Question 1

Which of the following can defeat the profit-maximizing strategy of price discrimination?

Accepted Answer

A) consumer surplus 
B) deadweight loss 
C) market power 
D) arbitrage 
A) consumer surplus 
B) deadweight loss 
C) market power 
D) arbitrage

Question 2

For a monopoly firm, the shape and position of the demand curve play a role in determining the (i)
Profit-maximizing price.(ii)
Shape and position of the marginal-cost curve.(iii)
Shape and position of the marginal-revenue curve.

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 3

A competitive firm

Accepted Answer

A) and a monopolist are price takers. 
B) and a monopolist are price makers. 
C) is a price taker, whereas a monopolist is a price maker. 
D) is a price maker, whereas a monopolist is a price taker. 
A) and a monopolist are price takers. 
B) and a monopolist are price makers. 
C) is a price taker, whereas a monopolist is a price maker. 
D) is a price maker, whereas a monopolist is a price taker.

Question 4

A natural monopoly occurs when

Accepted Answer

A) the product is sold in its natural state, such as water or diamonds. 
B) there are economies of scale over the relevant range of output. 
C) the firm is characterized by a rising marginal cost curve. 
D) production requires the use of free natural resources, such as water or air. 
A) the product is sold in its natural state, such as water or diamonds. 
B) there are economies of scale over the relevant range of output. 
C) the firm is characterized by a rising marginal cost curve. 
D) production requires the use of free natural resources, such as water or air.

Question 5

One problem with government operation of monopolies is that

Accepted Answer

A) a benevolent government is likely to be interested in generating profits for political gain. 
B) monopolies typically have rising average costs. 
C) the government typically has little incentive to reduce costs. 
D) a government-regulated outcome will increase the profitability of the monopoly. 
A) a benevolent government is likely to be interested in generating profits for political gain. 
B) monopolies typically have rising average costs. 
C) the government typically has little incentive to reduce costs. 
D) a government-regulated outcome will increase the profitability of the monopoly.

Question 6

Figure 15-2  
-Refer to Figure 15-2. If the firm profit-maximizes, what amount of output will it produce?

Accepted Answer

The answer of Figure 15-2  
-Refer to Figure 15-2....

Question 7

Which of the following would be most likely to have monopoly power?

Accepted Answer

A) a long-distance telephone service provider 
B) a local cable TV provider 
C) a large department store 
D) a gas station 
A) a long-distance telephone service provider 
B) a local cable TV provider 
C) a large department store 
D) a gas station

Question 8

Figure 15-3  
-Refer to Figure 15-3. Which letter represents the profit-maximizing price chosen by the single price monopolist?

Accepted Answer

The answer of Figure 15-3  
-Refer to Figure 15-3....

Question 9

The amount that producers receive for a good minus their costs of producing it equals

Accepted Answer

A) quantity supplied. 
B) supply price. 
C) deadweight loss. 
D) producer surplus. 
A) quantity supplied. 
B) supply price. 
C) deadweight loss. 
D) producer surplus.

Question 10

When a monopolist increases the number of units it sells, there are two effects on revenue. They are the

Accepted Answer

A) demand effect and the supply effect. 
B) competition effect and the cost effect. 
C) competitive effect and the monopoly effect. 
D) output effect and the price effect. 
A) demand effect and the supply effect. 
B) competition effect and the cost effect. 
C) competitive effect and the monopoly effect. 
D) output effect and the price effect.

Question 11

If the government deems a newly-invented drug to be truly original, the pharmaceutical company is given the exclusive right to manufacture and sell the drug for 50 years.

Accepted Answer

A) True 
 B)False

Question 12

Table 15-1  
-Refer to Table 15-1. When 4 units of output are produced and sold, what is average revenue?

Accepted Answer

A) $17 
B) $21 
C) $23 
D) $26 
A) $17 
B) $21 
C) $23 
D) $26

Question 13

Scenario 15-6
The concert promoters of a heavy-metal band, WeR2Loud, know that there are two types of concert-goers: die-hard fans and casual fans. For a particular WeR2Loud concert, there are 1,000 die-hard fans who will pay $150 for a ticket and 500 casual fans who will pay $50 for a ticket. There are 1,500 seats available at the concert venue. Suppose the cost of putting on the concert is $50,000, which includes the cost of the band, lighting, security, etc.
-Refer to Scenario 15-6. How much additional profit can the concert promoters earn by charging each customer their willingness to pay relative to charging a flat price of $150 per ticket?

Accepted Answer

A) $25,000 
B) $50,000 
C) $75,000 
D) $100,000 
A) $25,000 
B) $50,000 
C) $75,000 
D) $100,000

Question 14

The supply curve for a monopolist, in the short run, is defined in the same way as that for a competitive firm: it is the portion of the marginal cost curve above average variable cost.

Accepted Answer

A) True 
 B)False

Question 15

The amount of power that a monopoly has depends on whether there are close substitutes for its product.

Accepted Answer

A) True 
 B)False

Question 16

The fundamental cause of monopoly is

Accepted Answer

The answer of The fundamental cause of monopoly is...

Question 17

When we compare economic welfare in a monopoly market to a competitive market, the profits earned by the monopolist represent

Accepted Answer

A) a loss in total welfare. 
B) a transfer of benefits from the buyer to the seller. 
C) the higher marginal costs incurred by the monopolists in comparison to competitive firms. 
D) All of the above are correct. 
A) a loss in total welfare. 
B) a transfer of benefits from the buyer to the seller. 
C) the higher marginal costs incurred by the monopolists in comparison to competitive firms. 
D) All of the above are correct.

Question 18

Which of the following statements is not correct?

Accepted Answer

A) The government may use antitrust laws to prevent a merger if the government believes the merger will reduce competition and increase prices. 
B) By regulating a natural monopoly where price equals average total cost, the monopoly earns zero profits. 
C) An advantage of private ownership over public ownership is that private business owners tend to fire inefficient managers. 
D) The government should always intervene to improve monopoly inefficiency. 
A) The government may use antitrust laws to prevent a merger if the government believes the merger will reduce competition and increase prices. 
B) By regulating a natural monopoly where price equals average total cost, the monopoly earns zero profits. 
C) An advantage of private ownership over public ownership is that private business owners tend to fire inefficient managers. 
D) The government should always intervene to improve monopoly inefficiency.

Question 19

When a monopolist maximizes profit, its marginal cost will

Accepted Answer

A) be less than its average fixed cost. 
B) be less than the price per unit of its product. 
C) exceed its marginal revenue. 
D) equal its average total cost. 
A) be less than its average fixed cost. 
B) be less than the price per unit of its product. 
C) exceed its marginal revenue. 
D) equal its average total cost.

Question 20

A monopolist does not have a supply curve because the firm's decision about how much to supply is impossible to separate from the demand curve it faces.

Accepted Answer

A) True 
 B)False

Exam 15: Monopoly

Which of the following can defeat the profit-maximizing strategy of price discrimination?

For a monopoly firm, the shape and position of the demand curve play a role in determining the (i) Profit-maximizing price.(ii) Shape and position of the marginal-cost curve.(iii) Shape and position of the marginal-revenue curve.

A competitive firm

A natural monopoly occurs when

One problem with government operation of monopolies is that

Figure 15-2 -Refer to Figure 15-2. If the firm profit-maximizes, what amount of output will it produce?

Which of the following would be most likely to have monopoly power?

Figure 15-3 -Refer to Figure 15-3. Which letter represents the profit-maximizing price chosen by the single price monopolist?

The amount that producers receive for a good minus their costs of producing it equals

When a monopolist increases the number of units it sells, there are two effects on revenue. They are the

If the government deems a newly-invented drug to be truly original, the pharmaceutical company is given the exclusive right to manufacture and sell the drug for 50 years.

Table 15-1 -Refer to Table 15-1. When 4 units of output are produced and sold, what is average revenue?

The supply curve for a monopolist, in the short run, is defined in the same way as that for a competitive firm: it is the portion of the marginal cost curve above average variable cost.

The amount of power that a monopoly has depends on whether there are close substitutes for its product.

The fundamental cause of monopoly is

When we compare economic welfare in a monopoly market to a competitive market, the profits earned by the monopolist represent

Which of the following statements is not correct?

When a monopolist maximizes profit, its marginal cost will

A monopolist does not have a supply curve because the firm's decision about how much to supply is impossible to separate from the demand curve it faces.

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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