Question 1

Antitrust laws

Accepted Answer

A) prevent firms from maximizing profits. 
B) allow the government to prevent mergers, even ones that would benefit consumers. 
C) require the government to measure both the benefits and costs of a potential merger. 
D) All of the above are correct. 
A) prevent firms from maximizing profits. 
B) allow the government to prevent mergers, even ones that would benefit consumers. 
C) require the government to measure both the benefits and costs of a potential merger. 
D) All of the above are correct.

Question 2

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

Accepted Answer

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

Question 3

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) allow the government to earn patent revenue. 
D) None of the above is correct. 
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) allow the government to earn patent revenue. 
D) None of the above is correct.

Question 4

A patent gives a single person or firm the exclusive right to sell some good or service forever.

Accepted Answer

A) True 
 B)False

Question 5

Figure 15-4  
-Refer to Figure 15-4. If the monopoly firm is currently producing Q3 units of output, then a decrease in output will necessarily cause profit to

Accepted Answer

A) remain unchanged. 
B) decrease. 
C) increase as long as the new level of output is at least Q2. 
D) increase as long as the new level of output is at least Q1. 
A) remain unchanged. 
B) decrease. 
C) increase as long as the new level of output is at least Q2. 
D) increase as long as the new level of output is at least Q1.

Question 6

The deadweight loss that arises from a monopoly is a consequence of the fact that the monopoly

Accepted Answer

A) quantity is lower than the socially-optimal quantity. 
B) price equals marginal revenue. 
C) price is the same as average revenue. 
D) earns positive profits. 
A) quantity is lower than the socially-optimal quantity. 
B) price equals marginal revenue. 
C) price is the same as average revenue. 
D) earns positive profits.

Question 7

When a monopolist increases the quantity that it sells, price decreases, which, all else equal, decreases total revenue; this is called the price effect.

Accepted Answer

A) True 
 B)False

Question 8

Suppose that the DeBeers company faces very little competition from other firms in the wholesale diamond market. Why isn't the price of wholesale diamonds $10,000 per carat?

Accepted Answer

A) because the government would not allow such a high price 
B) because stockholders would not allow such a high price 
C) because the company would sell so few diamonds that it would earn higher profits by selling at a lower price 
D) All of the above are correct. 
A) because the government would not allow such a high price 
B) because stockholders would not allow such a high price 
C) because the company would sell so few diamonds that it would earn higher profits by selling at a lower price 
D) All of the above are correct.

Question 9

Table 15-3
Consider the following demand and cost information for a monopoly.  
-Refer to Table 15-3. The marginal cost of the 4th unit is

Accepted Answer

A) $7. 
B) $12. 
C) $25. 
D) $60. 
A) $7. 
B) $12. 
C) $25. 
D) $60.

Question 10

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 marginal cost of the 6th pair of shoes?

Accepted Answer

A) $44 
B) $46 
C) $55 
D) $60 
A) $44 
B) $46 
C) $55 
D) $60

Question 11

The reason to regulate utilities instead of using antitrust laws to promote competition is that a utility is usually a

Accepted Answer

A) profit-maximizing monopoly. 
B) producer of externalities. 
C) revenue-maximizing monopoly. 
D) natural monopoly. 
A) profit-maximizing monopoly. 
B) producer of externalities. 
C) revenue-maximizing monopoly. 
D) natural monopoly.

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

A key for a monopoly that wants to practice price discrimination is to be able to control the resale of its product.
​

Accepted Answer

A) True 
 B)False

Question 14

Figure 15-19  
-Refer to Figure 15-19. If the monopoly firm perfectly price discriminates, 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 15

Figure 15-7  
-Refer to Figure 15-7. A profit-maximizing monopolist would earn profits of

Accepted Answer

A) $96. 
B) $117. 
C) $120. 
D) $126. 
A) $96. 
B) $117. 
C) $120. 
D) $126.

Question 16

Figure 15-5  
-Refer to Figure 15-5. A profit-maximizing monopoly's total cost is equal to

Accepted Answer

A) P2 x Q3. 
B) P4 x Q3. 
C) P5 x Q3. 
D) (P2-P5) x Q3. 
A) P2 x Q3. 
B) P4 x Q3. 
C) P5 x Q3. 
D) (P2-P5) x Q3.

Question 17

Table 15-1  
-Refer to Table 15-1. If the monopolist wants to maximize its revenue, how many units of its product should it sell?

Accepted Answer

A) 4 
B) 5 
C) 6 
D) 8 
A) 4 
B) 5 
C) 6 
D) 8

Question 18

When a monopolist increases the quantity that it sells, all else equal, total revenue increases, which is called the output effect.

Accepted Answer

A) True 
 B)False

Question 19

Figure 15-19  
-Refer to Figure 15-19. If the monopoly firm is not allowed to price discriminate, then the deadweight loss 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 20

Which of the following are necessary characteristics of a monopoly?
(i)The firm is the sole seller of its product.
(ii)The firm's product does not have close substitutes.
(iii)The firm generates a large economic profit.
(iv)The firm is located in a small geographic market.

Accepted Answer

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

Exam 15: Monopoly

Antitrust laws

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

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

A patent gives a single person or firm the exclusive right to sell some good or service forever.

Figure 15-4 -Refer to Figure 15-4. If the monopoly firm is currently producing Q3 units of output, then a decrease in output will necessarily cause profit to

The deadweight loss that arises from a monopoly is a consequence of the fact that the monopoly

When a monopolist increases the quantity that it sells, price decreases, which, all else equal, decreases total revenue; this is called the price effect.

Suppose that the DeBeers company faces very little competition from other firms in the wholesale diamond market. Why isn't the price of wholesale diamonds $10,000 per carat?

Table 15-3 Consider the following demand and cost information for a monopoly. -Refer to Table 15-3. The marginal cost of the 4th unit is

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 marginal cost of the 6th pair of shoes?

The reason to regulate utilities instead of using antitrust laws to promote competition is that a utility is usually a

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

A key for a monopoly that wants to practice price discrimination is to be able to control the resale of its product. ​

Figure 15-19 -Refer to Figure 15-19. If the monopoly firm perfectly price discriminates, then consumer surplus amounts to

Figure 15-7 -Refer to Figure 15-7. A profit-maximizing monopolist would earn profits of

Figure 15-5 -Refer to Figure 15-5. A profit-maximizing monopoly's total cost is equal to

Table 15-1 -Refer to Table 15-1. If the monopolist wants to maximize its revenue, how many units of its product should it sell?

When a monopolist increases the quantity that it sells, all else equal, total revenue increases, which is called the output effect.

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

Which of the following are necessary characteristics of a monopoly? (i)The firm is the sole seller of its product. (ii)The firm's product does not have close substitutes. (iii)The firm generates a large economic profit. (iv)The firm is located in a small geographic market.

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

A key for a monopoly that wants to practice price discrimination is to be able to control the resale of its product.