Question 1

A movie theater can increase its profits through price discrimination by charging a higher price to adults and a lower price to children if it

Accepted Answer

A) can prevent children from buying the lower-priced tickets and selling them to adults. 
B) has some degree of monopoly pricing power. 
C) can easily distinguish between the two groups of customers. 
D) All of the above are correct. 
A) can prevent children from buying the lower-priced tickets and selling them to adults. 
B) has some degree of monopoly pricing power. 
C) can easily distinguish between the two groups of customers. 
D) All of the above are correct.

Question 2

Table 15-8
The following table provides information on the price, quantity, and average total cost for a monopoly.  
-Refer to Table 15-8. What is the maximum profit that the monopolist can earn?

Accepted Answer

A) $10 
B) $20 
C) $30 
D) $40 
A) $10 
B) $20 
C) $30 
D) $40

Question 3

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

Accepted Answer

A) Matthew offers free samples of his latest flavored coffee drink to entice customers to buy a cup. 
B) Mark charges a lower price to students than to faculty for his tattoo services. 
C) Luke charges a higher hourly price to business students than to liberal arts students for his economics tutoring. 
D) John obtained a copyright for the song he wrote and recorded. 
A) Matthew offers free samples of his latest flavored coffee drink to entice customers to buy a cup. 
B) Mark charges a lower price to students than to faculty for his tattoo services. 
C) Luke charges a higher hourly price to business students than to liberal arts students for his economics tutoring. 
D) John obtained a copyright for the song he wrote and recorded.

Question 4

Scenario 15-10
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:   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 15-10. What is Vincent's profit on a typical day?

Accepted Answer

A) $660 
B) $820 
C) $1,350 
D) $2,170 
A) $660 
B) $820 
C) $1,350 
D) $2,170

Question 5

The supply curve for the monopolist

Accepted Answer

A) is horizontal. 
B) is vertical. 
C) is upward sloping. 
D) does not exist. 
A) is horizontal. 
B) is vertical. 
C) is upward sloping. 
D) does not exist.

Question 6

Table 15-4
A monopolist faces the following demand curve:  
-Refer to Table 15-4. If the monopolist produces 5 units, what is its average revenue?

Accepted Answer

A) $100 
B) $20 
C) $5 
D) $4 
A) $100 
B) $20 
C) $5 
D) $4

Question 7

At the profit-maximizing quantity of output for a monopolist, average revenue, marginal revenue, and price are all equal.

Accepted Answer

A) True 
 B)False

Question 8

Comparing firms in perfectly competitive markets to monopoly firms, which can earn economic profits in the long run?

Accepted Answer

The answer of Comparing firms in perfectly competitive markets to...

Question 9

Suppose a profit-maximizing monopolist faces a constant marginal cost of $10, 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 $4,000.

Accepted Answer

A) True 
 B)False

Question 10

The legislation passed by Congress in 1914 to strengthen the government's powers and authorize private lawsuits was the

Accepted Answer

A) Morgan Act. 
B) Sherman Act. 
C) Clayton Act. 
D) 14th Amendment. 
A) Morgan Act. 
B) Sherman Act. 
C) Clayton Act. 
D) 14th Amendment.

Question 11

Figure 15-2  
-Refer to Figure 15-2. If the firm profit-maximizes, what amount of output will it produce?

Accepted Answer

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

Question 12

Scenario 15-7
Black Box Cable TV is able to purchase an exclusive right to sell a premium movie channel (PMC) in its market area. Let's assume that Black Box Cable pays $150,000 a year for the exclusive marketing rights to PMC. Since Black Box has already installed cable to all of the homes in its market area, the marginal cost of delivering PMC to subscribers is zero. The manager of Black Box needs to know what price to charge for the PMC service to maximize her profit. Before setting price, she hires an economist to estimate demand for the PMC service. The economist discovers that there are two types of subscribers who value premium movie channels. First are the 4,000 die-hard TV viewers who will pay as much as $150 a year for the new PMC premium channel. Second, the PMC channel will appeal to 20,000 occasional TV viewers who will pay as much as $20 a year for a subscription to PMC.
-Refer to Scenario 15-7. If Black Box Cable TV is able to price discriminate, what would be the maximum amount of profit it could generate?

Accepted Answer

A) $500,000 
B) $600,000 
C) $850,000 
D) $925,000 
A) $500,000 
B) $600,000 
C) $850,000 
D) $925,000

Question 13

Figure 15-18  
-Refer to Figure 15-18. If the monopoly firm is not allowed to price discriminate, then the deadweight loss amounts to

Accepted Answer

A) $0. 
B) $1,000. 
C) $2,000. 
D) $4,000. 
A) $0. 
B) $1,000. 
C) $2,000. 
D) $4,000.

Question 14

The fundamental cause of monopolies is barriers to entry.

Accepted Answer

A) True 
 B)False

Question 15

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 total profit at the profit-maximizing quantity?

Accepted Answer

A) $100 
B) $245 
C) $265 
D) $395 
A) $100 
B) $245 
C) $265 
D) $395

Question 16

Firms with substantial monopoly power are quite common because many goods are unique.

Accepted Answer

A) True 
 B)False

Question 17

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 pharmaceutical company obtains a patent for a specific high blood pressure medication. 
C) A musician obtains a copyright for her original song. 
D) An entrepreneur opens a popular new restaurant. 
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 pharmaceutical company obtains a patent for a specific high blood pressure medication. 
C) A musician obtains a copyright for her original song. 
D) An entrepreneur opens a popular new restaurant.

Question 18

Table 15-1  
-Refer to Table 15-1. When 4 units of output are produced and sold, what is average revenue?

Accepted Answer

A) $17 
B) $21 
C) $23 
D) $26 
A) $17 
B) $21 
C) $23 
D) $26

Question 19

For a monopolist, when the price effect is greater than the output effect, marginal revenue is

Accepted Answer

A) positive. 
B) negative. 
C) zero. 
D) maximized. 
A) positive. 
B) negative. 
C) zero. 
D) maximized.

Question 20

Table 15-18
A monopolist faces the following demand curve:   Suppose marginal cost is constant at $8 per unit.
-Refer to Table 15-18. Suppose the firm depicted in the table is selling a prescription drug for which it had a patent, but the patent has expired. As new firms enter the market and sell the generic version of this drug competitively, what quantity will be sold?

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

Exam 15: Monopoly

A movie theater can increase its profits through price discrimination by charging a higher price to adults and a lower price to children if it

Table 15-8 The following table provides information on the price, quantity, and average total cost for a monopoly. -Refer to Table 15-8. What is the maximum profit that the monopolist can earn?

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

The supply curve for the monopolist

Table 15-4 A monopolist faces the following demand curve: -Refer to Table 15-4. If the monopolist produces 5 units, what is its average revenue?

At the profit-maximizing quantity of output for a monopolist, average revenue, marginal revenue, and price are all equal.

Comparing firms in perfectly competitive markets to monopoly firms, which can earn economic profits in the long run?

The legislation passed by Congress in 1914 to strengthen the government's powers and authorize private lawsuits was the

Figure 15-2 -Refer to Figure 15-2. If the firm profit-maximizes, what amount of output will it produce?

Figure 15-18 -Refer to Figure 15-18. If the monopoly firm is not allowed to price discriminate, then the deadweight loss amounts to

The fundamental cause of monopolies is barriers to entry.

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 total profit at the profit-maximizing quantity?

Firms with substantial monopoly power are quite common because many goods are unique.

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

Table 15-1 -Refer to Table 15-1. When 4 units of output are produced and sold, what is average revenue?

For a monopolist, when the price effect is greater than the output effect, marginal revenue 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

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