Question 1

Figure 15-7  
-Refer to Figure 15-7. In order to maximize profits, the monopolist should charge a price of

Accepted Answer

A) $9. 
B) $12. 
C) $20. 
D) $23. 
A) $9. 
B) $12. 
C) $20. 
D) $23.

Question 2

A firm cannot price discriminate if

Accepted Answer

A) it has declining marginal revenue. 
B) it operates in a competitive market. 
C) buyers only reveal the price they are willing to pay for the product. 
D) it has a constant marginal cost. 
A) it has declining marginal revenue. 
B) it operates in a competitive market. 
C) buyers only reveal the price they are willing to pay for the product. 
D) it has a constant marginal cost.

Question 3

Figure 15-2  
-Refer to Figure 15-2. What type of monopoly is shown in the figure?

Accepted Answer

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

Question 4

Figure 15-19  
-Refer to Figure 15-19. If there are no fixed costs of production, monopoly profit without price discrimination equals

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 5

Average revenue for a monopoly is the total revenue divided by the quantity produced.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following statements is not correct?

Accepted Answer

A) Part of the deadweight loss associated with monopoly is measured by the monopolist's economic profit. 
B) Marginal cost is always less than average total cost in a natural monopoly. 
C) Discount coupons available free to the public are a type of price discrimination. 
D) Anti-trust laws make it harder for firms to create synergies. 
A) Part of the deadweight loss associated with monopoly is measured by the monopolist's economic profit. 
B) Marginal cost is always less than average total cost in a natural monopoly. 
C) Discount coupons available free to the public are a type of price discrimination. 
D) Anti-trust laws make it harder for firms to create synergies.

Question 7

What happens to the price and quantity sold of a drug when its patent runs out?
(i)The price will fall.
(ii)The quantity sold will fall.
(iii)The marginal cost of producing the drug will rise.

Accepted Answer

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

Question 8

If the government regulates the price that a natural monopolist can charge to be equal to the firm's average total cost, the firm will

Accepted Answer

A) earn zero profits. 
B) earn positive profits, causing other firms to enter the industry. 
C) earn negative profits, causing the firm to exit the industry. 
D) minimize costs in order to lower the price that it charges. 
A) earn zero profits. 
B) earn positive profits, causing other firms to enter the industry. 
C) earn negative profits, causing the firm to exit the industry. 
D) minimize costs in order to lower the price that it charges.

Question 9

A monopolist's profit is equal to (Price - Marginal Cost) × Quantity.

Accepted Answer

A) True 
 B)False

Question 10

Patent and copyright laws encourage

Accepted Answer

A) creative activity. 
B) research and development. 
C) competition among firms. 
D) Both a and b are correct. 
A) creative activity. 
B) research and development. 
C) competition among firms. 
D) Both a and b are correct.

Question 11

Figure 15-4  
-Refer to Figure 15-4. Profit will be maximized by charging a price equal to

Accepted Answer

A) P5. 
B) P4. 
C) P3. 
D) P1. 
A) P5. 
B) P4. 
C) P3. 
D) P1.

Question 12

Scenario 15-4
Suppose a monopolist has a demand curve that can be expressed as P=90-Q. The monopolist's marginal revenue curve can be expressed as MR=90-2Q. The monopolist has constant marginal costs and average total costs of $10.
-Refer to Scenario 15-4. The profit-maximizing monopolist will earn profits of

Accepted Answer

A) $6,400. 
B) $3,200. 
C) $1,600. 
D) $800. 
A) $6,400. 
B) $3,200. 
C) $1,600. 
D) $800.

Question 13

A monopoly creates a deadweight loss to society because it produces less output than the socially efficient level.

Accepted Answer

A) True 
 B)False

Question 14

A monopolist's average revenue is always

Accepted Answer

A) equal to marginal revenue. 
B) greater than the price of its product. 
C) equal to the price of its product. 
D) less than the price of its product. 
A) equal to marginal revenue. 
B) greater than the price of its product. 
C) equal to the price of its product. 
D) less than the price of its product.

Question 15

Consider a profit-maximizing monopoly pricing under the following conditions. The profit-maximizing quantity is 40 units, the profit-maximizing price is $160, and the marginal cost of the 40th unit is $120. If the good were produced in a perfectly competitive market, the equilibrium quantity would be 50, and the equilibrium price would be $150. The demand curve and marginal cost curves are linear. What is the value of the deadweight loss created by the monopolist?

Accepted Answer

A) $40 
B) $100 
C) $200 
D) $400 
A) $40 
B) $100 
C) $200 
D) $400

Question 16

A government-created monopoly arises when

Accepted Answer

A) government spending in a certain industry gives rise to monopoly power. 
B) the government exercises its market control by encouraging competition among sellers. 
C) the government gives a firm the exclusive right to sell some good or service. 
D) Both a and c are correct. 
A) government spending in a certain industry gives rise to monopoly power. 
B) the government exercises its market control by encouraging competition among sellers. 
C) the government gives a firm the exclusive right to sell some good or service. 
D) Both a and c are correct.

Question 17

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 sets the price of each ticket at $300?

Accepted Answer

A) -$15,000 
B) -$5,000 
C) $25,000 
D) $45,000 
A) -$15,000 
B) -$5,000 
C) $25,000 
D) $45,000

Question 18

A profit-maximizing monopolist charges a price of $14. The intersection of the marginal revenue curve and the marginal cost curve occurs where output is 15 units and marginal cost is $7. What is the monopolist's profit?

Accepted Answer

A) $90 
B) $105 
C) $180 
D) Not enough information is given to determine the answer. 
A) $90 
B) $105 
C) $180 
D) Not enough information is given to determine the answer.

Question 19

A perfectly competitive market

Accepted Answer

A) may not be in the best interests of society, whereas a monopoly market promotes general economic well-being 
B) promotes general economic well-being, whereas a monopoly market may not be in the best interests of society. 
C) and a monopoly market are equally likely to promote general economic well-being. 
D) is less likely to promote general economic well-being than a monopoly market. 
A) may not be in the best interests of society, whereas a monopoly market promotes general economic well-being 
B) promotes general economic well-being, whereas a monopoly market may not be in the best interests of society. 
C) and a monopoly market are equally likely to promote general economic well-being. 
D) is less likely to promote general economic well-being than a monopoly market.

Question 20

Figure 15-4  
-Refer to Figure 15-4. If a regulator requires this firm to charge a socially optimal price, how much deadweight loss results?

Accepted Answer

The answer of Figure 15-4  
-Refer to Figure 15-4....

Exam 15: Monopoly

Figure 15-7 -Refer to Figure 15-7. In order to maximize profits, the monopolist should charge a price of

A firm cannot price discriminate if

Figure 15-2 -Refer to Figure 15-2. What type of monopoly is shown in the figure?

Figure 15-19 -Refer to Figure 15-19. If there are no fixed costs of production, monopoly profit without price discrimination equals

Average revenue for a monopoly is the total revenue divided by the quantity produced.

Which of the following statements is not correct?

What happens to the price and quantity sold of a drug when its patent runs out? (i)The price will fall. (ii)The quantity sold will fall. (iii)The marginal cost of producing the drug will rise.

If the government regulates the price that a natural monopolist can charge to be equal to the firm's average total cost, the firm will

A monopolist's profit is equal to (Price - Marginal Cost) × Quantity.

Patent and copyright laws encourage

Figure 15-4 -Refer to Figure 15-4. Profit will be maximized by charging a price equal to

A monopoly creates a deadweight loss to society because it produces less output than the socially efficient level.

A monopolist's average revenue is always

A government-created monopoly arises when

A profit-maximizing monopolist charges a price of $14. The intersection of the marginal revenue curve and the marginal cost curve occurs where output is 15 units and marginal cost is $7. What is the monopolist's profit?

A perfectly competitive market

Figure 15-4 -Refer to Figure 15-4. If a regulator requires this firm to charge a socially optimal price, how much deadweight loss results?

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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