Question 1

In a natural monopoly,

Accepted Answer

A)  society would be better off if antitrust laws were used to create many different firms in the market. 
B)  the marginal cost curve is positively sloped. 
C)  if the government requires marginal cost pricing, it will likely have to subsidize the firm. 
D)  the marginal revenue curve is horizontal. 
A)  society would be better off if antitrust laws were used to create many different firms in the market. 
B)  the marginal cost curve is positively sloped. 
C)  if the government requires marginal cost pricing, it will likely have to subsidize the firm. 
D)  the marginal revenue curve is horizontal.

Question 2

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 $300 per ticket?

Accepted Answer

A)  $10,000 
B)  $15,000 
C)  $30,000 
D)  $45,000 
A)  $10,000 
B)  $15,000 
C)  $30,000 
D)  $45,000

Question 3

When a single firm can supply a product to an entire market at a lower cost than could two or more firms,the industry is called a

Accepted Answer

A)  resource industry. 
B)  exclusive industry. 
C)  government monopoly. 
D)  natural monopoly. 
A)  resource industry. 
B)  exclusive industry. 
C)  government monopoly. 
D)  natural monopoly.

Question 4

Figure 15-13
  
-Refer to Figure 15-13.If the monopoly operates at an output level less than Q0,then an increase in output toward (but not exceeding)Q0 would

Accepted Answer

A)  raise the price and raise total surplus. 
B)  lower the price and raise total surplus. 
C)  raise the price and lower total surplus. 
D)  lower the price and lower total surplus. 
A)  raise the price and raise total surplus. 
B)  lower the price and raise total surplus. 
C)  raise the price and lower total surplus. 
D)  lower the price and lower total surplus.

Question 5

The amount of power that a monopoly has depends on whether there are close substitutes for its product.

Accepted Answer

A) True 
 B)False

Question 6

Figure 15-5
  
-Refer to Figure 15-5.How much output will the monopolist produce?

Accepted Answer

A)  O 
B)  J 
C)  K 
D)  L 
A)  O 
B)  J 
C)  K 
D)  L

Question 7

A firm that is a natural monopoly

Accepted Answer

A)  is not likely to be concerned about new entrants eroding its monopoly power. 
B)  is taking advantage of economies of scale. 
C)  would experience a higher average total cost if more firms entered the market. 
D)  All of the above are correct. 
A)  is not likely to be concerned about new entrants eroding its monopoly power. 
B)  is taking advantage of economies of scale. 
C)  would experience a higher average total cost if more firms entered the market. 
D)  All of the above are correct.

Question 8

A natural monopoly arises when

Accepted Answer

A)  there are constant returns to scale over the relevant range of output. 
B)  there are economies of scale over the relevant range of output. 
C)  one firm owns a key natural resource. 
D)  the government gives a single firm the exclusive right to produce a particular good or service. 
A)  there are constant returns to scale over the relevant range of output. 
B)  there are economies of scale over the relevant range of output. 
C)  one firm owns a key natural resource. 
D)  the government gives a single firm the exclusive right to produce a particular good or service.

Question 9

Many movie theaters allow discount tickets to be sold to senior citizens because

Accepted Answer

A)  senior-citizen laws mandate such discounts. 
B)  goodwill efforts earn community respect and win loyal patrons. 
C)  the theaters are profit maximizers. 
D)  senior citizens lobby city councils for lower prices. 
A)  senior-citizen laws mandate such discounts. 
B)  goodwill efforts earn community respect and win loyal patrons. 
C)  the theaters are profit maximizers. 
D)  senior citizens lobby city councils for lower prices.

Question 10

Suppose a monopolist is able to charge each customer a price equal to that customer's willingness-to-pay for the product.Then the monopolist is engaging in

Accepted Answer

A)  marginal cost pricing. 
B)  arbitrage pricing. 
C)  voodoo economics. 
D)  perfect price discrimination. 
A)  marginal cost pricing. 
B)  arbitrage pricing. 
C)  voodoo economics. 
D)  perfect price discrimination.

Question 11

The DeBeers company faces very little competition from other firms in the wholesale diamond market.Why isn't the price of the wholesale diamonds $10,000 per carat?

Accepted Answer

A)  because the government would not allow such a high price 
B)  because stockholders would not allow such a high price 
C)  because the company would sell so few copies that they would earn higher profits by selling at a lower price 
D)  All of the above are correct. 
A)  because the government would not allow such a high price 
B)  because stockholders would not allow such a high price 
C)  because the company would sell so few copies that they would earn higher profits by selling at a lower price 
D)  All of the above are correct.

Question 12

The proper level of government intervention is unclear when dealing with a monopoly.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following can eliminate the inefficiency inherent in monopoly pricing?

Accepted Answer

A)  arbitrage 
B)  cost-plus pricing 
C)  price discrimination 
D)  regulations that force monopolies to reduce their levels of output 
A)  arbitrage 
B)  cost-plus pricing 
C)  price discrimination 
D)  regulations that force monopolies to reduce their levels of output

Question 14

Table 15-1
  
-Refer to Table 15-1.What is the marginal revenue for the monopolist for the sixth unit sold?

Accepted Answer

A)  $3 
B)  $5 
C)  $11 
D)  $17 
A)  $3 
B)  $5 
C)  $11 
D)  $17

Question 15

A fundamental source of monopoly market power arises from

Accepted Answer

A)  perfectly elastic demand. 
B)  perfectly inelastic demand. 
C)  barriers to entry. 
D)  availability of "free" natural resources, such as water or air. 
A)  perfectly elastic demand. 
B)  perfectly inelastic demand. 
C)  barriers to entry. 
D)  availability of "free" natural resources, such as water or air.

Question 16

Scenario 15-4
Suppose a monopolist has a demand curve that can be expressed as P=90-Q. The monopolist's marginal revenue curve can be expressed as MR=90-2Q. The monopolist has constant marginal costs and average total costs of $10.
-Refer to Scenario 15-4.The profit-maximizing monopolist will charge a price of

Accepted Answer

A)  $50. 
B)  $40. 
C)  $20. 
D)  $10. 
A)  $50. 
B)  $40. 
C)  $20. 
D)  $10.

Question 17

Which type of public policy toward monopolies is much more common in Europe than in the United States?

Accepted Answer

A)  antitrust laws 
B)  regulation 
C)  public ownership 
D)  "do nothing" 
A)  antitrust laws 
B)  regulation 
C)  public ownership 
D)  "do nothing"

Question 18

A monopolist that can practice perfect price discrimination will not impose a deadweight loss on society.

Accepted Answer

A) True 
 B)False

Question 19

For a monopoly,the level of output at which marginal revenue equals zero is also the level of output at which

Accepted Answer

A)  average revenue is zero. 
B)  profit is maximized. 
C)  total revenue is maximized. 
D)  marginal cost is zero. 
A)  average revenue is zero. 
B)  profit is maximized. 
C)  total revenue is maximized. 
D)  marginal cost is zero.

Question 20

Marginal revenue can become negative for

Accepted Answer

A)  both competitive and monopoly firms. 
B)  competitive firms but not for monopoly firms. 
C)  monopoly firms but not for competitive firms. 
D)  neither competitive nor monopoly firms. 
A)  both competitive and monopoly firms. 
B)  competitive firms but not for monopoly firms. 
C)  monopoly firms but not for competitive firms. 
D)  neither competitive nor monopoly firms.

In a natural monopoly,

When a single firm can supply a product to an entire market at a lower cost than could two or more firms,the industry is called a

Figure 15-13 -Refer to Figure 15-13.If the monopoly operates at an output level less than Q0,then an increase in output toward (but not exceeding)Q0 would

The amount of power that a monopoly has depends on whether there are close substitutes for its product.

Figure 15-5 -Refer to Figure 15-5.How much output will the monopolist produce?

A firm that is a natural monopoly

A natural monopoly arises when

Many movie theaters allow discount tickets to be sold to senior citizens because

Suppose a monopolist is able to charge each customer a price equal to that customer's willingness-to-pay for the product.Then the monopolist is engaging in

The DeBeers company faces very little competition from other firms in the wholesale diamond market.Why isn't the price of the wholesale diamonds $10,000 per carat?

The proper level of government intervention is unclear when dealing with a monopoly.

Which of the following can eliminate the inefficiency inherent in monopoly pricing?

Table 15-1 -Refer to Table 15-1.What is the marginal revenue for the monopolist for the sixth unit sold?

A fundamental source of monopoly market power arises from

Which type of public policy toward monopolies is much more common in Europe than in the United States?

A monopolist that can practice perfect price discrimination will not impose a deadweight loss on society.

For a monopoly,the level of output at which marginal revenue equals zero is also the level of output at which

Marginal revenue can become negative for

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.

In a natural monopoly,

When a single firm can supply a product to an entire market at a lower cost than could two or more firms,the industry is called a

Figure 15-13 -Refer to Figure 15-13.If the monopoly operates at an output level less than Q0,then an increase in output toward (but not exceeding)Q0 would

The amount of power that a monopoly has depends on whether there are close substitutes for its product.

Figure 15-5 -Refer to Figure 15-5.How much output will the monopolist produce?

A firm that is a natural monopoly

A natural monopoly arises when

Many movie theaters allow discount tickets to be sold to senior citizens because

Suppose a monopolist is able to charge each customer a price equal to that customer's willingness-to-pay for the product.Then the monopolist is engaging in

The DeBeers company faces very little competition from other firms in the wholesale diamond market.Why isn't the price of the wholesale diamonds $10,000 per carat?

The proper level of government intervention is unclear when dealing with a monopoly.

Which of the following can eliminate the inefficiency inherent in monopoly pricing?

Table 15-1 -Refer to Table 15-1.What is the marginal revenue for the monopolist for the sixth unit sold?

A fundamental source of monopoly market power arises from

Which type of public policy toward monopolies is much more common in Europe than in the United States?

A monopolist that can practice perfect price discrimination will not impose a deadweight loss on society.

For a monopoly,the level of output at which marginal revenue equals zero is also the level of output at which

Marginal revenue can become negative for

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