Question 1

Figure 15-20  
-Refer to Figure 15-20. The consumer surplus at the monopolist's profit-maximizing price is

Accepted Answer

A) $450. 
B) $900. 
C) $1,350. 
D) $2,025. 
A) $450. 
B) $900. 
C) $1,350. 
D) $2,025.

Question 2

Which of the following can defeat the profit-maximizing strategy of price discrimination?

Accepted Answer

A) consumer surplus 
B) deadweight loss 
C) market power 
D) arbitrage 
A) consumer surplus 
B) deadweight loss 
C) market power 
D) arbitrage

Question 3

For a monopoly firm,

Accepted Answer

A) price always exceeds average revenue. 
B) price always exceeds marginal revenue. 
C) any price-quantity combination will maximize profits. 
D) All of the above are correct. 
A) price always exceeds average revenue. 
B) price always exceeds marginal revenue. 
C) any price-quantity combination will maximize profits. 
D) All of the above are correct.

Question 4

The fundamental source of monopoly power is

Accepted Answer

A) barriers to entry. 
B) profit. 
C) decreasing average total cost. 
D) a product without close substitutes. 
A) barriers to entry. 
B) profit. 
C) decreasing average total cost. 
D) a product without close substitutes.

Question 5

Antitrust laws allow the government to

Accepted Answer

A) prevent mergers. 
B) break up companies. 
C) promote competition. 
D) All of the above are correct. 
A) prevent mergers. 
B) break up companies. 
C) promote competition. 
D) All of the above are correct.

Question 6

For a typical natural monopoly, average total cost is

Accepted Answer

A) falling, and marginal cost is above average total cost. 
B) falling, and marginal cost is below average total cost. 
C) rising, and marginal cost is below average total cost. 
D) rising, and marginal cost is above average total cost. 
A) falling, and marginal cost is above average total cost. 
B) falling, and marginal cost is below average total cost. 
C) rising, and marginal cost is below average total cost. 
D) rising, and marginal cost is above average total cost.

Question 7

Scenario 15-3
A monopoly firm maximizes its profit by producing Q = 500 units of output. At that level of output, its marginal revenue is $30, its average revenue is $60, and its average total cost is $34.
-Refer to Scenario 15-3. At Q = 500, the firm's marginal cost is

Accepted Answer

A) less than $30. 
B) $30. 
C) $34. 
D) greater than $34. 
A) less than $30. 
B) $30. 
C) $34. 
D) greater than $34.

Question 8

Which of the following statements is correct?

Accepted Answer

A) The benefits that accrue to a monopoly's owners are equal to the costs that are incurred by consumers of that firm's product. 
B) The deadweight loss that arises in monopoly stems from the fact that the profit-maximizing monopoly firm produces a quantity of output that exceeds the socially-efficient quantity. 
C) The deadweight loss caused by monopoly is similar to the deadweight loss caused by a tax on a product. 
D) The primary social problem caused by monopoly is monopoly profit. 
A) The benefits that accrue to a monopoly's owners are equal to the costs that are incurred by consumers of that firm's product. 
B) The deadweight loss that arises in monopoly stems from the fact that the profit-maximizing monopoly firm produces a quantity of output that exceeds the socially-efficient quantity. 
C) The deadweight loss caused by monopoly is similar to the deadweight loss caused by a tax on a product. 
D) The primary social problem caused by monopoly is monopoly profit.

Question 9

Airlines often separate their customers into business travelers and personal travelers by giving a discount to those travelers who stay over a Saturday night.

Accepted Answer

A) True 
 B)False

Question 10

Table 15-6
A monopolist faces the following demand curve:  
-Refer to Table 15-6. Suppose the monopolist has total fixed costs equal to $5 and a variable cost equal to $4 per unit for all units produced. What is the total profit if she operates at her profit-maximizing price?

Accepted Answer

A) $1 
B) $7 
C) $9 
D) $11 
A) $1 
B) $7 
C) $9 
D) $11

Question 11

Which of the following statements is true about patents and copyrights?
(i)They have benefits and costs.
(ii)They lead to higher prices.
(iii)They enhance the ability of monopolists to earn above-average profits.

Accepted Answer

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

Question 12

Which of the following is not correct?

Accepted Answer

A) The demand curve facing a competitive firm is perfectly elastic. 
B) The demand curve facing a monopolist is the market demand curve. 
C) A monopolist can charge any price and sell any quantity that it chooses. 
D) A monopolist can alter the market price by adjusting the quantity that it produces. 
A) The demand curve facing a competitive firm is perfectly elastic. 
B) The demand curve facing a monopolist is the market demand curve. 
C) A monopolist can charge any price and sell any quantity that it chooses. 
D) A monopolist can alter the market price by adjusting the quantity that it produces.

Question 13

Figure 15-3  
-Refer to Figure 15-3. Which letter represents the profit-maximizing price chosen by the single price monopolist?

Accepted Answer

The answer of Figure 15-3  
-Refer to Figure 15-3....

Question 14

A patent gives a single person or firm the exclusive right to sell some good or service for a specific period of time.

Accepted Answer

A) True 
 B)False

Question 15

A monopoly creates a deadweight loss to society because it earns both short-run and long-run positive economic profits.

Accepted Answer

A) True 
 B)False

Question 16

The key issue in determining the efficiency of public versus private ownership of a monopoly is

Accepted Answer

A) the tendency for efficient management of publicly owned enterprises. 
B) the inability of private monopolies to get rid of managers that are doing a bad job. 
C) the propensity of private monopolies to generate excessive profits. 
D) how ownership of the firm affects the cost of production. 
A) the tendency for efficient management of publicly owned enterprises. 
B) the inability of private monopolies to get rid of managers that are doing a bad job. 
C) the propensity of private monopolies to generate excessive profits. 
D) how ownership of the firm affects the cost of production.

Question 17

Which of the following statements is not correct?

Accepted Answer

A) The government may use antitrust laws to prevent a merger if the government believes the merger will reduce competition and increase prices. 
B) By regulating a natural monopoly where price equals average total cost, the monopoly earns zero profits. 
C) An advantage of private ownership over public ownership is that private business owners tend to fire inefficient managers. 
D) The government should always intervene to improve monopoly inefficiency. 
A) The government may use antitrust laws to prevent a merger if the government believes the merger will reduce competition and increase prices. 
B) By regulating a natural monopoly where price equals average total cost, the monopoly earns zero profits. 
C) An advantage of private ownership over public ownership is that private business owners tend to fire inefficient managers. 
D) The government should always intervene to improve monopoly inefficiency.

Question 18

Suppose a monopolist is able to charge each customer a price equal to that customer's willingness-to-pay for the product. Then the monopolist is engaging in

Accepted Answer

A) marginal cost pricing. 
B) arbitrage pricing. 
C) voodoo economics. 
D) perfect price discrimination. 
A) marginal cost pricing. 
B) arbitrage pricing. 
C) voodoo economics. 
D) perfect price discrimination.

Question 19

When regulators use a marginal-cost pricing strategy to regulate a natural monopoly, the regulated monopoly

Accepted Answer

A) will experience a loss. 
B) will experience a price below average total cost. 
C) may rely on a government subsidy to remain in business. 
D) All of the above are correct. 
A) will experience a loss. 
B) will experience a price below average total cost. 
C) may rely on a government subsidy to remain in business. 
D) All of the above are correct.

Question 20

When a monopoly increases its output and sales,

Accepted Answer

A) both the output effect and the price effect work to increase total revenue. 
B) the output effect works to increase total revenue, and the price effect works to decrease total revenue. 
C) the output effect works to decrease total revenue, and the price effect works to increase total revenue. 
D) both the output effect and the price effect work to decrease total revenue. 
A) both the output effect and the price effect work to increase total revenue. 
B) the output effect works to increase total revenue, and the price effect works to decrease total revenue. 
C) the output effect works to decrease total revenue, and the price effect works to increase total revenue. 
D) both the output effect and the price effect work to decrease total revenue.

Exam 15: Monopoly

Figure 15-20 -Refer to Figure 15-20. The consumer surplus at the monopolist's profit-maximizing price is

Which of the following can defeat the profit-maximizing strategy of price discrimination?

For a monopoly firm,

The fundamental source of monopoly power is

Antitrust laws allow the government to

For a typical natural monopoly, average total cost is

Scenario 15-3 A monopoly firm maximizes its profit by producing Q = 500 units of output. At that level of output, its marginal revenue is $30, its average revenue is $60, and its average total cost is $34. -Refer to Scenario 15-3. At Q = 500, the firm's marginal cost is

Which of the following statements is correct?

Airlines often separate their customers into business travelers and personal travelers by giving a discount to those travelers who stay over a Saturday night.

Table 15-6 A monopolist faces the following demand curve: -Refer to Table 15-6. Suppose the monopolist has total fixed costs equal to $5 and a variable cost equal to $4 per unit for all units produced. What is the total profit if she operates at her profit-maximizing price?

Which of the following statements is true about patents and copyrights? (i)They have benefits and costs. (ii)They lead to higher prices. (iii)They enhance the ability of monopolists to earn above-average profits.

Which of the following is not correct?

Figure 15-3 -Refer to Figure 15-3. Which letter represents the profit-maximizing price chosen by the single price monopolist?

A patent gives a single person or firm the exclusive right to sell some good or service for a specific period of time.

A monopoly creates a deadweight loss to society because it earns both short-run and long-run positive economic profits.

The key issue in determining the efficiency of public versus private ownership of a monopoly is

Which of the following statements is not correct?

Suppose a monopolist is able to charge each customer a price equal to that customer's willingness-to-pay for the product. Then the monopolist is engaging in

When regulators use a marginal-cost pricing strategy to regulate a natural monopoly, the regulated monopoly

When a monopoly increases its output and sales,

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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