Question 1

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 cost of the 6th pair of shoes?

Accepted Answer

A)  $44 
B)  $46 
C)  $55 
D)  $60 
A)  $44 
B)  $46 
C)  $55 
D)  $60

Question 2

Price discrimination is a rational strategy for a profit-maximizing monopolist when

Accepted Answer

A)  the monopolist finds itself able to produce only limited quantities of output. 
B)  consumers are unable to be segmented into identifiable markets. 
C)  the monopolist wishes to increase the deadweight loss that results from profit-maximizing behavior. 
D)  there is no opportunity for arbitrage across market segments. 
A)  the monopolist finds itself able to produce only limited quantities of output. 
B)  consumers are unable to be segmented into identifiable markets. 
C)  the monopolist wishes to increase the deadweight loss that results from profit-maximizing behavior. 
D)  there is no opportunity for arbitrage across market segments.

Question 3

Monopoly pricing prevents some mutually beneficial trades from taking place.These unrealized,mutually beneficial trades are

Accepted Answer

A)  less of a concern for a monopoly than competitive market. 
B)  offset by the higher profits earned by a monopolist. 
C)  a function of the reduction in the quantity produced by a monopolist in comparison to a competitive market. 
D)  All of the above are correct. 
A)  less of a concern for a monopoly than competitive market. 
B)  offset by the higher profits earned by a monopolist. 
C)  a function of the reduction in the quantity produced by a monopolist in comparison to a competitive market. 
D)  All of the above are correct.

Question 4

The best solution to the problem of welfare loss from monopoly is public ownership.

Accepted Answer

A) True 
 B)False

Question 5

If a monopoly lowers its price,its

Accepted Answer

A)  total revenue must increase. 
B)  total revenue must decrease. 
C)  marginal revenue must increase. 
D)  marginal revenue must decrease. 
A)  total revenue must increase. 
B)  total revenue must decrease. 
C)  marginal revenue must increase. 
D)  marginal revenue must decrease.

Question 6

Which of the following is not an example of a barrier to entry?

Accepted Answer

A)  Al owns the only parcel of lakeside property with a beach that is safe for swimming. He charges admission to neighbors who want to use the beach. 
B)  Meredith owns the copyright to a popular song. She receives royalties every time a radio station plays her song. 
C)  Matt sells computers to his state government for use in their legislative sessions. He has sold computers for ten years. 
D)  Anne owns the patent for a new running shoe. She receives payments from the company who manufactures the shoes. 
A)  Al owns the only parcel of lakeside property with a beach that is safe for swimming. He charges admission to neighbors who want to use the beach. 
B)  Meredith owns the copyright to a popular song. She receives royalties every time a radio station plays her song. 
C)  Matt sells computers to his state government for use in their legislative sessions. He has sold computers for ten years. 
D)  Anne owns the patent for a new running shoe. She receives payments from the company who manufactures the shoes.

Question 7

Which of the following statements is not correct?

Accepted Answer

A)  Consumers will likely benefit in the form of lower prices from buying a product made by a natural monopoly than if the market were served by several firms. 
B)  Monopolists typically charge higher prices than competitive firms. 
C)  Monopolists typically produce larger quantities of output than competitive firms. 
D)  Consumers may benefit from monopolies if the firms invest their higher profits into something that benefits society such as medical research. 
A)  Consumers will likely benefit in the form of lower prices from buying a product made by a natural monopoly than if the market were served by several firms. 
B)  Monopolists typically charge higher prices than competitive firms. 
C)  Monopolists typically produce larger quantities of output than competitive firms. 
D)  Consumers may benefit from monopolies if the firms invest their higher profits into something that benefits society such as medical research.

Question 8

A common solution to monopoly in European countries is public ownership.

Accepted Answer

A) True 
 B)False

Question 9

Figure 15-4
  
-Refer to Figure 15-4.A profit-maximizing monopoly will produce an output level of

Accepted Answer

A)  Q1. 
B)  Q2. 
C)  Q3. 
D)  Q4. 
A)  Q1. 
B)  Q2. 
C)  Q3. 
D)  Q4.

Question 10

The process of buying a good in one market at a low price and selling the good in another market for a higher price in order to profit from the price difference is known as

Accepted Answer

A)  sabotage. 
B)  conspiracy. 
C)  arbitrage. 
D)  collusion. 
A)  sabotage. 
B)  conspiracy. 
C)  arbitrage. 
D)  collusion.

Question 11

Table 15-11
The following table shows quantity, price, and marginal cost information for a monopoly:
  
-Refer to Table 15-11.What level of output should the firm produce to maximize its profit?

Accepted Answer

A)  2 units 
B)  3 units 
C)  4 units 
D)  5 units 
A)  2 units 
B)  3 units 
C)  4 units 
D)  5 units

Question 12

Suppose that a professional photographer takes a prize-winning digital photo.She can sell a 5"x7" color print of the photo for $10.She can also sell the digital file for $20.There are 500 people willing to buy the color print and 2,000 people willing to buy the digital file.Assume the costs to the photographer are zero and that the people who purchase the digital file cannot resell the file itself or any prints made from it.What should she do in order to maximize her profits?

Accepted Answer

A)  earn $5,000 by selling only the color prints 
B)  earn $40,000 by selling only the digital files 
C)  earn $45,000 by selling both the color prints and the digital files at their respective prices 
D)  We do not have enough information with which to answer this question. 
A)  earn $5,000 by selling only the color prints 
B)  earn $40,000 by selling only the digital files 
C)  earn $45,000 by selling both the color prints and the digital files at their respective prices 
D)  We do not have enough information with which to answer this question.

Question 13

Table 15-6
A monopolist faces the following demand curve:
  
-Refer to Table 15-6.If the monopolist has a constant marginal cost for her product equal to $7,what is her profit-maximizing price?

Accepted Answer

A)  $6 
B)  $9 
C)  $12 
D)  $15 
A)  $6 
B)  $9 
C)  $12 
D)  $15

Question 14

When there are economies of scale over the relevant range of output for a monopoly,the monopoly

Accepted Answer

A)  is a natural monopoly. 
B)  is a government-granted monopoly. 
C)  has monopoly power due to the ownership of a patent or copyright. 
D)  has monopoly power due to the ownership of a key production resource. 
A)  is a natural monopoly. 
B)  is a government-granted monopoly. 
C)  has monopoly power due to the ownership of a patent or copyright. 
D)  has monopoly power due to the ownership of a key production resource.

Question 15

Consider a profit-maximizing monopoly pricing under the following conditions.The profit-maximizing quantity is 40 units,the profit-maximizing price is $160,and the marginal cost of the 40th unit is $120.If the good were produced in a perfectly competitive market,the equilibrium quantity would be 50,and the equilibrium price would be $150.The demand curve and marginal cost curves are linear.What is the value of the deadweight loss created by the monopolist?

Accepted Answer

A)  $40 
B)  $100 
C)  $200 
D)  $400 
A)  $40 
B)  $100 
C)  $200 
D)  $400

Question 16

When deciding what price to charge consumers,the monopolist may choose to charge them different prices based on the customers'

Accepted Answer

A)  geographical location. 
B)  age. 
C)  income. 
D)  All of the above are correct. 
A)  geographical location. 
B)  age. 
C)  income. 
D)  All of the above are correct.

Question 17

Figure 15-4
  
-Refer to Figure 15-4.A profit-maximizing monopoly will charge a price of

Accepted Answer

A)  P5. 
B)  P4. 
C)  P3. 
D)  P2. 
A)  P5. 
B)  P4. 
C)  P3. 
D)  P2.

Question 18

Because monopoly firms do not have to compete with other firms,the outcome in a market with a monopoly is often

Accepted Answer

A)  not in the best interest of society. 
B)  one that fails to maximize total economic well-being. 
C)  inefficient. 
D)  All of the above are correct. 
A)  not in the best interest of society. 
B)  one that fails to maximize total economic well-being. 
C)  inefficient. 
D)  All of the above are correct.

Question 19

Perfect price discrimination

Accepted Answer

A)  increases profits to the firm. 
B)  increases total surplus. 
C)  decreases consumer surplus. 
D)  All of the above are correct. 
A)  increases profits to the firm. 
B)  increases total surplus. 
C)  decreases consumer surplus. 
D)  All of the above are correct.

Question 20

Figure 15-5
  
-Refer to Figure 15-5.What price will the monopolist charge?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  F 
A)  A 
B)  B 
C)  C 
D)  F

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 cost of the 6th pair of shoes?

Price discrimination is a rational strategy for a profit-maximizing monopolist when

Monopoly pricing prevents some mutually beneficial trades from taking place.These unrealized,mutually beneficial trades are

The best solution to the problem of welfare loss from monopoly is public ownership.

If a monopoly lowers its price,its

Which of the following is not an example of a barrier to entry?

Which of the following statements is not correct?

A common solution to monopoly in European countries is public ownership.

Figure 15-4 -Refer to Figure 15-4.A profit-maximizing monopoly will produce an output level of

The process of buying a good in one market at a low price and selling the good in another market for a higher price in order to profit from the price difference is known as

Table 15-11 The following table shows quantity, price, and marginal cost information for a monopoly: -Refer to Table 15-11.What level of output should the firm produce to maximize its profit?

Table 15-6 A monopolist faces the following demand curve: -Refer to Table 15-6.If the monopolist has a constant marginal cost for her product equal to $7,what is her profit-maximizing price?

When there are economies of scale over the relevant range of output for a monopoly,the monopoly

When deciding what price to charge consumers,the monopolist may choose to charge them different prices based on the customers'

Figure 15-4 -Refer to Figure 15-4.A profit-maximizing monopoly will charge a price of

Because monopoly firms do not have to compete with other firms,the outcome in a market with a monopoly is often

Perfect price discrimination

Figure 15-5 -Refer to Figure 15-5.What price will the monopolist charge?

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.

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 cost of the 6th pair of shoes?

Price discrimination is a rational strategy for a profit-maximizing monopolist when

Monopoly pricing prevents some mutually beneficial trades from taking place.These unrealized,mutually beneficial trades are

The best solution to the problem of welfare loss from monopoly is public ownership.

If a monopoly lowers its price,its

Which of the following is not an example of a barrier to entry?

Which of the following statements is not correct?

A common solution to monopoly in European countries is public ownership.

Figure 15-4 -Refer to Figure 15-4.A profit-maximizing monopoly will produce an output level of

The process of buying a good in one market at a low price and selling the good in another market for a higher price in order to profit from the price difference is known as

Table 15-11 The following table shows quantity, price, and marginal cost information for a monopoly: -Refer to Table 15-11.What level of output should the firm produce to maximize its profit?

Table 15-6 A monopolist faces the following demand curve: -Refer to Table 15-6.If the monopolist has a constant marginal cost for her product equal to $7,what is her profit-maximizing price?

When there are economies of scale over the relevant range of output for a monopoly,the monopoly

When deciding what price to charge consumers,the monopolist may choose to charge them different prices based on the customers'

Figure 15-4 -Refer to Figure 15-4.A profit-maximizing monopoly will charge a price of

Because monopoly firms do not have to compete with other firms,the outcome in a market with a monopoly is often

Perfect price discrimination

Figure 15-5 -Refer to Figure 15-5.What price will the monopolist charge?

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