Question 1

Additional firms often do not try to compete with a natural monopoly because

Accepted Answer

A) they fear retaliation in the form of pricing wars from the natural monopolist. 
B) they are unsure of the size of the market in general. 
C) they know they cannot achieve the same low costs that the natural monopolist enjoys. 
D) the natural monopoly does not make a large profit. 
A) they fear retaliation in the form of pricing wars from the natural monopolist. 
B) they are unsure of the size of the market in general. 
C) they know they cannot achieve the same low costs that the natural monopolist enjoys. 
D) the natural monopoly does not make a large profit.

Question 2

Microsoft's government-granted exclusive right to make and sell the Windows operating system is called a

Accepted Answer

The answer of Microsoft's government-granted exclusive right to make and...

Question 3

Figure 15-19  
-Refer to Figure 15-19. If there are no fixed costs of production, monopoly profit with perfect price discrimination equals

Accepted Answer

A) $1. 
B) $1,562.5. 
C) $3,125. 
D) $6,250. 
A) $1. 
B) $1,562.5. 
C) $3,125. 
D) $6,250.

Question 4

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 total profit at the profit-maximizing quantity?

Accepted Answer

A) $325 
B) $435 
C) $565 
D) $1000 
A) $325 
B) $435 
C) $565 
D) $1000

Question 5

Figure 15-3        
-Refer to Figure 15-3. Which panel could represent the demand curve facing the soybean industry?

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 6

Which of the following is not a characteristic of a monopoly?

Accepted Answer

A) barriers to entry 
B) one seller 
C) one buyer 
D) a product without close substitutes 
A) barriers to entry 
B) one seller 
C) one buyer 
D) a product without close substitutes

Question 7

A monopoly creates a deadweight loss to society because it earns both short-run and long-run positive economic profits.

Accepted Answer

A) True 
 B)False

Question 8

If government officials break up a natural monopoly into four smaller firms, then

Accepted Answer

A) each firm will be unable to maximize profits due to increased competition. 
B) competition will force firms to produce surplus output, which drives up price. 
C) the average cost of production will increase. 
D) consumers will benefit from lower average total costs. 
A) each firm will be unable to maximize profits due to increased competition. 
B) competition will force firms to produce surplus output, which drives up price. 
C) the average cost of production will increase. 
D) consumers will benefit from lower average total costs.

Question 9

Granting a pharmaceutical company a patent for a new medicine will lead to (i)
A product that is priced higher than it would be without the exclusive rights.
(ii)
Incentives for pharmaceutical companies to invest in research and development.
(iii)
Higher quantities of output than without the patent.

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 10

Patent and copyright laws encourage

Accepted Answer

A) creative activity. 
B) lower prices due to decreasing average total costs. 
C) competition among firms. 
D) All of the above are correct. 
A) creative activity. 
B) lower prices due to decreasing average total costs. 
C) competition among firms. 
D) All of the above are correct.

Question 11

A monopolist's supply curve is vertical.

Accepted Answer

A) True 
 B)False

Question 12

In order for a firm to maximize profits through price discrimination, the firm must have some market power and be able to prevent arbitrage.

Accepted Answer

A) True 
 B)False

Question 13

Figure 15-2  
-Refer to Figure 15-2. If a regulator requires the firm to charge an average cost price, what is the amount of profit or loss earned by the firm?

Accepted Answer

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

Question 14

Figure 15-19  
-Refer to Figure 15-19. If the monopoly firm is not allowed to price discriminate, then consumer surplus amounts to

Accepted Answer

A) $0. 
B) $1,562.50. 
C) $3,125. 
D) $6,250. 
A) $0. 
B) $1,562.50. 
C) $3,125. 
D) $6,250.

Question 15

Price discrimination explains why Ivy League universities often base tuition costs on students'

Accepted Answer

A) age. 
B) financial resources. 
C) high school GPA. 
D) gender. 
A) age. 
B) financial resources. 
C) high school GPA. 
D) gender.

Question 16

If the ABC company owns the exclusive rights to mine land in Afghanistan for Lapis Lazuli, a rare stone used in jewelry which is found only in Afghanistan, the company benefits from a barrier to entry.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

A) not a concern if a market is perfectly competitive. 
B) a deadweight loss to society. 
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) not a concern if a market is perfectly competitive. 
B) a deadweight loss to society. 
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 18

If the government regulates the price that a natural monopolist can charge to be equal to the firm's average total 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 19

A natural monopoly will always operate in the region of the long run average total cost curve where the cost per unit is constant.
​
​

Accepted Answer

A) True 
 B)False

Question 20

A movie theater can increase its profits through price discrimination by charging a higher price to adults and a lower price to children if

Accepted Answer

A) adults buy more popcorn than children. 
B) the cost of showing a movie to children is less than the cost of showing a movie to adults. 
C) it has some degree of monopoly-pricing power. 
D) All of the above are correct. 
A) adults buy more popcorn than children. 
B) the cost of showing a movie to children is less than the cost of showing a movie to adults. 
C) it has some degree of monopoly-pricing power. 
D) All of the above are correct.

Exam 15: Monopoly

Additional firms often do not try to compete with a natural monopoly because

Microsoft's government-granted exclusive right to make and sell the Windows operating system is called a

Figure 15-19 -Refer to Figure 15-19. If there are no fixed costs of production, monopoly profit with perfect price discrimination equals

Figure 15-3 -Refer to Figure 15-3. Which panel could represent the demand curve facing the soybean industry?

Which of the following is not a characteristic of a monopoly?

A monopoly creates a deadweight loss to society because it earns both short-run and long-run positive economic profits.

If government officials break up a natural monopoly into four smaller firms, then

Patent and copyright laws encourage

A monopolist's supply curve is vertical.

In order for a firm to maximize profits through price discrimination, the firm must have some market power and be able to prevent arbitrage.

Figure 15-2 -Refer to Figure 15-2. If a regulator requires the firm to charge an average cost price, what is the amount of profit or loss earned by the firm?

Figure 15-19 -Refer to Figure 15-19. If the monopoly firm is not allowed to price discriminate, then consumer surplus amounts to

Price discrimination explains why Ivy League universities often base tuition costs on students'

If the ABC company owns the exclusive rights to mine land in Afghanistan for Lapis Lazuli, a rare stone used in jewelry which is found only in Afghanistan, the company benefits from a barrier to entry.

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

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

A natural monopoly will always operate in the region of the long run average total cost curve where the cost per unit is constant. ​ ​

A movie theater can increase its profits through price discrimination by charging a higher price to adults and a lower price to children if

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

A natural monopoly will always operate in the region of the long run average total cost curve where the cost per unit is constant.