Question 1

The socially efficient level of production occurs where the marginal cost curve intersects

Accepted Answer

A)  average variable cost. 
B)  average total cost. 
C)  demand. 
D)  marginal revenue. 
A)  average variable cost. 
B)  average total cost. 
C)  demand. 
D)  marginal revenue.

Question 2

For a firm to price discriminate,

Accepted Answer

A)  it must be a natural monopoly. 
B)  it must be regulated by the government. 
C)  it must have some market power. 
D)  consumers must tell the firm what they are willing to pay for the product. 
A)  it must be a natural monopoly. 
B)  it must be regulated by the government. 
C)  it must have some market power. 
D)  consumers must tell the firm what they are willing to pay for the product.

Question 3

A patent gives a single person or firm the exclusive right to sell some good or service for a specific period of time.

Accepted Answer

A) True 
 B)False

Question 4

What do economists call the business practice of selling the same good at difference prices to different customers?

Accepted Answer

A)  price discrimination 
B)  collusion 
C)  compensating differential 
D)  Both a and b are correct 
A)  price discrimination 
B)  collusion 
C)  compensating differential 
D)  Both a and b are correct

Question 5

Monopolists can achieve any level of profit they desire because they have unlimited market power.

Accepted Answer

A) True 
 B)False

Question 6

Like competitive firms,monopolies choose to produce a quantity in which marginal revenue equals marginal cost.

Accepted Answer

A) True 
 B)False

Question 7

For a monopoly,

Accepted Answer

A)  average revenue exceeds marginal revenue. 
B)  average revenue equals marginal revenue. 
C)  average revenue is less than marginal revenue. 
D)  price equals marginal revenue. 
A)  average revenue exceeds marginal revenue. 
B)  average revenue equals marginal revenue. 
C)  average revenue is less than marginal revenue. 
D)  price equals marginal revenue.

Question 8

Due to the nature of the patent laws on pharmaceuticals,the market for such drugs

Accepted Answer

A)  always remains a competitive market. 
B)  always remains a monopolistic market. 
C)  switches from competitive to monopolistic once the firm's patent runs out. 
D)  switches from monopolistic to competitive once the firm's patent runs out. 
A)  always remains a competitive market. 
B)  always remains a monopolistic market. 
C)  switches from competitive to monopolistic once the firm's patent runs out. 
D)  switches from monopolistic to competitive once the firm's patent runs out.

Question 9

Scenario 15-2
Consider a local, privately-owned electrical cooperative named Minny County Megawatts (MCM, LLC). MCM has just completed a natural-gas-burning electrical power plant in the Midwest. Currently, MCM can meet the electricity needs of all residents in the county. In fact, its capacity far exceeds the needs of the county. After just a few years of operation, the shareholders of MCM experienced incredible rates of return on their investment due to the profitability of the corporation.
-Refer to Scenario 15-2.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 MCM currently has.
(ii)MCM is most likely experiencing rising marginal cost.
(iii)MCM is most likely experiencing declining average total cost.
(iv)MCM is a natural monopoly.

Accepted Answer

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

Question 10

Compared to the monopoly outcome with a single price,imperfect price discrimination
(i)sometimes raises total surplus.
(ii)sometimes lowers total surplus.
(iii)always leads to a lower quantity of output.

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 11

If government officials break a natural monopoly up into several smaller firms,then

Accepted Answer

A)  competition will force firms to attain economic profits rather than accounting profits. 
B)  competition will force firms to produce surplus output, which drives up price. 
C)  the average costs of production will increase. 
D)  the average costs of production will decrease. 
A)  competition will force firms to attain economic profits rather than accounting profits. 
B)  competition will force firms to produce surplus output, which drives up price. 
C)  the average costs of production will increase. 
D)  the average costs of production will decrease.

Question 12

Monopoly firms have

Accepted Answer

A)  downward-sloping demand curves, and they can sell as much output as they desire at the market price. 
B)  downward-sloping demand curves, and they can sell only a limited quantity of output at each price. 
C)  horizontal demand curves, and they can sell as much output as they desire at the market price. 
D)  horizontal demand curves, and they can sell only a limited quantity of output at each price. 
A)  downward-sloping demand curves, and they can sell as much output as they desire at the market price. 
B)  downward-sloping demand curves, and they can sell only a limited quantity of output at each price. 
C)  horizontal demand curves, and they can sell as much output as they desire at the market price. 
D)  horizontal demand curves, and they can sell only a limited quantity of output at each price.

Question 13

A monopolist earns higher profits by charging one price than by practicing price discrimination.

Accepted Answer

A) True 
 B)False

Question 14

If the ABC company owns the exclusive rights to mine land in Afghanistan for Lapis Lazuli,a rare stone used in jewelry which is found only in Afghanistan,the company benefits from a barrier to entry.

Accepted Answer

A) True 
 B)False

Question 15

Suppose a firm has a monopoly on the sale of a computer game and faces a downward-sloping demand curve.When selling the 50ᵗʰ game,the firm will always receive

Accepted Answer

A)  less marginal revenue on the 50th game than it received on the 49th game. 
B)  more average revenue on the 50th game than it received on the 49th game. 
C)  more total revenue on the 50 game than it received on the first 49 game. 
D)  Both b) and c) are correct. 
A)  less marginal revenue on the 50th game than it received on the 49th game. 
B)  more average revenue on the 50th game than it received on the 49th game. 
C)  more total revenue on the 50 game than it received on the first 49 game. 
D)  Both b) and c) are correct.

Question 16

If the distribution of water is a natural monopoly,then
(i)multiple firms would likely each have to pay large fixed costs to develop their own network of pipes.
(ii)allowing for competition among different firms in the water-distribution industry is efficient.
(iii)a single firm can serve the market at the lowest possible average total cost.

Accepted Answer

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

Question 17

Which of the following is an example of a barrier to entry?

Accepted Answer

A)  Tom charges a higher price than his competitors for his house-painting services. 
B)  Dick obtains a copyright for the new computer game that he invented. 
C)  Harry offers free concerts on Sunday afternoons as a form of advertising. 
D)  Larry charges a lower price than his competitors for his lawn-mowing services. 
A)  Tom charges a higher price than his competitors for his house-painting services. 
B)  Dick obtains a copyright for the new computer game that he invented. 
C)  Harry offers free concerts on Sunday afternoons as a form of advertising. 
D)  Larry charges a lower price than his competitors for his lawn-mowing services.

Question 18

Because a monopolist must lower its price in order to sell another unit of output,

Accepted Answer

A)  marginal revenue is less than price. 
B)  long-term economic profits will be zero. 
C)  total revenue increases as price increases. 
D)  average revenue is less than price. 
A)  marginal revenue is less than price. 
B)  long-term economic profits will be zero. 
C)  total revenue increases as price increases. 
D)  average revenue is less than price.

Question 19

Figure 15-8
  
-Refer to Figure 15-8.The monopolist's maximum profit

Accepted Answer

A)  is $800. 
B)  is $1,000. 
C)  is $1,250. 
D)  cannot be determined from the diagram. 
A)  is $800. 
B)  is $1,000. 
C)  is $1,250. 
D)  cannot be determined from the diagram.

Question 20

A monopoly chooses to supply the market with a quantity of a product that is determined by the intersection of the

Accepted Answer

A)  marginal cost and demand curves. 
B)  average total cost and demand curves. 
C)  marginal revenue and average total cost curves. 
D)  marginal revenue and marginal cost curves. 
A)  marginal cost and demand curves. 
B)  average total cost and demand curves. 
C)  marginal revenue and average total cost curves. 
D)  marginal revenue and marginal cost curves.

The socially efficient level of production occurs where the marginal cost curve intersects

For a firm to price discriminate,

A patent gives a single person or firm the exclusive right to sell some good or service for a specific period of time.

What do economists call the business practice of selling the same good at difference prices to different customers?

Monopolists can achieve any level of profit they desire because they have unlimited market power.

Like competitive firms,monopolies choose to produce a quantity in which marginal revenue equals marginal cost.

For a monopoly,

Due to the nature of the patent laws on pharmaceuticals,the market for such drugs

Compared to the monopoly outcome with a single price,imperfect price discrimination (i)sometimes raises total surplus. (ii)sometimes lowers total surplus. (iii)always leads to a lower quantity of output.

If government officials break a natural monopoly up into several smaller firms,then

Monopoly firms have

A monopolist earns higher profits by charging one price than by practicing price discrimination.

If the ABC company owns the exclusive rights to mine land in Afghanistan for Lapis Lazuli,a rare stone used in jewelry which is found only in Afghanistan,the company benefits from a barrier to entry.

Suppose a firm has a monopoly on the sale of a computer game and faces a downward-sloping demand curve.When selling the 50ᵗʰ game,the firm will always receive

Which of the following is an example of a barrier to entry?

Because a monopolist must lower its price in order to sell another unit of output,

Figure 15-8 -Refer to Figure 15-8.The monopolist's maximum profit

A monopoly chooses to supply the market with a quantity of a product that is determined by the intersection of the

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.

The socially efficient level of production occurs where the marginal cost curve intersects

For a firm to price discriminate,

A patent gives a single person or firm the exclusive right to sell some good or service for a specific period of time.

What do economists call the business practice of selling the same good at difference prices to different customers?

Monopolists can achieve any level of profit they desire because they have unlimited market power.

Like competitive firms,monopolies choose to produce a quantity in which marginal revenue equals marginal cost.

For a monopoly,

Due to the nature of the patent laws on pharmaceuticals,the market for such drugs

Compared to the monopoly outcome with a single price,imperfect price discrimination (i)sometimes raises total surplus. (ii)sometimes lowers total surplus. (iii)always leads to a lower quantity of output.

If government officials break a natural monopoly up into several smaller firms,then

Monopoly firms have

A monopolist earns higher profits by charging one price than by practicing price discrimination.

If the ABC company owns the exclusive rights to mine land in Afghanistan for Lapis Lazuli,a rare stone used in jewelry which is found only in Afghanistan,the company benefits from a barrier to entry.

Suppose a firm has a monopoly on the sale of a computer game and faces a downward-sloping demand curve.When selling the 50ᵗʰ game,the firm will always receive

Which of the following is an example of a barrier to entry?

Because a monopolist must lower its price in order to sell another unit of output,

Figure 15-8 -Refer to Figure 15-8.The monopolist's maximum profit

A monopoly chooses to supply the market with a quantity of a product that is determined by the intersection of the

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.

Filters