Question 1

Figure 15-8   ​
​
-Refer to Figure 15-8. What is the socially efficient price and quantity for this natural monopolist?

Accepted Answer

A) Q and A 
B) R and A 
C) R and B 
D) S and C 
A) Q and A 
B) R and A 
C) R and B 
D) S and C

Question 2

A monopolist's profits with price discrimination will be

Accepted Answer

A) lower than if the firm charged a single, profit-maximizing price. 
B) the same as if the firm charged a single, profit-maximizing price. 
C) higher than if the firm charged just one price because the firm will capture more consumer surplus. 
D) higher than if the firm charged a single price because the costs of selling the good will be lower. 
A) lower than if the firm charged a single, profit-maximizing price. 
B) the same as if the firm charged a single, profit-maximizing price. 
C) higher than if the firm charged just one price because the firm will capture more consumer surplus. 
D) higher than if the firm charged a single price because the costs of selling the good will be lower.

Question 3

In a monopoly market, the socially efficient quantity of output is typically higher than the profit-maximizing quantity of output for the monopolist.

Accepted Answer

A) True 
 B)False

Question 4

Government intervention always reduces monopoly deadweight loss.

Accepted Answer

A) True 
 B)False

Question 5

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 6

Price discrimination is a rational strategy for a profit-maximizing monopolist when

Accepted Answer

A) the monopolist finds itself able to produce only limited quantities of output. 
B) consumers are unable to be segmented into identifiable markets. 
C) the monopolist wishes to increase the deadweight loss that results from profit-maximizing behavior. 
D) there is no opportunity for arbitrage across market segments. 
A) the monopolist finds itself able to produce only limited quantities of output. 
B) consumers are unable to be segmented into identifiable markets. 
C) the monopolist wishes to increase the deadweight loss that results from profit-maximizing behavior. 
D) there is no opportunity for arbitrage across market segments.

Question 7

The profit that a monopolist earns represents a loss to society that is measured through deadweight loss.

Accepted Answer

A) True 
 B)False

Question 8

By selling hardcover books to die-hard fans and paperback books to less enthusiastic readers, the publisher is able to price discriminate and raise its profits.

Accepted Answer

A) True 
 B)False

Question 9

Goods that do not have close substitutes have downward-sloping demand curves.

Accepted Answer

A) True 
 B)False

Question 10

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 11

Scenario 15-2
Vincent operates a scenic tour business in Boston. He has one bus that 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:
​
​
 $$\begin{array} { | c | c | c | } 
\hline \text { Passenger Type } & \begin{array} { c } 
\text { Willingness to Pay } \
\text { (Dollars per unit) }
\end{array} & \begin{array} { c } 
\text { Quantity Demanded } \
\text { (Units) }
\end{array} \
\hline \text { Adult } & 18 & 70 \
\hline \text { Children } & 10 & 25 \
\hline \text { Senior Citizens } & 12 & 55 \
\hline
\end{array}$$ 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 15-2. 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

Exam 15: Monopoly

Figure 15-8 ​ ​ -Refer to Figure 15-8. What is the socially efficient price and quantity for this natural monopolist?

A monopolist's profits with price discrimination will be

In a monopoly market, the socially efficient quantity of output is typically higher than the profit-maximizing quantity of output for the monopolist.

Government intervention always reduces monopoly deadweight loss.

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

Price discrimination is a rational strategy for a profit-maximizing monopolist when

The profit that a monopolist earns represents a loss to society that is measured through deadweight loss.

By selling hardcover books to die-hard fans and paperback books to less enthusiastic readers, the publisher is able to price discriminate and raise its profits.

Goods that do not have close substitutes have downward-sloping demand curves.

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

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 Nations 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 15-8 -Refer to Figure 15-8. What is the socially efficient price and quantity for this natural monopolist?