Question 1

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

Accepted Answer

A) of little concern to society. 
B) a deadweight loss to society. 
C) a sunk cost to society. 
D) also observed in competitive markets. 
A) of little concern to society. 
B) a deadweight loss to society. 
C) a sunk cost to society. 
D) also observed in competitive markets.

Question 2

Consider a profit-maximizing monopoly pricing under the following conditions. The profit-maximizing price charged for goods produced is $12.The intersection of the marginal revenue and marginal cost curves occurs where output is 10 units and marginal cost is $6. The socially efficient level of production is 12 units. The demand curve and marginal cost curves are linear. What is the value of the deadweight loss created by the monopolist?

Accepted Answer

A) $4 
B) $6 
C) $12 
D) $16 
A) $4 
B) $6 
C) $12 
D) $16

Question 3

Customers who purchase an audio CD from Sally's Sounds are charged 20% more than customers who purchase the audio CD from the Sally's Sounds website. This is an example of

Accepted Answer

A) perfect price discrimination. 
B) price discrimination. 
C) deadweight loss. 
D) socially inefficient output. 
A) perfect price discrimination. 
B) price discrimination. 
C) deadweight loss. 
D) socially inefficient output.

Question 4

Which of the following statements is correct?

Accepted Answer

A) If the monopolist's marginal revenue is greater than its marginal cost, the monopolist can increase profit by selling more units at a lower price per unit. 
B) If the monopolist's marginal revenue is greater than its marginal cost, the monopolist can increase profit by selling fewer units at a higher price per unit. 
C) When a monopolist produces where price equals the minimum of average total cost, it earns a positive economic profit. 
D) If the monopolist is earning a positive economic profit, it must be producing where MR = MC. 
A) If the monopolist's marginal revenue is greater than its marginal cost, the monopolist can increase profit by selling more units at a lower price per unit. 
B) If the monopolist's marginal revenue is greater than its marginal cost, the monopolist can increase profit by selling fewer units at a higher price per unit. 
C) When a monopolist produces where price equals the minimum of average total cost, it earns a positive economic profit. 
D) If the monopolist is earning a positive economic profit, it must be producing where MR = MC.

Question 5

Figure 15-5  
-Refer to Figure 15-5. A profit-maximizing monopoly's total revenue is equal to

Accepted Answer

A) P1 x Q1. 
B) P2 x Q3. 
C) P3 x Q4. 
D) (P2-P4) x Q3. 
A) P1 x Q1. 
B) P2 x Q3. 
C) P3 x Q4. 
D) (P2-P4) x Q3.

Question 6

The marginal revenue curve for a monopoly firm starts at the same point on the vertical axis as the (i)
Average revenue curve.(ii)
Marginal cost curve.(iii)
Demand curve.

Accepted Answer

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

Question 7

Table 15-17
A monopolist faces the following demand curve:  
-Refer to Table 15-17. If the marginal cost of production is constant at $18 per unit, this profit-maximizing monopolist will choose to produce

Accepted Answer

A) 20 units. 
B) 30 units. 
C) 40 units. 
D) 50 units. 
A) 20 units. 
B) 30 units. 
C) 40 units. 
D) 50 units.

Question 8

Figure 15-3  
-Refer to Figure 15-3. If this firm were able to perfectly price discriminate, which letter represents the amount of output it would produce?

Accepted Answer

The answer of Figure 15-3  
-Refer to Figure 15-3....

Question 9

When deciding what price to charge consumers, the monopolist may choose to charge them different prices based on the customers'

Accepted Answer

A) geographical location. 
B) age. 
C) income. 
D) All of the above are correct. 
A) geographical location. 
B) age. 
C) income. 
D) All of the above are correct.

Question 10

Which of the following statements is correct for both a monopolist and a perfectly competitive firm? (i)
The firm maximizes profits by equating marginal revenue with marginal cost.
(ii)
The firm maximizes profits by equating price with marginal cost.
(iii)
Demand equals marginal revenue.(iv)
Average revenue equals price.

Accepted Answer

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

Question 11

After the patent runs out on a brand name drug, generic drugs enter the market. What happens next in the market?

Accepted Answer

A) Price increases, and total surplus decreases. 
B) Price decreases, and total surplus decreases. 
C) Price decreases, and total surplus increases. 
D) Price increases, and total surplus increases. 
A) Price increases, and total surplus decreases. 
B) Price decreases, and total surplus decreases. 
C) Price decreases, and total surplus increases. 
D) Price increases, and total surplus increases.

Question 12

Graphically depict the deadweight loss caused by a monopoly. How is this similar to the deadweight loss from taxation?

Accepted Answer

A profit-maximizing monopolist will choo

Question 13

When a monopolist increases the amount of output that it produces and sells, average revenue

Accepted Answer

A) increases, and marginal revenue increases. 
B) increases, and marginal revenue decreases. 
C) decreases, and marginal revenue increases. 
D) decreases, and marginal revenue decreases. 
A) increases, and marginal revenue increases. 
B) increases, and marginal revenue decreases. 
C) decreases, and marginal revenue increases. 
D) decreases, and marginal revenue decreases.

Question 14

Deadweight loss measures the loss in society's welfare that occurs because a monopolist does not produce the socially efficient level of output.

Accepted Answer

A) True 
 B)False

Question 15

Many movie theaters allow discount tickets to be sold to senior citizens because

Accepted Answer

A) senior-citizen laws mandate such discounts. 
B) goodwill efforts earn community respect and win loyal patrons. 
C) the theaters are profit maximizers. 
D) senior citizens lobby city councils for lower prices. 
A) senior-citizen laws mandate such discounts. 
B) goodwill efforts earn community respect and win loyal patrons. 
C) the theaters are profit maximizers. 
D) senior citizens lobby city councils for lower prices.

Question 16

To maximize total surplus with a monopoly firm, a benevolent social planner would choose the level of output where

Accepted Answer

A) MR = MC. 
B) MR intersects the demand curve. 
C) MC intersects the demand curve. 
D) MR exceeds MC by the greatest amount. 
A) MR = MC. 
B) MR intersects the demand curve. 
C) MC intersects the demand curve. 
D) MR exceeds MC by the greatest amount.

Question 17

Drug companies are allowed to be monopolists in the drugs they discover in order to

Accepted Answer

A) increase the availability of expensive but useful medications. 
B) increase the overall welfare of society through better health because drug companies continually produce better medications. 
C) encourage research. 
D) All of the above are correct. 
A) increase the availability of expensive but useful medications. 
B) increase the overall welfare of society through better health because drug companies continually produce better medications. 
C) encourage research. 
D) All of the above are correct.

Question 18

Figure 15-9  
-Refer to Figure 15-9. To maximize total surplus, a benevolent social planner would choose which of the following outcomes?

Accepted Answer

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

Question 19

A benefit of a monopoly is

Accepted Answer

A) efficient production. 
B) decreasing long-run marginal costs. 
C) profit that can be invested in research and development. 
D) All of the above are correct. 
A) efficient production. 
B) decreasing long-run marginal costs. 
C) profit that can be invested in research and development. 
D) All of the above are correct.

Question 20

The fundamental source of monopoly power is

Accepted Answer

A) barriers to entry. 
B) profit. 
C) decreasing average total cost. 
D) a product without close substitutes. 
A) barriers to entry. 
B) profit. 
C) decreasing average total cost. 
D) a product without close substitutes.

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

Customers who purchase an audio CD from Sally's Sounds are charged 20% more than customers who purchase the audio CD from the Sally's Sounds website. This is an example of

Which of the following statements is correct?

Figure 15-5 -Refer to Figure 15-5. A profit-maximizing monopoly's total revenue is equal to

The marginal revenue curve for a monopoly firm starts at the same point on the vertical axis as the (i) Average revenue curve.(ii) Marginal cost curve.(iii) Demand curve.

Table 15-17 A monopolist faces the following demand curve: -Refer to Table 15-17. If the marginal cost of production is constant at $18 per unit, this profit-maximizing monopolist will choose to produce

Figure 15-3 -Refer to Figure 15-3. If this firm were able to perfectly price discriminate, which letter represents the amount of output it would produce?

When deciding what price to charge consumers, the monopolist may choose to charge them different prices based on the customers'

After the patent runs out on a brand name drug, generic drugs enter the market. What happens next in the market?

Graphically depict the deadweight loss caused by a monopoly. How is this similar to the deadweight loss from taxation?

When a monopolist increases the amount of output that it produces and sells, average revenue

Deadweight loss measures the loss in society's welfare that occurs because a monopolist does not produce the socially efficient level of output.

Many movie theaters allow discount tickets to be sold to senior citizens because

To maximize total surplus with a monopoly firm, a benevolent social planner would choose the level of output where

Drug companies are allowed to be monopolists in the drugs they discover in order to

Figure 15-9 -Refer to Figure 15-9. To maximize total surplus, a benevolent social planner would choose which of the following outcomes?

A benefit of a monopoly is

The fundamental source of monopoly power 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

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Exam 15: Monopoly

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

Customers who purchase an audio CD from Sally's Sounds are charged 20% more than customers who purchase the audio CD from the Sally's Sounds website. This is an example of

Which of the following statements is correct?

Figure 15-5 -Refer to Figure 15-5. A profit-maximizing monopoly's total revenue is equal to

The marginal revenue curve for a monopoly firm starts at the same point on the vertical axis as the (i) Average revenue curve.(ii) Marginal cost curve.(iii) Demand curve.

Table 15-17 A monopolist faces the following demand curve: -Refer to Table 15-17. If the marginal cost of production is constant at $18 per unit, this profit-maximizing monopolist will choose to produce

Figure 15-3 -Refer to Figure 15-3. If this firm were able to perfectly price discriminate, which letter represents the amount of output it would produce?

When deciding what price to charge consumers, the monopolist may choose to charge them different prices based on the customers'

After the patent runs out on a brand name drug, generic drugs enter the market. What happens next in the market?

Graphically depict the deadweight loss caused by a monopoly. How is this similar to the deadweight loss from taxation?

When a monopolist increases the amount of output that it produces and sells, average revenue

Deadweight loss measures the loss in society's welfare that occurs because a monopolist does not produce the socially efficient level of output.

Many movie theaters allow discount tickets to be sold to senior citizens because

To maximize total surplus with a monopoly firm, a benevolent social planner would choose the level of output where

Drug companies are allowed to be monopolists in the drugs they discover in order to

Figure 15-9 -Refer to Figure 15-9. To maximize total surplus, a benevolent social planner would choose which of the following outcomes?

A benefit of a monopoly is

The fundamental source of monopoly power 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