Question 1

When we compare economic welfare in a monopoly market to a competitive market, the profits earned by the monopolist represent

Accepted Answer

A) a transfer of benefits from the consumer to the producer. 
B) a loss in total welfare. 
C) the higher marginal costs incurred by the monopolists in comparison to competitive firms. 
D) the higher marginal revenues gained by the monopolists in comparison to competitive firms. 
A) a transfer of benefits from the consumer to the producer. 
B) a loss in total welfare. 
C) the higher marginal costs incurred by the monopolists in comparison to competitive firms. 
D) the higher marginal revenues gained by the monopolists in comparison to competitive firms.

Question 2

A market force that can prevent firms from price discriminating is

Accepted Answer

A) fluctuating resource prices. 
B) arbitrage. 
C) high fixed costs. 
D) marginal-cost pricing. 
A) fluctuating resource prices. 
B) arbitrage. 
C) high fixed costs. 
D) marginal-cost pricing.

Question 3

Assume that a monopolist decides to maximize revenue rather than profit. How does this operating objective change the size of the deadweight loss? If you are a "benevolent" manager of a monopoly firm and are interested in reducing the deadweight loss of monopoly, should you maximize profits or maximize revenue? Explain your answer.

Accepted Answer

A revenue maximizer operates where MR =

Question 4

Figure 15-9  
-Refer to Figure 15-9. The deadweight loss caused by a profit-maximizing monopoly amounts to

Accepted Answer

A) $250. 
B) $500. 
C) $750. 
D) $1,000. 
A) $250. 
B) $500. 
C) $750. 
D) $1,000.

Question 5

A monopolist can sell 300 units of output for $45 per unit. Alternatively, it can sell 301 units of output for $44.60 per unit. The marginal revenue of the 301st unit of output is

Accepted Answer

A) -$120.00. 
B) -$75.40. 
C) -$0.40. 
D) $75.40. 
A) -$120.00. 
B) -$75.40. 
C) -$0.40. 
D) $75.40.

Question 6

Which of the following statements is not correct?

Accepted Answer

A) The competitive firm produces where P = MC. 
B) The monopolist produces where P = MC. 
C) The competitive firm produces where MR = MC. 
D) The monopolist produces where MR = MC. 
A) The competitive firm produces where P = MC. 
B) The monopolist produces where P = MC. 
C) The competitive firm produces where MR = MC. 
D) The monopolist produces where MR = MC.

Question 7

Figure 15-1  
-Refer to Figure 15-1. Considering the relationship between average total cost and marginal cost, the marginal cost curve for this firm must

Accepted Answer

A) lie entirely above the average total cost curve. 
B) lie entirely below the average total cost curve. 
C) be U-shaped. 
D) be horizontal. 
A) lie entirely above the average total cost curve. 
B) lie entirely below the average total cost curve. 
C) be U-shaped. 
D) be horizontal.

Question 8

A monopolist

Accepted Answer

A) has a supply curve that is upward-sloping, just like a competitive firm. 
B) does not have a supply curve because the monopolist sets its price at the same time it chooses the quantity to supply. 
C) has a horizontal supply curve, just like a competitive firm. 
D) does not have a supply curve because marginal revenue exceeds the price it charges for its products. 
A) has a supply curve that is upward-sloping, just like a competitive firm. 
B) does not have a supply curve because the monopolist sets its price at the same time it chooses the quantity to supply. 
C) has a horizontal supply curve, just like a competitive firm. 
D) does not have a supply curve because marginal revenue exceeds the price it charges for its products.

Question 9

Which of the following is an example of public ownership of a monopoly?

Accepted Answer

A) DeBeers 
B) Microsoft 
C) U.S. Postal Service 
D) AT&T 
A) DeBeers 
B) Microsoft 
C) U.S. Postal Service 
D) AT&T

Question 10

Which of the following is not correct?

Accepted Answer

A) Antitrust laws may prevent mergers that would actually raise social welfare. 
B) Public ownership is the most common public policy toward monopolies in the United States. 
C) Regulation is a common strategy for a natural monopoly. 
D) Sometimes the best public policy toward a monopoly may be to do nothing. 
A) Antitrust laws may prevent mergers that would actually raise social welfare. 
B) Public ownership is the most common public policy toward monopolies in the United States. 
C) Regulation is a common strategy for a natural monopoly. 
D) Sometimes the best public policy toward a monopoly may be to do nothing.

Question 11

Reduced competition through merging of companies will raise social welfare

Accepted Answer

A) if the social cost from the synergies exceeds the benefit of increased market power. 
B) if the benefit from the synergies exceeds the social cost of increased market power. 
C) always. 
D) never. 
A) if the social cost from the synergies exceeds the benefit of increased market power. 
B) if the benefit from the synergies exceeds the social cost of increased market power. 
C) always. 
D) never.

Question 12

If a monopolist can practice perfect price discrimination, the monopolist will

Accepted Answer

A) eliminate consumer surplus. 
B) eliminate deadweight loss. 
C) maximize profits. 
D) All of the above are correct. 
A) eliminate consumer surplus. 
B) eliminate deadweight loss. 
C) maximize profits. 
D) All of the above are correct.

Question 13

For a monopoly, marginal revenue is often greater than the price it charges for its good.

Accepted Answer

A) True 
 B)False

Question 14

Figure 15-4  
-Refer to Figure 15-4. If a regulator requires this firm to charge a fair return price, which letter represents the amount of output it will produce?

Accepted Answer

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

Question 15

In many countries, the government chooses to "internalize" the monopoly by owning monopoly providers of goods and services. (In some cases these firms are "nationalized," and the government actually buys or confiscates firms that operate in monopoly markets). What would be the advantages and disadvantages of such an approach to ensure that the "best interest of society" is promoted in these markets? Explain your answer.

Accepted Answer

As long as the government "owner" pursue

Question 16

​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, how many units will Bearclaws produce to maximize profits?

Accepted Answer

A) ​70. 
B) ​90. 
C) ​105. 
D) ​130. 
A) ​70. 
B) ​90. 
C) ​105. 
D) ​130.

Question 17

The government may choose to do nothing to reduce monopoly inefficiency because the "fix" may be worse than the problem.

Accepted Answer

A) True 
 B)False

Question 18

Price discrimination

Accepted Answer

A) is illegal in the United States and Europe. 
B) can occur in both perfectly competitive and monopoly markets. 
C) is illogical because it does not maximize profits. 
D) can maximize profits if the seller can prevent the resale of goods between customers. 
A) is illegal in the United States and Europe. 
B) can occur in both perfectly competitive and monopoly markets. 
C) is illogical because it does not maximize profits. 
D) can maximize profits if the seller can prevent the resale of goods between customers.

Question 19

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 additional cost to the firm when the monopolist lowers the price from $18 to $12?

Accepted Answer

A) The firm saves $15. 
B) $15 
C) $30 
D) $40 
A) The firm saves $15. 
B) $15 
C) $30 
D) $40

Question 20

For a monopolist, marginal revenue is

Accepted Answer

A) positive when the demand effect is greater than the supply effect. 
B) positive when the monopoly effect is greater than the competitive effect. 
C) negative when the price effect is greater than the output effect. 
D) negative when the output effect is greater than the price effect. 
A) positive when the demand effect is greater than the supply effect. 
B) positive when the monopoly effect is greater than the competitive effect. 
C) negative when the price effect is greater than the output effect. 
D) negative when the output effect is greater than the price effect.

Exam 15: Monopoly

When we compare economic welfare in a monopoly market to a competitive market, the profits earned by the monopolist represent

A market force that can prevent firms from price discriminating is

Figure 15-9 -Refer to Figure 15-9. The deadweight loss caused by a profit-maximizing monopoly amounts to

A monopolist can sell 300 units of output for $45 per unit. Alternatively, it can sell 301 units of output for $44.60 per unit. The marginal revenue of the 301st unit of output is

Which of the following statements is not correct?

Figure 15-1 -Refer to Figure 15-1. Considering the relationship between average total cost and marginal cost, the marginal cost curve for this firm must

A monopolist

Which of the following is an example of public ownership of a monopoly?

Which of the following is not correct?

Reduced competition through merging of companies will raise social welfare

If a monopolist can practice perfect price discrimination, the monopolist will

For a monopoly, marginal revenue is often greater than the price it charges for its good.

Figure 15-4 -Refer to Figure 15-4. If a regulator requires this firm to charge a fair return price, which letter represents the amount of output it will produce?

​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, how many units will Bearclaws produce to maximize profits?

The government may choose to do nothing to reduce monopoly inefficiency because the "fix" may be worse than the problem.

Price discrimination

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 additional cost to the firm when the monopolist lowers the price from $18 to $12?

For a monopolist, 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

Filters

A monopolist can sell 300 units of output for $45 per unit. Alternatively, it can sell 301 units of output for $44.60 per unit. The marginal revenue of the 301^st unit of output is

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, how many units will Bearclaws produce to maximize profits?