Question 1

When we compare economic welfare in a monopoly market to a competitive market, the profits earned by the monopolist represent

Accepted Answer

A) a loss in total welfare. 
B) a transfer of benefits from the buyer to the seller. 
C) the higher marginal costs incurred by the monopolists in comparison to competitive firms. 
D) All of the above are correct. 
A) a loss in total welfare. 
B) a transfer of benefits from the buyer to the seller. 
C) the higher marginal costs incurred by the monopolists in comparison to competitive firms. 
D) All of the above are correct.

Question 2

If a product can be produced by a natural monopoly, society will benefit in the form of lower prices if the monopolist is broken up into several smaller firms.

Accepted Answer

A) True 
 B)False

Question 3

Figure 15-2  
-Refer to Figure 15-2. If the firm profit-maximizes, what price will it charge?

Accepted Answer

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

Question 4

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 5

Figure 15-19  
-Refer to Figure 15-19. If the monopoly firm is not allowed to price discriminate, then consumer surplus amounts to

Accepted Answer

A) $0. 
B) $1,562.50. 
C) $3,125. 
D) $6,250. 
A) $0. 
B) $1,562.50. 
C) $3,125. 
D) $6,250.

Question 6

For a monopoly firm, which of the following equalities is always true?

Accepted Answer

A) price = marginal revenue 
B) price = average revenue 
C) price = total revenue 
D) marginal revenue = marginal cost 
A) price = marginal revenue 
B) price = average revenue 
C) price = total revenue 
D) marginal revenue = marginal cost

Question 7

When there are economies of scale over the relevant range of output for a monopoly, the monopoly

Accepted Answer

A) is a natural monopoly. 
B) is a government-granted monopoly. 
C) has monopoly power due to the ownership of a patent or copyright. 
D) has monopoly power due to the ownership of a key production resource. 
A) is a natural monopoly. 
B) is a government-granted monopoly. 
C) has monopoly power due to the ownership of a patent or copyright. 
D) has monopoly power due to the ownership of a key production resource.

Question 8

Comparing firms in perfectly competitive markets to monopoly firms, which charges higher prices?

Accepted Answer

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

Question 9

If a monopolist's marginal costs increase by $1 for all levels of output, then the monopoly price will

Accepted Answer

A) rise by $1. 
B) rise by more than $1. 
C) rise by less than $1. 
D) not change, but profits will decrease. 
A) rise by $1. 
B) rise by more than $1. 
C) rise by less than $1. 
D) not change, but profits will decrease.

Question 10

The best solution to the problem of welfare loss from monopoly is public ownership.

Accepted Answer

A) True 
 B)False

Question 11

Suppose a firm has a monopoly on the sale of widgets and faces a downward-sloping demand curve. When selling the 100th widget, the firm will always receive

Accepted Answer

A) less marginal revenue on the 100th widget than it received on the 99th widget. 
B) more average revenue on the 100th widget than it received on the 99th widget. 
C) more total revenue on the 100 widgets than it received on the first 99 widgets. 
D) a lower average cost per unit at 100 units of output than at 99 units of output. 
A) less marginal revenue on the 100th widget than it received on the 99th widget. 
B) more average revenue on the 100th widget than it received on the 99th widget. 
C) more total revenue on the 100 widgets than it received on the first 99 widgets. 
D) a lower average cost per unit at 100 units of output than at 99 units of output.

Question 12

Policymakers are discussing various proposals regarding how to deal with natural monopolies. Senator Huff wants to regulate natural monopolies by equating price with average total cost. Huff contends that such a policy will ensure that monopolies make every effort to reduce costs. Senator Puff wants the government to own natural monopolies. Puff argues that government-owned monopolies usually do a better job of holding down costs than privately owned monopolies. Which senator's argument is correct?

Accepted Answer

A) Senator Huff 
B) Senator Puff 
C) both senators 
D) neither senator 
A) Senator Huff 
B) Senator Puff 
C) both senators 
D) neither senator

Question 13

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 14

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 15

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 16

The market demand curve for a monopolist is typically

Accepted Answer

A) unit price elastic. 
B) downward sloping. 
C) horizontal. 
D) vertical. 
A) unit price elastic. 
B) downward sloping. 
C) horizontal. 
D) vertical.

Question 17

Like competitive firms, monopolies charge a price equal to marginal cost.

Accepted Answer

A) True 
 B)False

Question 18

Figure 15-1  
-Refer to Figure 15-1. Which is more efficient, single price profit maximization or perfect price discrimination?

Accepted Answer

perfect pr

Question 19

What is the shape of the monopolist's marginal revenue curve?

Accepted Answer

A) a downward-sloping line that is identical to the demand curve 
B) a downward-sloping line that lies below the demand curve 
C) a horizontal line that is identical to the demand curve 
D) a horizontal line that lies below the demand curve 
A) a downward-sloping line that is identical to the demand curve 
B) a downward-sloping line that lies below the demand curve 
C) a horizontal line that is identical to the demand curve 
D) a horizontal line that lies below the demand curve

Question 20

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.

Exam 15: Monopoly

When we compare economic welfare in a monopoly market to a competitive market, the profits earned by the monopolist represent

If a product can be produced by a natural monopoly, society will benefit in the form of lower prices if the monopolist is broken up into several smaller firms.

Figure 15-2 -Refer to Figure 15-2. If the firm profit-maximizes, what price will it charge?

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.

Figure 15-19 -Refer to Figure 15-19. If the monopoly firm is not allowed to price discriminate, then consumer surplus amounts to

For a monopoly firm, which of the following equalities is always true?

When there are economies of scale over the relevant range of output for a monopoly, the monopoly

Comparing firms in perfectly competitive markets to monopoly firms, which charges higher prices?

If a monopolist's marginal costs increase by $1 for all levels of output, then the monopoly price will

The best solution to the problem of welfare loss from monopoly is public ownership.

Suppose a firm has a monopoly on the sale of widgets and faces a downward-sloping demand curve. When selling the 100th widget, the firm will always receive

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

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

The market demand curve for a monopolist is typically

Like competitive firms, monopolies charge a price equal to marginal cost.

Figure 15-1 -Refer to Figure 15-1. Which is more efficient, single price profit maximization or perfect price discrimination?

What is the shape of the monopolist's marginal revenue curve?

When a natural monopoly exists, it 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

Applications: 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

Measuring a Nation S Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters

Suppose a firm has a monopoly on the sale of widgets and faces a downward-sloping demand curve. When selling the 100^th widget, the firm will always receive