Question 1

Comparing firms in perfectly competitive markets to monopoly firms, which produces more output?

Accepted Answer

perfectly

Question 2

If a profit-maximizing monopolist faces a downward-sloping market demand curve, its

Accepted Answer

A) average revenue is less than the price of the product. 
B) average revenue is less than marginal revenue. 
C) marginal revenue is less than the price of the product. 
D) marginal revenue is greater than the price of the product. 
A) average revenue is less than the price of the product. 
B) average revenue is less than marginal revenue. 
C) marginal revenue is less than the price of the product. 
D) marginal revenue is greater than the price of the product.

Question 3

​The best option to control the behavior of a natural monopoly is to use public ownership of the monopoly.

Accepted Answer

A) True 
 B)False

Question 4

Many economists criticize monopolists because they

Accepted Answer

A) charge a price that equals marginal cost rather than a price that equals average cost. 
B) do not innovate. 
C) produce a large quantity of waste. 
D) produce less than the socially efficient level of output. 
A) charge a price that equals marginal cost rather than a price that equals average cost. 
B) do not innovate. 
C) produce a large quantity of waste. 
D) produce less than the socially efficient level of output.

Question 5

Figure 15-17  
-Refer to Figure 15-17. Which of the following areas represents the consumer surplus from this profit-maximizing monopolist?

Accepted Answer

A) ABE 
B) BCFE 
C) EFG 
D) ACG 
A) ABE 
B) BCFE 
C) EFG 
D) ACG

Question 6

Figure 15-3  
-Refer to Figure 15-3. Use the letters in the figure to identify the area of deadweight loss for the single price monopolist.

Accepted Answer

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

Question 7

Figure 15-18  
-Refer to Figure 15-18. If there are no fixed costs of production, monopoly profit without price discrimination equals

Accepted Answer

A) $0. 
B) $1,000. 
C) $2,000. 
D) $4,000. 
A) $0. 
B) $1,000. 
C) $2,000. 
D) $4,000.

Question 8

One solution to the problems of marginal-cost pricing of a regulated natural monopolist is average cost pricing. In this model, the monopolist is allowed to price its production at average total cost. How does average-cost pricing differ from marginal-cost pricing? Does this solution maximize social well-being?

Accepted Answer

Under average-cost pricing, the monopoli

Question 9

Scenario 15-1
Vincent operates a scenic tour business in Boston. He has one bus which can fit 50 people per tour and each tour lasts 2 hours. His total cost of operating one tour is fixed at $450. Vincent's cost is not reduced if he runs a tour with a partially full bus. While his cost is the same for all tours, Vincent charges each passenger his/her willingness to pay: adults $18 per trip, children $10 per trip, and senior citizens $12 per trip. At those rates, on a typical day Vincent's demand is:   Assume that Vincent's customers are always available for the tour; therefore, he can fill his bus for each tour as long as there is sufficient total demand for the day.
-Refer to Scenario 15-1. One of Vincent's friends tells him he would be more profitable if he charged a single price of $18. Assuming no changes in consumer demand, what would Vincent's profit be if he charged every customer $18?

Accepted Answer

The answer of Scenario 15-1
Vincent operates a scenic tour business...

Question 10

When a monopolist is able to sell its product at different prices, it is engaging in

Accepted Answer

A) distribution pricing. 
B) quality-adjusted pricing. 
C) arbitrage. 
D) price discrimination. 
A) distribution pricing. 
B) quality-adjusted pricing. 
C) arbitrage. 
D) price discrimination.

Question 11

​Suppose that a market that is a natural monopoly has three producers providing the good to this market. This situation will

Accepted Answer

A) ​result in lower prices for consumers under all circumstances. 
B) ​result in higher average costs for each producer than if there were only a single producer. 
C) ​result in all firms taking full advantage of economies of scale in the production of the good. 
D) result in a more efficient outcome than the market with fewer producers. 
A) ​result in lower prices for consumers under all circumstances. 
B) ​result in higher average costs for each producer than if there were only a single producer. 
C) ​result in all firms taking full advantage of economies of scale in the production of the good. 
D) result in a more efficient outcome than the market with fewer producers.

Question 12

How does a competitive market compare to a monopoly that engages in perfect price discrimination?

Accepted Answer

A) In both cases, total social welfare is the same. 
B) Total social welfare is higher in the competitive market than with the perfectly price discriminating monopoly. 
C) In both cases, some potentially mutually beneficial trades do not occur. 
D) Consumer surplus is the same in both cases. 
A) In both cases, total social welfare is the same. 
B) Total social welfare is higher in the competitive market than with the perfectly price discriminating monopoly. 
C) In both cases, some potentially mutually beneficial trades do not occur. 
D) Consumer surplus is the same in both cases.

Question 13

Table 15-3
Consider the following demand and cost information for a monopoly.  
-Refer to Table 15-3. The marginal cost of the 4th unit is

Accepted Answer

A) $7. 
B) $12. 
C) $25. 
D) $60. 
A) $7. 
B) $12. 
C) $25. 
D) $60.

Question 14

For a monopolist, marginal revenue is

Accepted Answer

A) equal to price, as it is for a perfectly competitive firm. 
B) less than price, as it is for a perfectly competitive firm. 
C) equal to price, whereas marginal revenue is less than price for a perfectly competitive firm. 
D) less than price, whereas marginal revenue is equal to price for a perfectly competitive firm. 
A) equal to price, as it is for a perfectly competitive firm. 
B) less than price, as it is for a perfectly competitive firm. 
C) equal to price, whereas marginal revenue is less than price for a perfectly competitive firm. 
D) less than price, whereas marginal revenue is equal to price for a perfectly competitive firm.

Question 15

The fundamental cause of monopolies is barriers to entry.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following strategies is not an effective strategy to reduce monopoly inefficiency?

Accepted Answer

A) antitrust laws 
B) price discrimination 
C) doing nothing 
D) breaking up a natural monopoly into more than one firm 
A) antitrust laws 
B) price discrimination 
C) doing nothing 
D) breaking up a natural monopoly into more than one firm

Question 17

Which of the following statements comparing monopoly with competition is correct?

Accepted Answer

A) A monopolist produces a higher level of output and charges a lower price than a competitive firm would. 
B) With perfect price discrimination, the total surplus under monopoly can be the same as under competition. 
C) With or without price discrimination, the consumer surplus under monopoly is at least as large as it would be under competition. 
D) The deadweight loss associated with monopoly is caused by the positive economic profits of the monopolist; competitive firms do not earn a positive economic profit so there is no deadweight loss under competition. 
A) A monopolist produces a higher level of output and charges a lower price than a competitive firm would. 
B) With perfect price discrimination, the total surplus under monopoly can be the same as under competition. 
C) With or without price discrimination, the consumer surplus under monopoly is at least as large as it would be under competition. 
D) The deadweight loss associated with monopoly is caused by the positive economic profits of the monopolist; competitive firms do not earn a positive economic profit so there is no deadweight loss under competition.

Question 18

Monopoly pricing prevents some mutually beneficial trades from taking place. These unrealized, mutually beneficial trades are

Accepted Answer

A) less of a concern for a monopoly than competitive market. 
B) offset by the higher profits earned by a monopolist. 
C) a function of the reduction in the quantity produced by a monopolist in comparison to a competitive market. 
D) All of the above are correct. 
A) less of a concern for a monopoly than competitive market. 
B) offset by the higher profits earned by a monopolist. 
C) a function of the reduction in the quantity produced by a monopolist in comparison to a competitive market. 
D) All of the above are correct.

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 the average revenue when Sally sells 7 pairs of shoes?

Accepted Answer

A) $40 
B) $90 
C) $100 
D) $700 
A) $40 
B) $90 
C) $100 
D) $700

Question 20

Scenario 15-9
Suppose executives at an art museum know that 100 adults are willing to pay $12 for admission to the museum on a weekday. Suppose the executives also know that 200 students are willing to pay $8 for admission on a weekday. The cost of operating the museum on a weekday is $2,000.
-Refer to Scenario 15-9. How much additional profit will the museum earn if it engages in price discrimination compared to charging each customer $8 for admission?

Accepted Answer

A) $0 
B) $200 
C) $400 
D) $800 
A) $0 
B) $200 
C) $400 
D) $800

Comparing firms in perfectly competitive markets to monopoly firms, which produces more output?

If a profit-maximizing monopolist faces a downward-sloping market demand curve, its

The best option to control the behavior of a natural monopoly is to use public ownership of the monopoly.

Many economists criticize monopolists because they

Figure 15-17 -Refer to Figure 15-17. Which of the following areas represents the consumer surplus from this profit-maximizing monopolist?

Figure 15-3 -Refer to Figure 15-3. Use the letters in the figure to identify the area of deadweight loss for the single price monopolist.

Figure 15-18 -Refer to Figure 15-18. If there are no fixed costs of production, monopoly profit without price discrimination equals

When a monopolist is able to sell its product at different prices, it is engaging in

Suppose that a market that is a natural monopoly has three producers providing the good to this market. This situation will

How does a competitive market compare to a monopoly that engages in perfect price discrimination?

Table 15-3 Consider the following demand and cost information for a monopoly. -Refer to Table 15-3. The marginal cost of the 4th unit is

For a monopolist, marginal revenue is

The fundamental cause of monopolies is barriers to entry.

Which of the following strategies is not an effective strategy to reduce monopoly inefficiency?

Which of the following statements comparing monopoly with competition is correct?

Monopoly pricing prevents some mutually beneficial trades from taking place. These unrealized, mutually beneficial trades are

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 the average revenue when Sally sells 7 pairs of shoes?

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

Comparing firms in perfectly competitive markets to monopoly firms, which produces more output?

If a profit-maximizing monopolist faces a downward-sloping market demand curve, its

​The best option to control the behavior of a natural monopoly is to use public ownership of the monopoly.

Many economists criticize monopolists because they

Figure 15-17 -Refer to Figure 15-17. Which of the following areas represents the consumer surplus from this profit-maximizing monopolist?

Figure 15-3 -Refer to Figure 15-3. Use the letters in the figure to identify the area of deadweight loss for the single price monopolist.

Figure 15-18 -Refer to Figure 15-18. If there are no fixed costs of production, monopoly profit without price discrimination equals

When a monopolist is able to sell its product at different prices, it is engaging in

​Suppose that a market that is a natural monopoly has three producers providing the good to this market. This situation will

How does a competitive market compare to a monopoly that engages in perfect price discrimination?

Table 15-3 Consider the following demand and cost information for a monopoly. -Refer to Table 15-3. The marginal cost of the 4th unit is

For a monopolist, marginal revenue is

The fundamental cause of monopolies is barriers to entry.

Which of the following strategies is not an effective strategy to reduce monopoly inefficiency?

Which of the following statements comparing monopoly with competition is correct?

Monopoly pricing prevents some mutually beneficial trades from taking place. These unrealized, mutually beneficial trades are

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 the average revenue when Sally sells 7 pairs of shoes?

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

The best option to control the behavior of a natural monopoly is to use public ownership of the monopoly.

Suppose that a market that is a natural monopoly has three producers providing the good to this market. This situation will