Question 1

Because many good substitutes exist for a competitive firm's product, the demand curve that it faces is

Accepted Answer

A) unit-elastic. 
B) perfectly inelastic. 
C) perfectly elastic. 
D) inelastic only over a certain region. 
A) unit-elastic. 
B) perfectly inelastic. 
C) perfectly elastic. 
D) inelastic only over a certain region.

Question 2

The process of buying a good in one market at a low price and selling the good in another market for a higher price in order to profit from the price difference is known as

Accepted Answer

A) sabotage. 
B) conspiracy. 
C) arbitrage. 
D) collusion. 
A) sabotage. 
B) conspiracy. 
C) arbitrage. 
D) collusion.

Question 3

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 4

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

Accepted Answer

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

Question 5

Monopolists can practice price discrimination in all monopoly markets.​

Accepted Answer

A) True 
 B)False

Question 6

Figure 15-8  
-Refer to Figure 15-8. What is the socially efficient 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 7

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 total revenue when 7 ties are sold?

Accepted Answer

A) $650 
B) $700 
C) $910 
D) $1080 
A) $650 
B) $700 
C) $910 
D) $1080

Question 8

Private ownership of a monopoly may benefit society because the monopoly will have an incentive to

Accepted Answer

A) charge a price that is consistent with that of a benevolent social planner. 
B) charge a price that prevents some people from buying. 
C) price its good according to the intersection of marginal cost and average revenue. 
D) lower its costs to earn a higher profit. 
A) charge a price that is consistent with that of a benevolent social planner. 
B) charge a price that prevents some people from buying. 
C) price its good according to the intersection of marginal cost and average revenue. 
D) lower its costs to earn a higher profit.

Question 9

As a monopolist increases the quantity of output it sells, the price consumers are willing to pay for the good

Accepted Answer

A) is unaffected. 
B) decreases. 
C) increases. 
D) There is not enough information given in answer the question. 
A) is unaffected. 
B) decreases. 
C) increases. 
D) There is not enough information given in answer the question.

Question 10

The economic inefficiency of a monopolist can be measured by the

Accepted Answer

A) deadweight loss. 
B) value of the unrealized trades that could be made if the monopolist produced the socially-efficient output. 
C) area above marginal cost but beneath demand from the monopoly output to the socially-efficient output. 
D) All of the above are correct. 
A) deadweight loss. 
B) value of the unrealized trades that could be made if the monopolist produced the socially-efficient output. 
C) area above marginal cost but beneath demand from the monopoly output to the socially-efficient output. 
D) All of the above are correct.

Question 11

Suppose a monopolist chooses the price and production level that maximizes its profit. From that point, to increase society's economic welfare, output would need to be increased as long as

Accepted Answer

A) average revenue exceeds marginal cost. 
B) average revenue exceeds average total cost. 
C) marginal revenue exceeds marginal cost. 
D) marginal revenue exceeds average total cost. 
A) average revenue exceeds marginal cost. 
B) average revenue exceeds average total cost. 
C) marginal revenue exceeds marginal cost. 
D) marginal revenue exceeds average total cost.

Question 12

Table 15-9
Consider the following demand and cost information for a monopoly.  
-Refer to Table 15-9. At the profit-maximizing price, how much profit will the monopoly earn?

Accepted Answer

A) $8 
B) $10 
C) $12 
D) $14 
A) $8 
B) $10 
C) $12 
D) $14

Question 13

Drug companies are allowed to be monopolists in the drugs they discover in order to

Accepted Answer

A) allow drug companies to charge a price that is equal to their marginal cost. 
B) discourage new firms from entering the drug market. 
C) encourage research. 
D) allow the government to earn patent revenue. 
A) allow drug companies to charge a price that is equal to their marginal cost. 
B) discourage new firms from entering the drug market. 
C) encourage research. 
D) allow the government to earn patent revenue.

Question 14

The economic inefficiency of a monopolist can be measured by the

Accepted Answer

A) number of consumers who are unable to purchase the product because of its high price. 
B) excess profit generated by monopoly firms. 
C) poor quality of service offered by monopoly firms. 
D) deadweight loss. 
A) number of consumers who are unable to purchase the product because of its high price. 
B) excess profit generated by monopoly firms. 
C) poor quality of service offered by monopoly firms. 
D) deadweight loss.

Question 15

One problem with government operation of monopolies is that

Accepted Answer

A) a benevolent government is likely to be interested in generating profits for political gain. 
B) monopolies typically have rising average costs. 
C) the government typically has little incentive to reduce costs. 
D) a government-regulated outcome will increase the profitability of the monopoly. 
A) a benevolent government is likely to be interested in generating profits for political gain. 
B) monopolies typically have rising average costs. 
C) the government typically has little incentive to reduce costs. 
D) a government-regulated outcome will increase the profitability of the monopoly.

Question 16

A monopolist produces

Accepted Answer

A) more than the socially efficient quantity of output but at a higher price than in a competitive market. 
B) less than the socially efficient quantity of output but at a higher price than in a competitive market. 
C) the socially efficient quantity of output but at a higher price than in a competitive market. 
D) possibly more or possibly less than the socially efficient quantity of output, but definitely at a higher price than in a competitive market. 
A) more than the socially efficient quantity of output but at a higher price than in a competitive market. 
B) less than the socially efficient quantity of output but at a higher price than in a competitive market. 
C) the socially efficient quantity of output but at a higher price than in a competitive market. 
D) possibly more or possibly less than the socially efficient quantity of output, but definitely at a higher price than in a competitive market.

Question 17

Table 15-9
Consider the following demand and cost information for a monopoly.  
-Refer to Table 15-9. What is the marginal revenue of the 3rd unit?

Accepted Answer

A) $4 
B) $12 
C) $20 
D) $28 
A) $4 
B) $12 
C) $20 
D) $28

Question 18

Table 15-1  
-Refer to Table 15-1. The average revenue of the 50th unit of output is

Accepted Answer

The answer of Table 15-1  
-Refer to Table 15-1....

Question 19

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 20

Scenario 15-3
A monopoly firm maximizes its profit by producing Q = 500 units of output. At that level of output, its marginal revenue is $30, its average revenue is $60, and its average total cost is $34.
-Refer to Scenario 15-3. The firm's profit-maximizing price is

Accepted Answer

A) $30. 
B) between $30 and $34. 
C) between $34 and $60. 
D) $60. 
A) $30. 
B) between $30 and $34. 
C) between $34 and $60. 
D) $60.

Exam 15: Monopoly

Because many good substitutes exist for a competitive firm's product, the demand curve that it faces is

The process of buying a good in one market at a low price and selling the good in another market for a higher price in order to profit from the price difference is known as

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

Monopolists can practice price discrimination in all monopoly markets.​

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

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 total revenue when 7 ties are sold?

Private ownership of a monopoly may benefit society because the monopoly will have an incentive to

As a monopolist increases the quantity of output it sells, the price consumers are willing to pay for the good

The economic inefficiency of a monopolist can be measured by the

Suppose a monopolist chooses the price and production level that maximizes its profit. From that point, to increase society's economic welfare, output would need to be increased as long as

Table 15-9 Consider the following demand and cost information for a monopoly. -Refer to Table 15-9. At the profit-maximizing price, how much profit will the monopoly earn?

Drug companies are allowed to be monopolists in the drugs they discover in order to

The economic inefficiency of a monopolist can be measured by the

One problem with government operation of monopolies is that

A monopolist produces

Table 15-9 Consider the following demand and cost information for a monopoly. -Refer to Table 15-9. What is the marginal revenue of the 3rd unit?

Table 15-1 -Refer to Table 15-1. The average revenue of the 50th unit of output is

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

Scenario 15-3 A monopoly firm maximizes its profit by producing Q = 500 units of output. At that level of output, its marginal revenue is $30, its average revenue is $60, and its average total cost is $34. -Refer to Scenario 15-3. The firm's profit-maximizing price 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

Monopolists can practice price discrimination in all monopoly markets.