. Alternatively, it can sell 151 units of output for $9.98 per unit. The marginal revenue of the 151st unit of output is

Accepted Answer

A) -$6.98. 
B) -$0.02. 
C) $2.45. 
D) $6.98. 
A) -$6.98. 
B) -$0.02. 
C) $2.45. 
D) $6.98.

Question 15

Exclusive ownership of a key resource

Accepted Answer

A) is the most common cause of a monopoly. 
B) is a potential but rare cause of a monopoly. 
C) explains the monopoly ownership of the US Postal Service. 
D) explains why a single firm distributes water to a community. 
A) is the most common cause of a monopoly. 
B) is a potential but rare cause of a monopoly. 
C) explains the monopoly ownership of the US Postal Service. 
D) explains why a single firm distributes water to a community.

Question 16

Encouraging firms to invest in research and development and individuals to engage in creative endeavors such as writing novels is one justification for

Accepted Answer

A) resource monopolies. 
B) natural monopolies. 
C) government-created monopolies. 
D) breaking up monopolies into smaller firms. 
A) resource monopolies. 
B) natural monopolies. 
C) government-created monopolies. 
D) breaking up monopolies into smaller firms.

Question 17

Drug companies are allowed to be monopolists in the drugs they discover in order to

Accepted Answer

A) allow drug companies to charge a price that is equal to their marginal cost. 
B) discourage new firms from entering the drug market. 
C) allow the government to earn patent revenue. 
D) None of the above is correct. 
A) allow drug companies to charge a price that is equal to their marginal cost. 
B) discourage new firms from entering the drug market. 
C) allow the government to earn patent revenue. 
D) None of the above is correct.

Question 18

​Figure 15-22
The diagram depicts the market situation for a monopoly pastry shop called Bearclaws.  
-Refer to Figure 15-22. If we want to plot the supply curve for Bearclaws, what is the lowest output that it would produce?

Accepted Answer

A) ​56 units. 
B) ​35 units. 
C) ​40 units. 
D) ​None of these, since a monopoly does not have a supply curve. 
A) ​56 units. 
B) ​35 units. 
C) ​40 units. 
D) ​None of these, since a monopoly does not have a supply curve.

Question 19

Figure 15-5  
-Refer to Figure 15-5. A profit-maximizing monopoly will charge a price of

Accepted Answer

A) P1. 
B) P2. 
C) P3. 
D) P4. 
A) P1. 
B) P2. 
C) P3. 
D) P4.

Question 20

Consumers' willingness to pay for a good minus the amount they actually pay for it equals

Accepted Answer

A) consumer surplus. 
B) consumer benefit. 
C) price discriminant. 
D) deadweight loss. 
A) consumer surplus. 
B) consumer benefit. 
C) price discriminant. 
D) deadweight loss.

When a firm has a natural monopoly, the firm's

Since monopolists that practice price discrimination generally increase market output, compared to a monopoly that charges a single price, practicing price discrimination generally leads to a smaller deadweight loss.

The supply curve for the monopolist

When the marginal revenue curve is drawn for a monopolist, the curve

Table 15-19 A monopolist faces the following demand curve: -Refer to Table 15-19. If a monopolist faces a constant marginal cost of $3, how much output should the firm produce?

Figure 15-7 -Refer to Figure 15-7. A profit-maximizing monopolist would earn total revenues of

Which of the following is the preferred strategy for the government to follow to remedy the inefficient allocation of resources associated with monopolies?

Most firms have

Suppose ABC Aluminum Inc. owns 80% of the world's bauxite, a mineral used in the production of aluminum. Which of the following reasons describes the fundamental barrier to entry for the aluminum industry?

Figure 15-7 -Refer to Figure 15-7. A profit-maximizing monopolist would incur total costs of

A monopoly creates a deadweight loss to society because it produces less output than the socially efficient level.

A monopoly firm can sell 150 units of output for $10 per unit. Alternatively, it can sell 151 units of output for $9.98 per unit. The marginal revenue of the 151^st unit of output is

Exclusive ownership of a key resource

Encouraging firms to invest in research and development and individuals to engage in creative endeavors such as writing novels is one justification for

Drug companies are allowed to be monopolists in the drugs they discover in order to

Figure 15-22 The diagram depicts the market situation for a monopoly pastry shop called Bearclaws. -Refer to Figure 15-22. If we want to plot the supply curve for Bearclaws, what is the lowest output that it would produce?

Figure 15-5 -Refer to Figure 15-5. A profit-maximizing monopoly will charge a price of

Consumers' willingness to pay for a good minus the amount they actually pay for it equals

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

Filters

Exam 15: Monopoly

When a firm has a natural monopoly, the firm's

​Since monopolists that practice price discrimination generally increase market output, compared to a monopoly that charges a single price, practicing price discrimination generally leads to a smaller deadweight loss.

The supply curve for the monopolist

When the marginal revenue curve is drawn for a monopolist, the curve

Table 15-19 A monopolist faces the following demand curve: -Refer to Table 15-19. If a monopolist faces a constant marginal cost of $3, how much output should the firm produce?

Figure 15-7 -Refer to Figure 15-7. A profit-maximizing monopolist would earn total revenues of

Which of the following is the preferred strategy for the government to follow to remedy the inefficient allocation of resources associated with monopolies?

Most firms have

Suppose ABC Aluminum Inc. owns 80% of the world's bauxite, a mineral used in the production of aluminum. Which of the following reasons describes the fundamental barrier to entry for the aluminum industry?

Figure 15-7 -Refer to Figure 15-7. A profit-maximizing monopolist would incur total costs of

A monopoly creates a deadweight loss to society because it produces less output than the socially efficient level.

A monopoly firm can sell 150 units of output for $10 per unit. Alternatively, it can sell 151 units of output for $9.98 per unit. The marginal revenue of the 151st unit of output is

Exclusive ownership of a key resource

Encouraging firms to invest in research and development and individuals to engage in creative endeavors such as writing novels is one justification for

Drug companies are allowed to be monopolists in the drugs they discover in order to

​Figure 15-22 The diagram depicts the market situation for a monopoly pastry shop called Bearclaws. -Refer to Figure 15-22. If we want to plot the supply curve for Bearclaws, what is the lowest output that it would produce?

Figure 15-5 -Refer to Figure 15-5. A profit-maximizing monopoly will charge a price of

Consumers' willingness to pay for a good minus the amount they actually pay for it equals

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

Filters

Since monopolists that practice price discrimination generally increase market output, compared to a monopoly that charges a single price, practicing price discrimination generally leads to a smaller deadweight loss.

A monopoly firm can sell 150 units of output for $10 per unit. Alternatively, it can sell 151 units of output for $9.98 per unit. The marginal revenue of the 151^st unit of output is

Figure 15-22 The diagram depicts the market situation for a monopoly pastry shop called Bearclaws. -Refer to Figure 15-22. If we want to plot the supply curve for Bearclaws, what is the lowest output that it would produce?