Question 1

The simplest way for a monopoly to arise is for a single firm to

Accepted Answer

A) decrease its price below its competitors' prices. 
B) decrease production to increase demand for its product. 
C) make pricing decisions jointly with other firms. 
D) own a key resource. 
A) decrease its price below its competitors' prices. 
B) decrease production to increase demand for its product. 
C) make pricing decisions jointly with other firms. 
D) own a key resource.

Question 2

Figure 15-21  
-Refer to Figure 15-21. Which of the following areas describes the profit of this natural monopolist under socially optimal pricing?

Accepted Answer

A) ABCE 
B) 0HIL 
C) 0FGK 
D) None of the above is correct. 
A) ABCE 
B) 0HIL 
C) 0FGK 
D) None of the above is correct.

Question 3

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 8th pair of shoes?

Accepted Answer

A) $50 
B) $60 
C) $90 
D) $110 
A) $50 
B) $60 
C) $90 
D) $110

Question 4

​Figure 15-22
The diagram depicts the market situation for a monopoly pastry shop called Bearclaws.  
-​Refer to Figure 15-22. Given that Bearclaws chooses the profit maximizing price and quantity, what profit level will it obtain?

Accepted Answer

A) ​$700. 
B) ​$980. 
C) ​$490. 
D) ​$280. 
A) ​$700. 
B) ​$980. 
C) ​$490. 
D) ​$280.

Question 5

The profit-maximization problem for a monopolist differs from that of a competitive firm in which of the following ways?

Accepted Answer

A) A competitive firm maximizes profit at the point where marginal revenue equals marginal cost; a monopolist maximizes profit at the point where marginal revenue exceeds marginal cost. 
B) A competitive firm maximizes profit at the point where average revenue equals marginal cost; a monopolist maximizes profit at the point where average revenue exceeds marginal cost. 
C) For a competitive firm, marginal revenue at the profit-maximizing level of output is equal to marginal revenue at all other levels of output; for a monopolist, marginal revenue at the profit-maximizing level of output is smaller than it is for larger levels of output. 
D) For a profit-maximizing competitive firm, thinking at the margin is much more important than it is for a profit-maximizing monopolist. 
A) A competitive firm maximizes profit at the point where marginal revenue equals marginal cost; a monopolist maximizes profit at the point where marginal revenue exceeds marginal cost. 
B) A competitive firm maximizes profit at the point where average revenue equals marginal cost; a monopolist maximizes profit at the point where average revenue exceeds marginal cost. 
C) For a competitive firm, marginal revenue at the profit-maximizing level of output is equal to marginal revenue at all other levels of output; for a monopolist, marginal revenue at the profit-maximizing level of output is smaller than it is for larger levels of output. 
D) For a profit-maximizing competitive firm, thinking at the margin is much more important than it is for a profit-maximizing monopolist.

Question 6

Price discrimination is the business practice of

Accepted Answer

A) bundling related products to increase total sales. 
B) selling the same good at different prices to different customers. 
C) pricing above marginal cost. 
D) hiring marketing experts to increase consumers' brand loyalty. 
A) bundling related products to increase total sales. 
B) selling the same good at different prices to different customers. 
C) pricing above marginal cost. 
D) hiring marketing experts to increase consumers' brand loyalty.

Question 7

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 college student starts a part-time tutoring business. 
C) A novelist obtains a copyright for her new book. 
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 college student starts a part-time tutoring business. 
C) A novelist obtains a copyright for her new book. 
D) A taxi cab driver in New York City obtains a license to legally provide transportation in New York City.

Question 8

Figure 15-5  
-Refer to Figure 15-5. A profit-maximizing monopoly will produce an output level of

Accepted Answer

A) Q1. 
B) Q2. 
C) Q3. 
D) Q4. 
A) Q1. 
B) Q2. 
C) Q3. 
D) Q4.

Question 9

Which of the following statements is correct?

Accepted Answer

A) If the monopolist's marginal revenue is greater than its marginal cost, the monopolist can increase profit by selling more units at a lower price per unit. 
B) If the monopolist's marginal revenue is greater than its marginal cost, the monopolist can increase profit by selling fewer units at a higher price per unit. 
C) When a monopolist produces where price equals the minimum of average total cost, it earns a positive economic profit. 
D) If the monopolist is earning a positive economic profit, it must be producing where MR = MC. 
A) If the monopolist's marginal revenue is greater than its marginal cost, the monopolist can increase profit by selling more units at a lower price per unit. 
B) If the monopolist's marginal revenue is greater than its marginal cost, the monopolist can increase profit by selling fewer units at a higher price per unit. 
C) When a monopolist produces where price equals the minimum of average total cost, it earns a positive economic profit. 
D) If the monopolist is earning a positive economic profit, it must be producing where MR = MC.

Question 10

Scenario 15-5
An airline knows that there are two types of travelers: business travelers and vacationers. For a particular flight, there are 100 business travelers who will pay $600 for a ticket while there are 50 vacationers who will pay $300 for a ticket. There are 150 seats available on the plane. Suppose the cost to the airline of providing the flight is $20,000, which includes the cost of the pilots, flight attendants, fuel, etc.
-Refer to Scenario 15-5. How much additional profit can the airline earn by charging each customer their willingness to pay relative to charging a flat price of $600 per ticket?

Accepted Answer

A) $15,000 
B) $25,000 
C) $40,000 
D) $70,000 
A) $15,000 
B) $25,000 
C) $40,000 
D) $70,000

Question 11

In a competitive market, a firm's supply curve dictates the amount it will supply. In a monopoly market the

Accepted Answer

A) same is true. 
B) supply curve conceptually makes sense, but in practice is never used. 
C) supply curve will have limited predictive capacity. 
D) decision about how much to supply is impossible to separate from the demand curve it faces. 
A) same is true. 
B) supply curve conceptually makes sense, but in practice is never used. 
C) supply curve will have limited predictive capacity. 
D) decision about how much to supply is impossible to separate from the demand curve it faces.

Question 12

Price discrimination explains why Ivy League universities often base tuition costs on students'

Accepted Answer

A) age. 
B) financial resources. 
C) high school GPA. 
D) gender. 
A) age. 
B) financial resources. 
C) high school GPA. 
D) gender.

Question 13

Suppose when a monopolist produces 75 units its average revenue is $10 per unit, its marginal revenue is $5 per unit, its marginal cost is $6 per unit, and its average total cost is $5 per unit. What can we conclude about this monopolist?

Accepted Answer

A) The monopolist is currently maximizing profits, and its total profits are $375. 
B) The monopolist is currently maximizing profits, and its total profits are $300. 
C) The monopolist is not currently maximizing profits; it should produce more units and charge a lower price to maximize profits. 
D) The monopolist is not currently maximizing profits; it should produce fewer units and charge a higher price to maximize profits. 
A) The monopolist is currently maximizing profits, and its total profits are $375. 
B) The monopolist is currently maximizing profits, and its total profits are $300. 
C) The monopolist is not currently maximizing profits; it should produce more units and charge a lower price to maximize profits. 
D) The monopolist is not currently maximizing profits; it should produce fewer units and charge a higher price to maximize profits.

Question 14

Which of the following can eliminate the inefficiency inherent in monopoly pricing?

Accepted Answer

A) arbitrage 
B) cost-plus pricing 
C) price discrimination 
D) regulations that force monopolies to reduce their levels of output 
A) arbitrage 
B) cost-plus pricing 
C) price discrimination 
D) regulations that force monopolies to reduce their levels of output

Question 15

A monopolist will choose to increase output when

Accepted Answer

A) market price increases. 
B) at all levels of output, marginal cost increases. 
C) at the present level of output, marginal revenue exceeds marginal cost. 
D) the demand curve shifts to the left. 
A) market price increases. 
B) at all levels of output, marginal cost increases. 
C) at the present level of output, marginal revenue exceeds marginal cost. 
D) the demand curve shifts to the left.

Question 16

Table 15-11
The following table shows quantity, price, and marginal cost information for a monopoly:  
-Refer to Table 15-11. What price should the firm charge to maximize its profit?

Accepted Answer

A) $4 
B) $5 
C) $6 
D) $7 
A) $4 
B) $5 
C) $6 
D) $7

Question 17

Table 15-3
Consider the following demand and cost information for a monopoly.  
-Refer to Table 15-3. The maximum profit this monopolist can earn is

Accepted Answer

A) $5. 
B) $15. 
C) $16. 
D) $28. 
A) $5. 
B) $15. 
C) $16. 
D) $28.

Question 18

Deadweight loss measures the loss in society's welfare that occurs because a monopolist does not produce the socially efficient level of output.

Accepted Answer

A) True 
 B)False

Question 19

A monopoly firm can sell 150 units of output for $10 per unit. Alternatively, it can sell 151 units of output for $9.90 per unit. The marginal revenue of the 151st unit of output is

Accepted Answer

A) -$5.10. 
B) -$0.10. 
C) $2.45. 
D) $5.10. 
A) -$5.10. 
B) -$0.10. 
C) $2.45. 
D) $5.10.

Question 20

A monopoly firm can sell 150 units of output for $10 per unit. Alternatively, it can sell 151 units of output for $9.98 per unit. The marginal revenue of the 151st unit of output is

Accepted Answer

A) -$6.98. 
B) -$0.02. 
C) $2.45. 
D) $6.98. 
A) -$6.98. 
B) -$0.02. 
C) $2.45. 
D) $6.98.

Exam 15: Monopoly

The simplest way for a monopoly to arise is for a single firm to

Figure 15-21 -Refer to Figure 15-21. Which of the following areas describes the profit of 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 marginal cost of the 8th pair of shoes?

​Figure 15-22 The diagram depicts the market situation for a monopoly pastry shop called Bearclaws. -​Refer to Figure 15-22. Given that Bearclaws chooses the profit maximizing price and quantity, what profit level will it obtain?

The profit-maximization problem for a monopolist differs from that of a competitive firm in which of the following ways?

Price discrimination is the business practice of

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

Figure 15-5 -Refer to Figure 15-5. A profit-maximizing monopoly will produce an output level of

Which of the following statements is correct?

In a competitive market, a firm's supply curve dictates the amount it will supply. In a monopoly market the

Price discrimination explains why Ivy League universities often base tuition costs on students'

Suppose when a monopolist produces 75 units its average revenue is $10 per unit, its marginal revenue is $5 per unit, its marginal cost is $6 per unit, and its average total cost is $5 per unit. What can we conclude about this monopolist?

Which of the following can eliminate the inefficiency inherent in monopoly pricing?

A monopolist will choose to increase output when

Table 15-11 The following table shows quantity, price, and marginal cost information for a monopoly: -Refer to Table 15-11. What price should the firm charge to maximize its profit?

Table 15-3 Consider the following demand and cost information for a monopoly. -Refer to Table 15-3. The maximum profit this monopolist can earn is

Deadweight loss measures the loss in society's welfare that occurs because a monopolist does not produce the socially efficient level of output.

A monopoly firm can sell 150 units of output for $10 per unit. Alternatively, it can sell 151 units of output for $9.90 per unit. The marginal revenue of the 151st unit of output is

A monopoly firm can sell 150 units of output for $10 per unit. Alternatively, it can sell 151 units of output for $9.98 per unit. The marginal revenue of the 151st unit of output 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

Figure 15-22 The diagram depicts the market situation for a monopoly pastry shop called Bearclaws. -Refer to Figure 15-22. Given that Bearclaws chooses the profit maximizing price and quantity, what profit level will it obtain?

A monopoly firm can sell 150 units of output for $10 per unit. Alternatively, it can sell 151 units of output for $9.90 per unit. The marginal revenue of the 151^st unit of output is

A monopoly firm can sell 150 units of output for $10 per unit. Alternatively, it can sell 151 units of output for $9.98 per unit. The marginal revenue of the 151^st unit of output is