Question 1

Figure 15-14
  
-Refer to Figure 15-14.To maximize its profit,a monopolist 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 2

Patent and copyright laws are major sources of

Accepted Answer

A)  natural monopolies. 
B)  government-created monopolies. 
C)  resource monopolies. 
D)  antitrust regulation. 
A)  natural monopolies. 
B)  government-created monopolies. 
C)  resource monopolies. 
D)  antitrust regulation.

Question 3

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

Accepted Answer

A)  lobby the government for a subsidy. 
B)  lower its price. 
C)  advertise. 
D)  enact barriers to entry in related markets. 
A)  lobby the government for a subsidy. 
B)  lower its price. 
C)  advertise. 
D)  enact barriers to entry in related markets.

Question 4

Antitrust laws allow the government to

Accepted Answer

A)  collect revenues through the antitrust tax. 
B)  break up companies. 
C)  purchase privately-held companies through eminent domain. 
D)  All of the above are correct. 
A)  collect revenues through the antitrust tax. 
B)  break up companies. 
C)  purchase privately-held companies through eminent domain. 
D)  All of the above are correct.

Question 5

Marginal revenue for a monopolist is computed as

Accepted Answer

A)  average revenue divided by quantity sold. 
B)  average revenue times quantity divided by price. 
C)  total revenue divided by quantity sold. 
D)  change in total revenue per one unit increase in quantity sold. 
A)  average revenue divided by quantity sold. 
B)  average revenue times quantity divided by price. 
C)  total revenue divided by quantity sold. 
D)  change in total revenue per one unit increase in quantity sold.

Question 6

When regulators use a marginal-cost pricing strategy to regulate a natural monopoly,the regulated monopoly

Accepted Answer

A)  will experience a loss. 
B)  will experience a price below average total cost. 
C)  may rely on a government subsidy to remain in business. 
D)  All of the above are correct. 
A)  will experience a loss. 
B)  will experience a price below average total cost. 
C)  may rely on a government subsidy to remain in business. 
D)  All of the above are correct.

Question 7

Figure 15-4
  
-Refer to Figure 15-4.At the profit-maximizing level of output,

Accepted Answer

A)  marginal revenue is equal to P3. 
B)  marginal cost is equal to P3. 
C)  average revenue is equal to P4. 
D)  average total cost is equal to P0. 
A)  marginal revenue is equal to P3. 
B)  marginal cost is equal to P3. 
C)  average revenue is equal to P4. 
D)  average total cost is equal to P0.

Question 8

When a monopolist decreases the price of its good,consumers

Accepted Answer

A)  continue to buy the same amount. 
B)  buy more. 
C)  buy less. 
D)  may buy more or less, depending on the price elasticity of demand. 
A)  continue to buy the same amount. 
B)  buy more. 
C)  buy less. 
D)  may buy more or less, depending on the price elasticity of demand.

Question 9

The economic inefficiency of a monopolist can be measured by the

Accepted Answer

A)  deadweight loss. 
B)  value of the unrealized trades that could be made if the monopolist produced the socially-efficient output. 
C)  area above marginal cost but beneath demand from the monopoly output to the socially-efficient output. 
D)  All of the above are correct. 
A)  deadweight loss. 
B)  value of the unrealized trades that could be made if the monopolist produced the socially-efficient output. 
C)  area above marginal cost but beneath demand from the monopoly output to the socially-efficient output. 
D)  All of the above are correct.

Question 10

Table 15-1
  
-Refer to Table 15-1.When 4 units of output are produced and sold,what is average revenue?

Accepted Answer

A)  $17 
B)  $21 
C)  $23 
D)  $26 
A)  $17 
B)  $21 
C)  $23 
D)  $26

Question 11

Angelo is a wholesale meatball distributor.He sells his meatballs to all the finest Italian restaurants in town.Nobody can make meatballs like Angelo.As a result,his is the only business in town that sells meatballs to restaurants.Assuming that Angelo is maximizing his profit,which of the following statements is true?

Accepted Answer

A)  Meatball prices will be less than marginal cost. 
B)  Meatball prices will equal marginal cost. 
C)  Meatball prices will exceed marginal cost. 
D)  Costs are irrelevant to Angelo because he is a monopolist. 
A)  Meatball prices will be less than marginal cost. 
B)  Meatball prices will equal marginal cost. 
C)  Meatball prices will exceed marginal cost. 
D)  Costs are irrelevant to Angelo because he is a monopolist.

Question 12

Price discrimination requires the firm to

Accepted Answer

A)  separate customers according to their willingnesses to pay. 
B)  differentiate between different units of its product. 
C)  engage in arbitrage. 
D)  use coupons. 
A)  separate customers according to their willingnesses to pay. 
B)  differentiate between different units of its product. 
C)  engage in arbitrage. 
D)  use coupons.

Question 13

Table 15-17
  
-Refer to Table 15-17.If a monopolist faces a constant marginal cost of $1,how much output should the firm produce in order to equate marginal revenue with marginal cost?

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 14

Drug companies are allowed to be monopolists in the drugs they discover in order to

Accepted Answer

A)  allow drug companies to charge a price that is equal to their marginal cost. 
B)  discourage new firms from entering the drug market. 
C)  encourage research. 
D)  allow the government to earn patent revenue. 
A)  allow drug companies to charge a price that is equal to their marginal cost. 
B)  discourage new firms from entering the drug market. 
C)  encourage research. 
D)  allow the government to earn patent revenue.

Question 15

For a monopoly firm,the shape and position of the demand curve play a role in determining the
(i)profit-maximizing price.
(ii)shape and position of the marginal-cost curve.
(iii)shape and position of the marginal-revenue curve.

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

Scenario 15-7
Black Box Cable TV is able to purchase an exclusive right to sell a premium movie channel (PMC) in its market area. Let's assume that Black Box Cable pays $150,000 a year for the exclusive marketing rights to PMC. Since Black Box has already installed cable to all of the homes in its market area, the marginal cost of delivering PMC to subscribers is zero. The manager of Black Box needs to know what price to charge for the PMC service to maximize her profit. Before setting price, she hires an economist to estimate demand for the PMC service. The economist discovers that there are two types of subscribers who value premium movie channels. First are the 4,000 die-hard TV viewers who will pay as much as $150 a year for the new PMC premium channel. Second, the PMC channel will appeal to 20,000 occasional TV viewers who will pay as much as $20 a year for a subscription to PMC.
-Refer to Scenario 15-7.If Black Box Cable TV is able to price discriminate,what would be the maximum amount of profit it could generate?

Accepted Answer

A)  $500,000 
B)  $600,000 
C)  $850,000 
D)  $925,000 
A)  $500,000 
B)  $600,000 
C)  $850,000 
D)  $925,000

Question 17

If a social planner were running a monopoly,that planner could achieve an efficient outcome by charging the price that is determined by the

Accepted Answer

A)  minimum point on the average total cost curve. 
B)  intersection of the average total cost curve and the demand curve. 
C)  intersection of the marginal cost curve and the demand curve. 
D)  intersection of the marginal cost curve and the marginal revenue curve. 
A)  minimum point on the average total cost curve. 
B)  intersection of the average total cost curve and the demand curve. 
C)  intersection of the marginal cost curve and the demand curve. 
D)  intersection of the marginal cost curve and the marginal revenue curve.

Question 18

Figure 15-8
  
-Refer to Figure 15-8.The deadweight loss caused by a profit-maximizing monopoly amounts to

Accepted Answer

A)  $150. 
B)  $200. 
C)  $250. 
D)  $500. 
A)  $150. 
B)  $200. 
C)  $250. 
D)  $500.

Question 19

If a monopolist sells 100 units at $8 per unit and realizes an average total cost of $6 per unit,what is the monopolist's profit?

Accepted Answer

A)  $200 
B)  $400 
C)  $600 
D)  $800 
A)  $200 
B)  $400 
C)  $600 
D)  $800

Question 20

Figure 15-16
  
-Refer to Figure 15-16.If the monopoly firm is not allowed to price discriminate,then the deadweight loss amounts to

Accepted Answer

A)  $0. 
B)  $1,562.50. 
C)  $3,125. 
D)  $6,250. 
A)  $0. 
B)  $1,562.50. 
C)  $3,125. 
D)  $6,250.

Figure 15-14 -Refer to Figure 15-14.To maximize its profit,a monopolist would choose which of the following outcomes?

Patent and copyright laws are major sources of

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

Antitrust laws allow the government to

Marginal revenue for a monopolist is computed as

When regulators use a marginal-cost pricing strategy to regulate a natural monopoly,the regulated monopoly

Figure 15-4 -Refer to Figure 15-4.At the profit-maximizing level of output,

When a monopolist decreases the price of its good,consumers

The economic inefficiency of a monopolist can be measured by the

Table 15-1 -Refer to Table 15-1.When 4 units of output are produced and sold,what is average revenue?

Price discrimination requires the firm to

Table 15-17 -Refer to Table 15-17.If a monopolist faces a constant marginal cost of $1,how much output should the firm produce in order to equate marginal revenue with marginal cost?

Drug companies are allowed to be monopolists in the drugs they discover in order to

For a monopoly firm,the shape and position of the demand curve play a role in determining the (i)profit-maximizing price. (ii)shape and position of the marginal-cost curve. (iii)shape and position of the marginal-revenue curve.

If a social planner were running a monopoly,that planner could achieve an efficient outcome by charging the price that is determined by the

Figure 15-8 -Refer to Figure 15-8.The deadweight loss caused by a profit-maximizing monopoly amounts to

If a monopolist sells 100 units at $8 per unit and realizes an average total cost of $6 per unit,what is the monopolist's profit?

Figure 15-16 -Refer to Figure 15-16.If the monopoly firm is not allowed to price discriminate,then the deadweight loss amounts to

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.

Figure 15-14 -Refer to Figure 15-14.To maximize its profit,a monopolist would choose which of the following outcomes?

Patent and copyright laws are major sources of

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

Antitrust laws allow the government to

Marginal revenue for a monopolist is computed as

When regulators use a marginal-cost pricing strategy to regulate a natural monopoly,the regulated monopoly

Figure 15-4 -Refer to Figure 15-4.At the profit-maximizing level of output,

When a monopolist decreases the price of its good,consumers

The economic inefficiency of a monopolist can be measured by the

Table 15-1 -Refer to Table 15-1.When 4 units of output are produced and sold,what is average revenue?

Price discrimination requires the firm to

Table 15-17 -Refer to Table 15-17.If a monopolist faces a constant marginal cost of $1,how much output should the firm produce in order to equate marginal revenue with marginal cost?

Drug companies are allowed to be monopolists in the drugs they discover in order to

For a monopoly firm,the shape and position of the demand curve play a role in determining the (i)profit-maximizing price. (ii)shape and position of the marginal-cost curve. (iii)shape and position of the marginal-revenue curve.

If a social planner were running a monopoly,that planner could achieve an efficient outcome by charging the price that is determined by the

Figure 15-8 -Refer to Figure 15-8.The deadweight loss caused by a profit-maximizing monopoly amounts to

If a monopolist sells 100 units at $8 per unit and realizes an average total cost of $6 per unit,what is the monopolist's profit?

Figure 15-16 -Refer to Figure 15-16.If the monopoly firm is not allowed to price discriminate,then the deadweight loss amounts to

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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