Question 1

Like competitive firms, monopolies choose to produce a quantity in which marginal revenue equals marginal cost.

Accepted Answer

A) True 
 B)False

Question 2

In both perfectly competitive and monopoly markets, the price per unit of a good is equal to the

Accepted Answer

The answer of In both perfectly competitive and monopoly markets,...

Question 3

Monopolies are socially inefficient because the price they charge is

Accepted Answer

A) equal to marginal revenue. 
B) above marginal cost. 
C) equal to demand. 
D) above demand. 
A) equal to marginal revenue. 
B) above marginal cost. 
C) equal to demand. 
D) above demand.

Question 4

Figure 15-7  
-Refer to Figure 15-7. 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 5

Price discrimination adds to social welfare in the form of

Accepted Answer

A) increased total surplus. 
B) decreased total surplus 
C) reduced costs of production. 
D) increased consumer surplus and decreased producer surplus. 
A) increased total surplus. 
B) decreased total surplus 
C) reduced costs of production. 
D) increased consumer surplus and decreased producer surplus.

Question 6

Figure 15-4   ​
​
-Refer to Figure 15-4. What price will the monopolist charge in order to maximize profit?

Accepted Answer

A) X 
B) Z 
C) B 
D) C 
A) X 
B) Z 
C) B 
D) C

Question 7

Comparing firms in perfectly competitive markets to monopoly firms, which results in a deadweight loss?

Accepted Answer

The answer of Comparing firms in perfectly competitive markets to...

Question 8

Government intervention is always preferable to doing nothing when reducing the social inefficiencies of monopoly.

Accepted Answer

A) True 
 B)False

Question 9

When an industry is a natural monopoly,

Accepted Answer

A) it is characterized by constant returns to scale. 
B) it is characterized by diseconomies of scale. 
C) a larger number of firms may lead to a lower average total cost. 
D) a larger number of firms will lead to a higher average total cost. 
A) it is characterized by constant returns to scale. 
B) it is characterized by diseconomies of scale. 
C) a larger number of firms may lead to a lower average total cost. 
D) a larger number of firms will lead to a higher average total cost.

Question 10

In order for a firm to maximize profits through price discrimination, the firm must have some market power and be able to prevent arbitrage.

Accepted Answer

A) True 
 B)False

Question 11

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 12

There has been much discussion of deregulating electricity and natural gas delivery companies in the United States. Discuss the likely effect of deregulation on prices in these two industries.

Accepted Answer

If deregulation leads to increased compe

Question 13

Which of the following statements is not correct?

Accepted Answer

A) Two examples of early antitrust laws are the Sherman and Clayton Antitrust Acts. 
B) Antitrust laws automatically prevent mergers between companies that produce similar products. 
C) Antitrust laws give the government power to increase competition. 
D) Antitrust laws can reduce social welfare if they prevent mergers that would lower costs through more efficient joint production. 
A) Two examples of early antitrust laws are the Sherman and Clayton Antitrust Acts. 
B) Antitrust laws automatically prevent mergers between companies that produce similar products. 
C) Antitrust laws give the government power to increase competition. 
D) Antitrust laws can reduce social welfare if they prevent mergers that would lower costs through more efficient joint production.

Question 14

Table 15-2
Suppose a monopolist faces the following demand curve:
​
​
 $$\begin{array} { | c | c | } 
\hline \begin{array} { c } 
\text { Price } \
\text { (Dollars per unit) }
\end{array} & \begin{array} { c } 
\text { Quantity } \
\text { (Units) }
\end{array} \
\hline 8 & 300 \
\hline 7 & 400 \
\hline 6 & 500 \
\hline 5 & 600 \
\hline 4 & 700 \
\hline 3 & 800 \
\hline 2 & 900 \
\hline 1 & 1,000 \
\hline
\end{array}$$ ​
-Refer to Table 15-2. The monopolist has fixed costs of $1,000 and has a constant marginal cost of $2 per unit. If the monopolist were able to perfectly price discriminate, how many units would it sell?

Accepted Answer

A) 400 
B) 500 
C) 900 
D) 4,200 
A) 400 
B) 500 
C) 900 
D) 4,200

Question 15

Which of the following is not an example of a barrier to entry?

Accepted Answer

A) Ruby's Mining Company owns a unique plot of land in Utah, under which lies the only large deposit of Red beryl in the world. 
B) A pharmaceutical company obtains a patent for a specific allergy medication. 
C) A musician obtains a copyright for her original song. 
D) An entrepreneur opens a popular new restaurant. 
A) Ruby's Mining Company owns a unique plot of land in Utah, under which lies the only large deposit of Red beryl in the world. 
B) A pharmaceutical company obtains a patent for a specific allergy medication. 
C) A musician obtains a copyright for her original song. 
D) An entrepreneur opens a popular new restaurant.

Question 16

The law passed by Congress in 1890 to reduce the market power of the dominating trusts at that time was

Accepted Answer

A) the 14th Amendment. 
B) the Clayton Antitrust Act. 
C) the 19th Amendment. 
D) the Sherman Antitrust Act. 
A) the 14th Amendment. 
B) the Clayton Antitrust Act. 
C) the 19th Amendment. 
D) the Sherman Antitrust Act.

Question 17

For a monopoly, the socially efficient level of output occurs where

Accepted Answer

A) marginal revenue equals marginal cost. 
B) price equals marginal cost. 
C) marginal revenue equals average total cost. 
D) price equals average total cost. 
A) marginal revenue equals marginal cost. 
B) price equals marginal cost. 
C) marginal revenue equals average total cost. 
D) price equals average total cost.

Question 18

Scenario 15-1
A monopoly firm maximizes its profit by producing Q = 500 units of output. At that level of output, its marginal revenue is $40, its average revenue is $80, and its average total cost is $44.
-Refer to Scenario 15-1. At Q = 500, the firm's total revenue is

Accepted Answer

A) $2,000. 
B) $20,000. 
C) $22,000. 
D) $40,000. 
A) $2,000. 
B) $20,000. 
C) $22,000. 
D) $40,000.

Question 19

Figure 15-12
​   ​
-Refer to Figure 15-12. If a regulator requires this firm to charge a socially optimal price, which letter represents the amount of output it will produce?

Accepted Answer

The answer of Figure 15-12
​   ​
-Refer to Figure...

Question 20

​As long as as a monopolist is able to control the resale of its product, then it can successfully practice price discrimination.

Accepted Answer

A) True 
 B)False

Exam 15: Monopoly

Like competitive firms, monopolies choose to produce a quantity in which marginal revenue equals marginal cost.

In both perfectly competitive and monopoly markets, the price per unit of a good is equal to the

Monopolies are socially inefficient because the price they charge is

Figure 15-7 -Refer to Figure 15-7. To maximize total surplus, a benevolent social planner would choose which of the following outcomes?

Price discrimination adds to social welfare in the form of

Figure 15-4 ​ ​ -Refer to Figure 15-4. What price will the monopolist charge in order to maximize profit?

Comparing firms in perfectly competitive markets to monopoly firms, which results in a deadweight loss?

Government intervention is always preferable to doing nothing when reducing the social inefficiencies of monopoly.

When an industry is a natural monopoly,

In order for a firm to maximize profits through price discrimination, the firm must have some market power and be able to prevent arbitrage.

Price discrimination

There has been much discussion of deregulating electricity and natural gas delivery companies in the United States. Discuss the likely effect of deregulation on prices in these two industries.

Which of the following statements is not correct?

Which of the following is not an example of a barrier to entry?

The law passed by Congress in 1890 to reduce the market power of the dominating trusts at that time was

For a monopoly, the socially efficient level of output occurs where

Scenario 15-1 A monopoly firm maximizes its profit by producing Q = 500 units of output. At that level of output, its marginal revenue is $40, its average revenue is $80, and its average total cost is $44. -Refer to Scenario 15-1. At Q = 500, the firm's total revenue is

Figure 15-12 ​ ​ -Refer to Figure 15-12. If a regulator requires this firm to charge a socially optimal price, which letter represents the amount of output it will produce?

​As long as as a monopolist is able to control the resale of its product, then it can successfully practice price discrimination.

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 15-4 -Refer to Figure 15-4. What price will the monopolist charge in order to maximize profit?

Figure 15-12 -Refer to Figure 15-12. If a regulator requires this firm to charge a socially optimal price, which letter represents the amount of output it will produce?

As long as as a monopolist is able to control the resale of its product, then it can successfully practice price discrimination.