Question 1

Figure 15-6
  
-Refer to Figure 15-6.A profit-maximizing monopolist would earn profits of

Accepted Answer

A)  $96. 
B)  $117. 
C)  $120. 
D)  $126. 
A)  $96. 
B)  $117. 
C)  $120. 
D)  $126.

Question 2

A monopoly firm can sell 150 units of output for $10 per unit.Alternatively,it can sell 151 units of output for $9.95 per unit.The marginal revenue of the 151ˢᵗ unit of output is

Accepted Answer

A)  $-2.45. 
B)  $-0.05. 
C)  $2.45. 
D)  $9.95. 
A)  $-2.45. 
B)  $-0.05. 
C)  $2.45. 
D)  $9.95.

Question 3

Table 15-4
A monopolist faces the following demand curve:
  
-Refer to Table 15-4.If the monopolist produces 5 units,what is its marginal revenue?

Accepted Answer

A)  $100 
B)  $37.5 
C)  $15 
D)  $2.50 
A)  $100 
B)  $37.5 
C)  $15 
D)  $2.50

Question 4

Which of the following is a characteristic of a monopoly?

Accepted Answer

A)  low fixed costs as a portion of total costs 
B)  free entry and exit 
C)  barriers to entry 
D)  declining marginal cost 
A)  low fixed costs as a portion of total costs 
B)  free entry and exit 
C)  barriers to entry 
D)  declining marginal cost

Question 5

One solution to the problems of marginal-cost pricing of a regulated natural monopolist is average cost pricing.In this model,the monopolist is allowed to price its production at average total cost.How does average-cost pricing differ from marginal-cost pricing? Does this solution maximize social well-being?

Accepted Answer

Under average-cost pricing,the monopolis

Question 6

The legislation passed by Congress in 1914 to strengthen the government's powers and authorize private lawsuits was the

Accepted Answer

A)  Morgan Act. 
B)  Sherman Act. 
C)  Clayton Act. 
D)  14th Amendment. 
A)  Morgan Act. 
B)  Sherman Act. 
C)  Clayton Act. 
D)  14th Amendment.

Question 7

A monopolist maximizes profits by

Accepted Answer

A)  producing an output level where marginal revenue equals marginal cost. 
B)  charging a price that is greater than marginal revenue. 
C)  earning a profit of (P - M
C)  x Q. 
D)  Both a and b are correct. 
A)  producing an output level where marginal revenue equals marginal cost. 
B)  charging a price that is greater than marginal revenue. 
C)  earning a profit of (P - M
C)  x Q. 
D)  Both a and b are correct.

Question 8

Table 15-7
Sally owns the only shoe store in town. She has the following cost and revenue information.
  
-Refer to Table 15-7.What is the average revenue when Sally sells 7 pairs of shoes?

Accepted Answer

A)  $40 
B)  $90 
C)  $100 
D)  $700 
A)  $40 
B)  $90 
C)  $100 
D)  $700

Question 9

When a monopolist increases the number of units it sells,there are two effects on revenue.They are the

Accepted Answer

A)  demand effect and the supply effect. 
B)  competition effect and the cost effect. 
C)  competitive effect and the monopoly effect. 
D)  output effect and the price effect. 
A)  demand effect and the supply effect. 
B)  competition effect and the cost effect. 
C)  competitive effect and the monopoly effect. 
D)  output effect and the price effect.

Question 10

A benefit to society of the patent and copyright laws is that those laws

Accepted Answer

A)  help to keep prices down. 
B)  help to prevent a single firm from acquiring ownership of a key resource. 
C)  encourage creative activity. 
D)  discourage the production of inefficient products. 
A)  help to keep prices down. 
B)  help to prevent a single firm from acquiring ownership of a key resource. 
C)  encourage creative activity. 
D)  discourage the production of inefficient products.

Question 11

A firm that is the sole seller of a product without close substitutes is

Accepted Answer

A)  perfectly competitive. 
B)  monopolistically competitive. 
C)  an oligopolist. 
D)  a monopolist. 
A)  perfectly competitive. 
B)  monopolistically competitive. 
C)  an oligopolist. 
D)  a monopolist.

Question 12

Some prescription drugs sell for more in the United States than they do in other countries.Which of the following statements about this issue is most likely to be true?

Accepted Answer

A)  Drug companies are engaging in price discrimination, and this practice certainly reduces global social welfare. 
B)  Global social welfare could be improved if the price in the United States were reduced to the price charged in other countries. 
C)  Global social welfare could be improved if the price in the other countries were increased to the price charged in the United States. 
D)  Drug companies are engaging in price discrimination, but this might improve global social welfare if it gives more people access to the drugs. 
A)  Drug companies are engaging in price discrimination, and this practice certainly reduces global social welfare. 
B)  Global social welfare could be improved if the price in the United States were reduced to the price charged in other countries. 
C)  Global social welfare could be improved if the price in the other countries were increased to the price charged in the United States. 
D)  Drug companies are engaging in price discrimination, but this might improve global social welfare if it gives more people access to the drugs.

Question 13

When a firm's average total cost curve continually declines,the firm is a

Accepted Answer

A)  government-created monopoly. 
B)  natural monopoly. 
C)  revenue monopoly. 
D)  All of the above are correct. 
A)  government-created monopoly. 
B)  natural monopoly. 
C)  revenue monopoly. 
D)  All of the above are correct.

Question 14

Suppose a monopolist chooses the price and production level that maximizes its profit.From that point,to increase society's economic welfare,output would need to be increased as long as

Accepted Answer

A)  average revenue exceeds marginal cost. 
B)  average revenue exceeds average total cost. 
C)  marginal revenue exceeds marginal cost. 
D)  marginal revenue exceeds average total cost. 
A)  average revenue exceeds marginal cost. 
B)  average revenue exceeds average total cost. 
C)  marginal revenue exceeds marginal cost. 
D)  marginal revenue exceeds average total cost.

Question 15

Explain how a profit-maximizing monopolist chooses its level of output and the price of its goods.

Accepted Answer

A profit-maximizing monopolist produces

Question 16

Which of the following is not an example of price discrimination by a firm?

Accepted Answer

A)  children's meals at a restaurant 
B)  a natural gas company charging customers a higher rate in the winter than in the summer 
C)  a senior citizens' discount 
D)  coupons in the Sunday newspaper 
A)  children's meals at a restaurant 
B)  a natural gas company charging customers a higher rate in the winter than in the summer 
C)  a senior citizens' discount 
D)  coupons in the Sunday newspaper

Question 17

Table 15-4
A monopolist faces the following demand curve:
  
-Refer to Table 15-4.In order to maximize profits,the monopolist should produce

Accepted Answer

A)  7.5 units. 
B)  10 units. 
C)  where marginal revenue equals marginal cost. 
D)  Both a) and c) are correct. 
A)  7.5 units. 
B)  10 units. 
C)  where marginal revenue equals marginal cost. 
D)  Both a) and c) are correct.

Question 18

Scenario 15-5
An airline knows that there are two types of travelers: business travelers and vacationers. For a particular flight, there are 100 business travelers who will pay $600 for a ticket while there are 50 vacationers who will pay $300 for a ticket. There are 150 seats available on the plane. Suppose the cost to the airline of providing the flight is $20,000, which includes the cost of the pilots, flight attendants, fuel, etc.
-Refer to Scenario 15-5.How much profit will the airline earn if it sets the price of each ticket at $300?

Accepted Answer

A)  -$15,000 
B)  -$5,000 
C)  $25,000 
D)  $45,000 
A)  -$15,000 
B)  -$5,000 
C)  $25,000 
D)  $45,000

Question 19

Monopoly pricing prevents some mutually beneficial trades from taking place.These unrealized,mutually beneficial trades are

Accepted Answer

A)  of little concern to society. 
B)  a deadweight loss to society. 
C)  a sunk cost to society. 
D)  also observed in competitive markets. 
A)  of little concern to society. 
B)  a deadweight loss to society. 
C)  a sunk cost to society. 
D)  also observed in competitive markets.

Question 20

Figure 15-4
  
-Refer to Figure 15-4.A profit-maximizing monopoly's total revenue is equal to

Accepted Answer

A)  P4 x Q3. 
B)  P5 x Q1. 
C)  P3 x Q4. 
D)  (P4-P2) x Q3. 
A)  P4 x Q3. 
B)  P5 x Q1. 
C)  P3 x Q4. 
D)  (P4-P2) x Q3.

Figure 15-6 -Refer to Figure 15-6.A profit-maximizing monopolist would earn profits of

A monopoly firm can sell 150 units of output for $10 per unit.Alternatively,it can sell 151 units of output for $9.95 per unit.The marginal revenue of the 151ˢᵗ unit of output is

Table 15-4 A monopolist faces the following demand curve: -Refer to Table 15-4.If the monopolist produces 5 units,what is its marginal revenue?

Which of the following is a characteristic of a monopoly?

The legislation passed by Congress in 1914 to strengthen the government's powers and authorize private lawsuits was the

A monopolist maximizes profits by

Table 15-7 Sally owns the only shoe store in town. She has the following cost and revenue information. -Refer to Table 15-7.What is the average revenue when Sally sells 7 pairs of shoes?

When a monopolist increases the number of units it sells,there are two effects on revenue.They are the

A benefit to society of the patent and copyright laws is that those laws

A firm that is the sole seller of a product without close substitutes is

Some prescription drugs sell for more in the United States than they do in other countries.Which of the following statements about this issue is most likely to be true?

When a firm's average total cost curve continually declines,the firm is a

Suppose a monopolist chooses the price and production level that maximizes its profit.From that point,to increase society's economic welfare,output would need to be increased as long as

Explain how a profit-maximizing monopolist chooses its level of output and the price of its goods.

Which of the following is not an example of price discrimination by a firm?

Table 15-4 A monopolist faces the following demand curve: -Refer to Table 15-4.In order to maximize profits,the monopolist should produce

Monopoly pricing prevents some mutually beneficial trades from taking place.These unrealized,mutually beneficial trades are

Figure 15-4 -Refer to Figure 15-4.A profit-maximizing monopoly's total revenue is equal to

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.

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.

Oligopoly.

The Market For the Factors of Production.

Earnings and Discrimination.

Income Inequality and Poverty.

The Theory of Consumer Choice.

Frontiers in Microeconomics.

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Exam 15: Monopoly.

Figure 15-6 -Refer to Figure 15-6.A profit-maximizing monopolist would earn profits of

A monopoly firm can sell 150 units of output for $10 per unit.Alternatively,it can sell 151 units of output for $9.95 per unit.The marginal revenue of the 151ˢᵗ unit of output is

Table 15-4 A monopolist faces the following demand curve: -Refer to Table 15-4.If the monopolist produces 5 units,what is its marginal revenue?

Which of the following is a characteristic of a monopoly?

The legislation passed by Congress in 1914 to strengthen the government's powers and authorize private lawsuits was the

A monopolist maximizes profits by

Table 15-7 Sally owns the only shoe store in town. She has the following cost and revenue information. -Refer to Table 15-7.What is the average revenue when Sally sells 7 pairs of shoes?

When a monopolist increases the number of units it sells,there are two effects on revenue.They are the

A benefit to society of the patent and copyright laws is that those laws

A firm that is the sole seller of a product without close substitutes is

Some prescription drugs sell for more in the United States than they do in other countries.Which of the following statements about this issue is most likely to be true?

When a firm's average total cost curve continually declines,the firm is a

Suppose a monopolist chooses the price and production level that maximizes its profit.From that point,to increase society's economic welfare,output would need to be increased as long as

Explain how a profit-maximizing monopolist chooses its level of output and the price of its goods.

Which of the following is not an example of price discrimination by a firm?

Table 15-4 A monopolist faces the following demand curve: -Refer to Table 15-4.In order to maximize profits,the monopolist should produce

Monopoly pricing prevents some mutually beneficial trades from taking place.These unrealized,mutually beneficial trades are

Figure 15-4 -Refer to Figure 15-4.A profit-maximizing monopoly's total revenue is equal to

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.

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.

Oligopoly.

The Market For the Factors of Production.

Earnings and Discrimination.

Income Inequality and Poverty.

The Theory of Consumer Choice.

Frontiers in Microeconomics.

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