Question 1

When a firm has a natural monopoly,the firm's

Accepted Answer

A)  marginal cost always exceeds its average total cost. 
B)  total cost curve is horizontal. 
C)  average total cost curve is downward sloping. 
D)  marginal cost curve must lie above the firm's average total cost curve. 
A)  marginal cost always exceeds its average total cost. 
B)  total cost curve is horizontal. 
C)  average total cost curve is downward sloping. 
D)  marginal cost curve must lie above the firm's average total cost curve.

Question 2

The profit that a monopolist earns represents a loss to society that is measured through deadweight loss.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following statements is correct?

Accepted Answer

A)  The benefits that accrue to a monopoly's owners are equal to the costs that are incurred by consumers of that firm's product. 
B)  The deadweight loss that arises in monopoly stems from the fact that the profit-maximizing monopoly firm produces a quantity of output that exceeds the socially-efficient quantity. 
C)  The deadweight loss caused by monopoly is similar to the deadweight loss caused by a tax on a product. 
D)  The primary social problem caused by monopoly is monopoly profit. 
A)  The benefits that accrue to a monopoly's owners are equal to the costs that are incurred by consumers of that firm's product. 
B)  The deadweight loss that arises in monopoly stems from the fact that the profit-maximizing monopoly firm produces a quantity of output that exceeds the socially-efficient quantity. 
C)  The deadweight loss caused by monopoly is similar to the deadweight loss caused by a tax on a product. 
D)  The primary social problem caused by monopoly is monopoly profit.

Question 4

A monopoly firm is a price

Accepted Answer

A)  taker and has no supply curve. 
B)  maker and has no supply curve 
C)  taker and has an upward-sloping supply curve. 
D)  maker and has an upward-sloping supply curve. 
A)  taker and has no supply curve. 
B)  maker and has no supply curve 
C)  taker and has an upward-sloping supply curve. 
D)  maker and has an upward-sloping supply curve.

Question 5

By selling hardcover books to die-hard fans and paperback books to less enthusiastic readers,the publisher is able to price discriminate and raise its profits.

Accepted Answer

A) True 
 B)False

Question 6

In a competitive market,a firm's supply curve dictates the amount it will supply.In a monopoly market the

Accepted Answer

A)  same is true. 
B)  supply curve conceptually makes sense, but in practice is never used. 
C)  supply curve will have limited predictive capacity. 
D)  decision about how much to supply is impossible to separate from the demand curve it faces. 
A)  same is true. 
B)  supply curve conceptually makes sense, but in practice is never used. 
C)  supply curve will have limited predictive capacity. 
D)  decision about how much to supply is impossible to separate from the demand curve it faces.

Question 7

Figure 15-8
  
-Refer to Figure 15-8.To maximize total surplus,a benevolent social planner would choose which of the following outcomes?

Accepted Answer

A)  100 units of output and a price of $10 per unit 
B)  150 units of output and a price of $10 per unit 
C)  150 units of output and a price of $15 per unit 
D)  200 units of output and a price of $10 per unit 
A)  100 units of output and a price of $10 per unit 
B)  150 units of output and a price of $10 per unit 
C)  150 units of output and a price of $15 per unit 
D)  200 units of output and a price of $10 per unit

Question 8

Suppose a profit-maximizing monopolist faces a constant marginal cost of $10,produces an output level of 100 units,and charges a price of $50.The socially efficient level of output is 200 units.Assume that the demand curve and marginal revenue curve are the typical downward-sloping straight lines.The monopoly deadweight loss equals $4,000.

Accepted Answer

A) True 
 B)False

Question 9

Table 15-2
Tanya has the following demand curve for selling taffy. Assume that Tanya has a marginal cost of $3 per unit.
  
-Refer to Table 15-2.What is Tanya's profit-maximizing price?

Accepted Answer

A)  $2 
B)  $4 
C)  $6 
D)  $8 
A)  $2 
B)  $4 
C)  $6 
D)  $8

Question 10

Which of the following may eliminate some or all of the inefficiency that results from monopoly pricing?

Accepted Answer

A)  The government can regulate the monopoly. 
B)  The monopoly can be prohibited from price discriminating. 
C)  The monopoly can be forced to operate at a point where its marginal revenue is equal to its marginal cost. 
D)  None of the above would eliminate any inefficiency associated with a monopoly. 
A)  The government can regulate the monopoly. 
B)  The monopoly can be prohibited from price discriminating. 
C)  The monopoly can be forced to operate at a point where its marginal revenue is equal to its marginal cost. 
D)  None of the above would eliminate any inefficiency associated with a monopoly.

Question 11

Table 15-1
  
-Refer to Table 15-1.Assume this monopolist's marginal cost is constant at $12.What quantity of output (Q)will it produce and what price (P)will it charge?

Accepted Answer

A)  Q = 4, P = $29 
B)  Q = 4, P = $26 
C)  Q = 5, P = $23 
D)  Q = 7, P = $17 
A)  Q = 4, P = $29 
B)  Q = 4, P = $26 
C)  Q = 5, P = $23 
D)  Q = 7, P = $17

Question 12

A monopolist's supply curve is vertical.

Accepted Answer

A) True 
 B)False

Question 13

As a monopolist increases the quantity of output it sells,the price consumers are willing to pay for the good

Accepted Answer

A)  is unaffected. 
B)  decreases. 
C)  increases. 
D)  There is not enough information given in answer the question. 
A)  is unaffected. 
B)  decreases. 
C)  increases. 
D)  There is not enough information given in answer the question.

Question 14

A monopoly creates a deadweight loss to society because it produces less output than the socially efficient level.

Accepted Answer

A) True 
 B)False

Question 15

Figure 15-2

-Refer to Figure 15-2.Which of the following statements is correct?

Accepted Answer

A)  Panel C represents the typical demand curve for a perfectly competitive industry. 
B)  Panel B represents the typical demand curve for a monopoly. 
C)  Panel B represents the typical demand curve for a perfectly competitive firm. 
D)  All of the above are correct. 
A)  Panel C represents the typical demand curve for a perfectly competitive industry. 
B)  Panel B represents the typical demand curve for a monopoly. 
C)  Panel B represents the typical demand curve for a perfectly competitive firm. 
D)  All of the above are correct.

Question 16

Which of the following statements is correct?

Accepted Answer

A)  The demand curve facing a competitive firm is horizontal, as is the demand curve facing a monopolist. 
B)  The demand curve facing a competitive firm is downward sloping, whereas the demand curve facing a monopolist is horizontal. 
C)  The demand curve facing a competitive firm is horizontal, whereas the demand curve facing a monopolist is downward sloping. 
D)  The demand curve facing a competitive firm is downward sloping, as is the demand curve facing a monopolist. 
A)  The demand curve facing a competitive firm is horizontal, as is the demand curve facing a monopolist. 
B)  The demand curve facing a competitive firm is downward sloping, whereas the demand curve facing a monopolist is horizontal. 
C)  The demand curve facing a competitive firm is horizontal, whereas the demand curve facing a monopolist is downward sloping. 
D)  The demand curve facing a competitive firm is downward sloping, as is the demand curve facing a monopolist.

Question 17

Declining average total cost with increased production is one of the defining characteristics of a natural monopoly.

Accepted Answer

A) True 
 B)False

Question 18

Suppose a profit-maximizing monopolist faces a constant marginal cost of $10,produces an output level of 100 units,and charges a price of $50.The socially efficient level of output is 200 units.Assume that the demand curve and marginal revenue curve are the typical downward-sloping straight lines.The monopoly deadweight loss equals $2,000.

Accepted Answer

A) True 
 B)False

Question 19

The assessment by George Stigler concerning the tradeoffs between "market failure" and "political failure" in the American economy provides support for which of the following solutions to the problems of monopolies?

Accepted Answer

A)  public ownership of monopolies 
B)  government regulation of monopolies 
C)  government incentives to promote competition in monopolized industries 
D)  doing nothing at all 
A)  public ownership of monopolies 
B)  government regulation of monopolies 
C)  government incentives to promote competition in monopolized industries 
D)  doing nothing at all

Question 20

Which of the following is not correct?

Accepted Answer

A)  Antitrust laws may prevent mergers that would actually raise social welfare. 
B)  Public ownership is the most common public policy toward monopolies in the United States. 
C)  Regulation is a common strategy for a natural monopoly. 
D)  Sometimes the best public policy toward a monopoly may be to do nothing. 
A)  Antitrust laws may prevent mergers that would actually raise social welfare. 
B)  Public ownership is the most common public policy toward monopolies in the United States. 
C)  Regulation is a common strategy for a natural monopoly. 
D)  Sometimes the best public policy toward a monopoly may be to do nothing.

When a firm has a natural monopoly,the firm's

The profit that a monopolist earns represents a loss to society that is measured through deadweight loss.

Which of the following statements is correct?

A monopoly firm is a price

By selling hardcover books to die-hard fans and paperback books to less enthusiastic readers,the publisher is able to price discriminate and raise its profits.

In a competitive market,a firm's supply curve dictates the amount it will supply.In a monopoly market the

Figure 15-8 -Refer to Figure 15-8.To maximize total surplus,a benevolent social planner would choose which of the following outcomes?

Table 15-2 Tanya has the following demand curve for selling taffy. Assume that Tanya has a marginal cost of $3 per unit. -Refer to Table 15-2.What is Tanya's profit-maximizing price?

Which of the following may eliminate some or all of the inefficiency that results from monopoly pricing?

Table 15-1 -Refer to Table 15-1.Assume this monopolist's marginal cost is constant at $12.What quantity of output (Q)will it produce and what price (P)will it charge?

A monopolist's supply curve is vertical.

As a monopolist increases the quantity of output it sells,the price consumers are willing to pay for the good

A monopoly creates a deadweight loss to society because it produces less output than the socially efficient level.

Figure 15-2 -Refer to Figure 15-2.Which of the following statements is correct?

Which of the following statements is correct?

Declining average total cost with increased production is one of the defining characteristics of a natural monopoly.

The assessment by George Stigler concerning the tradeoffs between "market failure" and "political failure" in the American economy provides support for which of the following solutions to the problems of monopolies?

Which of the following is not correct?

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.

When a firm has a natural monopoly,the firm's

The profit that a monopolist earns represents a loss to society that is measured through deadweight loss.

Which of the following statements is correct?

A monopoly firm is a price

By selling hardcover books to die-hard fans and paperback books to less enthusiastic readers,the publisher is able to price discriminate and raise its profits.

In a competitive market,a firm's supply curve dictates the amount it will supply.In a monopoly market the

Figure 15-8 -Refer to Figure 15-8.To maximize total surplus,a benevolent social planner would choose which of the following outcomes?

Table 15-2 Tanya has the following demand curve for selling taffy. Assume that Tanya has a marginal cost of $3 per unit. -Refer to Table 15-2.What is Tanya's profit-maximizing price?

Which of the following may eliminate some or all of the inefficiency that results from monopoly pricing?

Table 15-1 -Refer to Table 15-1.Assume this monopolist's marginal cost is constant at $12.What quantity of output (Q)will it produce and what price (P)will it charge?

A monopolist's supply curve is vertical.

As a monopolist increases the quantity of output it sells,the price consumers are willing to pay for the good

A monopoly creates a deadweight loss to society because it produces less output than the socially efficient level.

Figure 15-2 -Refer to Figure 15-2.Which of the following statements is correct?

Which of the following statements is correct?

Declining average total cost with increased production is one of the defining characteristics of a natural monopoly.

The assessment by George Stigler concerning the tradeoffs between "market failure" and "political failure" in the American economy provides support for which of the following solutions to the problems of monopolies?

Which of the following is not correct?

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