Question 1

Goods that do not have close substitutes have downward-sloping demand curves.

Accepted Answer

A) True 
 B)False

Question 2

If a pharmaceutical company discovers a new drug and successfully patents it, patent law gives the firm

Accepted Answer

A) partial ownership of the right to sell the drug for a limited number of years. 
B) partial ownership of the right to sell the drug for an unlimited number of years. 
C) sole ownership of the right to sell the drug for a limited number of years. 
D) sole ownership of the right to sell the drug for an unlimited number of years. 
A) partial ownership of the right to sell the drug for a limited number of years. 
B) partial ownership of the right to sell the drug for an unlimited number of years. 
C) sole ownership of the right to sell the drug for a limited number of years. 
D) sole ownership of the right to sell the drug for an unlimited number of years.

Question 3

Many movie theaters allow discount tickets to be sold to senior citizens because

Accepted Answer

A) senior-citizen laws mandate such discounts. 
B) goodwill efforts earn community respect and win loyal patrons. 
C) the theaters are profit maximizers. 
D) senior citizens lobby city councils for lower prices. 
A) senior-citizen laws mandate such discounts. 
B) goodwill efforts earn community respect and win loyal patrons. 
C) the theaters are profit maximizers. 
D) senior citizens lobby city councils for lower prices.

Question 4

Figure 15-3  
-Refer to Figure 15-3. Use the letters in the figure to identify the profit area if this firm were able to perfectly price discriminate.

Accepted Answer

The answer of Figure 15-3  
-Refer to Figure 15-3....

Question 5

Marginal revenue can become negative for

Accepted Answer

A) both competitive and monopoly firms. 
B) competitive firms but not for monopoly firms. 
C) monopoly firms but not for competitive firms. 
D) neither competitive nor monopoly firms. 
A) both competitive and monopoly firms. 
B) competitive firms but not for monopoly firms. 
C) monopoly firms but not for competitive firms. 
D) neither competitive nor monopoly firms.

Question 6

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 average revenue when Sally sells 7 pairs of shoes?

Accepted Answer

A) $40 
B) $90 
C) $100 
D) $700 
A) $40 
B) $90 
C) $100 
D) $700

Question 7

What are the three main sources of barriers to entry for monopolies?

Accepted Answer

monopoly resources
g

Question 8

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 $12 for admission?

Accepted Answer

A) -$800 
B) $100 
C) $800 
D) $1,200 
A) -$800 
B) $100 
C) $800 
D) $1,200

Question 9

Figure 15-3        
-Refer to Figure 15-3. Which panel could represent the demand curve facing a soybean farmer?

Accepted Answer

A) Panel A 
B) Panel B 
C) Panel C 
D) Panel D 
A) Panel A 
B) Panel B 
C) Panel C 
D) Panel D

Question 10

Which of the following statements is correct?

Accepted Answer

A) Public ownership is preferred to regulation in order to minimize the deadweight losses associated with natural monopolies. 
B) Antitrust laws are always the best way to limit monopoly power. 
C) It is possible that the best approach to monopolies is for the government to do nothing. 
D) Marginal-cost pricing requires a natural monopoly to earn zero economic profits. 
A) Public ownership is preferred to regulation in order to minimize the deadweight losses associated with natural monopolies. 
B) Antitrust laws are always the best way to limit monopoly power. 
C) It is possible that the best approach to monopolies is for the government to do nothing. 
D) Marginal-cost pricing requires a natural monopoly to earn zero economic profits.

Question 11

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 profit will the airline earn if it engages in price discrimination?

Accepted Answer

A) -$5,000 
B) $40,000 
C) $55,000 
D) $75,000 
A) -$5,000 
B) $40,000 
C) $55,000 
D) $75,000

Question 12

Table 15-12
The following table provides information on the price, quantity, and average total cost for a monopoly.  
-Refer to Table 15-12. At what price will the firm maximize its profit?

Accepted Answer

A) $1 
B) $2 
C) $3 
D) $4 
A) $1 
B) $2 
C) $3 
D) $4

Question 13

A monopolist produces an output level where marginal revenue equals marginal cost and charges a price where marginal cost equals average total cost.

Accepted Answer

A) True 
 B)False

Question 14

Figure 15-4  
-Refer to Figure 15-4. The average total cost curve for a monopoly firm is depicted by curve

Accepted Answer

A) A. 
B) B. 
C) C. 
D) D. 
A) A. 
B) B. 
C) C. 
D) D.

Question 15

Figure 15-3        
-Refer to Figure 15-3. Which panel could represent the demand curve facing the soybean industry?

Accepted Answer

A) Panel A 
B) Panel B 
C) Panel C 
D) Panel D 
A) Panel A 
B) Panel B 
C) Panel C 
D) Panel D

Question 16

In order to sell more of its product, a monopolist must

Accepted Answer

A) sell to the government. 
B) sell in international markets. 
C) lower its price. 
D) use its market power to force up the price of complementary products. 
A) sell to the government. 
B) sell in international markets. 
C) lower its price. 
D) use its market power to force up the price of complementary products.

Question 17

Table 15-20
A monopolist faces the following demand curve:  
-Refer to Table 15-20. If a monopolist faces a constant marginal cost of $2, how much output should the firm produce in order to maximize profit?

Accepted Answer

A) 2 units 
B) 3 units 
C) 4 units 
D) 5 units 
A) 2 units 
B) 3 units 
C) 4 units 
D) 5 units

Question 18

When a monopolist maximizes profit, its marginal cost will

Accepted Answer

A) be less than its average fixed cost. 
B) be less than the price per unit of its product. 
C) exceed its marginal revenue. 
D) equal its average total cost. 
A) be less than its average fixed cost. 
B) be less than the price per unit of its product. 
C) exceed its marginal revenue. 
D) equal its average total cost.

Question 19

Figure 15-7  
-Refer to Figure 15-7. In order to maximize profits, the monopolist should produce

Accepted Answer

A) 9 units. 
B) 12 units. 
C) 15 units. 
D) more than 15 units. 
A) 9 units. 
B) 12 units. 
C) 15 units. 
D) more than 15 units.

Question 20

Figure 15-21  
-Refer to Figure 15-21. What is the price and quantity for this natural monopolist under fair return 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

Exam 15: Monopoly

Goods that do not have close substitutes have downward-sloping demand curves.

If a pharmaceutical company discovers a new drug and successfully patents it, patent law gives the firm

Many movie theaters allow discount tickets to be sold to senior citizens because

Figure 15-3 -Refer to Figure 15-3. Use the letters in the figure to identify the profit area if this firm were able to perfectly price discriminate.

Marginal revenue can become negative for

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 average revenue when Sally sells 7 pairs of shoes?

What are the three main sources of barriers to entry for monopolies?

Figure 15-3 -Refer to Figure 15-3. Which panel could represent the demand curve facing a soybean farmer?

Which of the following statements is correct?

Table 15-12 The following table provides information on the price, quantity, and average total cost for a monopoly. -Refer to Table 15-12. At what price will the firm maximize its profit?

A monopolist produces an output level where marginal revenue equals marginal cost and charges a price where marginal cost equals average total cost.

Figure 15-4 -Refer to Figure 15-4. The average total cost curve for a monopoly firm is depicted by curve

Figure 15-3 -Refer to Figure 15-3. Which panel could represent the demand curve facing the soybean industry?

In order to sell more of its product, a monopolist must

Table 15-20 A monopolist faces the following demand curve: -Refer to Table 15-20. If a monopolist faces a constant marginal cost of $2, how much output should the firm produce in order to maximize profit?

When a monopolist maximizes profit, its marginal cost will

Figure 15-7 -Refer to Figure 15-7. In order to maximize profits, the monopolist should produce

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

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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