Question 1

With no price discrimination,the monopolist sells every unit at the same price.Therefore

Accepted Answer

A) marginal revenue is equal to price. 
B) marginal revenue is equal to average revenue. 
C) price is greater than marginal revenue. 
D) Both a and b are correct. 
A) marginal revenue is equal to price. 
B) marginal revenue is equal to average revenue. 
C) price is greater than marginal revenue. 
D) Both a and b are correct.

Question 2

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.The firm's profit-maximizing price is

Accepted Answer

A) $30. 
B) between $30 and $34. 
C) between $34 and $60. 
D) $60. 
A) $30. 
B) between $30 and $34. 
C) between $34 and $60. 
D) $60.

Question 3

Concerning public utilities,the stated reason for resorting to regulation of a monopoly,rather than promoting competition through antitrust,is that the industry in question is believed to be a

Accepted Answer

A) profit-maximizing monopoly. 
B) producer of externalities. 
C) revenue-maximizing monopoly. 
D) natural monopoly. 
A) profit-maximizing monopoly. 
B) producer of externalities. 
C) revenue-maximizing monopoly. 
D) natural monopoly.

Question 4

Which of the following statements is true? (i)	When a competitive firm sells an additional unit of output,its revenue increases by an amount less than the price.
(ii)	When a monopoly firm sells an additional unit of output,its revenue increases by an amount less than the price.
(iii)	Average revenue is the same as price for both competitive and monopoly 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 5

One example of price discrimination occurs in the publishing industry when a publisher initially releases an expensive hardcover edition of a popular novel,and later releases a cheaper paperback edition.Use this example to demonstrate the benefits and potential pitfalls of a price discrimination pricing strategy.

Accepted Answer

The answer should address the three basi

Question 6

Figure 15-1
  
-Refer to Figure 15-1.Considering the relationship between average total cost and marginal cost,the marginal cost curve for this firm

Accepted Answer

A) must lie entirely above the average total cost curve. 
B) must lie entirely below the average total cost curve. 
C) must be upward sloping. 
D) does not exist. 
A) must lie entirely above the average total cost curve. 
B) must lie entirely below the average total cost curve. 
C) must be upward sloping. 
D) does not exist.

Question 7

Figure 15-2
The figure below illustrates the cost and revenue structure for a monopoly firm.
  
-Refer to Figure 15-2.The marginal revenue curve for a monopoly firm is depicted by curve

Accepted Answer

A) a. 
B) B. 
C) C. 
D) D. 
A) a. 
B) B. 
C) C. 
D) D.

Question 8

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 average revenue when 7 shirts are sold?

Accepted Answer

A) $40 
B) $90 
C) $100 
D) $700 
A) $40 
B) $90 
C) $100 
D) $700

Question 9

Table 15-3
George has the following demand curve for selling vegemite:
   
In addition, George has a marginal cost of $3.00 per unit.
-Refer to Table 15-3.What is George'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 is not an example of price discrimination by a firm?

Accepted Answer

A) Children's meals at a restaurant. 
B) A natural gas company charging customers a higher rate in the winter than in the summer. 
C) A senior citizens' discount. 
D) Coupons in the Sunday newspaper. 
A) Children's meals at a restaurant. 
B) A natural gas company charging customers a higher rate in the winter than in the summer. 
C) A senior citizens' discount. 
D) Coupons in the Sunday newspaper.

Question 11

Reduced competition through merging of companies will raise social welfare

Accepted Answer

A) if the cost from the synergies exceeds the benefit of increased market power. 
B) if the benefit from the synergies exceeds the social cost of increased market power. 
C) always. 
D) never. 
A) if the cost from the synergies exceeds the benefit of increased market power. 
B) if the benefit from the synergies exceeds the social cost of increased market power. 
C) always. 
D) never.

Question 12

For a firm to price discriminate,

Accepted Answer

A) it must be a natural monopoly. 
B) it must be regulated by the government. 
C) it must have some market power. 
D) consumers must tell the firm what they are willing to pay for the product. 
A) it must be a natural monopoly. 
B) it must be regulated by the government. 
C) it must have some market power. 
D) consumers must tell the firm what they are willing to pay for the product.

Question 13

A monopoly firm can sell 150 units of output for $10.00 per unit.Alternatively,it can sell 151 units of output for $9.95 per unit.The marginal revenue of the 151ˢᵗ unit of output is

Accepted Answer

A) $-2.45. 
B) $-0.05. 
C) $2.45. 
D) $9.95. 
A) $-2.45. 
B) $-0.05. 
C) $2.45. 
D) $9.95.

Question 14

The profit-maximization problem for a monopolist differs from that of a competitive firm in which of the following ways?

Accepted Answer

A) A competitive firm maximizes profit at the point where marginal revenue equals marginal cost; a monopolist maximizes profit at the point where marginal revenue exceeds marginal cost. 
B) A competitive firm maximizes profit at the point where average revenue equals marginal cost; a monopolist maximizes profit at the point where average revenue exceeds marginal cost. 
C) For a competitive firm, marginal revenue at the profit-maximizing level of output is equal to marginal revenue at all other levels of output; for a monopolist, marginal revenue at the profit-maximizing level of output is smaller than it is for larger levels of output. 
D) For a profit-maximizing competitive firm, thinking at the margin is much more important than it is for a profit-maximizing monopolist. 
A) A competitive firm maximizes profit at the point where marginal revenue equals marginal cost; a monopolist maximizes profit at the point where marginal revenue exceeds marginal cost. 
B) A competitive firm maximizes profit at the point where average revenue equals marginal cost; a monopolist maximizes profit at the point where average revenue exceeds marginal cost. 
C) For a competitive firm, marginal revenue at the profit-maximizing level of output is equal to marginal revenue at all other levels of output; for a monopolist, marginal revenue at the profit-maximizing level of output is smaller than it is for larger levels of output. 
D) For a profit-maximizing competitive firm, thinking at the margin is much more important than it is for a profit-maximizing monopolist.

Question 15

Perfect price discrimination describes a situation in which the monopolist

Accepted Answer

A) knows the exact willingness to pay of each of its customers. 
B) charges exactly two different prices to exactly two different groups of customers. 
C) maximizes consumer surplus. 
D) experiences a zero economic profit. 
A) knows the exact willingness to pay of each of its customers. 
B) charges exactly two different prices to exactly two different groups of customers. 
C) maximizes consumer surplus. 
D) experiences a zero economic profit.

Question 16

Average revenue for a monopoly is the total revenue divided by the quantity produced.

Accepted Answer

A) True 
 B)False

Question 17

Authors are allowed to be monopolists in the sale of their books in order to

Accepted Answer

A) encourage authors to write more and better books. 
B) correct for the negative externalities that the internet and television impose. 
C) satisfy literary advocacy groups that exercise their lobbying power. 
D) promote a society in which people think for themselves and learn from whichever books they please. 
A) encourage authors to write more and better books. 
B) correct for the negative externalities that the internet and television impose. 
C) satisfy literary advocacy groups that exercise their lobbying power. 
D) promote a society in which people think for themselves and learn from whichever books they please.

Question 18

A monopolist can sell 200 units of output for $36.00 per unit.Alternatively,it can sell 201 units of output for $35.80 per unit.The marginal revenue of the 201ˢᵗ unit of output is

Accepted Answer

A) $-4.20. 
B) $-0.20. 
C) $4.20. 
D) $35.80. 
A) $-4.20. 
B) $-0.20. 
C) $4.20. 
D) $35.80.

Question 19

A market force that can prevent firms from price discriminating is

Accepted Answer

A) fluctuating resource prices. 
B) arbitrage. 
C) high fixed costs. 
D) marginal-cost pricing. 
A) fluctuating resource prices. 
B) arbitrage. 
C) high fixed costs. 
D) marginal-cost pricing.

Question 20

Figure 15-2
The figure below illustrates the cost and revenue structure for a monopoly firm.
  
-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.

Exam 15: Monopoly

With no price discrimination,the monopolist sells every unit at the same price.Therefore

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.The firm's profit-maximizing price is

Concerning public utilities,the stated reason for resorting to regulation of a monopoly,rather than promoting competition through antitrust,is that the industry in question is believed to be a

Figure 15-1 -Refer to Figure 15-1.Considering the relationship between average total cost and marginal cost,the marginal cost curve for this firm

Figure 15-2 The figure below illustrates the cost and revenue structure for a monopoly firm. -Refer to Figure 15-2.The marginal revenue curve for a monopoly firm is depicted by curve

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 average revenue when 7 shirts are sold?

Table 15-3 George has the following demand curve for selling vegemite: In addition, George has a marginal cost of $3.00 per unit. -Refer to Table 15-3.What is George's profit-maximizing price?

Which of the following is not an example of price discrimination by a firm?

Reduced competition through merging of companies will raise social welfare

For a firm to price discriminate,

A monopoly firm can sell 150 units of output for $10.00 per unit.Alternatively,it can sell 151 units of output for $9.95 per unit.The marginal revenue of the 151ˢᵗ unit of output is

The profit-maximization problem for a monopolist differs from that of a competitive firm in which of the following ways?

Perfect price discrimination describes a situation in which the monopolist

Average revenue for a monopoly is the total revenue divided by the quantity produced.

Authors are allowed to be monopolists in the sale of their books in order to

A monopolist can sell 200 units of output for $36.00 per unit.Alternatively,it can sell 201 units of output for $35.80 per unit.The marginal revenue of the 201ˢᵗ unit of output is

A market force that can prevent firms from price discriminating is

Figure 15-2 The figure below illustrates the cost and revenue structure for a monopoly firm. -In a competitive market,a firm's supply curve dictates the amount it will supply.In a monopoly market the

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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