Question 1

Authors are allowed to be monopolists in the sale of their books in order to

Accepted Answer

A) encourage authors to write more and better books. 
B) correct for the negative externalities that the Internet and television impose. 
C) satisfy literary advocacy groups that exercise their lobbying power. 
D) promote a society in which people think for themselves and learn from whichever books they please. 
A) encourage authors to write more and better books. 
B) correct for the negative externalities that the Internet and television impose. 
C) satisfy literary advocacy groups that exercise their lobbying power. 
D) promote a society in which people think for themselves and learn from whichever books they please.

Question 2

The assessment by George Stigler concerning the tradeoffs between "market failure" and "political failure" in the American economy provides support for which of the following solutions to the problems of monopolies?

Accepted Answer

A) public ownership of monopolies 
B) government regulation of monopolies 
C) government incentives to promote competition in monopolized industries 
D) doing nothing at all 
A) public ownership of monopolies 
B) government regulation of monopolies 
C) government incentives to promote competition in monopolized industries 
D) doing nothing at all

Question 3

The profit that a monopolist earns represents a loss to society that is measured through deadweight loss.

Accepted Answer

A) True 
 B)False

Question 4

The deadweight loss associated with a monopoly occurs because the monopolist

Accepted Answer

A) maximizes profits. 
B) produces an output level less than the socially optimal level. 
C) produces an output level greater than the socially optimal level. 
D) equates marginal revenue with marginal cost. 
A) maximizes profits. 
B) produces an output level less than the socially optimal level. 
C) produces an output level greater than the socially optimal level. 
D) equates marginal revenue with marginal cost.

Question 5

A profit-maximizing monopolist will produce the level of output at which

Accepted Answer

A) average revenue is equal to average total cost. 
B) average revenue is equal to marginal cost. 
C) marginal revenue is equal to marginal cost. 
D) total revenue is equal to opportunity cost. 
A) average revenue is equal to average total cost. 
B) average revenue is equal to marginal cost. 
C) marginal revenue is equal to marginal cost. 
D) total revenue is equal to opportunity cost.

Question 6

A market structure with barriers to entry is

Accepted Answer

A) a monopoly. 
B) oligopolistically competitive. 
C) monopolistically competitive. 
D) perfectly competitive. 
A) a monopoly. 
B) oligopolistically competitive. 
C) monopolistically competitive. 
D) perfectly competitive.

Question 7

A monopolist is able to choose whatever price that it wishes and is only constrained by its greed.
​

Accepted Answer

A) True 
 B)False

Question 8

It is difficult in a natural monopoly market for the firm to achieve both efficiency and zero economic profit simultaneously, even with regulation.
​

Accepted Answer

A) True 
 B)False

Question 9

Monopolists can achieve any level of profit they desire because they have unlimited market power.

Accepted Answer

A) True 
 B)False

Question 10

Figure 15-1  
-Refer to Figure 15-1. If the monopolist uses perfect price discrimination, what price will it charge?

Accepted Answer

The amount

Question 11

An industry is a natural monopoly when
(i)the government assists the firm in maintaining the monopoly.
(ii)a single firm owns a key resource.
(iii)a single firm can supply a good or service to an entire market at a smaller cost than could two or more firms.

Accepted Answer

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

Question 12

Which of the following statements is not correct?

Accepted Answer

A) The government may use antitrust laws to break up an existing company to improve competition. 
B) The government may break up a natural monopoly to lower the price charged to customers. 
C) Private ownership is typically preferred to public ownership. 
D) Sometimes the best strategy is for the government to do nothing about monopoly inefficiency because the "fix" may be worse than the problem. 
A) The government may use antitrust laws to break up an existing company to improve competition. 
B) The government may break up a natural monopoly to lower the price charged to customers. 
C) Private ownership is typically preferred to public ownership. 
D) Sometimes the best strategy is for the government to do nothing about monopoly inefficiency because the "fix" may be worse than the problem.

Question 13

When a single firm can supply a product to an entire market at a lower cost than could two or more firms, the industry is called a

Accepted Answer

A) resource industry. 
B) exclusive industry. 
C) government monopoly. 
D) natural monopoly. 
A) resource industry. 
B) exclusive industry. 
C) government monopoly. 
D) natural monopoly.

Question 14

Figure 15-9  
-Refer to Figure 15-9. To maximize its profit, a monopolist would choose which of the following outcomes?

Accepted Answer

A) 100 units of output and a price of $20 per unit 
B) 100 units of output and a price of $40 per unit 
C) 150 units of output and a price of $30 per unit 
D) 200 units of output and a price of $40 per unit 
A) 100 units of output and a price of $20 per unit 
B) 100 units of output and a price of $40 per unit 
C) 150 units of output and a price of $30 per unit 
D) 200 units of output and a price of $40 per unit

Question 15

Which of the following would be most likely to have monopoly power?

Accepted Answer

A) a long-distance telephone service provider 
B) a local cable TV provider 
C) a large department store 
D) a gas station 
A) a long-distance telephone service provider 
B) a local cable TV provider 
C) a large department store 
D) a gas station

Question 16

If a profit-maximizing monopolist faces a downward-sloping market demand curve, its

Accepted Answer

A) average revenue is less than the price of the product. 
B) average revenue is less than marginal revenue. 
C) marginal revenue is less than the price of the product. 
D) marginal revenue is greater than the price of the product. 
A) average revenue is less than the price of the product. 
B) average revenue is less than marginal revenue. 
C) marginal revenue is less than the price of the product. 
D) marginal revenue is greater than the price of the product.

Question 17

Scenario 15-1
Vincent operates a scenic tour business in Boston. He has one bus which can fit 50 people per tour and each tour lasts 2 hours. His total cost of operating one tour is fixed at $450. Vincent's cost is not reduced if he runs a tour with a partially full bus. While his cost is the same for all tours, Vincent charges each passenger his/her willingness to pay: adults $18 per trip, children $10 per trip, and senior citizens $12 per trip. At those rates, on a typical day Vincent's demand is:
Passenger Type
Willingness to Pay
Demand per day
Adults
$18
70
Children
$10
25
Senior Citizens
$12
55
Assume that Vincent's customers are always available for the tour; therefore, he can fill his bus for each tour as long as there is sufficient total demand for the day.
-Refer to Scenario 15-1. Vincent uses a pricing practice called

Accepted Answer

price disc

Question 18

​As long as as a monopolist is able to control the resale of its product, then it can successfully practice price discrimination.

Accepted Answer

A) True 
 B)False

Question 19

Scenario 15-1
Consider a transportation corporation named Reading's that has just completed the development of a new light rail system in Minneapolis. Currently, there are plenty of seats on the train, and it is never crowded. Its capacity far exceeds the needs of the city. After just a few years of operation, the shareholders of Reading's experienced incredibly high rates of return on their investment due to the profitability of the corporation.
-Refer to Scenario 15-1. Which of the following statements is most likely to be true?
(i)New entrants to the market know they will have a smaller market share than Reading's currently has.
(ii)Reading's is most likely experiencing decreasing average total cost.
(iii)Reading's is a natural monopoly.

Accepted Answer

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

Question 20

If government officials break up a natural monopoly into four smaller firms, then

Accepted Answer

A) each firm will be unable to maximize profits due to increased competition. 
B) competition will force firms to produce surplus output, which drives up price. 
C) the average cost of production will increase. 
D) consumers will benefit from lower average total costs. 
A) each firm will be unable to maximize profits due to increased competition. 
B) competition will force firms to produce surplus output, which drives up price. 
C) the average cost of production will increase. 
D) consumers will benefit from lower average total costs.

Exam 15: Monopoly

Authors are allowed to be monopolists in the sale of their books in order to

The assessment by George Stigler concerning the tradeoffs between "market failure" and "political failure" in the American economy provides support for which of the following solutions to the problems of monopolies?

The profit that a monopolist earns represents a loss to society that is measured through deadweight loss.

The deadweight loss associated with a monopoly occurs because the monopolist

A profit-maximizing monopolist will produce the level of output at which

A market structure with barriers to entry is

A monopolist is able to choose whatever price that it wishes and is only constrained by its greed. ​

It is difficult in a natural monopoly market for the firm to achieve both efficiency and zero economic profit simultaneously, even with regulation. ​

Monopolists can achieve any level of profit they desire because they have unlimited market power.

Figure 15-1 -Refer to Figure 15-1. If the monopolist uses perfect price discrimination, what price will it charge?

An industry is a natural monopoly when (i)the government assists the firm in maintaining the monopoly. (ii)a single firm owns a key resource. (iii)a single firm can supply a good or service to an entire market at a smaller cost than could two or more firms.

Which of the following statements is not correct?

When a single firm can supply a product to an entire market at a lower cost than could two or more firms, the industry is called a

Figure 15-9 -Refer to Figure 15-9. To maximize its profit, a monopolist would choose which of the following outcomes?

Which of the following would be most likely to have monopoly power?

If a profit-maximizing monopolist faces a downward-sloping market demand curve, its

​As long as as a monopolist is able to control the resale of its product, then it can successfully practice price discrimination.

If government officials break up a natural monopoly into four smaller firms, then

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 monopolist is able to choose whatever price that it wishes and is only constrained by its greed.

It is difficult in a natural monopoly market for the firm to achieve both efficiency and zero economic profit simultaneously, even with regulation.

As long as as a monopolist is able to control the resale of its product, then it can successfully practice price discrimination.