Question 1

Figure 15-7  
-Refer to Figure 15-7. To maximize its profit, a monopolist 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 2

Which of the following is not one of the ways that antitrust laws promote competition?

Accepted Answer

A) Antitrust laws allow the government to prevent mergers. 
B) Antitrust laws allow the government to break up big companies into smaller ones. 
C) Antitrust laws prevent companies from coordinating their activities in ways that make markets less competitive. 
D) Antitrust laws allow the government to shut down a firm if the government believes the firm has monopoly power. 
A) Antitrust laws allow the government to prevent mergers. 
B) Antitrust laws allow the government to break up big companies into smaller ones. 
C) Antitrust laws prevent companies from coordinating their activities in ways that make markets less competitive. 
D) Antitrust laws allow the government to shut down a firm if the government believes the firm has monopoly power.

Question 3

What are the three main sources of barriers to entry for monopolies?

Accepted Answer

monopoly resources
g

Question 4

A common solution to monopoly in European countries is public ownership.

Accepted Answer

A) True 
 B)False

Question 5

A firm cannot price discriminate if

Accepted Answer

A) it has declining marginal revenue. 
B) it operates in a competitive market. 
C) buyers only reveal the price they are willing to pay for the product. 
D) it has a constant marginal cost. 
A) it has declining marginal revenue. 
B) it operates in a competitive market. 
C) buyers only reveal the price they are willing to pay for the product. 
D) it has a constant marginal cost.

Question 6

A monopolist's supply curve is horizontal.

Accepted Answer

A) True 
 B)False

Question 7

When a firm operates under conditions of monopoly, its price is

Accepted Answer

A) not constrained. 
B) constrained by marginal cost. 
C) constrained by demand. 
D) constrained only by its social agenda. 
A) not constrained. 
B) constrained by marginal cost. 
C) constrained by demand. 
D) constrained only by its social agenda.

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

Figure 15-10
​   ​
-Refer to Figure 15-10. If a regulator requires the firm to charge an average cost price, what is the amount of profit or loss earned by the firm?

Accepted Answer

The answer of Figure 15-10
​   ​
-Refer to Figure...

Question 10

The profit-maximization problem for a monopolist differs from that of a competitive firm in which of the following ways?

Accepted Answer

A) A competitive firm maximizes profit at the point where marginal revenue equals marginal cost; a monopolist maximizes profit at the point where marginal revenue exceeds marginal cost. 
B) A competitive firm maximizes profit at the point where average revenue equals marginal cost; a monopolist maximizes profit at the point where average revenue exceeds marginal cost. 
C) For a competitive firm, marginal revenue at the profit-maximizing level of output is equal to marginal revenue at all other levels of output; for a monopolist, marginal revenue at the profit-maximizing level of output is smaller than it is for larger levels of output. 
D) For a profit-maximizing competitive firm, thinking at the margin is much more important than it is for a profit-maximizing monopolist. 
A) A competitive firm maximizes profit at the point where marginal revenue equals marginal cost; a monopolist maximizes profit at the point where marginal revenue exceeds marginal cost. 
B) A competitive firm maximizes profit at the point where average revenue equals marginal cost; a monopolist maximizes profit at the point where average revenue exceeds marginal cost. 
C) For a competitive firm, marginal revenue at the profit-maximizing level of output is equal to marginal revenue at all other levels of output; for a monopolist, marginal revenue at the profit-maximizing level of output is smaller than it is for larger levels of output. 
D) For a profit-maximizing competitive firm, thinking at the margin is much more important than it is for a profit-maximizing monopolist.

Question 11

​The best option to control the behavior of a natural monopoly is to use public ownership of the monopoly.

Accepted Answer

A) True 
 B)False

Question 12

If the ABC company owns the exclusive rights to mine land in Afghanistan for Lapis Lazuli, a rare stone used in jewelry which is found only in Afghanistan, the company benefits from a barrier to entry.

Accepted Answer

A) True 
 B)False

Question 13

Figure 15-9
​   ​
-Refer to Figure 15-9. How much consumer surplus results if this single-price monopolist profit-maximizes?

Accepted Answer

The answer of Figure 15-9
​   ​
-Refer to Figure...

Question 14

Figure 15-12
​   ​
-Refer to Figure 15-12. 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 15-12
​   ​
-Refer to Figure...

Question 15

A movie theater can increase its profits through price discrimination by charging a higher price to adults and a lower price to children if it

Accepted Answer

A) only shows G-rated movies. 
B) has no monopoly pricing power. 
C) cannot easily distinguish between the two groups of customers. 
D) can prevent children from buying the lower-priced tickets and selling them to adults. 
A) only shows G-rated movies. 
B) has no monopoly pricing power. 
C) cannot easily distinguish between the two groups of customers. 
D) can prevent children from buying the lower-priced tickets and selling them to adults.

Question 16

The De Beers Diamond company is not worried about differentiating its product from all other gemstones.

Accepted Answer

A) True 
 B)False

Question 17

A key for a monopoly that wants to practice price discrimination is to be able to control the resale of its product.
​

Accepted Answer

A) True 
 B)False

Question 18

Scenario 15-3
Vincent operates a scenic tour business in Boston. He has one bus which 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:
 $$\begin{array} { | l | l | l | } 
\hline \text { Passen ger Type } & \text { Willingness to Pay } & \text { Demand per day } \
\hline \text { Adults } & \$ 18 & 70 \
\hline \text { Children } & \$ 10 & 25 \
\hline \text { Senior Citizens } & \$ 12 & 55 \
\hline
\end{array}$$ 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 15-3. Vincent uses a pricing practice called

Accepted Answer

price disc

Question 19

A monopolist earns higher profits by charging one price than by practicing price discrimination.

Accepted Answer

A) True 
 B)False

Question 20

A monopolist maximizes profit by producing an output level where marginal cost equals price.

Accepted Answer

A) True 
 B)False

Exam 15: Monopoly

Figure 15-7 -Refer to Figure 15-7. To maximize its profit, a monopolist would choose which of the following outcomes?

Which of the following is not one of the ways that antitrust laws promote competition?

What are the three main sources of barriers to entry for monopolies?

A common solution to monopoly in European countries is public ownership.

A firm cannot price discriminate if

A monopolist's supply curve is horizontal.

When a firm operates under conditions of monopoly, its price is

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

Figure 15-10 ​ ​ -Refer to Figure 15-10. If a regulator requires the firm to charge an average cost price, what is the amount of profit or loss earned by the firm?

The profit-maximization problem for a monopolist differs from that of a competitive firm in which of the following ways?

​The best option to control the behavior of a natural monopoly is to use public ownership of the monopoly.

If the ABC company owns the exclusive rights to mine land in Afghanistan for Lapis Lazuli, a rare stone used in jewelry which is found only in Afghanistan, the company benefits from a barrier to entry.

Figure 15-9 ​ ​ -Refer to Figure 15-9. How much consumer surplus results if this single-price monopolist profit-maximizes?

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

A movie theater can increase its profits through price discrimination by charging a higher price to adults and a lower price to children if it

The De Beers Diamond company is not worried about differentiating its product from all other gemstones.

A key for a monopoly that wants to practice price discrimination is to be able to control the resale of its product. ​

A monopolist earns higher profits by charging one price than by practicing price discrimination.

A monopolist maximizes profit by producing an output level where marginal cost equals price.

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 15-10 -Refer to Figure 15-10. If a regulator requires the firm to charge an average cost price, what is the amount of profit or loss earned by the firm?

The best option to control the behavior of a natural monopoly is to use public ownership of the monopoly.

Figure 15-9 -Refer to Figure 15-9. How much consumer surplus results if this single-price monopolist profit-maximizes?

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

A key for a monopoly that wants to practice price discrimination is to be able to control the resale of its product.