Question 1

Competitive firms have

Accepted Answer

A) downward-sloping demand curves, and they can sell as much output as they desire at the market price. 
B) downward-sloping demand curves, and they can sell only a limited quantity of output at each price. 
C) horizontal demand curves, and they can sell as much output as they desire at the market price. 
D) horizontal demand curves, and they can sell only a limited quantity of output at each price. 
A) downward-sloping demand curves, and they can sell as much output as they desire at the market price. 
B) downward-sloping demand curves, and they can sell only a limited quantity of output at each price. 
C) horizontal demand curves, and they can sell as much output as they desire at the market price. 
D) horizontal demand curves, and they can sell only a limited quantity of output at each price.

Question 2

State one benefit of government-granted monopolies like patents and copyrights.

Accepted Answer

increased

Question 3

Table 15-18
A monopolist faces the following demand curve:   Suppose marginal cost is constant at $8 per unit.
-Refer to Table 15-18. The monopolist's total revenue from selling 4 units of output is

Accepted Answer

A) $4. 
B) $16. 
C) $32. 
D) $48. 
A) $4. 
B) $16. 
C) $32. 
D) $48.

Question 4

If the government regulates the price a natural monopolist can charge to be equal to the firm's marginal cost, the government will likely need to subsidize the firm.

Accepted Answer

A) True 
 B)False

Question 5

Antitrust laws have economic benefits that outweigh the costs if they

Accepted Answer

A) prevent mergers that would decrease competition and lower the costs of production. 
B) prevent mergers that would decrease competition and raise the costs of production. 
C) allow mergers that would decrease competition and raise the costs of production. 
D) None of the above is correct because antitrust laws never have economic benefits that outweigh the costs. 
A) prevent mergers that would decrease competition and lower the costs of production. 
B) prevent mergers that would decrease competition and raise the costs of production. 
C) allow mergers that would decrease competition and raise the costs of production. 
D) None of the above is correct because antitrust laws never have economic benefits that outweigh the costs.

Question 6

Figure 15-4  
-Refer to Figure 15-4. The marginal 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 7

The proper level of government intervention is unclear when dealing with a monopoly.

Accepted Answer

A) True 
 B)False

Question 8

Patent and copyright laws are major sources of

Accepted Answer

A) natural monopolies. 
B) government-created monopolies. 
C) resource monopolies. 
D) antitrust regulation. 
A) natural monopolies. 
B) government-created monopolies. 
C) resource monopolies. 
D) antitrust regulation.

Question 9

Monopoly profit is not a social problem because

Accepted Answer

A) the size of the economic pie grows when monopoly profits increase. 
B) producers are more efficient than consumers. 
C) the profit represents a transfer from the consumer to the producer with no loss in total surplus. 
D) None of the above are correct. 
A) the size of the economic pie grows when monopoly profits increase. 
B) producers are more efficient than consumers. 
C) the profit represents a transfer from the consumer to the producer with no loss in total surplus. 
D) None of the above are correct.

Question 10

Which of the following is an example of a barrier to entry?

Accepted Answer

A) Crystal charges a higher price than her competitors for her hair-styling services. 
B) Dan charges a lower price than his competitors for his dry-walling services. 
C) Jackie offers free samples of her loose-meat sandwiches to attract new customers. 
D) Roseanne obtains a copyright for a short story that she wrote and published. 
A) Crystal charges a higher price than her competitors for her hair-styling services. 
B) Dan charges a lower price than his competitors for his dry-walling services. 
C) Jackie offers free samples of her loose-meat sandwiches to attract new customers. 
D) Roseanne obtains a copyright for a short story that she wrote and published.

Question 11

When deciding what price to charge consumers, the monopolist may choose to charge them different prices based on the customers'

Accepted Answer

A) geographical location. 
B) age. 
C) income. 
D) All of the above are correct. 
A) geographical location. 
B) age. 
C) income. 
D) All of the above are correct.

Question 12

Table 15-19
A monopolist faces the following demand curve:  
-Refer to Table 15-19. If a monopolist faces a constant marginal cost of $1, how much output should the firm produce in order to equate marginal revenue with marginal cost?

Accepted Answer

A) 3 units 
B) 4 units 
C) 5 units 
D) 6 units 
A) 3 units 
B) 4 units 
C) 5 units 
D) 6 units

Question 13

Which of the following formulas would correctly calculate a monopolist's profit?

Accepted Answer

A) profit = price - marginal cost 
B) profit = price - average total cost 
C) profit = (price - marginal cost) × quantity 
D) profit = (price - average total cost) × quantity 
A) profit = price - marginal cost 
B) profit = price - average total cost 
C) profit = (price - marginal cost) × quantity 
D) profit = (price - average total cost) × quantity

Question 14

Suppose a profit-maximizing monopolist faces a constant marginal cost of $20, produces an output level of 100 units, and charges a price of $50. The socially efficient level of output is 200 units. Assume that the demand curve and marginal revenue curve are the typical downward-sloping straight lines. The monopoly deadweight loss equals $1,500.

Accepted Answer

A) True 
 B)False

Question 15

Figure 15-1  
-Refer to Figure 15-1. The shape of the average total cost curve in the figure suggests an opportunity for a profit-maximizing monopolist to take advantage of

Accepted Answer

A) economies of scale. 
B) diseconomies of scale. 
C) diminishing marginal product. 
D) increasing marginal cost. 
A) economies of scale. 
B) diseconomies of scale. 
C) diminishing marginal product. 
D) increasing marginal cost.

Question 16

In order for a firm to maximize profits through price discrimination, the firm must have some market power and be able to prevent arbitrage.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

A) not in the best interest of society. 
B) one that fails to maximize total economic well-being. 
C) inefficient. 
D) All of the above are correct. 
A) not in the best interest of society. 
B) one that fails to maximize total economic well-being. 
C) inefficient. 
D) All of the above are correct.

Question 18

Deadweight loss

Accepted Answer

A) measures monopoly inefficiency. 
B) exceeds monopoly profits. 
C) equals monopoly profits. 
D) equals monopoly revenues minus profits. 
A) measures monopoly inefficiency. 
B) exceeds monopoly profits. 
C) equals monopoly profits. 
D) equals monopoly revenues minus profits.

Question 19

Table 15-10
The monopolist faces the following demand curve:  
-Refer to Table 15-10. If the monopolist has total fixed costs of $40 and a constant marginal cost of $5, what is the profit-maximizing level of output?

Accepted Answer

A) 7 units 
B) 16 units 
C) 23 units 
D) 31 units 
A) 7 units 
B) 16 units 
C) 23 units 
D) 31 units

Question 20

Because a monopolist must lower its price in order to sell another unit of output,

Accepted Answer

A) marginal revenue is less than price. 
B) long-term economic profits will be zero. 
C) total revenue increases as price increases. 
D) average revenue is less than price. 
A) marginal revenue is less than price. 
B) long-term economic profits will be zero. 
C) total revenue increases as price increases. 
D) average revenue is less than price.

Exam 15: Monopoly

Competitive firms have

State one benefit of government-granted monopolies like patents and copyrights.

Table 15-18 A monopolist faces the following demand curve: Suppose marginal cost is constant at $8 per unit. -Refer to Table 15-18. The monopolist's total revenue from selling 4 units of output is

If the government regulates the price a natural monopolist can charge to be equal to the firm's marginal cost, the government will likely need to subsidize the firm.

Antitrust laws have economic benefits that outweigh the costs if they

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

The proper level of government intervention is unclear when dealing with a monopoly.

Patent and copyright laws are major sources of

Monopoly profit is not a social problem because

Which of the following is an example of a barrier to entry?

When deciding what price to charge consumers, the monopolist may choose to charge them different prices based on the customers'

Table 15-19 A monopolist faces the following demand curve: -Refer to Table 15-19. If a monopolist faces a constant marginal cost of $1, how much output should the firm produce in order to equate marginal revenue with marginal cost?

Which of the following formulas would correctly calculate a monopolist's profit?

Figure 15-1 -Refer to Figure 15-1. The shape of the average total cost curve in the figure suggests an opportunity for a profit-maximizing monopolist to take advantage of

In order for a firm to maximize profits through price discrimination, the firm must have some market power and be able to prevent arbitrage.

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

Deadweight loss

Table 15-10 The monopolist faces the following demand curve: -Refer to Table 15-10. If the monopolist has total fixed costs of $40 and a constant marginal cost of $5, what is the profit-maximizing level of output?

Because a monopolist must lower its price in order to sell another unit 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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