Question 1

Antitrust laws give the Justice Department the authority to challenge potential mergers between companies in an effort to safeguard society from monopoly power.

Accepted Answer

A) True 
 B)False

Question 2

Table 15-6
A monopolist faces the following demand curve:
  
-Refer to Table 15-6.Suppose the monopolist has total fixed costs equal to $5 and a variable cost equal to $4 per unit for all units produced.What is the total profit if she operates at her profit-maximizing price?

Accepted Answer

A)  $1 
B)  $7 
C)  $9 
D)  $11 
A)  $1 
B)  $7 
C)  $9 
D)  $11

Question 3

Sizable economic profits can persist over time under monopoly if the monopolist

Accepted Answer

A)  produces that output where average total cost is at a maximum. 
B)  is protected by barriers to entry. 
C)  operates as a price taker rather than a price maker. 
D)  earns revenues that exceed variable costs. 
A)  produces that output where average total cost is at a maximum. 
B)  is protected by barriers to entry. 
C)  operates as a price taker rather than a price maker. 
D)  earns revenues that exceed variable costs.

Question 4

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

Accepted Answer

A)  Fixed costs are typically a small portion of total costs. 
B)  Average total cost declines over large regions of output. 
C)  The product sold is a natural resource such as diamonds or water. 
D)  All of the above are correct. 
A)  Fixed costs are typically a small portion of total costs. 
B)  Average total cost declines over large regions of output. 
C)  The product sold is a natural resource such as diamonds or water. 
D)  All of the above are correct.

Question 5

Table 15-3
Consider the following demand and cost information for a monopoly.
  
-Refer to Table 15-3.To maximize profit,the monopolist sets price at

Accepted Answer

A)  $10. 
B)  $15. 
C)  $20. 
D)  $25. 
A)  $10. 
B)  $15. 
C)  $20. 
D)  $25.

Question 6

Table 15-13
The following table gives information on the price, quantity, and total cost of production for a monopolist.
  
-Refer to Table 15-13.How much profit will the firm earn at the profit-maximizing price?

Accepted Answer

A)  $9 
B)  $12 
C)  $15 
D)  $18 
A)  $9 
B)  $12 
C)  $15 
D)  $18

Question 7

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 the marginal revenue from selling the 2nd pair of shoes?

Accepted Answer

A)  $140 
B)  $150 
C)  $160 
D)  $170 
A)  $140 
B)  $150 
C)  $160 
D)  $170

Question 8

Table 15-11
The following table shows quantity, price, and marginal cost information for a monopoly:
  
-Refer to Table 15-11.What would be the firm's marginal revenue at the profit-maximizing level of output?

Accepted Answer

A)  $7 
B)  $6 
C)  $5 
D)  $1 
A)  $7 
B)  $6 
C)  $5 
D)  $1

Question 9

The difference in total surplus between the socially efficient level of production and the monopolist's level of production is

Accepted Answer

A)  offset by regulatory revenues. 
B)  called a deadweight loss. 
C)  equal to the monopolist's profit. 
D)  Both b and c are correct. 
A)  offset by regulatory revenues. 
B)  called a deadweight loss. 
C)  equal to the monopolist's profit. 
D)  Both b and c are correct.

Question 10

Encouraging firms to invest in research and development and individuals to engage in creative endeavors such as writing novels is one justification for

Accepted Answer

A)  resource monopolies. 
B)  natural monopolies. 
C)  government-created monopolies. 
D)  breaking up monopolies into smaller firms. 
A)  resource monopolies. 
B)  natural monopolies. 
C)  government-created monopolies. 
D)  breaking up monopolies into smaller firms.

Question 11

Table 15-4
A monopolist faces the following demand curve:
  
-Refer to Table 15-4.In order to maximize total revenues,the monopolist should produce

Accepted Answer

A)  5 units. 
B)  7.5 units. 
C)  10 units. 
D)  12.5 units. 
A)  5 units. 
B)  7.5 units. 
C)  10 units. 
D)  12.5 units.

Question 12

Scenario 15-5
An airline knows that there are two types of travelers: business travelers and vacationers. For a particular flight, there are 100 business travelers who will pay $600 for a ticket while there are 50 vacationers who will pay $300 for a ticket. There are 150 seats available on the plane. Suppose the cost to the airline of providing the flight is $20,000, which includes the cost of the pilots, flight attendants, fuel, etc.
-Refer to Scenario 15-5.How much additional profit can the airline earn by charging each customer their willingness to pay relative to charging a flat price of $600 per ticket?

Accepted Answer

A)  $15,000 
B)  $25,000 
C)  $40,000 
D)  $70,000 
A)  $15,000 
B)  $25,000 
C)  $40,000 
D)  $70,000

Question 13

A benefit of a monopoly is

Accepted Answer

A)  lower prices. 
B)  a wide variety of similar products. 
C)  decreasing long-run average total costs. 
D)  greater creativity by authors who can copyright their novels. 
A)  lower prices. 
B)  a wide variety of similar products. 
C)  decreasing long-run average total costs. 
D)  greater creativity by authors who can copyright their novels.

Question 14

In order for a firm to maximize profits through price discrimination,the firm must have some market power and be able to prevent arbitrage.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following statements is not correct?

Accepted Answer

A)  The government may use antitrust laws to prevent a merger if the government believes the merger will reduce competition and increase prices. 
B)  By regulating a natural monopoly where price equals average total cost, the monopoly earns zero profits. 
C)  An advantage of private ownership over public ownership is that private business owners tend to fire inefficient managers. 
D)  The government should always intervene to improve monopoly inefficiency. 
A)  The government may use antitrust laws to prevent a merger if the government believes the merger will reduce competition and increase prices. 
B)  By regulating a natural monopoly where price equals average total cost, the monopoly earns zero profits. 
C)  An advantage of private ownership over public ownership is that private business owners tend to fire inefficient managers. 
D)  The government should always intervene to improve monopoly inefficiency.

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 total profit at the profit-maximizing quantity?

Accepted Answer

A)  $325 
B)  $435 
C)  $565 
D)  $1000 
A)  $325 
B)  $435 
C)  $565 
D)  $1000

Question 17

Table 15-4
A monopolist faces the following demand curve:
  
-Refer to Table 15-4.If the monopolist produces 10 units,what is its marginal revenue?

Accepted Answer

A)  $12.50 
B)  $5 
C)  -$5 
D)  -$12.50 
A)  $12.50 
B)  $5 
C)  -$5 
D)  -$12.50

Question 18

If the government regulates the price a natural monopolist can charge to be equal to the firm's average total cost,the firm has no incentive to reduce costs.

Accepted Answer

A) True 
 B)False

Question 19

A perfectly price-discriminating monopolist is able to

Accepted Answer

A)  maximize profit and produce a socially-optimal level of output. 
B)  maximize profit, but not produce a socially-optimal level of output. 
C)  produce a socially-optimal level of output, but not maximize profit. 
D)  exercise illegal preferences regarding the race and/or gender of its employees. 
A)  maximize profit and produce a socially-optimal level of output. 
B)  maximize profit, but not produce a socially-optimal level of output. 
C)  produce a socially-optimal level of output, but not maximize profit. 
D)  exercise illegal preferences regarding the race and/or gender of its employees.

Question 20

Table 15-6
A monopolist faces the following demand curve:
  
-Refer to Table 15-6.What is the marginal revenue from the sale of the 3rd unit?

Accepted Answer

A)  $-3 
B)  $3 
C)  $9 
D)  $24 
A)  $-3 
B)  $3 
C)  $9 
D)  $24

Antitrust laws give the Justice Department the authority to challenge potential mergers between companies in an effort to safeguard society from monopoly power.

Table 15-6 A monopolist faces the following demand curve: -Refer to Table 15-6.Suppose the monopolist has total fixed costs equal to $5 and a variable cost equal to $4 per unit for all units produced.What is the total profit if she operates at her profit-maximizing price?

Sizable economic profits can persist over time under monopoly if the monopolist

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

Table 15-3 Consider the following demand and cost information for a monopoly. -Refer to Table 15-3.To maximize profit,the monopolist sets price at

Table 15-13 The following table gives information on the price, quantity, and total cost of production for a monopolist. -Refer to Table 15-13.How much profit will the firm earn at the profit-maximizing price?

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 the marginal revenue from selling the 2nd pair of shoes?

Table 15-11 The following table shows quantity, price, and marginal cost information for a monopoly: -Refer to Table 15-11.What would be the firm's marginal revenue at the profit-maximizing level of output?

The difference in total surplus between the socially efficient level of production and the monopolist's level of production is

Encouraging firms to invest in research and development and individuals to engage in creative endeavors such as writing novels is one justification for

Table 15-4 A monopolist faces the following demand curve: -Refer to Table 15-4.In order to maximize total revenues,the monopolist should produce

A benefit of a monopoly is

In order for a firm to maximize profits through price discrimination,the firm must have some market power and be able to prevent arbitrage.

Which of the following statements is not correct?

Table 15-4 A monopolist faces the following demand curve: -Refer to Table 15-4.If the monopolist produces 10 units,what is its marginal revenue?

If the government regulates the price a natural monopolist can charge to be equal to the firm's average total cost,the firm has no incentive to reduce costs.

A perfectly price-discriminating monopolist is able to

Table 15-6 A monopolist faces the following demand curve: -Refer to Table 15-6.What is the marginal revenue from the sale of the 3rd unit?

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

Exam 15: Monopoly.

Antitrust laws give the Justice Department the authority to challenge potential mergers between companies in an effort to safeguard society from monopoly power.

Table 15-6 A monopolist faces the following demand curve: -Refer to Table 15-6.Suppose the monopolist has total fixed costs equal to $5 and a variable cost equal to $4 per unit for all units produced.What is the total profit if she operates at her profit-maximizing price?

Sizable economic profits can persist over time under monopoly if the monopolist

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

Table 15-3 Consider the following demand and cost information for a monopoly. -Refer to Table 15-3.To maximize profit,the monopolist sets price at

Table 15-13 The following table gives information on the price, quantity, and total cost of production for a monopolist. -Refer to Table 15-13.How much profit will the firm earn at the profit-maximizing price?

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 the marginal revenue from selling the 2nd pair of shoes?

Table 15-11 The following table shows quantity, price, and marginal cost information for a monopoly: -Refer to Table 15-11.What would be the firm's marginal revenue at the profit-maximizing level of output?

The difference in total surplus between the socially efficient level of production and the monopolist's level of production is

Encouraging firms to invest in research and development and individuals to engage in creative endeavors such as writing novels is one justification for

Table 15-4 A monopolist faces the following demand curve: -Refer to Table 15-4.In order to maximize total revenues,the monopolist should produce

A benefit of a monopoly is

In order for a firm to maximize profits through price discrimination,the firm must have some market power and be able to prevent arbitrage.

Which of the following statements is not correct?

Table 15-4 A monopolist faces the following demand curve: -Refer to Table 15-4.If the monopolist produces 10 units,what is its marginal revenue?

If the government regulates the price a natural monopolist can charge to be equal to the firm's average total cost,the firm has no incentive to reduce costs.

A perfectly price-discriminating monopolist is able to

Table 15-6 A monopolist faces the following demand curve: -Refer to Table 15-6.What is the marginal revenue from the sale of the 3rd unit?

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