Question 1

Which of the following is not a characteristic of a monopoly?

Accepted Answer

A)  barriers to entry 
B)  one seller 
C)  one buyer 
D)  a product without close substitutes 
A)  barriers to entry 
B)  one seller 
C)  one buyer 
D)  a product without close substitutes

Question 2

The fundamental source of monopoly power is

Accepted Answer

A)  barriers to entry. 
B)  profit. 
C)  decreasing average total cost. 
D)  a product without close substitutes. 
A)  barriers to entry. 
B)  profit. 
C)  decreasing average total cost. 
D)  a product without close substitutes.

Question 3

Figure 15-12
  
-Refer to Figure 15-12.A profit-maximizing monopolist would create a deadweight loss to society valued at

Accepted Answer

A)  $12. 
B)  $24. 
C)  $42. 
D)  $84. 
A)  $12. 
B)  $24. 
C)  $42. 
D)  $84.

Question 4

Which of the following is a characteristic of a natural monopoly?

Accepted Answer

A)  Average cost exceeds marginal cost over large regions of output. 
B)  Increasing the number of firms increases each firm's average total cost. 
C)  One firm can supply output at a lower cost than two firms. 
D)  All of the above are correct. 
A)  Average cost exceeds marginal cost over large regions of output. 
B)  Increasing the number of firms increases each firm's average total cost. 
C)  One firm can supply output at a lower cost than two firms. 
D)  All of the above are correct.

Question 5

Figure 15-9
  
-Refer to Figure 15-9.What area measures the deadweight loss?

Accepted Answer

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

Question 6

When a local grocery store offers discount coupons in the Sunday paper it is most likely trying to

Accepted Answer

A)  reduce prices for all customers. 
B)  encourage literacy. 
C)  encourage arbitrage. 
D)  price discriminate. 
A)  reduce prices for all customers. 
B)  encourage literacy. 
C)  encourage arbitrage. 
D)  price discriminate.

Question 7

Figure 15-3
  
-Refer to Figure 15-3.The marginal revenue 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 8

A natural monopoly has economies of scale for most if not all of its range of output.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following statements is not correct?

Accepted Answer

A)  Part of the deadweight loss associated with monopoly is measured by the monopolist's economic profit. 
B)  Marginal cost is always less than average total cost in a natural monopoly. 
C)  Discount coupons available free to the public are a type of price discrimination. 
D)  Anti-trust laws make it harder for firms to create synergies. 
A)  Part of the deadweight loss associated with monopoly is measured by the monopolist's economic profit. 
B)  Marginal cost is always less than average total cost in a natural monopoly. 
C)  Discount coupons available free to the public are a type of price discrimination. 
D)  Anti-trust laws make it harder for firms to create synergies.

Question 10

Figure 15-3
  
-Refer to Figure 15-3.The average total cost 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 11

Table 15-17
  
-Refer to Table 15-17.If a monopolist faces a constant marginal cost of $4,how much output should the firm produce?

Accepted Answer

A)  3 units 
B)  4 units 
C)  5 units 
D)  6 units 
A)  3 units 
B)  4 units 
C)  5 units 
D)  6 units

Question 12

Scenario 15-3
A monopoly firm maximizes its profit by producing Q = 500 units of output. At that level of output, its marginal revenue is $30, its average revenue is $60, and its average total cost is $34.
-Refer to Scenario 15-3.At Q = 500,the firm's marginal cost is

Accepted Answer

A)  less than $30. 
B)  $30. 
C)  $34. 
D)  greater than $34. 
A)  less than $30. 
B)  $30. 
C)  $34. 
D)  greater than $34.

Question 13

Generic drugs enter the pharmaceutical drug market once

Accepted Answer

A)  the ingredients to the name brand drug have been discovered. 
B)  10 years have passed. 
C)  they are patented. 
D)  the patent on the name brand drug expires. 
A)  the ingredients to the name brand drug have been discovered. 
B)  10 years have passed. 
C)  they are patented. 
D)  the patent on the name brand drug expires.

Question 14

Table 15-15
A monopolist faces the following demand curve:
  
-Refer to Table 15-15.The monopolist has total fixed costs of $40 and a constant marginal cost of $5.At the profit-maximizing level of output,the monopolist's profit is

Accepted Answer

A)  $88. 
B)  $8. 
C)  $6. 
D)  We do not have enough information to determine profit. 
A)  $88. 
B)  $8. 
C)  $6. 
D)  We do not have enough information to determine profit.

Question 15

Name brand drugs are able to continue capitalizing on their market power even after generic drugs enter the market because
(i)almost all people fear the generic drug companies are devoting too few resources to research and development.
(ii)some people fear that generic drugs are inferior.
(iii)some people are loyal to the name brand.

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 16

Table 15-18
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 15-18.If the monopolist can engage in perfect price discrimination,what is the total revenue when 3 ties are sold?

Accepted Answer

A)  $140 
B)  $420 
C)  $450 
D)  $620 
A)  $140 
B)  $420 
C)  $450 
D)  $620

Question 17

By offering lower prices to customers who buy a large quantity,a monopoly is price discriminating.

Accepted Answer

A) True 
 B)False

Question 18

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 19

Table 15-1
  
-Refer to Table 15-1.If the monopolist wants to maximize its revenue,how many units of its product should it sell?

Accepted Answer

A)  4 
B)  5 
C)  6 
D)  8 
A)  4 
B)  5 
C)  6 
D)  8

Question 20

Because many good substitutes exist for a competitive firm's product,the demand curve that it faces is

Accepted Answer

A)  unit-elastic. 
B)  perfectly inelastic. 
C)  perfectly elastic. 
D)  inelastic only over a certain region. 
A)  unit-elastic. 
B)  perfectly inelastic. 
C)  perfectly elastic. 
D)  inelastic only over a certain region.

Exam 15: Monopoly.

Which of the following is not a characteristic of a monopoly?

The fundamental source of monopoly power is

Figure 15-12 -Refer to Figure 15-12.A profit-maximizing monopolist would create a deadweight loss to society valued at

Which of the following is a characteristic of a natural monopoly?

Figure 15-9 -Refer to Figure 15-9.What area measures the deadweight loss?

When a local grocery store offers discount coupons in the Sunday paper it is most likely trying to

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

A natural monopoly has economies of scale for most if not all of its range of output.

Which of the following statements is not correct?

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

Table 15-17 -Refer to Table 15-17.If a monopolist faces a constant marginal cost of $4,how much output should the firm produce?

Scenario 15-3 A monopoly firm maximizes its profit by producing Q = 500 units of output. At that level of output, its marginal revenue is $30, its average revenue is $60, and its average total cost is $34. -Refer to Scenario 15-3.At Q = 500,the firm's marginal cost is

Generic drugs enter the pharmaceutical drug market once

Table 15-15 A monopolist faces the following demand curve: -Refer to Table 15-15.The monopolist has total fixed costs of $40 and a constant marginal cost of $5.At the profit-maximizing level of output,the monopolist's profit is

Table 15-18 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 15-18.If the monopolist can engage in perfect price discrimination,what is the total revenue when 3 ties are sold?

By offering lower prices to customers who buy a large quantity,a monopoly is price discriminating.

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

Table 15-1 -Refer to Table 15-1.If the monopolist wants to maximize its revenue,how many units of its product should it sell?

Because many good substitutes exist for a competitive firm's product,the demand curve that it faces is

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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