Question 1

For a monopoly market, total surplus can be defined as the value of the good to

Accepted Answer

A) producers minus the cost incurred by consumers. 
B) producers plus the cost incurred by consumers. 
C) consumers minus the costs of producing the good. 
D) consumers plus the cost of producing the good. 
A) producers minus the cost incurred by consumers. 
B) producers plus the cost incurred by consumers. 
C) consumers minus the costs of producing the good. 
D) consumers plus the cost of producing the good.

Question 2

​Figure 15-22
The diagram depicts the market situation for a monopoly pastry shop called Bearclaws.  
-Refer to Figure 15-22. Based upon the information shown, what price will Bearclaws charge to maximize profits?

Accepted Answer

A) ​$7. 
B) ​$10.50. 
C) ​$14. 
D) ​$12. 
A) ​$7. 
B) ​$10.50. 
C) ​$14. 
D) ​$12.

Question 3

A natural monopolist's ability to price its product is

Accepted Answer

A) constrained by the market demand curve. 
B) constrained by market supply. 
C) not affected by market demand. 
D) enhanced by regulatory control of the government. 
A) constrained by the market demand curve. 
B) constrained by market supply. 
C) not affected by market demand. 
D) enhanced by regulatory control of the government.

Question 4

Perfect price discrimination

Accepted Answer

A) eliminates deadweight loss. 
B) reduces profits to the monopolist. 
C) decreases the total quantity sold by the monopolist. 
D) requires arbitrage in order for the monopolist to maximize profits. 
A) eliminates deadweight loss. 
B) reduces profits to the monopolist. 
C) decreases the total quantity sold by the monopolist. 
D) requires arbitrage in order for the monopolist to maximize profits.

Question 5

A monopolist maximizes profits by

Accepted Answer

A) producing an output level where marginal revenue equals marginal cost. 
B) charging a price equal to marginal revenue and marginal cost. 
C) charging a price where marginal cost equals average total cost. 
D) Both a and b are correct. 
A) producing an output level where marginal revenue equals marginal cost. 
B) charging a price equal to marginal revenue and marginal cost. 
C) charging a price where marginal cost equals average total cost. 
D) Both a and b are correct.

Question 6

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 $2,000.

Accepted Answer

A) True 
 B)False

Question 7

For a monopoly,

Accepted Answer

A) average revenue exceeds marginal revenue. 
B) average revenue equals marginal revenue. 
C) average revenue is less than marginal revenue. 
D) price equals marginal revenue. 
A) average revenue exceeds marginal revenue. 
B) average revenue equals marginal revenue. 
C) average revenue is less than marginal revenue. 
D) price equals marginal revenue.

Question 8

Even with market power, monopolists cannot achieve any level of profit they desire because they will sell lower quantities at higher prices.

Accepted Answer

A) True 
 B)False

Question 9

"Monopolists do not worry about efficient production and minimizing costs since they can just pass along any increase in costs to their consumers." This statement is

Accepted Answer

A) false; price increases will mean fewer sales, which may lower profits. 
B) true; this is the primary reason why economists believe that monopolies result in economic inefficiency. 
C) false; the monopolist is a price taker. 
D) true; consumers in a monopoly market have no substitutes to turn to when the monopolist raises prices. 
A) false; price increases will mean fewer sales, which may lower profits. 
B) true; this is the primary reason why economists believe that monopolies result in economic inefficiency. 
C) false; the monopolist is a price taker. 
D) true; consumers in a monopoly market have no substitutes to turn to when the monopolist raises prices.

Question 10

Table 15-4
A monopolist faces the following demand curve:  
-Refer to Table 15-4. In order to maximize profits, the monopolist should produce

Accepted Answer

A) 7.5 units. 
B) 10 units. 
C) where marginal revenue equals marginal cost. 
D) Both a and c are correct. 
A) 7.5 units. 
B) 10 units. 
C) where marginal revenue equals marginal cost. 
D) Both a and c are correct.

Question 11

Table 15-16
A monopolist faces the following demand curve:  
-Refer to Table 15-16. The monopolist has total fixed costs of $40 and a constant marginal cost of $5. At the profit-maximizing level of output, the monopolist's average total cost is

Accepted Answer

A) $9.00. 
B) $7.50. 
C) $6.74. 
D) $5.82. 
A) $9.00. 
B) $7.50. 
C) $6.74. 
D) $5.82.

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 $7, how much output should the firm produce?

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

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. One of Vincent's friends tells him he would be more profitable if he charged a single price of $12. Assuming no changes in consumer demand, what would Vincent's profit be if he charged every customer $12?

Accepted Answer

The answer of Scenario 15-1
Vincent operates a scenic tour business...

Question 14

Microsoft's government-granted exclusive right to make and sell the Windows operating system is called a

Accepted Answer

The answer of Microsoft's government-granted exclusive right to make and...

Question 15

Compared to the monopoly outcome with a single price, imperfect price discrimination
(i)sometimes raises total surplus.
(ii)sometimes lowers total surplus.
(iii)always leads to a lower quantity of output.

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 16

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 marginal revenue from selling the 8th pair of shoes?

Accepted Answer

A) $10 
B) $20 
C) $40 
D) $90 
A) $10 
B) $20 
C) $40 
D) $90

Question 17

Most firms have

Accepted Answer

A) no monopoly pricing power. 
B) some monopoly pricing power. 
C) absolute monopoly pricing power. 
D) the ability to earn monopoly profits. 
A) no monopoly pricing power. 
B) some monopoly pricing power. 
C) absolute monopoly pricing power. 
D) the ability to earn monopoly profits.

Question 18

If government regulation sets the maximum price for a natural monopoly equal to its marginal cost, then the natural monopolist will

Accepted Answer

A) earn economic losses. 
B) earn economic profits. 
C) earn zero economic profits. 
D) produce a lower quantity of output than is socially optimal. 
A) earn economic losses. 
B) earn economic profits. 
C) earn zero economic profits. 
D) produce a lower quantity of output than is socially optimal.

Question 19

Government intervention always reduces monopoly deadweight loss.

Accepted Answer

A) True 
 B)False

Question 20

Table 15-12
The following table provides information on the price, quantity, and average total cost for a monopoly.  
-Refer to Table 15-12. If the firm produces the profit-maximizing level of output, it will earn profits of

Accepted Answer

A) $24. 
B) $18. 
C) $15. 
D) $12. 
A) $24. 
B) $18. 
C) $15. 
D) $12.

Exam 15: Monopoly

For a monopoly market, total surplus can be defined as the value of the good to

​Figure 15-22 The diagram depicts the market situation for a monopoly pastry shop called Bearclaws. -Refer to Figure 15-22. Based upon the information shown, what price will Bearclaws charge to maximize profits?

A natural monopolist's ability to price its product is

Perfect price discrimination

A monopolist maximizes profits by

For a monopoly,

Even with market power, monopolists cannot achieve any level of profit they desire because they will sell lower quantities at higher prices.

"Monopolists do not worry about efficient production and minimizing costs since they can just pass along any increase in costs to their consumers." This statement is

Table 15-4 A monopolist faces the following demand curve: -Refer to Table 15-4. In order to maximize profits, the monopolist should produce

Table 15-16 A monopolist faces the following demand curve: -Refer to Table 15-16. The monopolist has total fixed costs of $40 and a constant marginal cost of $5. At the profit-maximizing level of output, the monopolist's average total cost is

Table 15-19 A monopolist faces the following demand curve: -Refer to Table 15-19. If a monopolist faces a constant marginal cost of $7, how much output should the firm produce?

Microsoft's government-granted exclusive right to make and sell the Windows operating system is called a

Compared to the monopoly outcome with a single price, imperfect price discrimination (i)sometimes raises total surplus. (ii)sometimes lowers total surplus. (iii)always leads to a lower quantity of output.

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 marginal revenue from selling the 8th pair of shoes?

Most firms have

If government regulation sets the maximum price for a natural monopoly equal to its marginal cost, then the natural monopolist will

Government intervention always reduces monopoly deadweight loss.

Table 15-12 The following table provides information on the price, quantity, and average total cost for a monopoly. -Refer to Table 15-12. If the firm produces the profit-maximizing level of output, it will earn profits of

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

Figure 15-22 The diagram depicts the market situation for a monopoly pastry shop called Bearclaws. -Refer to Figure 15-22. Based upon the information shown, what price will Bearclaws charge to maximize profits?