Question 1

A monopoly market is characterized by

Accepted Answer

A) many buyers and sellers. 
B) "natural" products. 
C) barriers to entry. 
D) a Nash equilibrium. 
A) many buyers and sellers. 
B) "natural" products. 
C) barriers to entry. 
D) a Nash equilibrium.

Question 2

Table 15-9
Consider the following demand and cost information for a monopoly.  
-Refer to Table 15-9. What is the monopolist's average total cost of production at the profit-maximizing price?

Accepted Answer

A) $12 
B) $14 
C) $16 
D) $17 
A) $12 
B) $14 
C) $16 
D) $17

Question 3

Which of the following is an example of a barrier to entry?

Accepted Answer

A) Tom charges a higher price than his competitors for his golf lessons. 
B) Dick charges a lower price than his competitors for his lawn-mowing services. 
C) Harry offers free concerts on Sunday afternoons as a form of advertising. 
D) Larry obtains a copyright for the new computer game that he invented. 
A) Tom charges a higher price than his competitors for his golf lessons. 
B) Dick charges a lower price than his competitors for his lawn-mowing services. 
C) Harry offers free concerts on Sunday afternoons as a form of advertising. 
D) Larry obtains a copyright for the new computer game that he invented.

Question 4

Which of the following is not correct?

Accepted Answer

A) The demand curve facing a competitive firm is perfectly elastic. 
B) The demand curve facing a monopolist is the market demand curve. 
C) A monopolist can charge any price and sell any quantity that it chooses. 
D) A monopolist can alter the market price by adjusting the quantity that it produces. 
A) The demand curve facing a competitive firm is perfectly elastic. 
B) The demand curve facing a monopolist is the market demand curve. 
C) A monopolist can charge any price and sell any quantity that it chooses. 
D) A monopolist can alter the market price by adjusting the quantity that it produces.

Question 5

Figure 15-18  
-Refer to Figure 15-18. If the monopoly firm perfectly price discriminates, then consumer surplus amounts to

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 6

The proper level of government intervention is unclear when dealing with a monopoly.

Accepted Answer

A) True 
 B)False

Question 7

Table 15-3
Consider the following demand and cost information for a monopoly.  
-Refer to Table 15-3. The marginal revenue of the 2nd unit is

Accepted Answer

A) $10. 
B) $15. 
C) $20. 
D) $25. 
A) $10. 
B) $15. 
C) $20. 
D) $25.

Question 8

Which of the following statements is not correct?

Accepted Answer

A) The competitive firm produces where P = MC. 
B) The monopolist produces where P = MC. 
C) The competitive firm produces where MR = MC. 
D) The monopolist produces where MR = MC. 
A) The competitive firm produces where P = MC. 
B) The monopolist produces where P = MC. 
C) The competitive firm produces where MR = MC. 
D) The monopolist produces where MR = MC.

Question 9

Figure 15-2  
-Refer to Figure 15-2. If the firm profit-maximizes, what price will it charge?

Accepted Answer

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

Question 10

Figure 15-8  
-Refer to Figure 15-8. What is the socially efficient price and quantity?

Accepted Answer

A) price = A; quantity = X 
B) price = B; quantity = Y 
C) price = B; quantity = X 
D) price = C; quantity = X 
A) price = A; quantity = X 
B) price = B; quantity = Y 
C) price = B; quantity = X 
D) price = C; quantity = X

Question 11

Which of the following statements is not correct?

Accepted Answer

A) The government may use antitrust laws to break up an existing company to improve competition. 
B) The government may break up a natural monopoly to lower the price charged to customers. 
C) Private ownership is typically preferred to public ownership. 
D) Sometimes the best strategy is for the government to do nothing about monopoly inefficiency because the "fix" may be worse than the problem. 
A) The government may use antitrust laws to break up an existing company to improve competition. 
B) The government may break up a natural monopoly to lower the price charged to customers. 
C) Private ownership is typically preferred to public ownership. 
D) Sometimes the best strategy is for the government to do nothing about monopoly inefficiency because the "fix" may be worse than the problem.

Question 12

What is the defining characteristic of a natural monopoly? Give an example of a natural monopoly.

Accepted Answer

The defining characteristic of

Question 13

Figure 15-1  
-Refer to Figure 15-1. If the monopolist uses perfect price discrimination, how much output does the firm produce?

Accepted Answer

The answer of Figure 15-1  
-Refer to Figure 15-1....

Question 14

Price discrimination can increase both the monopolist's profits and society's welfare.

Accepted Answer

A) True 
 B)False

Question 15

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 have a deadweight loss of

Accepted Answer

A) $6,400. 
B) $3,200. 
C) $1,600. 
D) $800. 
A) $6,400. 
B) $3,200. 
C) $1,600. 
D) $800.

Question 16

Most markets are not monopolies in the real world because

Accepted Answer

A) firms usually face downward-sloping demand curves. 
B) supply curves slope upward. 
C) firms usually equate price with marginal cost. 
D) there are reasonable substitutes for most goods. 
A) firms usually face downward-sloping demand curves. 
B) supply curves slope upward. 
C) firms usually equate price with marginal cost. 
D) there are reasonable substitutes for most goods.

Question 17

Antitrust laws

Accepted Answer

A) prevent firms from maximizing profits. 
B) allow the government to prevent mergers, even ones that would benefit consumers. 
C) require the government to measure both the benefits and costs of a potential merger. 
D) All of the above are correct. 
A) prevent firms from maximizing profits. 
B) allow the government to prevent mergers, even ones that would benefit consumers. 
C) require the government to measure both the benefits and costs of a potential merger. 
D) All of the above are correct.

Question 18

Table 15-12
The following table provides information on the price, quantity, and average total cost for a monopoly.  
-Refer to Table 15-12. At what price will the firm maximize its profit?

Accepted Answer

A) $1 
B) $2 
C) $3 
D) $4 
A) $1 
B) $2 
C) $3 
D) $4

Question 19

Figure 15-4  
-Refer to Figure 15-4. If a regulator requires this firm to charge a socially optimal price, how much deadweight loss results?

Accepted Answer

The answer of Figure 15-4  
-Refer to Figure 15-4....

Question 20

A profit-maximizing monopolist charges a price of $12. The intersection of the marginal revenue and marginal cost curves occurs where output is 10 units and marginal cost is $6. Average total cost for 10 units of output is $5. What is the monopolist's profit?

Accepted Answer

A) $60 
B) $70 
C) $100 
D) $120 
A) $60 
B) $70 
C) $100 
D) $120

Exam 15: Monopoly

A monopoly market is characterized by

Table 15-9 Consider the following demand and cost information for a monopoly. -Refer to Table 15-9. What is the monopolist's average total cost of production at the profit-maximizing price?

Which of the following is an example of a barrier to entry?

Which of the following is not correct?

Figure 15-18 -Refer to Figure 15-18. If the monopoly firm perfectly price discriminates, then consumer surplus amounts to

The proper level of government intervention is unclear when dealing with a monopoly.

Table 15-3 Consider the following demand and cost information for a monopoly. -Refer to Table 15-3. The marginal revenue of the 2nd unit is

Which of the following statements is not correct?

Figure 15-2 -Refer to Figure 15-2. If the firm profit-maximizes, what price will it charge?

Figure 15-8 -Refer to Figure 15-8. What is the socially efficient price and quantity?

Which of the following statements is not correct?

What is the defining characteristic of a natural monopoly? Give an example of a natural monopoly.

Figure 15-1 -Refer to Figure 15-1. If the monopolist uses perfect price discrimination, how much output does the firm produce?

Price discrimination can increase both the monopolist's profits and society's welfare.

Most markets are not monopolies in the real world because

Antitrust laws

Table 15-12 The following table provides information on the price, quantity, and average total cost for a monopoly. -Refer to Table 15-12. At what price will the firm maximize its profit?

Figure 15-4 -Refer to Figure 15-4. If a regulator requires this firm to charge a socially optimal price, how much deadweight loss results?

A profit-maximizing monopolist charges a price of $12. The intersection of the marginal revenue and marginal cost curves occurs where output is 10 units and marginal cost is $6. Average total cost for 10 units of output is $5. What is the monopolist's 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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