Question 1

If a product can be produced by a natural monopoly, society will benefit in the form of lower prices if the monopolist is broken up into several smaller firms.

Accepted Answer

A) True 
 B)False

Question 2

A perfectly competitive market

Accepted Answer

A) may not be in the best interests of society, whereas a monopoly market promotes general economic well-being 
B) promotes general economic well-being, whereas a monopoly market may not be in the best interests of society. 
C) and a monopoly market are equally likely to promote general economic well-being. 
D) is less likely to promote general economic well-being than a monopoly market. 
A) may not be in the best interests of society, whereas a monopoly market promotes general economic well-being 
B) promotes general economic well-being, whereas a monopoly market may not be in the best interests of society. 
C) and a monopoly market are equally likely to promote general economic well-being. 
D) is less likely to promote general economic well-being than a monopoly market.

Question 3

A patent gives a single person or firm the exclusive right to sell some good or service forever.

Accepted Answer

A) True 
 B)False

Question 4

Price discrimination is a rational strategy for a profit-maximizing monopolist when

Accepted Answer

A) the monopolist finds itself able to produce only limited quantities of output. 
B) consumers are unable to be segmented into identifiable markets. 
C) the monopolist wishes to increase the deadweight loss that results from profit-maximizing behavior. 
D) there is no opportunity for arbitrage across market segments. 
A) the monopolist finds itself able to produce only limited quantities of output. 
B) consumers are unable to be segmented into identifiable markets. 
C) the monopolist wishes to increase the deadweight loss that results from profit-maximizing behavior. 
D) there is no opportunity for arbitrage across market segments.

Question 5

For a profit-maximizing monopolist,

Accepted Answer

A) P > MR = MC. B) P = MR = MC. C) P > MR > MC. D) MR < MC < P. A) P > MR = MC. B) P = MR = MC. C) P > MR > MC. D) MR < MC < P.

Question 6

Economists assume that monopolists behave as

Accepted Answer

A) cost minimizers. 
B) profit maximizers. 
C) price maximizers. 
D) maximizers of social welfare. 
A) cost minimizers. 
B) profit maximizers. 
C) price maximizers. 
D) maximizers of social welfare.

Question 7

Scenario 15-7
Black Box Cable TV is able to purchase an exclusive right to sell a premium movie channel (PMC) in its market area. Let's assume that Black Box Cable pays $150,000 a year for the exclusive marketing rights to PMC. Since Black Box has already installed cable to all of the homes in its market area, the marginal cost of delivering PMC to subscribers is zero. The manager of Black Box needs to know what price to charge for the PMC service to maximize her profit. Before setting price, she hires an economist to estimate demand for the PMC service. The economist discovers that there are two types of subscribers who value premium movie channels. First are the 4,000 die-hard TV viewers who will pay as much as $150 a year for the new PMC premium channel. Second, the PMC channel will appeal to 20,000 occasional TV viewers who will pay as much as $20 a year for a subscription to PMC.
-Refer to Scenario 15-7. If Black Box Cable TV is able to price discriminate, what would be the maximum amount of profit it could generate?

Accepted Answer

A) $500,000 
B) $600,000 
C) $850,000 
D) $925,000 
A) $500,000 
B) $600,000 
C) $850,000 
D) $925,000

Question 8

Which of the following is not an example of price discrimination by a firm?

Accepted Answer

A) children's meals at a restaurant 
B) a natural gas company charging customers a higher rate in the winter than in the summer 
C) a senior citizens' discount 
D) coupons in the Sunday newspaper 
A) children's meals at a restaurant 
B) a natural gas company charging customers a higher rate in the winter than in the summer 
C) a senior citizens' discount 
D) coupons in the Sunday newspaper

Question 9

​Figure 15-22
The diagram depicts the market situation for a monopoly pastry shop called Bearclaws.  
-​Refer to Figure 15-22. Based upon the information shown, what is total revenue for Bearclaws, given that it maximizes profits?

Accepted Answer

A) ​$900. 
B) ​$980. 
C) ​$490. 
D) ​$1080. 
A) ​$900. 
B) ​$980. 
C) ​$490. 
D) ​$1080.

Question 10

A patent gives the inventor monopoly control over the patented good. Patents also

Accepted Answer

A) ​lead to lower prices for goods. 
B) ​create incentives to develop new products. 
C) lead to an increase in the number of producers of the patented good. 
D) ​lead to increased entry into the market for the patented good. 
A) ​lead to lower prices for goods. 
B) ​create incentives to develop new products. 
C) lead to an increase in the number of producers of the patented good. 
D) ​lead to increased entry into the market for the patented good.

Question 11

The price effect describes the situation when a monopolist lowers the price of output and, all else equal, total revenue

Accepted Answer

A) increases. 
B) decreases. 
C) is unchanged. 
D) is maximized. 
A) increases. 
B) decreases. 
C) is unchanged. 
D) is maximized.

Question 12

Figure 15-1  
-Refer to Figure 15-1. The shape of the average total cost curve in the figure suggests an opportunity for a profit-maximizing monopolist to take advantage of

Accepted Answer

A) economies of scale. 
B) diseconomies of scale. 
C) diminishing marginal product. 
D) increasing marginal cost. 
A) economies of scale. 
B) diseconomies of scale. 
C) diminishing marginal product. 
D) increasing marginal cost.

Question 13

In a monopoly market, the socially efficient quantity of output is typically higher than the profit-maximizing quantity of output for the monopolist.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following are necessary characteristics of a monopoly? (i)
The firm is the sole seller of its product.
(ii)
The firm's product does not have close substitutes.
(iii)
The firm generates a large economic profit.
(iv)
The firm is located in a small geographic market.

Accepted Answer

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

Question 15

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

Accepted Answer

A) a national florist 
B) an online bookstore 
C) a local restaurant 
D) a local electrical cooperative 
A) a national florist 
B) an online bookstore 
C) a local restaurant 
D) a local electrical cooperative

Question 16

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. What is Vincent's cost of serving all passengers demanding a tour on a typical day?

Accepted Answer

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

Question 17

If a monopolist has zero marginal costs, it will produce

Accepted Answer

A) the output at which total revenue is maximized. 
B) in the range in which marginal revenue is still increasing. 
C) at the point at which marginal revenue is at a maximum. 
D) in the range in which marginal revenue is negative. 
A) the output at which total revenue is maximized. 
B) in the range in which marginal revenue is still increasing. 
C) at the point at which marginal revenue is at a maximum. 
D) in the range in which marginal revenue is negative.

Question 18

The laws governing patents and copyrights

Accepted Answer

A) eliminate the need for firms to engage in research and development. 
B) are intended to serve private interests, not the public's interest. 
C) reduce fixed costs for firms that obtain them. 
D) None of the above is correct. 
A) eliminate the need for firms to engage in research and development. 
B) are intended to serve private interests, not the public's interest. 
C) reduce fixed costs for firms that obtain them. 
D) None of the above is correct.

Question 19

Table 15-20
A monopolist faces the following demand curve:  
-Refer to Table 15-20. If a monopolist faces a constant marginal cost of $20, 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 20

A natural monopolist's ability to price its product is

Accepted Answer

A) constrained by the market demand curve. 
B) constrained by market supply. 
C) not affected by market demand. 
D) enhanced by regulatory control of the government. 
A) constrained by the market demand curve. 
B) constrained by market supply. 
C) not affected by market demand. 
D) enhanced by regulatory control of the government.

If a product can be produced by a natural monopoly, society will benefit in the form of lower prices if the monopolist is broken up into several smaller firms.

A perfectly competitive market

A patent gives a single person or firm the exclusive right to sell some good or service forever.

Price discrimination is a rational strategy for a profit-maximizing monopolist when

For a profit-maximizing monopolist,

Economists assume that monopolists behave as

Which of the following is not an example of price discrimination by a firm?

Figure 15-22 The diagram depicts the market situation for a monopoly pastry shop called Bearclaws. -Refer to Figure 15-22. Based upon the information shown, what is total revenue for Bearclaws, given that it maximizes profits?

A patent gives the inventor monopoly control over the patented good. Patents also

The price effect describes the situation when a monopolist lowers the price of output and, all else equal, total revenue

Figure 15-1 -Refer to Figure 15-1. The shape of the average total cost curve in the figure suggests an opportunity for a profit-maximizing monopolist to take advantage of

In a monopoly market, the socially efficient quantity of output is typically higher than the profit-maximizing quantity of output for the monopolist.

Which of the following are necessary characteristics of a monopoly? (i) The firm is the sole seller of its product. (ii) The firm's product does not have close substitutes. (iii) The firm generates a large economic profit. (iv) The firm is located in a small geographic market.

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

If a monopolist has zero marginal costs, it will produce

The laws governing patents and copyrights

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

A natural monopolist's ability to price its product is

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

If a product can be produced by a natural monopoly, society will benefit in the form of lower prices if the monopolist is broken up into several smaller firms.

A perfectly competitive market

A patent gives a single person or firm the exclusive right to sell some good or service forever.

Price discrimination is a rational strategy for a profit-maximizing monopolist when

For a profit-maximizing monopolist,

Economists assume that monopolists behave as

Which of the following is not an example of price discrimination by a firm?

​Figure 15-22 The diagram depicts the market situation for a monopoly pastry shop called Bearclaws. -​Refer to Figure 15-22. Based upon the information shown, what is total revenue for Bearclaws, given that it maximizes profits?

A patent gives the inventor monopoly control over the patented good. Patents also

The price effect describes the situation when a monopolist lowers the price of output and, all else equal, total revenue

Figure 15-1 -Refer to Figure 15-1. The shape of the average total cost curve in the figure suggests an opportunity for a profit-maximizing monopolist to take advantage of

In a monopoly market, the socially efficient quantity of output is typically higher than the profit-maximizing quantity of output for the monopolist.

Which of the following are necessary characteristics of a monopoly? (i) The firm is the sole seller of its product. (ii) The firm's product does not have close substitutes. (iii) The firm generates a large economic profit. (iv) The firm is located in a small geographic market.

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

If a monopolist has zero marginal costs, it will produce

The laws governing patents and copyrights

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

A natural monopolist's ability to price its product is

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

Figure 15-22 The diagram depicts the market situation for a monopoly pastry shop called Bearclaws. -Refer to Figure 15-22. Based upon the information shown, what is total revenue for Bearclaws, given that it maximizes profits?