Question 1

Which of the following statements comparing monopoly with competition is correct?

Accepted Answer

A) A monopolist produces a higher level of output and charges a lower price than a competitive firm would. 
B) With perfect price discrimination, the total surplus under monopoly can be the same as under competition. 
C) With or without price discrimination, the consumer surplus under monopoly is at least as large as it would be under competition. 
D) The deadweight loss associated with monopoly is caused by the positive economic profits of the monopolist; competitive firms do not earn a positive economic profit so there is no deadweight loss under competition. 
A) A monopolist produces a higher level of output and charges a lower price than a competitive firm would. 
B) With perfect price discrimination, the total surplus under monopoly can be the same as under competition. 
C) With or without price discrimination, the consumer surplus under monopoly is at least as large as it would be under competition. 
D) The deadweight loss associated with monopoly is caused by the positive economic profits of the monopolist; competitive firms do not earn a positive economic profit so there is no deadweight loss under competition.

Question 2

Table 15-9
Consider the following demand and cost information for a monopoly.  
-Refer to Table 15-9. What price should the monopoly charge to maximize profit?

Accepted Answer

A) $16 
B) $20 
C) $24 
D) $28 
A) $16 
B) $20 
C) $24 
D) $28

Question 3

Table 15-1  
-Refer to Table 15-1. What is the marginal revenue for the monopolist for the sixth unit sold?

Accepted Answer

A) $3 
B) $5 
C) $11 
D) $17 
A) $3 
B) $5 
C) $11 
D) $17

Question 4

When a firm has a natural monopoly, the firm's

Accepted Answer

A) marginal cost always exceeds its average total cost. 
B) total cost curve is horizontal. 
C) average total cost curve is downward sloping. 
D) marginal cost curve must lie above the firm's average total cost curve. 
A) marginal cost always exceeds its average total cost. 
B) total cost curve is horizontal. 
C) average total cost curve is downward sloping. 
D) marginal cost curve must lie above the firm's average total cost curve.

Question 5

Price discrimination adds to social welfare in the form of
(i)increased total surplus.
(ii)reduced costs of production.
(iii)increased consumer surplus.

Accepted Answer

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

Question 6

Graphically depict the deadweight loss caused by a monopoly. How is this similar to the deadweight loss from taxation?

Accepted Answer

A profit-maximizing monopolist will choo

Question 7

A perfectly competitive firm produces where

Accepted Answer

A) marginal cost equals price, while a monopolist produces where price exceeds marginal cost. 
B) marginal cost equals price, while a monopolist produces where marginal cost exceeds price. 
C) price exceeds marginal cost, while a monopolist produces where marginal cost equals price. 
D) marginal cost exceeds price, while a monopolist produces where marginal cost equals price. 
A) marginal cost equals price, while a monopolist produces where price exceeds marginal cost. 
B) marginal cost equals price, while a monopolist produces where marginal cost exceeds price. 
C) price exceeds marginal cost, while a monopolist produces where marginal cost equals price. 
D) marginal cost exceeds price, while a monopolist produces where marginal cost equals price.

Question 8

A benefit of a monopoly is

Accepted Answer

A) lower prices. 
B) a wide variety of similar products. 
C) decreasing long-run average total costs. 
D) greater creativity by authors who can copyright their novels. 
A) lower prices. 
B) a wide variety of similar products. 
C) decreasing long-run average total costs. 
D) greater creativity by authors who can copyright their novels.

Question 9

Figure 15-15  
-Refer to Figure 15-15. To maximize total surplus, a benevolent social planner would choose which of the following outcomes?

Accepted Answer

A) Q = 30 and P = 30 
B) Q = 30 and P = 60 
C) Q = 45 and P = 45 
D) Q = 60 and P = 30 
A) Q = 30 and P = 30 
B) Q = 30 and P = 60 
C) Q = 45 and P = 45 
D) Q = 60 and P = 30

Question 10

For a monopolist, marginal revenue is

Accepted Answer

A) equal to price, as it is for a perfectly competitive firm. 
B) less than price, as it is for a perfectly competitive firm. 
C) equal to price, whereas marginal revenue is less than price for a perfectly competitive firm. 
D) less than price, whereas marginal revenue is equal to price for a perfectly competitive firm. 
A) equal to price, as it is for a perfectly competitive firm. 
B) less than price, as it is for a perfectly competitive firm. 
C) equal to price, whereas marginal revenue is less than price for a perfectly competitive firm. 
D) less than price, whereas marginal revenue is equal to price for a perfectly competitive firm.

Question 11

Figure 15-2  
-Refer to Figure 15-2. If a regulator requires the firm to charge a marginal cost price, what quantity will the firm produce?

Accepted Answer

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

Question 12

Table 15-18
A monopolist faces the following demand curve:   Suppose marginal cost is constant at $8 per unit.
-Refer to Table 15-18. When the price effect on revenue is greater than the output effect, marginal revenue is

Accepted Answer

A) positive. This occurs with the 3rd unit of output. 
B) positive. This occurs with the 4th unit of output. 
C) negative. This occurs with the 5th unit of output. 
D) negative. This occurs with the 6th unit of output. 
A) positive. This occurs with the 3rd unit of output. 
B) positive. This occurs with the 4th unit of output. 
C) negative. This occurs with the 5th unit of output. 
D) negative. This occurs with the 6th unit of output.

Question 13

University financial aid can be viewed as a type of price discrimination.

Accepted Answer

A) True 
 B)False

Question 14

The marginal revenue curve for a monopoly firm starts at the same point on the vertical axis as the
(i)average revenue curve.
(ii)marginal cost curve.
(iii)demand curve.

Accepted Answer

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

Question 15

Which of the following statements is not correct?

Accepted Answer

A) Consumers will likely benefit in the form of lower prices from buying a product made by a natural monopoly than if the market were served by several firms. 
B) Monopolists typically charge higher prices than competitive firms. 
C) Monopolists typically produce larger quantities of output than competitive firms. 
D) Consumers may benefit from monopolies if the firms invest their higher profits into something that benefits society such as medical research. 
A) Consumers will likely benefit in the form of lower prices from buying a product made by a natural monopoly than if the market were served by several firms. 
B) Monopolists typically charge higher prices than competitive firms. 
C) Monopolists typically produce larger quantities of output than competitive firms. 
D) Consumers may benefit from monopolies if the firms invest their higher profits into something that benefits society such as medical research.

Question 16

When a firm's average total cost curve continually declines, the firm is a

Accepted Answer

A) government-created monopoly. 
B) natural monopoly. 
C) revenue monopoly. 
D) All of the above are correct. 
A) government-created monopoly. 
B) natural monopoly. 
C) revenue monopoly. 
D) All of the above are correct.

Question 17

Monopolies are inefficient because they
(i)eliminate barriers to entry.
(ii)price their product at a level where marginal revenue exceeds marginal cost.
(iii)restrict output below the socially efficient level of production.

Accepted Answer

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

Question 18

Figure 15-5  
-Refer to Figure 15-5. A profit-maximizing monopoly's profit is equal to

Accepted Answer

A) P2 x Q3. 
B) (P2-P4) x Q3. 
C) (P2-P5) x Q3. 
D) (P1-P6) x Q1. 
A) P2 x Q3. 
B) (P2-P4) x Q3. 
C) (P2-P5) x Q3. 
D) (P1-P6) x Q1.

Question 19

Which of the following statements is correct for a monopolist?
(i)The firm maximizes profits by equating marginal revenue with marginal cost.
(ii)The firm maximizes profits by equating price with marginal cost.
(iii)Demand equals marginal revenue.
(iv)Average revenue equals price.

Accepted Answer

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

Question 20

The first major piece of antitrust legislation was the

Accepted Answer

A) Clayton Act. 
B) Obama Care Act. 
C) Sherman Act. 
D) Clinton Act. 
A) Clayton Act. 
B) Obama Care Act. 
C) Sherman Act. 
D) Clinton Act.

Exam 15: Monopoly

Which of the following statements comparing monopoly with competition is correct?

Table 15-9 Consider the following demand and cost information for a monopoly. -Refer to Table 15-9. What price should the monopoly charge to maximize profit?

Table 15-1 -Refer to Table 15-1. What is the marginal revenue for the monopolist for the sixth unit sold?

When a firm has a natural monopoly, the firm's

Price discrimination adds to social welfare in the form of (i)increased total surplus. (ii)reduced costs of production. (iii)increased consumer surplus.

Graphically depict the deadweight loss caused by a monopoly. How is this similar to the deadweight loss from taxation?

A perfectly competitive firm produces where

A benefit of a monopoly is

Figure 15-15 -Refer to Figure 15-15. To maximize total surplus, a benevolent social planner would choose which of the following outcomes?

For a monopolist, marginal revenue is

Figure 15-2 -Refer to Figure 15-2. If a regulator requires the firm to charge a marginal cost price, what quantity will the firm produce?

Table 15-18 A monopolist faces the following demand curve: Suppose marginal cost is constant at $8 per unit. -Refer to Table 15-18. When the price effect on revenue is greater than the output effect, marginal revenue is

University financial aid can be viewed as a type of price discrimination.

The marginal revenue curve for a monopoly firm starts at the same point on the vertical axis as the (i)average revenue curve. (ii)marginal cost curve. (iii)demand curve.

Which of the following statements is not correct?

When a firm's average total cost curve continually declines, the firm is a

Monopolies are inefficient because they (i)eliminate barriers to entry. (ii)price their product at a level where marginal revenue exceeds marginal cost. (iii)restrict output below the socially efficient level of production.

Figure 15-5 -Refer to Figure 15-5. A profit-maximizing monopoly's profit is equal to

Which of the following statements is correct for a monopolist? (i)The firm maximizes profits by equating marginal revenue with marginal cost. (ii)The firm maximizes profits by equating price with marginal cost. (iii)Demand equals marginal revenue. (iv)Average revenue equals price.

The first major piece of antitrust legislation was the

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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