Question 1

Figure 15-3
The figure below illustrates the cost and revenue structure for a monopoly firm.
  
-Refer to Figure 15-3.A profit-maximizing monopoly's total cost is equal to

Accepted Answer

A) (P₁ - P₀) × Q₂. 
B) P₀ × Q₁. 
C) P₀ × Q₂. 
D) P₀ × Q₃. 
A) (P₁ - P₀) × Q₂. 
B) P₀ × Q₁. 
C) P₀ × Q₂. 
D) P₀ × Q₃.

Question 2

A government-created monopoly arises when

Accepted Answer

A) government spending in a certain industry gives rise to monopoly power. 
B) the government exercises its market control by encouraging competition among sellers. 
C) the government gives a firm the exclusive right to sell some good or service. 
D) Both a and c are correct. 
A) government spending in a certain industry gives rise to monopoly power. 
B) the government exercises its market control by encouraging competition among sellers. 
C) the government gives a firm the exclusive right to sell some good or service. 
D) Both a and c are correct.

Question 3

Figure 15-1
  
-Refer to Figure 15-1.The shape of the average total cost curve reveals information about the nature of the barrier to entry that might exist in a monopoly market.Which of the following monopoly types best coincides with the figure?

Accepted Answer

A) Ownership of a key resource by a single firm 
B) Natural monopoly 
C) Government-created monopoly 
D) A patent or copyright monopoly 
A) Ownership of a key resource by a single firm 
B) Natural monopoly 
C) Government-created monopoly 
D) A patent or copyright monopoly

Question 4

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.How much profit will the airline earn if it sets the price of a ticket at $600?

Accepted Answer

A) -$5,000 
B) $15,000 
C) $40,000 
D) $70,000 
A) -$5,000 
B) $15,000 
C) $40,000 
D) $70,000

Question 5

Most markets are not monopolies in the real world because

Accepted Answer

A) firms usually face downward-sloping demand curves. 
B) supply curves slope upward. 
C) price is usually set equal to marginal cost by firms. 
D) there are reasonable substitutes for most goods. 
A) firms usually face downward-sloping demand curves. 
B) supply curves slope upward. 
C) price is usually set equal to marginal cost by firms. 
D) there are reasonable substitutes for most goods.

Question 6

A monopoly chooses to supply the market with a quantity of goods that is determined by the intersection of the

Accepted Answer

A) marginal cost and demand curves. 
B) average total cost and demand curves. 
C) marginal revenue and average total cost curves. 
D) marginal revenue and marginal cost curves. 
A) marginal cost and demand curves. 
B) average total cost and demand curves. 
C) marginal revenue and average total cost curves. 
D) marginal revenue and marginal cost curves.

Question 7

An industry is a natural monopoly when (i)	the government assists the firm in maintaining the monopoly.
(ii)	a single firm owns a key resource.
(iii)	a single firm can supply a good or service to an entire market at a smaller cost than could two or more firms.

Accepted Answer

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

Question 8

Graphically depict the deadweight loss caused by a monopoly.How is this similar to the deadweight loss from taxation?

Accepted Answer

A profit-maximizing monopolist will choo

Question 9

When a pharmaceutical company discovers a new drug,patent law gives the monopoly

Accepted Answer

A) partial ownership of the right to sell the drug for a limited number of years. 
B) partial ownership of the right to sell the drug for an unlimited number of years. 
C) sole ownership of the right to sell the drug for a limited number of years. 
D) sole ownership of the right to sell the drug for an unlimited number of years. 
A) partial ownership of the right to sell the drug for a limited number of years. 
B) partial ownership of the right to sell the drug for an unlimited number of years. 
C) sole ownership of the right to sell the drug for a limited number of years. 
D) sole ownership of the right to sell the drug for an unlimited number of years.

Question 10

Table 15-4
Consider the following demand and cost information for a monopoly.
  
-Refer to Table 15-4.The marginal revenue of the second unit is

Accepted Answer

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

Question 11

One method used to control the ability of firms to capture monopoly profit in the United States is through

Accepted Answer

A) government purchase of products produced by monopolists. 
B) government distribution of a monopolist's excess production. 
C) enforcement of antitrust laws. 
D) regulation of firms in highly competitive markets. 
A) government purchase of products produced by monopolists. 
B) government distribution of a monopolist's excess production. 
C) enforcement of antitrust laws. 
D) regulation of firms in highly competitive markets.

Question 12

If a profit-maximizing monopolist faces a downward-sloping market demand curve,its

Accepted Answer

A) average revenue is less than the price of the product. 
B) average revenue is less than marginal revenue. 
C) marginal revenue is less than the price of the product. 
D) marginal revenue is greater than the price of the product. 
A) average revenue is less than the price of the product. 
B) average revenue is less than marginal revenue. 
C) marginal revenue is less than the price of the product. 
D) marginal revenue is greater than the price of the product.

Question 13

Figure 15-5
The figure below depicts the demand, marginal revenue and marginal cost curves of a profit-maximizing monopolist.
  
-Refer to Figure 15-5.Which of the following areas represents the deadweight loss due to monopoly pricing?

Accepted Answer

A) Triangle bde 
B) Triangle bge 
C) Rectangle acdb 
D) Rectangle cfgd 
A) Triangle bde 
B) Triangle bge 
C) Rectangle acdb 
D) Rectangle cfgd

Question 14

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 cost of the 8th shirt?

Accepted Answer

A) $50 
B) $60 
C) $90 
D) $110 
A) $50 
B) $60 
C) $90 
D) $110

Question 15

Scenario 15-1
Consider a transportation corporation named C.R. Evans that has just completed the development of a new subway system in a medium-sized town in the Northwest. Currently, there are plenty of seats on the subway, and it is never crowded. Its capacity far exceeds the needs of the city. After just a few years of operation, the shareholders of C.R. Evans experienced incredible rates of return on their investment, due to the profitability of the corporation.
-Refer to Scenario 15-1.Which of the following statements are most likely to be true? (i)	New entrants to the market know they will earn a smaller piece of the market than C.R.Evans currently has.
(ii)	C.R.Evans is most likely experiencing increasing average total cost.
(iii)	C.R.Evans is a natural monopoly.

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)

Question 16

Which of the following is an example of price discrimination?

Accepted Answer

A) Nabisco provides cents-off coupons for its products. 
B) Amtrak offers a lower price for weekend travel compared to weekday rates on the same routes. 
C) Hotel rates for AAA members are lower than for nonmembers. 
D) All of the above are correct. 
A) Nabisco provides cents-off coupons for its products. 
B) Amtrak offers a lower price for weekend travel compared to weekday rates on the same routes. 
C) Hotel rates for AAA members are lower than for nonmembers. 
D) All of the above are correct.

Question 17

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 18

Selling a good at a price determined by the intersection of the demand curve and the marginal cost curve is consistent with (i)	the socially-optimal level of output.
(ii)	the market solution for profit-maximizing competitive firms.
(iii)	the market solution for a profit-maximizing monopoly.

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)

Question 19

When a firm operates under conditions of monopoly,its price is

Accepted Answer

A) not constrained. 
B) constrained by marginal cost. 
C) constrained by demand. 
D) constrained only by its social agenda. 
A) not constrained. 
B) constrained by marginal cost. 
C) constrained by demand. 
D) constrained only by its social agenda.

Question 20

Like monopolies,competitive firms choose to produce a quantity in which marginal revenue equals marginal cost.

Accepted Answer

A) True 
 B)False

Exam 15: Monopoly

Figure 15-3 The figure below illustrates the cost and revenue structure for a monopoly firm. -Refer to Figure 15-3.A profit-maximizing monopoly's total cost is equal to

A government-created monopoly arises when

Figure 15-1 -Refer to Figure 15-1.The shape of the average total cost curve reveals information about the nature of the barrier to entry that might exist in a monopoly market.Which of the following monopoly types best coincides with the figure?

Most markets are not monopolies in the real world because

A monopoly chooses to supply the market with a quantity of goods that is determined by the intersection of the

An industry is a natural monopoly when (i) the government assists the firm in maintaining the monopoly. (ii) a single firm owns a key resource. (iii) a single firm can supply a good or service to an entire market at a smaller cost than could two or more firms.

Graphically depict the deadweight loss caused by a monopoly.How is this similar to the deadweight loss from taxation?

When a pharmaceutical company discovers a new drug,patent law gives the monopoly

Table 15-4 Consider the following demand and cost information for a monopoly. -Refer to Table 15-4.The marginal revenue of the second unit is

One method used to control the ability of firms to capture monopoly profit in the United States is through

If a profit-maximizing monopolist faces a downward-sloping market demand curve,its

Figure 15-5 The figure below depicts the demand, marginal revenue and marginal cost curves of a profit-maximizing monopolist. -Refer to Figure 15-5.Which of the following areas represents the deadweight loss due to monopoly pricing?

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 cost of the 8th shirt?

Which of the following is an example of price discrimination?

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

Selling a good at a price determined by the intersection of the demand curve and the marginal cost curve is consistent with (i) the socially-optimal level of output. (ii) the market solution for profit-maximizing competitive firms. (iii) the market solution for a profit-maximizing monopoly.

When a firm operates under conditions of monopoly,its price is

Like monopolies,competitive firms choose to produce a quantity in which marginal revenue equals marginal cost.

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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