Question 1

Using the above information, if the publisher cannot price-discriminate then she should charge a price of:

Accepted Answer

A) $2 
B) $5 
C) $10 
D) $20 
A) $2 
B) $5 
C) $10 
D) $20

Question 2

Which of the following scenarios best represents a monopoly situation?

Accepted Answer

A) Bill and Tom work separately from one another but both sell a very rare form of the same diamond; they are the only sellers of this type of diamond in town 
B) Bill owns the only grocery store in a small community that lies 200 miles from the nearest city 
C) Tom owns a fishing tackle shop in Miami, Florida, in which he sells all the top-of-the-line fishing equipment 
D) none of the above adequately represent a monopoly 
A) Bill and Tom work separately from one another but both sell a very rare form of the same diamond; they are the only sellers of this type of diamond in town 
B) Bill owns the only grocery store in a small community that lies 200 miles from the nearest city 
C) Tom owns a fishing tackle shop in Miami, Florida, in which he sells all the top-of-the-line fishing equipment 
D) none of the above adequately represent a monopoly

Question 3

A monopoly's profit can be calculated as:

Accepted Answer

A) (Price - Marginal Cost) * Quantity 
B) (Price - Average Total Cost) * Quantity 
C) (Quantity * Price) - Total Variable Costs 
D) (Marginal Revenue - Average Total Cost) * Quantity 
A) (Price - Marginal Cost) * Quantity 
B) (Price - Average Total Cost) * Quantity 
C) (Quantity * Price) - Total Variable Costs 
D) (Marginal Revenue - Average Total Cost) * Quantity

Question 4

Graph 15-3   This graph reflects the cost and revenue structure for a monopoly firm.Use the graph to answer the following question(s).
-Refer to Graph 15-3.At the profit-maximising level of output, average revenue is equal to:

Accepted Answer

A) P₃ 
B) P₂ 
C) P₁ 
D) P₀ 
A) P₃ 
B) P₂ 
C) P₁ 
D) P₀

Question 5

A monopoly generates inefficiency because:

Accepted Answer

A) the high prices cause some people to choose to go without the good 
B) the monopoly owner earns an abnormally large profit 
C) the monopoly pays its workers very low wages 
D) of all of the above 
A) the high prices cause some people to choose to go without the good 
B) the monopoly owner earns an abnormally large profit 
C) the monopoly pays its workers very low wages 
D) of all of the above

Question 6

An industry is a natural monopoly when which of the following is(are) true?
(i) a single firm will supply a good or service at a socially optimal quantity
(ii) a single firm can supply a fixed number of goods or services at a smaller cost than could two or more firms
(iii) a single firm can produce additional units at a smaller marginal cost

Accepted Answer

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

Question 7

If a monopolist sells 200 units at $10 per unit and realises an average total cost of $6 per unit, what is the monopolist's profit?

Accepted Answer

A) $800 
B) $1400 
C) $2000 
D) none of the above 
A) $800 
B) $1400 
C) $2000 
D) none of the above

Question 8

A monopolist is a price:

Accepted Answer

A) setter, and therefore has no indifference curve 
B) setter, and therefore has no variable-cost curve 
C) setter, and therefore has no supply curve 
D) setter, and therefore has no demand curve 
A) setter, and therefore has no indifference curve 
B) setter, and therefore has no variable-cost curve 
C) setter, and therefore has no supply curve 
D) setter, and therefore has no demand curve

Question 9

Graph 15-6   This graph depicts the demand, marginal-revenue and marginal-cost curves of a profit-maximising monopolist.Use the graph to answer the following question(s).
-Refer to Graph 15-6.If the monopolist engages in perfect price discrimination, then the prices it charges will be equal to:

Accepted Answer

A) a single price equal to b 
B) a single price equal to d 
C) a range of prices between b and d 
D) a range of prices between a and d 
A) a single price equal to b 
B) a single price equal to d 
C) a range of prices between b and d 
D) a range of prices between a and d

Question 10

The profit-maximising level of output for a monopoly firm is where:

Accepted Answer

A) marginal revenue equals average total cost 
B) marginal revenue equals marginal cost 
C) marginal cost equals average revenue 
D) average total cost equals demand 
A) marginal revenue equals average total cost 
B) marginal revenue equals marginal cost 
C) marginal cost equals average revenue 
D) average total cost equals demand

Question 11

Graph 15-3   This graph reflects the cost and revenue structure for a monopoly firm.Use the graph to answer the following question(s).
-Refer to Graph 15-3.Profit on a typical unit sold for a profit-maximising monopoly would equal:

Accepted Answer

A) P₃ - P₂ 
B) P₃ - P₀ 
C) P₂ - P₁ 
D) P₂ - P₀ 
A) P₃ - P₂ 
B) P₃ - P₀ 
C) P₂ - P₁ 
D) P₂ - P₀

Question 12

The main differences between a competitive firm and a monopoly are:
(i) competitive firms do not have to worry about the price effect lowering their total revenue
(ii) marginal revenue for a competitive firm equals price, while marginal revenue for a monopoly is less than the price it is able to charge
(iii) monopolies must lower their price in order to sell more of their product, while competitive firms do not

Accepted Answer

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

Exam 15: Monopoly

Using the above information, if the publisher cannot price-discriminate then she should charge a price of:

Which of the following scenarios best represents a monopoly situation?

A monopoly's profit can be calculated as:

Graph 15-3 This graph reflects the cost and revenue structure for a monopoly firm.Use the graph to answer the following question(s). -Refer to Graph 15-3.At the profit-maximising level of output, average revenue is equal to:

A monopoly generates inefficiency because:

If a monopolist sells 200 units at $10 per unit and realises an average total cost of $6 per unit, what is the monopolist's profit?

A monopolist is a price:

Graph 15-6 This graph depicts the demand, marginal-revenue and marginal-cost curves of a profit-maximising monopolist.Use the graph to answer the following question(s). -Refer to Graph 15-6.If the monopolist engages in perfect price discrimination, then the prices it charges will be equal to:

The profit-maximising level of output for a monopoly firm is where:

Graph 15-3 This graph reflects the cost and revenue structure for a monopoly firm.Use the graph to answer the following question(s). -Refer to Graph 15-3.Profit on a typical unit sold for a profit-maximising monopoly would equal:

Ten Lessons From 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

Application: 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

Business Strategy and Oligopoly

Competition Policy

The Markets for the Factors of Production

Earnings, Unions and Discrimination

Income Inequity and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment and the Financial System

The Natural Rate of Unemployment

The Monetary System

Inflation: Its Causes and Costs

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 Trade-Off Between Inflation and Unemployment

Global Financial Crisis of 2008 and Beyond

Five Debates Over Macroeconomic Policy

Filters