Question 1

Round-trip airline tickets are usually cheaper if you stay over a Saturday night before you fly back.What is the reason for this price discrepancy?

Accepted Answer

A) Airlines are practicing imperfect price discrimination to raise their profits. 
B) Airlines charge a different rate based on the different nature of peoples' travel needs. 
C) Airlines are attempting to charge people based on their willingness to pay. 
D) All of the above are correct. 
A) Airlines are practicing imperfect price discrimination to raise their profits. 
B) Airlines charge a different rate based on the different nature of peoples' travel needs. 
C) Airlines are attempting to charge people based on their willingness to pay. 
D) All of the above are correct.

Question 2

When a certain monopoly sets its price at $8 it sells 64 units.When the monopoly sets its price at $10 it sells 60 units.The marginal revenue for the firm over this range is

Accepted Answer

A) $11. 
B) $22. 
C) $33. 
D) $44. 
A) $11. 
B) $22. 
C) $33. 
D) $44.

Question 3

The first major piece of antitrust legislation was the

Accepted Answer

A) Clayton Act. 
B) Celler-Kefauver Act. 
C) Sherman Act. 
D) Robinson-Patman Act. 
A) Clayton Act. 
B) Celler-Kefauver Act. 
C) Sherman Act. 
D) Robinson-Patman Act.

Question 4

A natural monopolist's ability to price its product is

Accepted Answer

A) constrained by the market demand curve. 
B) constrained by market supply. 
C) not affected by market demand. 
D) enhanced by regulatory control of the government. 
A) constrained by the market demand curve. 
B) constrained by market supply. 
C) not affected by market demand. 
D) enhanced by regulatory control of the government.

Question 5

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 6

When a monopolist increases the number of units it sells,there are two effects on revenue.They are the

Accepted Answer

A) demand effect and the supply effect. 
B) competition effect and the cost effect. 
C) competitive effect and the monopoly effect. 
D) output effect and the price effect. 
A) demand effect and the supply effect. 
B) competition effect and the cost effect. 
C) competitive effect and the monopoly effect. 
D) output effect and the price effect.

Question 7

Figure 15-6
  
-Refer to Figure 15-6.The deadweight loss caused by a profit-maximizing monopoly amounts to

Accepted Answer

A) $150. 
B) $200. 
C) $250. 
D) $300. 
A) $150. 
B) $200. 
C) $250. 
D) $300.

Question 8

The defining characteristic of a natural monopoly is

Accepted Answer

A) constant marginal cost over the relevant range of output. 
B) economies of scale over the relevant range of output. 
C) constant returns to scale over the relevant range of output. 
D) diseconomies of scale over the relevant range of output. 
A) constant marginal cost over the relevant range of output. 
B) economies of scale over the relevant range of output. 
C) constant returns to scale over the relevant range of output. 
D) diseconomies of scale over the relevant range of output.

Question 9

Figure 15-2
The figure below illustrates the cost and revenue structure for a monopoly firm.
  
-Which of the following statements is true of a monopoly firm?

Accepted Answer

A) A monopoly firm is a price taker and has no supply curve. 
B) A monopoly firm is a price maker and has no supply curve 
C) A monopoly firm is a price maker and has a downward-sloping supply curve. 
D) A monopoly firm is a price maker and has an upward-sloping supply curve. 
A) A monopoly firm is a price taker and has no supply curve. 
B) A monopoly firm is a price maker and has no supply curve 
C) A monopoly firm is a price maker and has a downward-sloping supply curve. 
D) A monopoly firm is a price maker and has an upward-sloping supply curve.

Question 10

Sizable economic profits can persist over time under monopoly if the monopolist

Accepted Answer

A) produces that output where average total cost is at a maximum. 
B) is protected by barriers to entry. 
C) operates as a price taker rather than a price maker. 
D) realizes revenues that exceed variable costs. 
A) produces that output where average total cost is at a maximum. 
B) is protected by barriers to entry. 
C) operates as a price taker rather than a price maker. 
D) realizes revenues that exceed variable costs.

Question 11

A monopolist faces the following demand curve:  
The monopolist has fixed costs of $1,000 and has a constant marginal cost of $2 per unit.If the monopolist were able to perfectly price discriminate,how many units would it sell?

Accepted Answer

A) 400 
B) 500 
C) 900 
D) 4,200 
A) 400 
B) 500 
C) 900 
D) 4,200

Question 12

Which of the following statements is (are)true of a monopoly? (i)	A monopoly has the ability to set the price of its product at whatever level it desires.
(ii)	A monopoly's total revenue will always increase when it increases the price of its product.
(iii)	A monopoly can earn unlimited profits.

Accepted Answer

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

Question 13

Economists assume that monopolists behave as

Accepted Answer

A) cost minimizers. 
B) profit maximizers. 
C) price maximizers. 
D) maximizers of social welfare. 
A) cost minimizers. 
B) profit maximizers. 
C) price maximizers. 
D) maximizers of social welfare.

Question 14

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 15

The key difference between a competitive firm and a monopoly firm is the ability to select

Accepted Answer

A) the level of competition in the market. 
B) the level of production. 
C) inputs in the production process. 
D) the price of its output. 
A) the level of competition in the market. 
B) the level of production. 
C) inputs in the production process. 
D) the price of its output.

Question 16

Which of the following statements is true about patents and copyrights? (i)	They both have benefits and costs.
(ii)	They lead to higher prices.
(iii)	They enhance the ability of monopolists to earn above-average profits.

Accepted Answer

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

Question 17

The practice of selling the same goods to different customers at different prices,but with the same marginal cost,is known as

Accepted Answer

A) price segregation. 
B) price discrimination. 
C) arbitrage. 
D) monopoly pricing. 
A) price segregation. 
B) price discrimination. 
C) arbitrage. 
D) monopoly pricing.

Question 18

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 19

Scenario 15-2
A monopoly firm maximizes its profit by producing Q = 500 units of output. At that level of output, its marginal revenue is $30, its average revenue is $60, and its average total cost is $34.
-Refer to Scenario 15-2.At Q = 500,the firm's marginal cost is

Accepted Answer

A) less than $30. 
B) $30. 
C) $34. 
D) greater than $34. 
A) less than $30. 
B) $30. 
C) $34. 
D) greater than $34.

Question 20

It is not uncommon to find that prescription drugs sell for more in the United States than they do in other countries.Which of the following statements about this issue is most likely to be true?

Accepted Answer

A) Drug companies are engaging in price discrimination, and this practice certainly reduces global social welfare. 
B) Global social welfare could be improved if the price in the United States were reduced to the price charged in other countries. 
C) Global social welfare could be improved if the price in the other countries were increased to the price charged in the United States. 
D) Drug companies are engaging in price discrimination, but this might improve global social welfare if it gives more people access to the drugs. 
A) Drug companies are engaging in price discrimination, and this practice certainly reduces global social welfare. 
B) Global social welfare could be improved if the price in the United States were reduced to the price charged in other countries. 
C) Global social welfare could be improved if the price in the other countries were increased to the price charged in the United States. 
D) Drug companies are engaging in price discrimination, but this might improve global social welfare if it gives more people access to the drugs.

Exam 15: Monopoly

Round-trip airline tickets are usually cheaper if you stay over a Saturday night before you fly back.What is the reason for this price discrepancy?

When a certain monopoly sets its price at $8 it sells 64 units.When the monopoly sets its price at $10 it sells 60 units.The marginal revenue for the firm over this range is

The first major piece of antitrust legislation was the

A natural monopolist's ability to price its product is

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

When a monopolist increases the number of units it sells,there are two effects on revenue.They are the

Figure 15-6 -Refer to Figure 15-6.The deadweight loss caused by a profit-maximizing monopoly amounts to

The defining characteristic of a natural monopoly is

Figure 15-2 The figure below illustrates the cost and revenue structure for a monopoly firm. -Which of the following statements is true of a monopoly firm?

Sizable economic profits can persist over time under monopoly if the monopolist

A monopolist faces the following demand curve: The monopolist has fixed costs of $1,000 and has a constant marginal cost of $2 per unit.If the monopolist were able to perfectly price discriminate,how many units would it sell?

Which of the following statements is (are)true of a monopoly? (i) A monopoly has the ability to set the price of its product at whatever level it desires. (ii) A monopoly's total revenue will always increase when it increases the price of its product. (iii) A monopoly can earn unlimited profits.

Economists assume that monopolists behave as

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?

The key difference between a competitive firm and a monopoly firm is the ability to select

Which of the following statements is true about patents and copyrights? (i) They both have benefits and costs. (ii) They lead to higher prices. (iii) They enhance the ability of monopolists to earn above-average profits.

The practice of selling the same goods to different customers at different prices,but with the same marginal cost,is known as

A firm that is a natural monopoly

Scenario 15-2 A monopoly firm maximizes its profit by producing Q = 500 units of output. At that level of output, its marginal revenue is $30, its average revenue is $60, and its average total cost is $34. -Refer to Scenario 15-2.At Q = 500,the firm's marginal cost is

It is not uncommon to find that prescription drugs sell for more in the United States than they do in other countries.Which of the following statements about this issue is most likely to be true?

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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