Question 1

Table 15-4
A monopolist faces the following demand curve:  
-Refer to Table 15-4. If the monopolist increases production from 2.5 to 5 units, what is its marginal revenue?

Accepted Answer

A) $100 
B) $37.5 
C) $15 
D) $2.50 
A) $100 
B) $37.5 
C) $15 
D) $2.50

Question 2

Figure 15-9  
-Refer to Figure 15-9. To maximize its profit, a monopolist would choose which of the following outcomes?

Accepted Answer

A) 100 units of output and a price of $20 per unit 
B) 100 units of output and a price of $40 per unit 
C) 150 units of output and a price of $30 per unit 
D) 200 units of output and a price of $40 per unit 
A) 100 units of output and a price of $20 per unit 
B) 100 units of output and a price of $40 per unit 
C) 150 units of output and a price of $30 per unit 
D) 200 units of output and a price of $40 per unit

Question 3

Table 15-10
The monopolist faces the following demand curve:  
-Refer to Table 15-10. If the monopolist has total fixed costs of $40 and a constant marginal cost of $5, how much profit can the firm earn at the profit-maximizing level of output?

Accepted Answer

A) $128 
B) $120 
C) $80 
D) $8 
A) $128 
B) $120 
C) $80 
D) $8

Question 4

Scenario 15-1
Consider a transportation corporation named Reading's that has just completed the development of a new light rail system in Minneapolis. Currently, there are plenty of seats on the train, and it is never crowded. Its capacity far exceeds the needs of the city. After just a few years of operation, the shareholders of Reading's experienced incredibly high rates of return on their investment due to the profitability of the corporation.
-Refer to Scenario 15-1. Which of the following statements is most likely to be true? (i)
New entrants to the market know they will have a smaller market share than Reading's currently has.
(ii)
Reading's is most likely experiencing decreasing average total cost.
(iii)
Reading's is a natural monopoly.

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 5

Because a monopolist is the sole producer in its market, it can necessarily alter the price of its good (i)
Without affecting the quantity sold.(ii)
Without affecting its average total cost.
(iii)
By adjusting the quantity it supplies to the market.

Accepted Answer

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

Question 6

Table 15-6
A monopolist faces the following demand curve:  
-Refer to Table 15-6. Suppose the monopolist has total fixed costs equal to $5 and a variable cost equal to $4 per unit for all units produced. What is the profit-maximizing price?

Accepted Answer

A) $6 
B) $9 
C) $12 
D) $15 
A) $6 
B) $9 
C) $12 
D) $15

Question 7

Table 15-19
A monopolist faces the following demand curve:  
-Refer to Table 15-19. If a monopolist faces a constant marginal cost of $7, how much output should the firm produce?

Accepted Answer

A) 3 units 
B) 4 units 
C) 5 units 
D) 6 units 
A) 3 units 
B) 4 units 
C) 5 units 
D) 6 units

Question 8

Figure 15-16  
-Refer to Figure 15-16. Which triangle represents the monopoly deadweight loss?

Accepted Answer

A) the triangle with vertical lines that is bordered by ACT 
B) the triangle with vertical lines and light grey shading that is bordered by ABH 
C) the triangle with vertical lines and dark grey shading that is bordered by HIT 
D) the triangle with dark grey shading that is bordered by HKT 
A) the triangle with vertical lines that is bordered by ACT 
B) the triangle with vertical lines and light grey shading that is bordered by ABH 
C) the triangle with vertical lines and dark grey shading that is bordered by HIT 
D) the triangle with dark grey shading that is bordered by HKT

Question 9

A monopolist's profits with price discrimination will be

Accepted Answer

A) lower than if the firm charged a single, profit-maximizing price 
B) the same as if the firm charged a single, profit-maximizing price. 
C) higher than if the firm charged just one price because the firm will capture more consumer surplus. 
D) higher than if the firm charged a single price because the costs of selling the good will be lower. 
A) lower than if the firm charged a single, profit-maximizing price 
B) the same as if the firm charged a single, profit-maximizing price. 
C) higher than if the firm charged just one price because the firm will capture more consumer surplus. 
D) higher than if the firm charged a single price because the costs of selling the good will be lower.

Question 10

Give some examples of the benefits and costs of antitrust laws.

Accepted Answer

Benefits include promoting com

Question 11

Figure 15-20  
-Refer to Figure 15-20. The deadweight loss caused by a profit-maximizing monopoly amounts to

Accepted Answer

A) $225. 
B) $450. 
C) $900. 
D) $1,350. 
A) $225. 
B) $450. 
C) $900. 
D) $1,350.

Question 12

Table 15-19
A monopolist faces the following demand curve:  
-Refer to Table 15-19. If a monopolist faces a constant marginal cost of $1, how much output should the firm produce in order to equate marginal revenue with marginal cost?

Accepted Answer

A) 3 units 
B) 4 units 
C) 5 units 
D) 6 units 
A) 3 units 
B) 4 units 
C) 5 units 
D) 6 units

Question 13

Table 15-6
A monopolist faces the following demand curve:  
-Refer to Table 15-6. What is the marginal revenue from the sale of the 2nd unit?

Accepted Answer

A) -$3 
B) $3 
C) $9 
D) $24 
A) -$3 
B) $3 
C) $9 
D) $24

Question 14

Figure 15-7  
-Refer to Figure 15-7. A profit-maximizing monopolist would earn profits of

Accepted Answer

A) $96. 
B) $117. 
C) $120. 
D) $126. 
A) $96. 
B) $117. 
C) $120. 
D) $126.

Question 15

Figure 15-18  
-Refer to Figure 15-18. If there are no fixed costs of production, monopoly profit with perfect 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 16

One example of price discrimination occurs in the publishing industry when a publisher initially releases an expensive hardcover edition of a popular novel and later releases a cheaper paperback edition. Use this example to demonstrate the benefits and potential pitfalls of a price discrimination pricing strategy.

Accepted Answer

The answer should address the three basi

Question 17

When a monopolist reduces the quantity of output it produces and sells, the

Accepted Answer

A) price of its output increases. 
B) price of its output remains constant. 
C) price of its output decreases. 
D) profits for the firm always decrease. 
A) price of its output increases. 
B) price of its output remains constant. 
C) price of its output decreases. 
D) profits for the firm always decrease.

Question 18

Which of the following statements is not correct?

Accepted Answer

A) Part of the deadweight loss associated with monopoly is measured by the monopolist's economic profit. 
B) Marginal cost is always less than average total cost in a natural monopoly. 
C) Discount coupons available free to the public are a type of price discrimination. 
D) Anti-trust laws make it harder for firms to create synergies. 
A) Part of the deadweight loss associated with monopoly is measured by the monopolist's economic profit. 
B) Marginal cost is always less than average total cost in a natural monopoly. 
C) Discount coupons available free to the public are a type of price discrimination. 
D) Anti-trust laws make it harder for firms to create synergies.

Question 19

Describe how government is involved in creating a monopoly. Why might the government create one? Give an example.

Accepted Answer

The government can create a monopoly by

Question 20

Table 15-13
The following table gives information on the price, quantity, and total cost of production for a monopolist.  
-Refer to Table 15-13. How much profit will the firm earn at the profit-maximizing price?

Accepted Answer

A) $9 
B) $12 
C) $15 
D) $18 
A) $9 
B) $12 
C) $15 
D) $18

Table 15-4 A monopolist faces the following demand curve: -Refer to Table 15-4. If the monopolist increases production from 2.5 to 5 units, what is its marginal revenue?

Figure 15-9 -Refer to Figure 15-9. To maximize its profit, a monopolist would choose which of the following outcomes?

Table 15-10 The monopolist faces the following demand curve: -Refer to Table 15-10. If the monopolist has total fixed costs of $40 and a constant marginal cost of $5, how much profit can the firm earn at the profit-maximizing level of output?

Because a monopolist is the sole producer in its market, it can necessarily alter the price of its good (i) Without affecting the quantity sold.(ii) Without affecting its average total cost. (iii) By adjusting the quantity it supplies to the market.

Table 15-6 A monopolist faces the following demand curve: -Refer to Table 15-6. Suppose the monopolist has total fixed costs equal to $5 and a variable cost equal to $4 per unit for all units produced. What is the profit-maximizing price?

Table 15-19 A monopolist faces the following demand curve: -Refer to Table 15-19. If a monopolist faces a constant marginal cost of $7, how much output should the firm produce?

Figure 15-16 -Refer to Figure 15-16. Which triangle represents the monopoly deadweight loss?

A monopolist's profits with price discrimination will be

Give some examples of the benefits and costs of antitrust laws.

Figure 15-20 -Refer to Figure 15-20. The deadweight loss caused by a profit-maximizing monopoly amounts to

Table 15-19 A monopolist faces the following demand curve: -Refer to Table 15-19. If a monopolist faces a constant marginal cost of $1, how much output should the firm produce in order to equate marginal revenue with marginal cost?

Table 15-6 A monopolist faces the following demand curve: -Refer to Table 15-6. What is the marginal revenue from the sale of the 2nd unit?

Figure 15-7 -Refer to Figure 15-7. A profit-maximizing monopolist would earn profits of

Figure 15-18 -Refer to Figure 15-18. If there are no fixed costs of production, monopoly profit with perfect price discrimination equals

When a monopolist reduces the quantity of output it produces and sells, the

Which of the following statements is not correct?

Describe how government is involved in creating a monopoly. Why might the government create one? Give an example.

Table 15-13 The following table gives information on the price, quantity, and total cost of production for a monopolist. -Refer to Table 15-13. How much profit will the firm earn at the profit-maximizing price?

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

Table 15-4 A monopolist faces the following demand curve: -Refer to Table 15-4. If the monopolist increases production from 2.5 to 5 units, what is its marginal revenue?

Figure 15-9 -Refer to Figure 15-9. To maximize its profit, a monopolist would choose which of the following outcomes?

Table 15-10 The monopolist faces the following demand curve: -Refer to Table 15-10. If the monopolist has total fixed costs of $40 and a constant marginal cost of $5, how much profit can the firm earn at the profit-maximizing level of output?

Because a monopolist is the sole producer in its market, it can necessarily alter the price of its good (i) Without affecting the quantity sold.(ii) Without affecting its average total cost. (iii) By adjusting the quantity it supplies to the market.

Table 15-6 A monopolist faces the following demand curve: -Refer to Table 15-6. Suppose the monopolist has total fixed costs equal to $5 and a variable cost equal to $4 per unit for all units produced. What is the profit-maximizing price?

Table 15-19 A monopolist faces the following demand curve: -Refer to Table 15-19. If a monopolist faces a constant marginal cost of $7, how much output should the firm produce?

Figure 15-16 -Refer to Figure 15-16. Which triangle represents the monopoly deadweight loss?

A monopolist's profits with price discrimination will be

Give some examples of the benefits and costs of antitrust laws.

Figure 15-20 -Refer to Figure 15-20. The deadweight loss caused by a profit-maximizing monopoly amounts to

Table 15-19 A monopolist faces the following demand curve: -Refer to Table 15-19. If a monopolist faces a constant marginal cost of $1, how much output should the firm produce in order to equate marginal revenue with marginal cost?

Table 15-6 A monopolist faces the following demand curve: -Refer to Table 15-6. What is the marginal revenue from the sale of the 2nd unit?

Figure 15-7 -Refer to Figure 15-7. A profit-maximizing monopolist would earn profits of

Figure 15-18 -Refer to Figure 15-18. If there are no fixed costs of production, monopoly profit with perfect price discrimination equals

When a monopolist reduces the quantity of output it produces and sells, the

Which of the following statements is not correct?

Describe how government is involved in creating a monopoly. Why might the government create one? Give an example.

Table 15-13 The following table gives information on the price, quantity, and total cost of production for a monopolist. -Refer to Table 15-13. How much profit will the firm earn at the profit-maximizing price?

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