Question 1

Table 15-9
Consider the following demand and cost information for a monopoly.  
-Refer to Table 15-9. What price should the monopoly charge to maximize profit?

Accepted Answer

A) $16 
B) $20 
C) $24 
D) $28 
A) $16 
B) $20 
C) $24 
D) $28

Question 2

When a firm experiences continually declining average total costs,

Accepted Answer

A) the firm is a price taker. 
B) society is better served by having one firm supply the product. 
C) the firm will earn higher profits than if average total costs are increasing. 
D) All of the above are correct. 
A) the firm is a price taker. 
B) society is better served by having one firm supply the product. 
C) the firm will earn higher profits than if average total costs are increasing. 
D) All of the above are correct.

Question 3

Barriers to entry only exist for monopoly markets.

Accepted Answer

A) True 
 B)False

Question 4

Since a monopolist faces a downward sloping demand curve,

Accepted Answer

A) ​the monopolist is able to sell all that it wants at whatever price the monopolist chooses. 
B) ​it is necessary for the monopolist to lower the price to sell additional units of the good. 
C) ​the monopolist sells only a fraction of the total sales of the good in the market. 
D) ​the monopolist must always make an economic profit. 
A) ​the monopolist is able to sell all that it wants at whatever price the monopolist chooses. 
B) ​it is necessary for the monopolist to lower the price to sell additional units of the good. 
C) ​the monopolist sells only a fraction of the total sales of the good in the market. 
D) ​the monopolist must always make an economic profit.

Question 5

What is the deadweight loss due to profit-maximizing monopoly pricing under the following conditions: The price charged for goods produced is $10. The intersection of the marginal revenue and marginal cost curves occurs where output is 100 units and marginal revenue is $5. The socially efficient level of production is 110 units. The demand curve is linear and downward sloping, and the marginal cost curve is constant.

Accepted Answer

1/2*(110-1

Question 6

The key issue in determining the efficiency of public versus private ownership of a monopoly is

Accepted Answer

A) the tendency for efficient management of publicly owned enterprises. 
B) the inability of private monopolies to get rid of managers that are doing a bad job. 
C) the propensity of private monopolies to generate excessive profits. 
D) how ownership of the firm affects the cost of production. 
A) the tendency for efficient management of publicly owned enterprises. 
B) the inability of private monopolies to get rid of managers that are doing a bad job. 
C) the propensity of private monopolies to generate excessive profits. 
D) how ownership of the firm affects the cost of production.

Question 7

Competitive firms have

Accepted Answer

A) downward-sloping demand curves, and they can sell as much output as they desire at the market price. 
B) downward-sloping demand curves, and they can sell only a limited quantity of output at each price. 
C) horizontal demand curves, and they can sell as much output as they desire at the market price. 
D) horizontal demand curves, and they can sell only a limited quantity of output at each price. 
A) downward-sloping demand curves, and they can sell as much output as they desire at the market price. 
B) downward-sloping demand curves, and they can sell only a limited quantity of output at each price. 
C) horizontal demand curves, and they can sell as much output as they desire at the market price. 
D) horizontal demand curves, and they can sell only a limited quantity of output at each price.

Question 8

One problem with regulating a monopolist on the basis of cost is that

Accepted Answer

A) by focusing on costs, the regulators ignore profits. 
B) it does not provide an incentive for the monopolist to reduce its cost. 
C) a monopolist's costs, by definition, are higher than costs of perfectly competitive firms. 
D) a monopolist is still able to generate excessive economic profits. 
A) by focusing on costs, the regulators ignore profits. 
B) it does not provide an incentive for the monopolist to reduce its cost. 
C) a monopolist's costs, by definition, are higher than costs of perfectly competitive firms. 
D) a monopolist is still able to generate excessive economic profits.

Question 9

Figure 15-1  
-Refer to Figure 15-1. Considering the relationship between average total cost and marginal cost, the marginal cost curve for this firm

Accepted Answer

A) must lie entirely above the average total cost curve. 
B) must lie entirely below the average total cost curve. 
C) must be upward sloping. 
D) does not exist. 
A) must lie entirely above the average total cost curve. 
B) must lie entirely below the average total cost curve. 
C) must be upward sloping. 
D) does not exist.

Question 10

Table 15-7
Sally owns the only shoe store in town. She has the following cost and revenue information.  
-Refer to Table 15-7. What is the total revenue from selling 8 pairs of shoes?

Accepted Answer

A) $90 
B) $695 
C) $720 
D) $800 
A) $90 
B) $695 
C) $720 
D) $800

Question 11

Figure 15-12  
-Refer to Figure 15-12. Which area represents the deadweight loss from monopoly?

Accepted Answer

A) A+B 
B) C+F 
C) G 
D) A+B+C+F 
A) A+B 
B) C+F 
C) G 
D) A+B+C+F

Question 12

Which of the following is not a reason for the existence of a monopoly?

Accepted Answer

A) patents 
B) marginal-cost pricing 
C) economies of scale 
D) trademarks 
A) patents 
B) marginal-cost pricing 
C) economies of scale 
D) trademarks

Question 13

In a market characterized by monopoly, the market demand curve is

Accepted Answer

A) upward sloping. 
B) horizontal. 
C) downward sloping. 
D) vertical. 
A) upward sloping. 
B) horizontal. 
C) downward sloping. 
D) vertical.

Question 14

Without price discrimination, the monopolist sells every unit at the same price. As a consequence,

Accepted Answer

A) marginal revenue is equal to price. 
B) marginal revenue is equal to average revenue. 
C) price is greater than marginal revenue. 
D) Both a and b are correct. 
A) marginal revenue is equal to price. 
B) marginal revenue is equal to average revenue. 
C) price is greater than marginal revenue. 
D) Both a and b are correct.

Question 15

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 the marginal revenue from selling the 8th tie?

Accepted Answer

A) $45 
B) $60 
C) $80 
D) $95 
A) $45 
B) $60 
C) $80 
D) $95

Question 16

A profit-maximizing monopolist charges a price of $14. The intersection of the marginal revenue curve and the marginal cost curve occurs where output is 15 units and marginal cost is $7. What is the monopolist's profit?

Accepted Answer

A) $90 
B) $105 
C) $180 
D) Not enough information is given to determine the answer. 
A) $90 
B) $105 
C) $180 
D) Not enough information is given to determine the answer.

Question 17

What happens to the price and quantity sold of a drug when its patent runs out? (i)
The price will fall.
(ii)
The quantity sold will fall.
(iii)
The marginal cost of producing the drug will rise.

Accepted Answer

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

Question 18

Price discrimination

Accepted Answer

A) forces monopolies to charge a lower price as a result of government regulation. 
B) is an attempt by a monopoly to prevent some customers from purchasing its product by charging a high price. 
C) is an attempt by a monopoly to increases its profit by selling the same good to different customers at different prices. 
D) increases the consumer surplus associated with a monopolistic market. 
A) forces monopolies to charge a lower price as a result of government regulation. 
B) is an attempt by a monopoly to prevent some customers from purchasing its product by charging a high price. 
C) is an attempt by a monopoly to increases its profit by selling the same good to different customers at different prices. 
D) increases the consumer surplus associated with a monopolistic market.

Question 19

For a typical natural monopoly, average total cost is

Accepted Answer

A) falling, and marginal cost is above average total cost. 
B) falling, and marginal cost is below average total cost. 
C) rising, and marginal cost is below average total cost. 
D) rising, and marginal cost is above average total cost. 
A) falling, and marginal cost is above average total cost. 
B) falling, and marginal cost is below average total cost. 
C) rising, and marginal cost is below average total cost. 
D) rising, and marginal cost is above average total cost.

Question 20

A firm cannot price discriminate if it

Accepted Answer

A) has perfect information about consumer demand. 
B) operates in a competitive market. 
C) faces a downward-sloping demand curve. 
D) is regulated by the government. 
A) has perfect information about consumer demand. 
B) operates in a competitive market. 
C) faces a downward-sloping demand curve. 
D) is regulated by the government.

Table 15-9 Consider the following demand and cost information for a monopoly. -Refer to Table 15-9. What price should the monopoly charge to maximize profit?

When a firm experiences continually declining average total costs,

Barriers to entry only exist for monopoly markets.

Since a monopolist faces a downward sloping demand curve,

The key issue in determining the efficiency of public versus private ownership of a monopoly is

Competitive firms have

One problem with regulating a monopolist on the basis of cost is that

Figure 15-1 -Refer to Figure 15-1. Considering the relationship between average total cost and marginal cost, the marginal cost curve for this firm

Table 15-7 Sally owns the only shoe store in town. She has the following cost and revenue information. -Refer to Table 15-7. What is the total revenue from selling 8 pairs of shoes?

Figure 15-12 -Refer to Figure 15-12. Which area represents the deadweight loss from monopoly?

Which of the following is not a reason for the existence of a monopoly?

In a market characterized by monopoly, the market demand curve is

Without price discrimination, the monopolist sells every unit at the same price. As a consequence,

A profit-maximizing monopolist charges a price of $14. The intersection of the marginal revenue curve and the marginal cost curve occurs where output is 15 units and marginal cost is $7. What is the monopolist's profit?

What happens to the price and quantity sold of a drug when its patent runs out? (i) The price will fall. (ii) The quantity sold will fall. (iii) The marginal cost of producing the drug will rise.

Price discrimination

For a typical natural monopoly, average total cost is

A firm cannot price discriminate if it

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

Table 15-9 Consider the following demand and cost information for a monopoly. -Refer to Table 15-9. What price should the monopoly charge to maximize profit?

When a firm experiences continually declining average total costs,

Barriers to entry only exist for monopoly markets.

Since a monopolist faces a downward sloping demand curve,

The key issue in determining the efficiency of public versus private ownership of a monopoly is

Competitive firms have

One problem with regulating a monopolist on the basis of cost is that

Figure 15-1 -Refer to Figure 15-1. Considering the relationship between average total cost and marginal cost, the marginal cost curve for this firm

Table 15-7 Sally owns the only shoe store in town. She has the following cost and revenue information. -Refer to Table 15-7. What is the total revenue from selling 8 pairs of shoes?

Figure 15-12 -Refer to Figure 15-12. Which area represents the deadweight loss from monopoly?

Which of the following is not a reason for the existence of a monopoly?

In a market characterized by monopoly, the market demand curve is

Without price discrimination, the monopolist sells every unit at the same price. As a consequence,

A profit-maximizing monopolist charges a price of $14. The intersection of the marginal revenue curve and the marginal cost curve occurs where output is 15 units and marginal cost is $7. What is the monopolist's profit?

What happens to the price and quantity sold of a drug when its patent runs out? (i) The price will fall. (ii) The quantity sold will fall. (iii) The marginal cost of producing the drug will rise.

Price discrimination

For a typical natural monopoly, average total cost is

A firm cannot price discriminate if it

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