Question 1

Figure 15-3
  
-Refer to Figure 15-3.A profit-maximizing monopoly's total revenue is equal to

Accepted Answer

A)  P4 x Q2. 
B)  P3 x Q4. 
C)  (P4-P2) x Q2. 
D)  (P4-P3) x Q2. 
A)  P4 x Q2. 
B)  P3 x Q4. 
C)  (P4-P2) x Q2. 
D)  (P4-P3) x Q2.

Question 2

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 3

In reality,perfect price discrimination is

Accepted Answer

A)  used by about 75 percent of all monopolies. 
B)  used by about 50 percent of all monopolies. 
C)  seldom used by monopolies because it leads to lower profits. 
D)  rarely possible. 
A)  used by about 75 percent of all monopolies. 
B)  used by about 50 percent of all monopolies. 
C)  seldom used by monopolies because it leads to lower profits. 
D)  rarely possible.

Question 4

Why might economists prefer private ownership of monopolies over public ownership of monopolies?

Accepted Answer

The private monopolist is governed by th

Question 5

A monopolist produces an output level where marginal revenue equals marginal cost and charges a price where marginal cost equals average total cost.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following statements is true about patents and copyrights?
(i)They have benefits and costs.
(ii)They lead to higher prices.
(iii)They enhance the ability of monopolists to earn above-average profits.

Accepted Answer

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

Question 7

Which of the following is not an example of price discrimination?

Accepted Answer

A)  A movie theater charges a lower price for a child's ticket than for an adult's ticket. 
B)  A university rebates part of the cost of tuition in the form of financial aid for needy students. 
C)  A local pizza chain offers a "buy three get one free" deal. 
D)  An ice cream parlor charges a higher price for ice cream than for sherbet. 
A)  A movie theater charges a lower price for a child's ticket than for an adult's ticket. 
B)  A university rebates part of the cost of tuition in the form of financial aid for needy students. 
C)  A local pizza chain offers a "buy three get one free" deal. 
D)  An ice cream parlor charges a higher price for ice cream than for sherbet.

Question 8

Which of the following is an example of price discrimination?

Accepted Answer

A)  Nabisco provides cents-off coupons for its products. 
B)  Amtrak offers a lower price for weekend travel compared to weekday rates on the same routes. 
C)  Hotel rates for AAA members are lower than for nonmembers. 
D)  All of the above are correct. 
A)  Nabisco provides cents-off coupons for its products. 
B)  Amtrak offers a lower price for weekend travel compared to weekday rates on the same routes. 
C)  Hotel rates for AAA members are lower than for nonmembers. 
D)  All of the above are correct.

Question 9

What are the four ways that government policymakers can respond to the problem of monopoly?

Accepted Answer

First,the government can try to make mon

Question 10

Table 15-5
A monopolist faces the following demand curve:
  
-Refer to Table 15-5.The monopolist has total fixed costs of $60 and has a constant marginal cost of $15.What is the profit-maximizing level of production?

Accepted Answer

A)  2 units 
B)  3 units 
C)  4 units 
D)  5 units 
A)  2 units 
B)  3 units 
C)  4 units 
D)  5 units

Question 11

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

Accepted Answer

A) True 
 B)False

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

For a monopolist,when the output effect is greater than the price effect,marginal revenue is

Accepted Answer

A)  positive. 
B)  negative. 
C)  zero. 
D)  maximized. 
A)  positive. 
B)  negative. 
C)  zero. 
D)  maximized.

Question 14

The George Stigler quote,"...the degree of 'market failure' for the American economy is much smaller than the 'political failure' arising from the imperfections of economic policies ..." illustrates the advantage of which type of public policy toward monopolies?

Accepted Answer

A)  antitrust laws 
B)  regulation 
C)  public ownership 
D)  "do nothing" 
A)  antitrust laws 
B)  regulation 
C)  public ownership 
D)  "do nothing"

Question 15

Microsoft faces very little competition from other firms for its Windows software.Why isn't the price of the software $1,000 per copy?

Accepted Answer

A)  because the government would not allow such a high price 
B)  because stockholders would not allow such a high price 
C)  because the company would sell so few copies that they would earn higher profits by selling at a lower price 
D)  All of the above are correct. 
A)  because the government would not allow such a high price 
B)  because stockholders would not allow such a high price 
C)  because the company would sell so few copies that they would earn higher profits by selling at a lower price 
D)  All of the above are correct.

Question 16

For a monopolist,marginal revenue is

Accepted Answer

A)  positive when the demand effect is greater than the supply effect. 
B)  positive when the monopoly effect is greater than the competitive effect. 
C)  negative when the price effect is greater than the output effect. 
D)  negative when the output effect is greater than the price effect. 
A)  positive when the demand effect is greater than the supply effect. 
B)  positive when the monopoly effect is greater than the competitive effect. 
C)  negative when the price effect is greater than the output effect. 
D)  negative when the output effect is greater than the price effect.

Question 17

Figure 15-15
  
-Refer to Figure 15-15.If there are no fixed costs of production,monopoly profit with perfect price discrimination equals

Accepted Answer

A)  $500. 
B)  $1,000. 
C)  $2,000. 
D)  $4,000. 
A)  $500. 
B)  $1,000. 
C)  $2,000. 
D)  $4,000.

Question 18

Natural monopolies differ from other forms of monopoly because they are

Accepted Answer

A)  not subject to barriers to entry. 
B)  not regulated by government. 
C)  unable to sustain long-run profits. 
D)  are generally not worried about competition eroding their monopoly position in the market. 
A)  not subject to barriers to entry. 
B)  not regulated by government. 
C)  unable to sustain long-run profits. 
D)  are generally not worried about competition eroding their monopoly position in the market.

Question 19

Allowing an inventor to have the exclusive rights to market her new invention will lead to
(i)a product that is priced higher than it would be without the exclusive rights.
(ii)desirable behavior in the sense that inventors are encouraged to invent.
(iii)higher profits for the inventor.

Accepted Answer

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

Question 20

The practice of selling the same goods to different customers at different prices,but with the same marginal cost,is known as

Accepted Answer

A)  price segregation. 
B)  price discrimination. 
C)  arbitrage. 
D)  monopoly pricing. 
A)  price segregation. 
B)  price discrimination. 
C)  arbitrage. 
D)  monopoly pricing.

Exam 15: Monopoly.

Figure 15-3 -Refer to Figure 15-3.A profit-maximizing monopoly's total revenue is equal to

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

In reality,perfect price discrimination is

Why might economists prefer private ownership of monopolies over public ownership of monopolies?

A monopolist produces an output level where marginal revenue equals marginal cost and charges a price where marginal cost equals average total cost.

Which of the following statements is true about patents and copyrights? (i)They have benefits and costs. (ii)They lead to higher prices. (iii)They enhance the ability of monopolists to earn above-average profits.

Which of the following is not an example of price discrimination?

Which of the following is an example of price discrimination?

What are the four ways that government policymakers can respond to the problem of monopoly?

Table 15-5 A monopolist faces the following demand curve: -Refer to Table 15-5.The monopolist has total fixed costs of $60 and has a constant marginal cost of $15.What is the profit-maximizing level of production?

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

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

For a monopolist,when the output effect is greater than the price effect,marginal revenue is

The George Stigler quote,"...the degree of 'market failure' for the American economy is much smaller than the 'political failure' arising from the imperfections of economic policies ..." illustrates the advantage of which type of public policy toward monopolies?

Microsoft faces very little competition from other firms for its Windows software.Why isn't the price of the software $1,000 per copy?

For a monopolist,marginal revenue is

Figure 15-15 -Refer to Figure 15-15.If there are no fixed costs of production,monopoly profit with perfect price discrimination equals

Natural monopolies differ from other forms of monopoly because they are

Allowing an inventor to have the exclusive rights to market her new invention will lead to (i)a product that is priced higher than it would be without the exclusive rights. (ii)desirable behavior in the sense that inventors are encouraged to invent. (iii)higher profits for the inventor.

The practice of selling the same goods to different customers at different prices,but with the same marginal cost,is known as

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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