Question 1

Which of the following is not an example of a barrier to entry?

Accepted Answer

A) Mighty Mitch's Mining Company owns a unique plot of land in Tanzania, under which lies the only large deposit of Tanzanite in the world. 
B) A chemist receives a patent for a new skin cream. 
C) An entrepreneur opens a cupcake bakery. 
D) A taxi cab driver in New York City obtains a license to legally provide transportation in New York City. 
A) Mighty Mitch's Mining Company owns a unique plot of land in Tanzania, under which lies the only large deposit of Tanzanite in the world. 
B) A chemist receives a patent for a new skin cream. 
C) An entrepreneur opens a cupcake bakery. 
D) A taxi cab driver in New York City obtains a license to legally provide transportation in New York City.

Question 2

Patent and copyright laws

Accepted Answer

A) encourage creative activity. 
B) promote competition among firms. 
C) discourage creative activity. 
D) Both a and b are correct. 
A) encourage creative activity. 
B) promote competition among firms. 
C) discourage creative activity. 
D) Both a and b are correct.

Question 3

Figure 15-2  
-Refer to Figure 15-2. If the firm profit-maximizes, how much profit will it earn?

Accepted Answer

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

Question 4

For a monopolist, when does marginal revenue exceed average revenue?

Accepted Answer

A) never 
B) when output is less than the profit-maximizing level of output 
C) when output is greater than the profit-maximizing level of output 
D) for all levels of output greater than zero 
A) never 
B) when output is less than the profit-maximizing level of output 
C) when output is greater than the profit-maximizing level of output 
D) for all levels of output greater than zero

Question 5

The social cost of a monopoly is equal to its

Accepted Answer

A) economic profit. 
B) fixed cost. 
C) deadweight loss. 
D) variable cost. 
A) economic profit. 
B) fixed cost. 
C) deadweight loss. 
D) variable cost.

Question 6

Which of the following is not one of the ways that antitrust laws promote competition?

Accepted Answer

A) Antitrust laws allow the government to prevent mergers. 
B) Antitrust laws allow the government to break up companies into smaller ones. 
C) Antitrust laws prevent companies from coordinating their activities in ways that make markets less competitive. 
D) Antitrust laws allow the government to shut down any firm the government believes has monopoly power. 
A) Antitrust laws allow the government to prevent mergers. 
B) Antitrust laws allow the government to break up companies into smaller ones. 
C) Antitrust laws prevent companies from coordinating their activities in ways that make markets less competitive. 
D) Antitrust laws allow the government to shut down any firm the government believes has monopoly power.

Question 7

Which of the following is not a difference between monopolies and perfectly competitive markets?

Accepted Answer

A) Monopolies can earn profits in the long run while perfectly competitive firms break even. 
B) Monopolies charge a price higher than marginal cost while perfectly competitive firms charge a price equal to marginal cost. 
C) Monopolies choose to produce the quantity at which marginal revenue equals marginal cost while perfectly competitive firms do not. 
D) Monopolies face downward sloping demand curves while perfectly competitive firms face horizontal demand curves. 
A) Monopolies can earn profits in the long run while perfectly competitive firms break even. 
B) Monopolies charge a price higher than marginal cost while perfectly competitive firms charge a price equal to marginal cost. 
C) Monopolies choose to produce the quantity at which marginal revenue equals marginal cost while perfectly competitive firms do not. 
D) Monopolies face downward sloping demand curves while perfectly competitive firms face horizontal demand curves.

Question 8

Comparing firms in perfectly competitive markets to monopoly firms, which results in a deadweight loss?

Accepted Answer

The answer of Comparing firms in perfectly competitive markets to...

Question 9

Which of the following statements is correct?

Accepted Answer

A) The benefits that accrue to a monopoly's owners are equal to the costs that are incurred by consumers of that firm's product. 
B) The deadweight loss that arises in monopoly stems from the fact that the profit-maximizing monopoly firm produces a quantity of output that exceeds the socially-efficient quantity. 
C) The deadweight loss caused by monopoly is similar to the deadweight loss caused by a tax on a product. 
D) The primary social problem caused by monopoly is monopoly profit. 
A) The benefits that accrue to a monopoly's owners are equal to the costs that are incurred by consumers of that firm's product. 
B) The deadweight loss that arises in monopoly stems from the fact that the profit-maximizing monopoly firm produces a quantity of output that exceeds the socially-efficient quantity. 
C) The deadweight loss caused by monopoly is similar to the deadweight loss caused by a tax on a product. 
D) The primary social problem caused by monopoly is monopoly profit.

Question 10

Price discrimination requires the firm to

Accepted Answer

A) separate customers according to their willingnesses to pay. 
B) differentiate between different units of its product. 
C) engage in arbitrage. 
D) use coupons. 
A) separate customers according to their willingnesses to pay. 
B) differentiate between different units of its product. 
C) engage in arbitrage. 
D) use coupons.

Question 11

Scenario 15-4
Suppose a monopolist has a demand curve that can be expressed as P=90-Q. The monopolist's marginal revenue curve can be expressed as MR=90-2Q. The monopolist has constant marginal costs and average total costs of $10.
-Refer to Scenario 15-4. The profit-maximizing monopolist will charge a price of

Accepted Answer

A) $50. 
B) $40. 
C) $20. 
D) $10. 
A) $50. 
B) $40. 
C) $20. 
D) $10.

Question 12

When a certain monopoly sets its price at $8 it sells 64 units. When the monopoly sets its price at $10 it sells 60 units. The marginal revenue for the firm over this range is

Accepted Answer

A) $11. 
B) $22. 
C) $33. 
D) $44. 
A) $11. 
B) $22. 
C) $33. 
D) $44.

Question 13

Table 15-4
A monopolist faces the following demand curve:  
-Refer to Table 15-4. If the monopolist produces 10 units, what is its average revenue?

Accepted Answer

A) $100 
B) $15 
C) $10 
D) $1 
A) $100 
B) $15 
C) $10 
D) $1

Question 14

Figure 15-3        
-Refer to Figure 15-3. Which of the following statements is correct?

Accepted Answer

A) Panel B represents the typical demand curve for a perfectly competitive industry. 
B) Panel A represents the typical demand curve for a monopoly. 
C) Panel C represents the typical demand curve for a perfectly competitive firm. 
D) All of the above are correct. 
A) Panel B represents the typical demand curve for a perfectly competitive industry. 
B) Panel A represents the typical demand curve for a monopoly. 
C) Panel C represents the typical demand curve for a perfectly competitive firm. 
D) All of the above are correct.

Question 15

Which of the following statements is not correct?

Accepted Answer

A) Two examples of early antitrust laws are the Sherman and Clayton Antitrust Acts. 
B) Antitrust laws automatically prevent mergers between companies that produce similar products. 
C) Antitrust laws give the government power to increase competition. 
D) Antitrust laws can reduce social welfare if they prevent mergers that would lower costs through more efficient joint production. 
A) Two examples of early antitrust laws are the Sherman and Clayton Antitrust Acts. 
B) Antitrust laws automatically prevent mergers between companies that produce similar products. 
C) Antitrust laws give the government power to increase competition. 
D) Antitrust laws can reduce social welfare if they prevent mergers that would lower costs through more efficient joint production.

Question 16

The first major piece of antitrust legislation was the

Accepted Answer

A) Clayton Act. 
B) Obama Care Act. 
C) Sherman Act. 
D) Clinton Act. 
A) Clayton Act. 
B) Obama Care Act. 
C) Sherman Act. 
D) Clinton Act.

Question 17

Table 15-5
A monopolist faces the following demand curve:  
-Refer to Table 15-5. The monopolist has total fixed costs of $60 and has a constant marginal cost of $15. What is the profit-maximizing level of production?

Accepted Answer

A) 2 units 
B) 3 units 
C) 4 units 
D) 5 units 
A) 2 units 
B) 3 units 
C) 4 units 
D) 5 units

Question 18

A fundamental source of monopoly market power arises from

Accepted Answer

A) perfectly elastic demand. 
B) perfectly inelastic demand. 
C) barriers to entry. 
D) availability of "free" natural resources, such as water or air. 
A) perfectly elastic demand. 
B) perfectly inelastic demand. 
C) barriers to entry. 
D) availability of "free" natural resources, such as water or air.

Question 19

Scenario 15-1
Vincent operates a scenic tour business in Boston. He has one bus which can fit 50 people per tour and each tour lasts 2 hours. His total cost of operating one tour is fixed at $450. Vincent's cost is not reduced if he runs a tour with a partially full bus. While his cost is the same for all tours, Vincent charges each passenger his/her willingness to pay: adults $18 per trip, children $10 per trip, and senior citizens $12 per trip. At those rates, on a typical day Vincent's demand is:   Assume that Vincent's customers are always available for the tour; therefore, he can fill his bus for each tour as long as there is sufficient total demand for the day.
-Refer to Scenario 15-1. Vincent uses a pricing practice called

Accepted Answer

price disc

Question 20

In order to sell more of its product, a monopolist must

Accepted Answer

A) lobby the government for a subsidy. 
B) lower its price. 
C) advertise. 
D) enact barriers to entry in related markets. 
A) lobby the government for a subsidy. 
B) lower its price. 
C) advertise. 
D) enact barriers to entry in related markets.

Which of the following is not an example of a barrier to entry?

Patent and copyright laws

Figure 15-2 -Refer to Figure 15-2. If the firm profit-maximizes, how much profit will it earn?

For a monopolist, when does marginal revenue exceed average revenue?

The social cost of a monopoly is equal to its

Which of the following is not one of the ways that antitrust laws promote competition?

Which of the following is not a difference between monopolies and perfectly competitive markets?

Comparing firms in perfectly competitive markets to monopoly firms, which results in a deadweight loss?

Which of the following statements is correct?

Price discrimination requires the firm to

When a certain monopoly sets its price at $8 it sells 64 units. When the monopoly sets its price at $10 it sells 60 units. The marginal revenue for the firm over this range is

Table 15-4 A monopolist faces the following demand curve: -Refer to Table 15-4. If the monopolist produces 10 units, what is its average revenue?

Figure 15-3 -Refer to Figure 15-3. Which of the following statements is correct?

Which of the following statements is not correct?

The first major piece of antitrust legislation was the

Table 15-5 A monopolist faces the following demand curve: -Refer to Table 15-5. The monopolist has total fixed costs of $60 and has a constant marginal cost of $15. What is the profit-maximizing level of production?

A fundamental source of monopoly market power arises from

In order to sell more of its product, a monopolist must

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

Which of the following is not an example of a barrier to entry?

Patent and copyright laws

Figure 15-2 -Refer to Figure 15-2. If the firm profit-maximizes, how much profit will it earn?

For a monopolist, when does marginal revenue exceed average revenue?

The social cost of a monopoly is equal to its

Which of the following is not one of the ways that antitrust laws promote competition?

Which of the following is not a difference between monopolies and perfectly competitive markets?

Comparing firms in perfectly competitive markets to monopoly firms, which results in a deadweight loss?

Which of the following statements is correct?

Price discrimination requires the firm to

When a certain monopoly sets its price at $8 it sells 64 units. When the monopoly sets its price at $10 it sells 60 units. The marginal revenue for the firm over this range is

Table 15-4 A monopolist faces the following demand curve: -Refer to Table 15-4. If the monopolist produces 10 units, what is its average revenue?

Figure 15-3 -Refer to Figure 15-3. Which of the following statements is correct?

Which of the following statements is not correct?

The first major piece of antitrust legislation was the

Table 15-5 A monopolist faces the following demand curve: -Refer to Table 15-5. The monopolist has total fixed costs of $60 and has a constant marginal cost of $15. What is the profit-maximizing level of production?

A fundamental source of monopoly market power arises from

In order to sell more of its product, a monopolist must

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