Question 1

Because monopoly firms do not have to compete with other firms, the outcome in a market with a monopoly

Accepted Answer

A) is often not in the best interest of society. 
B) maximizes total economic well-being. 
C) is efficient. 
D) benefits consumers more so than the producer. 
A) is often not in the best interest of society. 
B) maximizes total economic well-being. 
C) is efficient. 
D) benefits consumers more so than the producer.

Question 2

Table 15-4
A monopolist faces the following demand curve:  
-Refer to Table 15-4. If the monopolist increases production from 7.5 to 10 units, what is its marginal revenue?

Accepted Answer

A) $12.50 
B) $5 
C) -$5 
D) -$12.50 
A) $12.50 
B) $5 
C) -$5 
D) -$12.50

Question 3

Price discrimination is prohibited by antitrust laws.

Accepted Answer

A) True 
 B)False

Question 4

One method used to control the ability of firms to capture monopoly profit in the United States is through

Accepted Answer

A) government purchase of products produced by monopolists. 
B) government distribution of a monopolist's excess production. 
C) enforcement of antitrust laws. 
D) regulation of firms in highly competitive markets. 
A) government purchase of products produced by monopolists. 
B) government distribution of a monopolist's excess production. 
C) enforcement of antitrust laws. 
D) regulation of firms in highly competitive markets.

Question 5

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 6

When a monopolist decreases the price of its good, consumers

Accepted Answer

A) continue to buy the same amount. 
B) buy more. 
C) buy less. 
D) may buy more or less, depending on the price elasticity of demand. 
A) continue to buy the same amount. 
B) buy more. 
C) buy less. 
D) may buy more or less, depending on the price elasticity of demand.

Question 7

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 8

State two examples of government-created monopolies.

Accepted Answer

patents
co

Question 9

Perfect price discrimination describes a situation in which the monopolist

Accepted Answer

A) knows the exact willingness to pay of each of its customers. 
B) charges exactly two different prices to exactly two different groups of customers. 
C) maximizes consumer surplus. 
D) experiences a zero economic profit. 
A) knows the exact willingness to pay of each of its customers. 
B) charges exactly two different prices to exactly two different groups of customers. 
C) maximizes consumer surplus. 
D) experiences a zero economic profit.

Question 10

Which of the following is an example of a barrier to entry?
(i)A key resource is owned by a single firm.
(ii)The costs of production make a single producer more efficient than a large number of producers.
(iii)The government has given the existing monopolist the exclusive right to produce the good.

Accepted Answer

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

Question 11

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

Accepted Answer

A) sole ownership of a key resource 
B) patents 
C) copyrights 
D) diseconomies of scale 
A) sole ownership of a key resource 
B) patents 
C) copyrights 
D) diseconomies of scale

Question 12

Figure 15-8  
-Refer to Figure 15-8. What is the area of deadweight loss?

Accepted Answer

A) the rectangle (A-
C) *X 
B) the triangle 1/2[(A-
C) *(Y-X)] 
C) the triangle 1/2[(A-
B) *(Y-X)] 
D) the rectangle (A-
C) *X plus the triangle 1/2[(A-
C) *(Y-X)] 
A) the rectangle (A-
C) *X 
B) the triangle 1/2[(A-
C) *(Y-X)] 
C) the triangle 1/2[(A-
B) *(Y-X)] 
D) the rectangle (A-
C) *X plus the triangle 1/2[(A-
C) *(Y-X)]

Question 13

Figure 15-11  
-Refer to Figure 15-11. Which area represents the deadweight loss from monopoly?

Accepted Answer

A) J 
B) H 
C) A+B+C+D+F+I+J+H 
D) J+H 
A) J 
B) H 
C) A+B+C+D+F+I+J+H 
D) J+H

Question 14

Table 15-6
A monopolist faces the following demand curve:  
-Refer to Table 15-6. Suppose the monopolist has total fixed costs equal to $5 and a variable cost equal to $4 per unit for all units produced. What is the profit-maximizing price?

Accepted Answer

A) $6 
B) $9 
C) $12 
D) $15 
A) $6 
B) $9 
C) $12 
D) $15

Question 15

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 16

Figure 15-21  
-Refer to Figure 15-21. What is the price and quantity for this natural monopolist under socially optimal pricing?

Accepted Answer

A) A and J 
B) E and J 
C) F and K 
D) H and L 
A) A and J 
B) E and J 
C) F and K 
D) H and L

Question 17

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 $8 for admission?

Accepted Answer

A) $200 
B) $400 
C) $800 
D) $2,400 
A) $200 
B) $400 
C) $800 
D) $2,400

Question 18

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 variable cost of production when Sally produces six pairs of shoes?

Accepted Answer

A) $100 
B) $295 
C) $600 
D) $620 
A) $100 
B) $295 
C) $600 
D) $620

Question 19

Price discrimination is a rational strategy for a profit-maximizing monopolist when

Accepted Answer

A) the monopolist finds itself able to produce only limited quantities of output. 
B) consumers are unable to be segmented into identifiable markets. 
C) the monopolist wishes to increase the deadweight loss that results from profit-maximizing behavior. 
D) there is no opportunity for arbitrage across market segments. 
A) the monopolist finds itself able to produce only limited quantities of output. 
B) consumers are unable to be segmented into identifiable markets. 
C) the monopolist wishes to increase the deadweight loss that results from profit-maximizing behavior. 
D) there is no opportunity for arbitrage across market segments.

Question 20

Table 15-11
The following table shows quantity, price, and marginal cost information for a monopoly:  
-Refer to Table 15-11. What would be the firm's marginal revenue at the profit-maximizing level of output?

Accepted Answer

A) $7 
B) $6 
C) $5 
D) $1 
A) $7 
B) $6 
C) $5 
D) $1

Exam 15: Monopoly

Because monopoly firms do not have to compete with other firms, the outcome in a market with a monopoly

Table 15-4 A monopolist faces the following demand curve: -Refer to Table 15-4. If the monopolist increases production from 7.5 to 10 units, what is its marginal revenue?

Price discrimination is prohibited by antitrust laws.

One method used to control the ability of firms to capture monopoly profit in the United States is through

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

When a monopolist decreases the price of its good, consumers

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

State two examples of government-created monopolies.

Perfect price discrimination describes a situation in which the monopolist

Which of the following is an example of a barrier to entry? (i)A key resource is owned by a single firm. (ii)The costs of production make a single producer more efficient than a large number of producers. (iii)The government has given the existing monopolist the exclusive right to produce the good.

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

Figure 15-8 -Refer to Figure 15-8. What is the area of deadweight loss?

Figure 15-11 -Refer to Figure 15-11. Which area represents the deadweight loss from monopoly?

Table 15-6 A monopolist faces the following demand curve: -Refer to Table 15-6. Suppose the monopolist has total fixed costs equal to $5 and a variable cost equal to $4 per unit for all units produced. What is the profit-maximizing price?

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

Figure 15-21 -Refer to Figure 15-21. What is the price and quantity for this natural monopolist under socially optimal pricing?

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 variable cost of production when Sally produces six pairs of shoes?

Price discrimination is a rational strategy for a profit-maximizing monopolist when

Table 15-11 The following table shows quantity, price, and marginal cost information for a monopoly: -Refer to Table 15-11. What would be the firm's marginal revenue at the profit-maximizing level of output?

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

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