Question 1

Table 15-2
Dreher's Designer Shirt Company, a monopolist, has the following cost and revenue information.
  
-Refer to Table 15-2.What is total profit at the profit-maximizing quantity?

Accepted Answer

A) $100 
B) $245 
C) $265 
D) $395 
A) $100 
B) $245 
C) $265 
D) $395

Question 2

If a monopolist's marginal costs shift up by $1.00,then

Accepted Answer

A) the monopoly price will rise by $1. 
B) the monopoly price will rise by more than $1. 
C) the monopoly price will rise by less than $1. 
D) there is no change in the monopoly price and profits fall. 
A) the monopoly price will rise by $1. 
B) the monopoly price will rise by more than $1. 
C) the monopoly price will rise by less than $1. 
D) there is no change in the monopoly price and profits fall.

Question 3

Table 15-2
Dreher's Designer Shirt Company, a monopolist, has the following cost and revenue information.
  
-Refer to Table 15-2.What is the marginal revenue from selling the 8th shirt?

Accepted Answer

A) $10 
B) $20 
C) $40 
D) $90 
A) $10 
B) $20 
C) $40 
D) $90

Question 4

Figure 15-3
The figure below illustrates the cost and revenue structure for a monopoly firm.
  
-Refer to Figure 15-3.Profit on a typical unit sold for a profit-maximizing monopoly would equal

Accepted Answer

A) P₂ - P₁. 
B) P₂ - P₀. 
C) P₃ - P₂. 
D) P₃ - P₀. 
A) P₂ - P₁. 
B) P₂ - P₀. 
C) P₃ - P₂. 
D) P₃ - P₀.

Question 5

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 6

Figure 15-6
  
-Refer to Figure 15-6.To maximize its profit,a monopolist would choose which of the following outcomes?

Accepted Answer

A) 100 units of output and a price of $10 per unit 
B) 100 units of output and a price of $20 per unit 
C) 150 units of output and a price of $15 per unit 
D) 200 units of output and a price of $20 per unit 
A) 100 units of output and a price of $10 per unit 
B) 100 units of output and a price of $20 per unit 
C) 150 units of output and a price of $15 per unit 
D) 200 units of output and a price of $20 per unit

Question 7

Explain how a profit-maximizing monopolist chooses its level of output and the price of its goods.

Accepted Answer

A profit-maximizing monopolist

Question 8

Antitrust laws may

Accepted Answer

A) enhance the ability of firms to capture profits from a concentration of market power. 
B) enhance the ability of firms to reduce economic losses. 
C) restrict the ability of firms to operate at the socially efficient level of production. 
D) restrict the ability of firms to merge. 
A) enhance the ability of firms to capture profits from a concentration of market power. 
B) enhance the ability of firms to reduce economic losses. 
C) restrict the ability of firms to operate at the socially efficient level of production. 
D) restrict the ability of firms to merge.

Question 9

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 10

Which of the following statements is false?

Accepted Answer

A) The competitive firm produces where P = MC. 
B) The monopolist produces where P = MC. 
C) The competitive firm produces where MR = MC. 
D) The monopolist produces where MR = MC. 
A) The competitive firm produces where P = MC. 
B) The monopolist produces where P = MC. 
C) The competitive firm produces where MR = MC. 
D) The monopolist produces where MR = MC.

Question 11

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 12

The monopolist's profit-maximizing quantity of output is determined by the intersection of which of the following two curves?

Accepted Answer

A) Marginal cost and demand 
B) Marginal cost and marginal revenue 
C) Average total cost and marginal revenue 
D) Average variable cost and average revenue 
A) Marginal cost and demand 
B) Marginal cost and marginal revenue 
C) Average total cost and marginal revenue 
D) Average variable cost and average revenue

Question 13

The De Beers Diamond company is not worried about differentiating its product from all other gemstones.

Accepted Answer

A) True 
 B)False

Question 14

Antitrust laws allow the government to

Accepted Answer

A) prevent mergers. 
B) break up companies. 
C) promote competition. 
D) All of the above are correct. 
A) prevent mergers. 
B) break up companies. 
C) promote competition. 
D) All of the above are correct.

Question 15

For a monopoly,the socially efficient level of output occurs where

Accepted Answer

A) marginal revenue equals marginal cost. 
B) average revenue equals marginal cost. 
C) marginal revenue equals average total cost. 
D) average revenue equals average total cost. 
A) marginal revenue equals marginal cost. 
B) average revenue equals marginal cost. 
C) marginal revenue equals average total cost. 
D) average revenue equals average total cost.

Question 16

What is the deadweight loss due to profit-maximizing monopoly pricing under the following conditions: The price charged for goods produced is $10.The intersection of the marginal revenue and marginal cost curves occurs where output is 100 units and marginal revenue is $5.The socially efficient level of production is 110 units.The demand curve is linear and downward sloping and the marginal cost curve is linear and upward sloping.

Accepted Answer

The answer of What is the deadweight loss due to...

Question 17

Consider a profit-maximizing monopoly pricing under the following conditions.The profit-maximizing price charged for goods produced is $12.The intersection of the marginal revenue and marginal cost curves occurs where output is 10 units and marginal cost is $6.The socially efficient level of production is 12 units.The demand curve and marginal cost curves are linear.What is the deadweight loss?

Accepted Answer

A) $4 
B) $6 
C) $12 
D) $16 
A) $4 
B) $6 
C) $12 
D) $16

Question 18

Table 15-2
Dreher's Designer Shirt Company, a monopolist, has the following cost and revenue information.
  
-Refer to Table 15-2.What is the total variable cost of production when six units are produced?

Accepted Answer

A) $100 
B) $295 
C) $600 
D) $620 
A) $100 
B) $295 
C) $600 
D) $620

Question 19

When a monopolist is able to sell its product at different prices,it is engaging in

Accepted Answer

A) distribution pricing. 
B) quality-adjusted pricing. 
C) price differentiation. 
D) price discrimination. 
A) distribution pricing. 
B) quality-adjusted pricing. 
C) price differentiation. 
D) price discrimination.

Question 20

Allowing an inventor to have the exclusive rights to market her new invention will lead to (i)	a product that is priced higher than it would be without the exclusive rights.
(ii)	desirable behavior in the sense that inventors are encouraged to invent.
(iii)	higher profits for the inventor.

Accepted Answer

A) (i) and (ii) 
B) (ii) and (iii) 
C) (i) and (iii) 
D) (i), (ii), and (iii) 
A) (i) and (ii) 
B) (ii) and (iii) 
C) (i) and (iii) 
D) (i), (ii), and (iii)

Exam 15: Monopoly

Table 15-2 Dreher's Designer Shirt Company, a monopolist, has the following cost and revenue information. -Refer to Table 15-2.What is total profit at the profit-maximizing quantity?

If a monopolist's marginal costs shift up by $1.00,then

Table 15-2 Dreher's Designer Shirt Company, a monopolist, has the following cost and revenue information. -Refer to Table 15-2.What is the marginal revenue from selling the 8th shirt?

Figure 15-3 The figure below illustrates the cost and revenue structure for a monopoly firm. -Refer to Figure 15-3.Profit on a typical unit sold for a profit-maximizing monopoly would equal

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

Figure 15-6 -Refer to Figure 15-6.To maximize its profit,a monopolist would choose which of the following outcomes?

Explain how a profit-maximizing monopolist chooses its level of output and the price of its goods.

Antitrust laws may

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

Which of the following statements is false?

A fundamental source of monopoly market power arises from

The monopolist's profit-maximizing quantity of output is determined by the intersection of which of the following two curves?

The De Beers Diamond company is not worried about differentiating its product from all other gemstones.

Antitrust laws allow the government to

For a monopoly,the socially efficient level of output occurs where

Table 15-2 Dreher's Designer Shirt Company, a monopolist, has the following cost and revenue information. -Refer to Table 15-2.What is the total variable cost of production when six units are produced?

When a monopolist is able to sell its product at different prices,it is engaging in

Allowing an inventor to have the exclusive rights to market her new invention will lead to (i) a product that is priced higher than it would be without the exclusive rights. (ii) desirable behavior in the sense that inventors are encouraged to invent. (iii) higher profits for the inventor.

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Applications

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

Oligopoly

Monopolistic Competition

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short Run Trade Off Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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