Question 1

A monopolist will choose to increase output when

Accepted Answer

A) market price increases. 
B) at all levels of output, marginal cost increases. 
C) at the present level of output, marginal revenue exceeds marginal cost. 
D) the demand curve shifts to the left. 
A) market price increases. 
B) at all levels of output, marginal cost increases. 
C) at the present level of output, marginal revenue exceeds marginal cost. 
D) the demand curve shifts to the left.

Question 2

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 3rd unit?

Accepted Answer

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

Question 3

Authors are allowed to be monopolists in the sale of their books in order to

Accepted Answer

A) promote a society in which people think for themselves and learn from whichever books they please. 
B) correct for the negative externalities that the Internet and television impose. 
C) satisfy literary advocacy groups that exercise their lobbying power. 
D) None of the above is correct. 
A) promote a society in which people think for themselves and learn from whichever books they please. 
B) correct for the negative externalities that the Internet and television impose. 
C) satisfy literary advocacy groups that exercise their lobbying power. 
D) None of the above is correct.

Question 4

The fundamental cause of monopoly is

Accepted Answer

A) incompetent management in competitive firms. 
B) the zero-profit feature of long-run equilibrium in competitive markets. 
C) advertising. 
D) barriers to entry. 
A) incompetent management in competitive firms. 
B) the zero-profit feature of long-run equilibrium in competitive markets. 
C) advertising. 
D) barriers to entry.

Question 5

When a monopolist chooses the output that maximizes profits, we know that MR = MC and also that P > MR. This is inefficient because

Accepted Answer

A) ​the monopolist is not minimizing costs. 
B) ​the monopolist is the only producer in the market. 
C) ​the monopolist fails to make transactions where the marginal benefit is greater than the marginal cost. 
D) ​there are entry barriers. 
A) ​the monopolist is not minimizing costs. 
B) ​the monopolist is the only producer in the market. 
C) ​the monopolist fails to make transactions where the marginal benefit is greater than the marginal cost. 
D) ​there are entry barriers.

Question 6

When a natural monopoly exists, it is

Accepted Answer

A) always cost effective for government-owned firms to produce the product. 
B) never cost effective for one firm to produce the product. 
C) always cost effective for two or more private firms to produce the product. 
D) never cost effective for two or more private firms to produce the product. 
A) always cost effective for government-owned firms to produce the product. 
B) never cost effective for one firm to produce the product. 
C) always cost effective for two or more private firms to produce the product. 
D) never cost effective for two or more private firms to produce the product.

Question 7

Round-trip airline tickets are usually cheaper if you stay over a Saturday night before you fly back. What is the reason for this price discrepancy?

Accepted Answer

A) Airlines are practicing imperfect price discrimination to raise their profits. 
B) Airlines charge a different rate based on the different nature of peoples' travel needs. 
C) Airlines are attempting to charge people based on their willingness to pay. 
D) All of the above are correct. 
A) Airlines are practicing imperfect price discrimination to raise their profits. 
B) Airlines charge a different rate based on the different nature of peoples' travel needs. 
C) Airlines are attempting to charge people based on their willingness to pay. 
D) All of the above are correct.

Question 8

Table 15-8
The following table provides information on the price, quantity, and average total cost for a monopoly.  
-Refer to Table 15-8. At what price will the monopolist maximize his profit?

Accepted Answer

A) $6 
B) $12 
C) $18 
D) $24 
A) $6 
B) $12 
C) $18 
D) $24

Question 9

Patents, copyrights, and trademarks

Accepted Answer

A) are examples of government-created monopolies. 
B) are examples of barriers to entry. 
C) allow their owners to charge higher prices. 
D) All of the above are correct. 
A) are examples of government-created monopolies. 
B) are examples of barriers to entry. 
C) allow their owners to charge higher prices. 
D) All of the above are correct.

Question 10

Figure 15-17  
-Refer to Figure 15-17. Which of the following areas represents the deadweight loss from this profit-maximizing monopolist?

Accepted Answer

A) ABE 
B) BCFE 
C) EFG 
D) ACG 
A) ABE 
B) BCFE 
C) EFG 
D) ACG

Question 11

Suppose a monopolist charges a price of $27 for its product and sells 10 units at that price. At 10 units of production the firm has average fixed cost equal to $10 and average variable cost equal to $12. How much total profit is the firm earning at this price?

Accepted Answer

A) $5 
B) $25 
C) $50 
D) $140 
A) $5 
B) $25 
C) $50 
D) $140

Question 12

Figure 15-8  
-Refer to Figure 15-8. What is the monopoly 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 13

Figure 15-2  
-Refer to Figure 15-2. If a regulator requires the firm to charge a marginal cost price, what quantity will the firm produce?

Accepted Answer

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

Question 14

For a monopolist, when the output effect is greater than the price effect, marginal revenue is

Accepted Answer

A) positive. 
B) negative. 
C) zero. 
D) maximized. 
A) positive. 
B) negative. 
C) zero. 
D) maximized.

Question 15

Scenario 15-9
Suppose executives at an art museum know that 100 adults are willing to pay $12 for admission to the museum on a weekday. Suppose the executives also know that 200 students are willing to pay $8 for admission on a weekday. The cost of operating the museum on a weekday is $2,000.
-Refer to Scenario 15-9. How much profit will the museum earn if it charges all customers $12 for admission?

Accepted Answer

A) -$800 
B) $100 
C) $800 
D) $1,200 
A) -$800 
B) $100 
C) $800 
D) $1,200

Question 16

Figure 15-14  
-Refer to Figure 15-14. A benevolent social planner would have the monopoly operate at an output level

Accepted Answer

A) less than Q0. 
B) greater than Q0. 
C) equal to Q0. 
D) equal to zero. 
A) less than Q0. 
B) greater than Q0. 
C) equal to Q0. 
D) equal to zero.

Question 17

Figure 15-6  
-Refer to Figure 15-6. How much output will the monopolist produce?

Accepted Answer

A) O 
B) T 
C) W 
D) Z 
A) O 
B) T 
C) W 
D) Z

Question 18

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 must

Accepted Answer

A) lie entirely above the average total cost curve. 
B) lie entirely below the average total cost curve. 
C) be U-shaped. 
D) be horizontal. 
A) lie entirely above the average total cost curve. 
B) lie entirely below the average total cost curve. 
C) be U-shaped. 
D) be horizontal.

Question 19

For a long while, electricity producers were thought to be a classic example of a natural monopoly. People held this view because

Accepted Answer

A) the average cost of producing units of electricity by one producer in a specific region was lower than if the same quantity were produced by two or more producers in the same region. 
B) the average cost of producing units of electricity by one producer in a specific region was higher than if the same quantity were produced by two or more produced in the same region. 
C) the marginal cost of producing units of electricity by one producer in a specific region was higher than if the same quantity were produced by two or more producers in the same region. 
D) electricity is a special non-excludable good that could never be sold in a competitive market. 
A) the average cost of producing units of electricity by one producer in a specific region was lower than if the same quantity were produced by two or more producers in the same region. 
B) the average cost of producing units of electricity by one producer in a specific region was higher than if the same quantity were produced by two or more produced in the same region. 
C) the marginal cost of producing units of electricity by one producer in a specific region was higher than if the same quantity were produced by two or more producers in the same region. 
D) electricity is a special non-excludable good that could never be sold in a competitive market.

Question 20

Which of the following is not correct?

Accepted Answer

A) Antitrust laws may prevent mergers that would actually raise social welfare. 
B) Public ownership is the most common public policy toward monopolies in the United States. 
C) Regulation is a common strategy for a natural monopoly. 
D) Sometimes the best public policy toward a monopoly may be to do nothing. 
A) Antitrust laws may prevent mergers that would actually raise social welfare. 
B) Public ownership is the most common public policy toward monopolies in the United States. 
C) Regulation is a common strategy for a natural monopoly. 
D) Sometimes the best public policy toward a monopoly may be to do nothing.

Exam 15: Monopoly

A monopolist will choose to increase output when

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 3rd unit?

Authors are allowed to be monopolists in the sale of their books in order to

The fundamental cause of monopoly is

When a monopolist chooses the output that maximizes profits, we know that MR = MC and also that P > MR. This is inefficient because

When a natural monopoly exists, it is

Round-trip airline tickets are usually cheaper if you stay over a Saturday night before you fly back. What is the reason for this price discrepancy?

Table 15-8 The following table provides information on the price, quantity, and average total cost for a monopoly. -Refer to Table 15-8. At what price will the monopolist maximize his profit?

Patents, copyrights, and trademarks

Figure 15-17 -Refer to Figure 15-17. Which of the following areas represents the deadweight loss from this profit-maximizing monopolist?

Suppose a monopolist charges a price of $27 for its product and sells 10 units at that price. At 10 units of production the firm has average fixed cost equal to $10 and average variable cost equal to $12. How much total profit is the firm earning at this price?

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

Figure 15-2 -Refer to Figure 15-2. If a regulator requires the firm to charge a marginal cost price, what quantity will the firm produce?

For a monopolist, when the output effect is greater than the price effect, marginal revenue is

Figure 15-14 -Refer to Figure 15-14. A benevolent social planner would have the monopoly operate at an output level

Figure 15-6 -Refer to Figure 15-6. How much output will the monopolist produce?

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 must

For a long while, electricity producers were thought to be a classic example of a natural monopoly. People held this view because

Which of the following is not correct?

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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