Question 1

One problem with government operation of monopolies is that

Accepted Answer

A)  a benevolent government is likely to be interested in generating profits for political gain. 
B)  monopolies typically have rising average costs. 
C)  the government typically has little incentive to reduce costs. 
D)  a government-regulated outcome will increase the profitability of the monopoly. 
A)  a benevolent government is likely to be interested in generating profits for political gain. 
B)  monopolies typically have rising average costs. 
C)  the government typically has little incentive to reduce costs. 
D)  a government-regulated outcome will increase the profitability of the monopoly.

Question 2

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

Accepted Answer

A)  not a concern if a market is perfectly competitive. 
B)  a deadweight loss to society. 
C)  a function of the reduction in the quantity produced by a monopolist in comparison to a competitive market. 
D)  All of the above are correct. 
A)  not a concern if a market is perfectly competitive. 
B)  a deadweight loss to society. 
C)  a function of the reduction in the quantity produced by a monopolist in comparison to a competitive market. 
D)  All of the above are correct.

Question 3

Antitrust laws may

Accepted Answer

A)  enhance the ability of firms to capture profits from a concentration of market power. 
B)  enhance the ability of firms to reduce economic losses. 
C)  restrict the ability of firms to operate at the socially efficient level of production. 
D)  restrict the ability of firms to merge. 
A)  enhance the ability of firms to capture profits from a concentration of market power. 
B)  enhance the ability of firms to reduce economic losses. 
C)  restrict the ability of firms to operate at the socially efficient level of production. 
D)  restrict the ability of firms to merge.

Question 4

Figure 15-5
  
-Refer to Figure 15-5.What area measures the monopolist's profit?

Accepted Answer

A)  (B-F)*K 
B)  (A-H)*J 
C)  (B-G)*K 
D)  0.5[(B-F)*(L-K)] 
A)  (B-F)*K 
B)  (A-H)*J 
C)  (B-G)*K 
D)  0.5[(B-F)*(L-K)]

Question 5

For a profit-maximizing monopolist,

Accepted Answer

A) P > MR = MC. B) P = MR = MC. C) P > MR > MC. D) MR < MC < P. A) P > MR = MC. B) P = MR = MC. C) P > MR > MC. D) MR < MC < P.

Question 6

To maximize total surplus with a monopoly firm,a benevolent social planner would choose the level of output where

Accepted Answer

A)  MR = MC. 
B)  MR intersects the demand curve. 
C)  MC intersects the demand curve. 
D)  MR exceeds MC by the greatest amount. 
A)  MR = MC. 
B)  MR intersects the demand curve. 
C)  MC intersects the demand curve. 
D)  MR exceeds MC by the greatest amount.

Question 7

Figure 15-15
  
-Refer to Figure 15-15.If the monopoly firm is not allowed to price discriminate,then the deadweight loss amounts to

Accepted Answer

A)  $50. 
B)  $100. 
C)  $500. 
D)  $1,000. 
A)  $50. 
B)  $100. 
C)  $500. 
D)  $1,000.

Question 8

A profit-maximizing monopolist charges a price of $12.The intersection of the marginal revenue and marginal cost curves occurs where output is 10 units and marginal cost is $6.Average total cost for 10 units of output is $5.What is the monopolist's profit?

Accepted Answer

A)  $60 
B)  $70 
C)  $100 
D)  $120 
A)  $60 
B)  $70 
C)  $100 
D)  $120

Question 9

Average revenue for a monopoly is the total revenue divided by the quantity produced.

Accepted Answer

A) True 
 B)False

Question 10

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 are Sally's fixed costs?

Accepted Answer

A)  $0 
B)  $100 
C)  $600 
D)  $745 
A)  $0 
B)  $100 
C)  $600 
D)  $745

Question 11

Scenario 15-1
Consider a transportation corporation named C.R. Evans that has just completed the development of a new subway system in a medium-sized town in the Northwest. Currently, there are plenty of seats on the subway, and it is never crowded. Its capacity far exceeds the needs of the city. After just a few years of operation, the shareholders of C.R. Evans experienced incredible rates of return on their investment due to the profitability of the corporation.
-Refer to Scenario 15-1.Which of the following statements is most likely to be true?
(i)New entrants to the market know they will have a smaller market share than C.R.Evans currently has.
(ii)C.R.Evans is most likely experiencing decreasing average total cost.
(iii)C.R.Evans is a natural monopoly.

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 12

Figure 15-1
  
-Refer to Figure 15-1.Considering the relationship between average total cost and marginal cost,the marginal cost curve for this firm

Accepted Answer

A)  must lie entirely above the average total cost curve. 
B)  must lie entirely below the average total cost curve. 
C)  must be upward sloping. 
D)  does not exist. 
A)  must lie entirely above the average total cost curve. 
B)  must lie entirely below the average total cost curve. 
C)  must be upward sloping. 
D)  does not exist.

Question 13

How does a competitive market compare to a monopoly that engages in perfect price discrimination?

Accepted Answer

A)  In both cases, total social welfare is the same. 
B)  Total social welfare is higher in the competitive market than with the perfectly price discriminating monopoly. 
C)  In both cases, some potentially mutually beneficial trades do not occur. 
D)  Consumer surplus is the same in both cases. 
A)  In both cases, total social welfare is the same. 
B)  Total social welfare is higher in the competitive market than with the perfectly price discriminating monopoly. 
C)  In both cases, some potentially mutually beneficial trades do not occur. 
D)  Consumer surplus is the same in both cases.

Question 14

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

Accepted Answer

A)  sell to the government. 
B)  sell in international markets. 
C)  lower its price. 
D)  use its market power to force up the price of complementary products. 
A)  sell to the government. 
B)  sell in international markets. 
C)  lower its price. 
D)  use its market power to force up the price of complementary products.

Question 15

A government-created monopoly arises when

Accepted Answer

A)  government spending in a certain industry gives rise to monopoly power. 
B)  the government exercises its market control by encouraging competition among sellers. 
C)  the government gives a firm the exclusive right to sell some good or service. 
D)  Both a and c are correct. 
A)  government spending in a certain industry gives rise to monopoly power. 
B)  the government exercises its market control by encouraging competition among sellers. 
C)  the government gives a firm the exclusive right to sell some good or service. 
D)  Both a and c are correct.

Question 16

Financial aid to college students,quantity discounts,and senior citizen discounts are all examples of

Accepted Answer

A)  consumer surplus. 
B)  deadweight loss. 
C)  price discrimination. 
D)  nonprofit pricing strategies. 
A)  consumer surplus. 
B)  deadweight loss. 
C)  price discrimination. 
D)  nonprofit pricing strategies.

Question 17

Figure 15-3
  
-Refer to Figure 15-3.Profit will be maximized by charging a price equal to

Accepted Answer

A)  P1. 
B)  P2. 
C)  P3. 
D)  P4. 
A)  P1. 
B)  P2. 
C)  P3. 
D)  P4.

Question 18

Figure 15-3
  
-Refer to Figure 15-3.The demand curve for a monopoly firm is depicted by curve

Accepted Answer

A)  A. 
B)  B. 
C)  C. 
D)  D. 
A)  A. 
B)  B. 
C)  C. 
D)  D.

Question 19

Which of the following is an example of a barrier to entry?
(i)A key resource is owned by a single firm.
(ii)The costs of production make a single producer more efficient than a large number of producers.
(iii)The government has given the existing monopolist the exclusive right to produce the good.

Accepted Answer

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

Question 20

With no price discrimination,the monopolist sells every unit at the same price.Therefore

Accepted Answer

A)  marginal revenue is equal to price. 
B)  marginal revenue is equal to average revenue. 
C)  price is greater than marginal revenue. 
D)  Both a and b are correct. 
A)  marginal revenue is equal to price. 
B)  marginal revenue is equal to average revenue. 
C)  price is greater than marginal revenue. 
D)  Both a and b are correct.

Exam 15: Monopoly.

One problem with government operation of monopolies is that

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

Antitrust laws may

Figure 15-5 -Refer to Figure 15-5.What area measures the monopolist's profit?

For a profit-maximizing monopolist,

To maximize total surplus with a monopoly firm,a benevolent social planner would choose the level of output where

Figure 15-15 -Refer to Figure 15-15.If the monopoly firm is not allowed to price discriminate,then the deadweight loss amounts to

A profit-maximizing monopolist charges a price of $12.The intersection of the marginal revenue and marginal cost curves occurs where output is 10 units and marginal cost is $6.Average total cost for 10 units of output is $5.What is the monopolist's profit?

Average revenue for a monopoly is the total revenue divided by the quantity produced.

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 are Sally's fixed costs?

Figure 15-1 -Refer to Figure 15-1.Considering the relationship between average total cost and marginal cost,the marginal cost curve for this firm

How does a competitive market compare to a monopoly that engages in perfect price discrimination?

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

A government-created monopoly arises when

Financial aid to college students,quantity discounts,and senior citizen discounts are all examples of

Figure 15-3 -Refer to Figure 15-3.Profit will be maximized by charging a price equal to

Figure 15-3 -Refer to Figure 15-3.The demand curve for a monopoly firm is depicted by curve

Which of the following is an example of a barrier to entry? (i)A key resource is owned by a single firm. (ii)The costs of production make a single producer more efficient than a large number of producers. (iii)The government has given the existing monopolist the exclusive right to produce the good.

With no price discrimination,the monopolist sells every unit at the same price.Therefore

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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