Question 1

Copyrights and patents are examples of barriers to entry that give firms monopoly pricing powers.

Accepted Answer

A) True 
 B)False

Question 2

For a monopoly, marginal revenue is often greater than the price it charges for its good.

Accepted Answer

A) True 
 B)False

Question 3

State one benefit of government-granted monopolies like patents and copyrights.

Accepted Answer

increased

Question 4

Figure 15-20  
-Refer to Figure 15-20. The consumer surplus at the monopolist's profit-maximizing price is

Accepted Answer

A) $450. 
B) $900. 
C) $1,350. 
D) $2,025. 
A) $450. 
B) $900. 
C) $1,350. 
D) $2,025.

Question 5

During the holiday season, high-end retailers frequently place a high price on merchandise on weekends and discount the price during the week. They do this because they believe that two groups of customers exist: shoppers with little free time and bargain hunters. Bargain hunters have time to shop around and frequently shop during the week. What do economists call this price strategy used by high-end retailers?

Accepted Answer

A) oligopoly 
B) price discrimination 
C) compensating differential 
D) in-kind transfers 
A) oligopoly 
B) price discrimination 
C) compensating differential 
D) in-kind transfers

Question 6

Suppose when a monopolist produces 75 units its average revenue is $10 per unit, its marginal revenue is $5 per unit, its marginal cost is $6 per unit, and its average total cost is $5 per unit. What can we conclude about this monopolist?

Accepted Answer

A) The monopolist is currently maximizing profits, and its total profits are $375. 
B) The monopolist is currently maximizing profits, and its total profits are $300. 
C) The monopolist is not currently maximizing profits; it should produce more units and charge a lower price to maximize profits. 
D) The monopolist is not currently maximizing profits; it should produce fewer units and charge a higher price to maximize profits. 
A) The monopolist is currently maximizing profits, and its total profits are $375. 
B) The monopolist is currently maximizing profits, and its total profits are $300. 
C) The monopolist is not currently maximizing profits; it should produce more units and charge a lower price to maximize profits. 
D) The monopolist is not currently maximizing profits; it should produce fewer units and charge a higher price to maximize profits.

Question 7

Comparing firms in perfectly competitive markets to monopoly firms, which charges a price equal to marginal cost?

Accepted Answer

perfectly

Question 8

Table 15-21
Tommy's Tie Company, a monopolist, has the following cost and revenue information. Assume that Tommy's is able to engage in perfect price discrimination.  
-Refer to Table 15-21. If the monopolist can engage in perfect price discrimination, what is the average revenue when 7 ties are sold?

Accepted Answer

A) $90 
B) $100 
C) $110 
D) $130 
A) $90 
B) $100 
C) $110 
D) $130

Question 9

At the profit-maximizing quantity of output for a monopolist, average revenue, marginal revenue, and price are all equal.

Accepted Answer

A) True 
 B)False

Question 10

When a local grocery store offers discount coupons in the Sunday paper it is most likely trying to

Accepted Answer

A) reduce prices for all customers. 
B) encourage literacy. 
C) encourage arbitrage. 
D) price discriminate. 
A) reduce prices for all customers. 
B) encourage literacy. 
C) encourage arbitrage. 
D) price discriminate.

Question 11

Figure 15-9  
-Refer to Figure 15-9. The deadweight loss caused by a profit-maximizing monopoly amounts to

Accepted Answer

A) $250. 
B) $500. 
C) $750. 
D) $1,000. 
A) $250. 
B) $500. 
C) $750. 
D) $1,000.

Question 12

In order for antitrust laws to raise social welfare, the government must

Accepted Answer

A) disallow synergy benefits from accruing to monopolists. 
B) disallow any mergers from taking place. 
C) be able to determine which mergers are desirable and which are not. 
D) always attempt to keep markets in their most competitive form. 
A) disallow synergy benefits from accruing to monopolists. 
B) disallow any mergers from taking place. 
C) be able to determine which mergers are desirable and which are not. 
D) always attempt to keep markets in their most competitive form.

Question 13

Figure 15-3        
-Refer to Figure 15-3. Which panel could represent the demand curve facing a local cable television provider if that firm in a monopolist?

Accepted Answer

A) Panel A 
B) Panel B 
C) Panel C 
D) Panel D 
A) Panel A 
B) Panel B 
C) Panel C 
D) Panel D

Question 14

If the distribution of water is a natural monopoly, then (i)
Multiple firms would likely each have to pay large fixed costs to develop their own network of pipes.
(ii)
Allowing for competition among different firms in the water-distribution industry is efficient.
(iii)
A single firm can serve the market at the lowest possible average total cost.

Accepted Answer

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

Question 15

If the government regulates the price that a natural monopolist can charge to be equal to the firm's marginal cost, the firm will

Accepted Answer

A) earn zero profits. 
B) earn positive profits, causing other firms to enter the industry. 
C) earn negative profits, causing the firm to exit the industry. 
D) minimize costs in order to lower the price that it charges. 
A) earn zero profits. 
B) earn positive profits, causing other firms to enter the industry. 
C) earn negative profits, causing the firm to exit the industry. 
D) minimize costs in order to lower the price that it charges.

Question 16

When a monopolist increases the quantity that it sells, price decreases, which, all else equal, decreases total revenue; this is called the price effect.

Accepted Answer

A) True 
 B)False

Question 17

A monopolist maximizes profits by

Accepted Answer

A) producing an output level where marginal revenue equals marginal cost. 
B) charging a price equal to marginal revenue and marginal cost. 
C) charging a price where marginal cost equals average total cost. 
D) Both a and b are correct. 
A) producing an output level where marginal revenue equals marginal cost. 
B) charging a price equal to marginal revenue and marginal cost. 
C) charging a price where marginal cost equals average total cost. 
D) Both a and b are correct.

Question 18

Table 15-8
The following table provides information on the price, quantity, and average total cost for a monopoly.  
-Refer to Table 15-8. What is the additional cost to the firm when the monopolist lowers the price from $18 to $12?

Accepted Answer

A) The firm saves $15. 
B) $15 
C) $30 
D) $40 
A) The firm saves $15. 
B) $15 
C) $30 
D) $40

Question 19

Marginal revenue can become negative for

Accepted Answer

A) both competitive and monopoly firms. 
B) competitive firms but not for monopoly firms. 
C) monopoly firms but not for competitive firms. 
D) neither competitive nor monopoly firms. 
A) both competitive and monopoly firms. 
B) competitive firms but not for monopoly firms. 
C) monopoly firms but not for competitive firms. 
D) neither competitive nor monopoly firms.

Question 20

Table 15-11
The following table shows quantity, price, and marginal cost information for a monopoly:  
-Refer to Table 15-11. What level of output should the firm produce to maximize its 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

Copyrights and patents are examples of barriers to entry that give firms monopoly pricing powers.

For a monopoly, marginal revenue is often greater than the price it charges for its good.

State one benefit of government-granted monopolies like patents and copyrights.

Figure 15-20 -Refer to Figure 15-20. The consumer surplus at the monopolist's profit-maximizing price is

Suppose when a monopolist produces 75 units its average revenue is $10 per unit, its marginal revenue is $5 per unit, its marginal cost is $6 per unit, and its average total cost is $5 per unit. What can we conclude about this monopolist?

Comparing firms in perfectly competitive markets to monopoly firms, which charges a price equal to marginal cost?

Table 15-21 Tommy's Tie Company, a monopolist, has the following cost and revenue information. Assume that Tommy's is able to engage in perfect price discrimination. -Refer to Table 15-21. If the monopolist can engage in perfect price discrimination, what is the average revenue when 7 ties are sold?

At the profit-maximizing quantity of output for a monopolist, average revenue, marginal revenue, and price are all equal.

When a local grocery store offers discount coupons in the Sunday paper it is most likely trying to

Figure 15-9 -Refer to Figure 15-9. The deadweight loss caused by a profit-maximizing monopoly amounts to

In order for antitrust laws to raise social welfare, the government must

Figure 15-3 -Refer to Figure 15-3. Which panel could represent the demand curve facing a local cable television provider if that firm in a monopolist?

If the government regulates the price that a natural monopolist can charge to be equal to the firm's marginal cost, the firm will

When a monopolist increases the quantity that it sells, price decreases, which, all else equal, decreases total revenue; this is called the price effect.

A monopolist maximizes profits by

Table 15-8 The following table provides information on the price, quantity, and average total cost for a monopoly. -Refer to Table 15-8. What is the additional cost to the firm when the monopolist lowers the price from $18 to $12?

Marginal revenue can become negative for

Table 15-11 The following table shows quantity, price, and marginal cost information for a monopoly: -Refer to Table 15-11. What level of output should the firm produce to maximize its profit?

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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Exam 15: Monopoly

Copyrights and patents are examples of barriers to entry that give firms monopoly pricing powers.

For a monopoly, marginal revenue is often greater than the price it charges for its good.

State one benefit of government-granted monopolies like patents and copyrights.

Figure 15-20 -Refer to Figure 15-20. The consumer surplus at the monopolist's profit-maximizing price is

Suppose when a monopolist produces 75 units its average revenue is $10 per unit, its marginal revenue is $5 per unit, its marginal cost is $6 per unit, and its average total cost is $5 per unit. What can we conclude about this monopolist?

Comparing firms in perfectly competitive markets to monopoly firms, which charges a price equal to marginal cost?

At the profit-maximizing quantity of output for a monopolist, average revenue, marginal revenue, and price are all equal.

When a local grocery store offers discount coupons in the Sunday paper it is most likely trying to

Figure 15-9 -Refer to Figure 15-9. The deadweight loss caused by a profit-maximizing monopoly amounts to

In order for antitrust laws to raise social welfare, the government must

Figure 15-3 -Refer to Figure 15-3. Which panel could represent the demand curve facing a local cable television provider if that firm in a monopolist?

If the government regulates the price that a natural monopolist can charge to be equal to the firm's marginal cost, the firm will

When a monopolist increases the quantity that it sells, price decreases, which, all else equal, decreases total revenue; this is called the price effect.

A monopolist maximizes profits by

Table 15-8 The following table provides information on the price, quantity, and average total cost for a monopoly. -Refer to Table 15-8. What is the additional cost to the firm when the monopolist lowers the price from $18 to $12?

Marginal revenue can become negative for

Table 15-11 The following table shows quantity, price, and marginal cost information for a monopoly: -Refer to Table 15-11. What level of output should the firm produce to maximize its profit?

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