Question 1

Which of the following statements is not correct?

Accepted Answer

A)  The government may use antitrust laws to break up an existing company to improve competition. 
B)  The government may break up a natural monopoly to lower the price charged to customers. 
C)  Private ownership is typically preferred to public ownership. 
D)  Sometimes the best strategy is for the government to do nothing about monopoly inefficiency because the "fix" may be worse than the problem. 
A)  The government may use antitrust laws to break up an existing company to improve competition. 
B)  The government may break up a natural monopoly to lower the price charged to customers. 
C)  Private ownership is typically preferred to public ownership. 
D)  Sometimes the best strategy is for the government to do nothing about monopoly inefficiency because the "fix" may be worse than the problem.

Question 2

University financial aid can be viewed as a type of price discrimination.

Accepted Answer

A) True 
 B)False

Question 3

Figure 15-3
  
-Refer to Figure 15-3.If the monopoly firm is currently producing Q3 units of output,then a decrease in output will necessarily cause profit to

Accepted Answer

A)  remain unchanged. 
B)  decrease. 
C)  increase as long as the new level of output is at least Q2. 
D)  increase as long as the new level of output is at least Q1. 
A)  remain unchanged. 
B)  decrease. 
C)  increase as long as the new level of output is at least Q2. 
D)  increase as long as the new level of output is at least Q1.

Question 4

Which of the following statements is correct? Monopolies are socially inefficient because they
(i)charge a price above marginal cost.
(ii)produce too little output.
(iii)earn profits at the expense of consumers.
(iv)maximize the market's total surplus.

Accepted Answer

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

Question 5

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 total profit at the profit-maximizing quantity?

Accepted Answer

A)  $100 
B)  $245 
C)  $265 
D)  $395 
A)  $100 
B)  $245 
C)  $265 
D)  $395

Question 6

Figure 15-14
  
-Refer to Figure 15-14.To maximize total surplus,a benevolent social planner would choose which of the following outcomes?

Accepted Answer

A)  Q = 30 and P = 30 
B)  Q = 30 and P = 60 
C)  Q = 45 and P = 45 
D)  Q = 60 and P = 30 
A)  Q = 30 and P = 30 
B)  Q = 30 and P = 60 
C)  Q = 45 and P = 45 
D)  Q = 60 and P = 30

Question 7

Table 15-12
The following table provides information on the price, quantity, and average total cost for a monopoly.
  
-Refer to Table 15-12.At what price will the firm maximize its profit?

Accepted Answer

A)  $1 
B)  $2 
C)  $3 
D)  $4 
A)  $1 
B)  $2 
C)  $3 
D)  $4

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.Sally will maximize her profits by selling

Accepted Answer

A)  3 pairs of shoes. 
B)  4 pairs of shoes. 
C)  6 pairs of shoes. 
D)  7 pairs of shoes. 
A)  3 pairs of shoes. 
B)  4 pairs of shoes. 
C)  6 pairs of shoes. 
D)  7 pairs of shoes.

Question 9

When a firm experiences continually declining average total costs,the firm is a

Accepted Answer

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

Question 10

If government regulation sets the maximum price for a natural monopoly equal to its marginal cost,then the natural monopolist will

Accepted Answer

A)  earn economic losses. 
B)  earn economic profits. 
C)  earn zero economic profits. 
D)  produce a lower quantity of output than is socially optimal. 
A)  earn economic losses. 
B)  earn economic profits. 
C)  earn zero economic profits. 
D)  produce a lower quantity of output than is socially optimal.

Question 11

Table 15-9
Consider the following demand and cost information for a monopoly.
  
-Refer to Table 15-9.What is the monopolist's average total cost of production at the profit-maximizing price?

Accepted Answer

A)  $12 
B)  $14 
C)  $16 
D)  $17 
A)  $12 
B)  $14 
C)  $16 
D)  $17

Question 12

The De Beers Diamond company advertises heavily to promote the sale of all diamonds,not just its own.This is evidence that it has a monopoly position to some degree.

Accepted Answer

A) True 
 B)False

Question 13

The marginal revenue curve for a monopoly firm starts at the same point on the vertical axis as the
(i)average revenue curve.
(ii)marginal cost curve.
(iii)demand curve.

Accepted Answer

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

Question 14

Which of the following statements is correct?

Accepted Answer

A)  If the monopolist's marginal revenue is greater than its marginal cost, the monopolist can increase profit by selling more units at a lower price per unit. 
B)  If the monopolist's marginal revenue is greater than its marginal cost, the monopolist can increase profit by selling fewer units at a higher price per unit. 
C)  When a monopolist produces where price equals the minimum of average total cost, it earns a positive economic profit. 
D)  If the monopolist is earning a positive economic profit, it must be producing where MR = MC. 
A)  If the monopolist's marginal revenue is greater than its marginal cost, the monopolist can increase profit by selling more units at a lower price per unit. 
B)  If the monopolist's marginal revenue is greater than its marginal cost, the monopolist can increase profit by selling fewer units at a higher price per unit. 
C)  When a monopolist produces where price equals the minimum of average total cost, it earns a positive economic profit. 
D)  If the monopolist is earning a positive economic profit, it must be producing where MR = MC.

Question 15

Table 15-3
Consider the following demand and cost information for a monopoly.
  
-Refer to Table 15-3.The marginal cost of the 4th unit is

Accepted Answer

A)  $7. 
B)  $12. 
C)  $25. 
D)  $60. 
A)  $7. 
B)  $12. 
C)  $25. 
D)  $60.

Question 16

Firms with substantial monopoly power are quite common because many goods are unique.

Accepted Answer

A) True 
 B)False

Question 17

Table 15-3
Consider the following demand and cost information for a monopoly.
  
-Refer to Table 15-3.The maximum profit this monopolist can earn is

Accepted Answer

A)  $5. 
B)  $15. 
C)  $16. 
D)  $28. 
A)  $5. 
B)  $15. 
C)  $16. 
D)  $28.

Question 18

Deadweight loss measures the loss in society's welfare that occurs because a monopolist does not produce the socially efficient level of output.

Accepted Answer

A) True 
 B)False

Question 19

Figure 15-3
  
-Refer to Figure 15-3.The marginal 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 20

If a profit-maximizing monopolist faces a downward-sloping market demand curve,its

Accepted Answer

A)  average revenue is less than the price of the product. 
B)  average revenue is less than marginal revenue. 
C)  marginal revenue is less than the price of the product. 
D)  marginal revenue is greater than the price of the product. 
A)  average revenue is less than the price of the product. 
B)  average revenue is less than marginal revenue. 
C)  marginal revenue is less than the price of the product. 
D)  marginal revenue is greater than the price of the product.

Exam 15: Monopoly.

Which of the following statements is not correct?

University financial aid can be viewed as a type of price discrimination.

Figure 15-3 -Refer to Figure 15-3.If the monopoly firm is currently producing Q3 units of output,then a decrease in output will necessarily cause profit to

Which of the following statements is correct? Monopolies are socially inefficient because they (i)charge a price above marginal cost. (ii)produce too little output. (iii)earn profits at the expense of consumers. (iv)maximize the market's total surplus.

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 total profit at the profit-maximizing quantity?

Figure 15-14 -Refer to Figure 15-14.To maximize total surplus,a benevolent social planner would choose which of the following outcomes?

Table 15-12 The following table provides information on the price, quantity, and average total cost for a monopoly. -Refer to Table 15-12.At what price will the firm maximize its profit?

Table 15-7 Sally owns the only shoe store in town. She has the following cost and revenue information. -Refer to Table 15-7.Sally will maximize her profits by selling

When a firm experiences continually declining average total costs,the firm is a

If government regulation sets the maximum price for a natural monopoly equal to its marginal cost,then the natural monopolist will

Table 15-9 Consider the following demand and cost information for a monopoly. -Refer to Table 15-9.What is the monopolist's average total cost of production at the profit-maximizing price?

The De Beers Diamond company advertises heavily to promote the sale of all diamonds,not just its own.This is evidence that it has a monopoly position to some degree.

The marginal revenue curve for a monopoly firm starts at the same point on the vertical axis as the (i)average revenue curve. (ii)marginal cost curve. (iii)demand curve.

Which of the following statements is correct?

Table 15-3 Consider the following demand and cost information for a monopoly. -Refer to Table 15-3.The marginal cost of the 4th unit is

Firms with substantial monopoly power are quite common because many goods are unique.

Table 15-3 Consider the following demand and cost information for a monopoly. -Refer to Table 15-3.The maximum profit this monopolist can earn is

Deadweight loss measures the loss in society's welfare that occurs because a monopolist does not produce the socially efficient level of output.

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

If a profit-maximizing monopolist faces a downward-sloping market demand curve,its

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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