Question 1

The social cost of a monopoly is equal to its

Accepted Answer

A) economic profit. 
B) fixed cost. 
C) deadweight loss. 
D) variable cost. 
A) economic profit. 
B) fixed cost. 
C) deadweight loss. 
D) variable cost.

Question 2

The deadweight loss for a monopolist equals one-half of its profits for any given level of output.

Accepted Answer

A) True 
 B)False

Question 3

Selling the same good at different prices to different customers is known as

Accepted Answer

A) arbitrage. 
B) price discrimination. 
C) collusion. 
D) consumer surplus. 
A) arbitrage. 
B) price discrimination. 
C) collusion. 
D) consumer surplus.

Question 4

If the government deems a newly-invented drug to be truly original, the pharmaceutical company is given the exclusive right to manufacture and sell the drug for 50 years.

Accepted Answer

A) True 
 B)False

Question 5

A monopolist's profit is equal to (Price - Marginal Cost) × Quantity.

Accepted Answer

A) True 
 B)False

Question 6

A perfectly price-discriminating monopolist is able to

Accepted Answer

A) maximize profit and produce a socially optimal level of output. 
B) maximize profit, but not produce a socially optimal level of output. 
C) produce a socially optimal level of output, but not maximize profit. 
D) exercise illegal preferences regarding the race and/or gender of its employees. 
A) maximize profit and produce a socially optimal level of output. 
B) maximize profit, but not produce a socially optimal level of output. 
C) produce a socially optimal level of output, but not maximize profit. 
D) exercise illegal preferences regarding the race and/or gender of its employees.

Question 7

Monopolists can achieve any level of profit they desire because they have unlimited market power.

Accepted Answer

A) True 
 B)False

Question 8

Price discrimination is prohibited by antitrust laws.

Accepted Answer

A) True 
 B)False

Question 9

A monopolist can sell 300 units of output for $50 per unit. Alternatively, it can sell 301 units of output for $49.60 per unit. The marginal revenue of the 301st unit of output is

Accepted Answer

A) -$99.60. 
B) -$70.40. 
C) -$0.40. 
D) $70.40. 
A) -$99.60. 
B) -$70.40. 
C) -$0.40. 
D) $70.40.

Question 10

Figure 15-9
​   ​
-Refer to Figure 15-9. If the monopolist uses perfect price discrimination, how much profit does the firm earn?

Accepted Answer

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

Question 11

Figure 15-10
​   ​
-Refer to Figure 15-10. What type of monopoly is shown in the figure?

Accepted Answer

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

Question 12

Figure 15-1  
-Refer to Figure 15-1. The shape of the average total cost curve in the figure suggests an opportunity for a profit-maximizing monopolist to take advantage of

Accepted Answer

A) economies of scale. 
B) diseconomies of scale. 
C) diminishing marginal product. 
D) increasing marginal cost. 
A) economies of scale. 
B) diseconomies of scale. 
C) diminishing marginal product. 
D) increasing marginal cost.

Question 13

In order to sell more of its product, a monopolist must

Accepted Answer

A) lobby the government for a subsidy. 
B) lower its price. 
C) advertise. 
D) enact barriers to entry in related markets. 
A) lobby the government for a subsidy. 
B) lower its price. 
C) advertise. 
D) enact barriers to entry in related markets.

Question 14

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. One of Vincent's friends tells him he would be more profitable if he charged a single price of $12. Assuming no changes in consumer demand, what would Vincent's profit be if he charged every customer $12?

Accepted Answer

The answer of Scenario 15-3
Vincent operates a scenic tour business...

Question 15

Figure 15-11
​   ​
-Refer to Figure 15-11. Which letter represents the profit-maximizing price chosen by the single price monopolist?

Accepted Answer

The answer of Figure 15-11
​   ​
-Refer to Figure...

Question 16

Figure 15-5
The following graph depicts the market situation for a monopoly pastry shop called Bearclaws.  
-Refer to Figure 15-5. Based upon the information shown, what are total costs for Bearclaws, given that it maximizes profits?

Accepted Answer

A) $700. 
B) $980. 
C) $490. 
D) $784. 
A) $700. 
B) $980. 
C) $490. 
D) $784.

Question 17

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 18

The distribution of water to residents of a town and an infrequently used bridge are examples of

Accepted Answer

The answer of The distribution of water to residents of...

Question 19

Table 15-3
Tommy's Tie Company, a monopolist, has the following cost and revenue information. Assume that Tommy's is able to engage in perfect price discrimination.
​
​
   ​
-Refer to Table 15-3. If the monopolist can engage in perfect price discrimination, what is the average revenue when 7 ties are sold?

Accepted Answer

A) $90 
B) $100 
C) $110 
D) $130 
A) $90 
B) $100 
C) $110 
D) $130

Question 20

Figure 15-11
​   ​
-Refer to Figure 15-11. Use the letters in the figure to identify the profit area if this firm were able to perfectly price discriminate.

Accepted Answer

The answer of Figure 15-11
​   ​
-Refer to Figure...

Exam 15: Monopoly

The social cost of a monopoly is equal to its

The deadweight loss for a monopolist equals one-half of its profits for any given level of output.

Selling the same good at different prices to different customers is known as

If the government deems a newly-invented drug to be truly original, the pharmaceutical company is given the exclusive right to manufacture and sell the drug for 50 years.

A monopolist's profit is equal to (Price - Marginal Cost) × Quantity.

A perfectly price-discriminating monopolist is able to

Monopolists can achieve any level of profit they desire because they have unlimited market power.

Price discrimination is prohibited by antitrust laws.

A monopolist can sell 300 units of output for $50 per unit. Alternatively, it can sell 301 units of output for $49.60 per unit. The marginal revenue of the 301st unit of output is

Figure 15-9 ​ ​ -Refer to Figure 15-9. If the monopolist uses perfect price discrimination, how much profit does the firm earn?

Figure 15-10 ​ ​ -Refer to Figure 15-10. What type of monopoly is shown in the figure?

Figure 15-1 -Refer to Figure 15-1. The shape of the average total cost curve in the figure suggests an opportunity for a profit-maximizing monopolist to take advantage of

In order to sell more of its product, a monopolist must

Figure 15-11 ​ ​ -Refer to Figure 15-11. Which letter represents the profit-maximizing price chosen by the single price monopolist?

Figure 15-5 The following graph depicts the market situation for a monopoly pastry shop called Bearclaws. -Refer to Figure 15-5. Based upon the information shown, what are total costs for Bearclaws, given that it maximizes profits?

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

The distribution of water to residents of a town and an infrequently used bridge are examples of

Figure 15-11 ​ ​ -Refer to Figure 15-11. Use the letters in the figure to identify the profit area if this firm were able to perfectly price discriminate.

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

A monopolist can sell 300 units of output for $50 per unit. Alternatively, it can sell 301 units of output for $49.60 per unit. The marginal revenue of the 301^st unit of output is

Figure 15-9 -Refer to Figure 15-9. If the monopolist uses perfect price discrimination, how much profit does the firm earn?

Figure 15-10 -Refer to Figure 15-10. What type of monopoly is shown in the figure?

Figure 15-11 -Refer to Figure 15-11. Which letter represents the profit-maximizing price chosen by the single price monopolist?

Figure 15-11 -Refer to Figure 15-11. Use the letters in the figure to identify the profit area if this firm were able to perfectly price discriminate.