Question 1

What can measure the economic inefficiency of a monopolist

Accepted Answer

A) the number of consumers who are unable to purchase the product because of its high price 
B) the excess profit generated by monopoly firms 
C) the loss of producer surplus by monopoly firms 
D) the deadweight loss 
A) the number of consumers who are unable to purchase the product because of its high price 
B) the excess profit generated by monopoly firms 
C) the loss of producer surplus by monopoly firms 
D) the deadweight loss

Question 2

What would result from a reduction in a monopolist's fixed costs

Accepted Answer

A) The profit-maximizing price would decrease, and the profit-maximizing quantity produced would increase. 
B) The profit-maximizing price would increase, and the profit-maximizing quantity produced would decrease. 
C) The profit-maximizing price would decrease and the profit-maximizing quantity produced would not change. 
D) The profit-maximizing price would increase, and the profit-maximizing quantity produced would not change. 
A) The profit-maximizing price would decrease, and the profit-maximizing quantity produced would increase. 
B) The profit-maximizing price would increase, and the profit-maximizing quantity produced would decrease. 
C) The profit-maximizing price would decrease and the profit-maximizing quantity produced would not change. 
D) The profit-maximizing price would increase, and the profit-maximizing quantity produced would not change.

Question 3

For which firm can marginal revenue become negative

Accepted Answer

A) competitive firms, since price is equal to marginal revenue 
B) competitive firms, since they are facing downward-sloping demand curves 
C) monopoly firms, since they are facing a downward-sloping demand curves 
D) monopoly firms, since price is equal to marginal revenue 
A) competitive firms, since price is equal to marginal revenue 
B) competitive firms, since they are facing downward-sloping demand curves 
C) monopoly firms, since they are facing a downward-sloping demand curves 
D) monopoly firms, since price is equal to marginal revenue

Question 4

Due to the nature of the patent laws on pharmaceuticals,what happens to the market for such drugs

Accepted Answer

A) It remains a competitive market indefinitely. 
B) It remains a monopolistic market indefinitely. 
C) It switches from competitive to monopolistic once the firm's patent runs out. 
D) It switches from monopolistic to competitive once the firm's patent runs out. 
A) It remains a competitive market indefinitely. 
B) It remains a monopolistic market indefinitely. 
C) It switches from competitive to monopolistic once the firm's patent runs out. 
D) It switches from monopolistic to competitive once the firm's patent runs out.

Question 5

A monopolist faces market demand given by P = 80 - Q.For this market,MR = 80 - 2Q and MC = 2Q.What price will the monopolist charge in order to maximize profits

Accepted Answer

A) $20 
B) $30 
C) $50 
D) $60 
A) $20 
B) $30 
C) $50 
D) $60

Question 6

Let P = price,MR = marginal revenue,and MC = marginal cost.For a profit-maximizing monopolist,which of the following describes the relationship

Accepted Answer

A) P = MR = MC 
B) P = MC MC 
D) P > MR = MC 
A) P = MR = MC 
B) P = MC MC 
D) P > MR = MC

Question 7

Airlines often separate their customers into business travellers and personal travellers by giving a discount to those travellers who stay over a Saturday night.

Accepted Answer

A) True 
 B)False

Question 8

During the life of a drug patent,the monopoly pharmaceutical firm maximizes profit by producing the quantity at which marginal revenue equals marginal cost.

Accepted Answer

A) True 
 B)False

Question 9

When a monopolist increases the amount of output that it produces and sells,what happens to the price of its output

Accepted Answer

A) It may only increase if the demand is elastic. 
B) It may only decreases if the demand is inelastic. 
C) It decreases regardless of the elasticity of demand. 
D) It increases regardless of the elasticity of demand. 
A) It may only increase if the demand is elastic. 
B) It may only decreases if the demand is inelastic. 
C) It decreases regardless of the elasticity of demand. 
D) It increases regardless of the elasticity of demand.

Question 10

Figure 15-5
The figure depicts the demand, marginal-revenue, and marginal-cost curves of a profit-maximizing monopolist.
  
-Refer to Figure 15-5.What is total surplus lost 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 11

Scenario 15-3
Black Box Cable TV is able to purchase an exclusive right to sell a premium movie channel (PMC) in its market area.Let's assume that Black Box Cable pays $150,000 a year for the exclusive marketing rights to PMC.Since Black Box has already installed cable to all of the homes in its market area, the marginal cost of PMC to subscribers is zero.The manager of Black Box needs to know what price to charge for the PMC service to maximize her profit.Before setting price, she hires an economist to estimate demand for the PMC service.The economist discovers that there are two types of subscribers who value premium movie channels.First are the 4000 die-hard TV viewers who will pay as much as $150 a year for the new PMC premium channel.Second, the PMC channel will appeal to about 20,000 occasional TV viewers who will pay as much as $25 a year for a subscription to PMC.
-Refer to Scenario 15-3.If Black Box Cable TV is able to price discriminate,what would be the maximum amount of profit it could generate

Accepted Answer

A) $500,000 
B) $600,000 
C) $950,000 
D) $1,100,000 
A) $500,000 
B) $600,000 
C) $950,000 
D) $1,100,000

Question 12

Why do many movie theatres sell discount tickets to senior citizens

Accepted Answer

A) Senior-citizen laws mandate such discounts. 
B) Efforts of goodwill show community respect and win loyal patrons. 
C) The theatres are profit maximizers. 
D) Senior citizens usually comprise a solid portion of those who voice their opinions. 
A) Senior-citizen laws mandate such discounts. 
B) Efforts of goodwill show community respect and win loyal patrons. 
C) The theatres are profit maximizers. 
D) Senior citizens usually comprise a solid portion of those who voice their opinions.

Question 13

What is generally the case for a monopolist's average revenue

Accepted Answer

A) It is equal to marginal revenue. 
B) It is less than marginal revenue. 
C) It is equal to the price of its product. 
D) It is less than the price of its product. 
A) It is equal to marginal revenue. 
B) It is less than marginal revenue. 
C) It is equal to the price of its product. 
D) It is less than the price of its product.

Question 14

What does encouraging firms to invest in research and development,and individuals to engage in creative endeavours such as writing novels,justify

Accepted Answer

A) resource monopolies 
B) natural monopolies 
C) government-created monopolies 
D) breaking up monopolies into smaller firms 
A) resource monopolies 
B) natural monopolies 
C) government-created monopolies 
D) breaking up monopolies into smaller firms

Question 15

A monopolist faces market demand given by P = 200 - Q.For this market,MR = 250 - 2Q and MC = 3Q.What price will the monopolist charge in order to maximize profits

Accepted Answer

A) $140 
B) $150 
C) $160 
D) $180 
A) $140 
B) $150 
C) $160 
D) $180

Question 16

Table 15-1
  
-Refer to Table 15-1.If the monopolist wants to maximize its revenue,how many units of its product should it sell

Accepted Answer

A) 4 
B) 5 
C) 6 
D) 7 
A) 4 
B) 5 
C) 6 
D) 7

Question 17

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

Accepted Answer

A) P₂ × Q₄ 
B) P₃ × Q₂ 
C) (P₃ - P₁) × Q₂ 
D) (P₃ - P₀) × Q₄ 
A) P₂ × Q₄ 
B) P₃ × Q₂ 
C) (P₃ - P₁) × Q₂ 
D) (P₃ - P₀) × Q₄

Question 18

Angelo is a wholesale meatball distributor.He sells his meatballs to all the finest Italian restaurants in town.Nobody can make meatballs like Angelo.As a result,his is the only business in town that sells meatballs to restaurants.Assuming that Angelo is maximizing his profit,how will meatball prices compare with marginal cost

Accepted Answer

A) Meatball prices will be less than marginal cost. 
B) Meatball prices will equal marginal cost. 
C) Meatball prices will exceed marginal cost. 
D) Meatball prices will be a function of supply and demand and will therefore fluctuate around marginal costs. 
A) Meatball prices will be less than marginal cost. 
B) Meatball prices will equal marginal cost. 
C) Meatball prices will exceed marginal cost. 
D) Meatball prices will be a function of supply and demand and will therefore fluctuate around marginal costs.

Question 19

A monopolist faces market demand given by P = 250 - 0.5Q.For this market,MR = 250 - Q and MC = 100.What is the deadweight loss due to the monopoly

Accepted Answer

A) $5625 
B) $7500 
C) $11,250 
D) $15,000 
A) $5625 
B) $7500 
C) $11,250 
D) $15,000

Question 20

In order for antitrust laws to raise social welfare,what must the government do

Accepted Answer

A) It must disallow synergy benefits from accruing to monopolists. 
B) It must disallow any mergers from taking place. 
C) It must be able to determine which mergers are desirable and which are not. 
D) It must always attempt to keep markets in their most competitive form. 
A) It must disallow synergy benefits from accruing to monopolists. 
B) It must disallow any mergers from taking place. 
C) It must be able to determine which mergers are desirable and which are not. 
D) It must always attempt to keep markets in their most competitive form.

What can measure the economic inefficiency of a monopolist

What would result from a reduction in a monopolist's fixed costs

For which firm can marginal revenue become negative

Due to the nature of the patent laws on pharmaceuticals,what happens to the market for such drugs

A monopolist faces market demand given by P = 80 - Q.For this market,MR = 80 - 2Q and MC = 2Q.What price will the monopolist charge in order to maximize profits

Let P = price,MR = marginal revenue,and MC = marginal cost.For a profit-maximizing monopolist,which of the following describes the relationship

Airlines often separate their customers into business travellers and personal travellers by giving a discount to those travellers who stay over a Saturday night.

During the life of a drug patent,the monopoly pharmaceutical firm maximizes profit by producing the quantity at which marginal revenue equals marginal cost.

When a monopolist increases the amount of output that it produces and sells,what happens to the price of its output

Figure 15-5 The figure depicts the demand, marginal-revenue, and marginal-cost curves of a profit-maximizing monopolist. -Refer to Figure 15-5.What is total surplus lost due to monopoly pricing

Why do many movie theatres sell discount tickets to senior citizens

What is generally the case for a monopolist's average revenue

What does encouraging firms to invest in research and development,and individuals to engage in creative endeavours such as writing novels,justify

A monopolist faces market demand given by P = 200 - Q.For this market,MR = 250 - 2Q and MC = 3Q.What price will the monopolist charge in order to maximize profits

Table 15-1 -Refer to Table 15-1.If the monopolist wants to maximize its revenue,how many units of its product should it sell

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

A monopolist faces market demand given by P = 250 - 0.5Q.For this market,MR = 250 - Q and MC = 100.What is the deadweight loss due to the monopoly

In order for antitrust laws to raise social welfare,what must the government do

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 Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Filters

Exam 15: Monopoly

What can measure the economic inefficiency of a monopolist

What would result from a reduction in a monopolist's fixed costs

For which firm can marginal revenue become negative

Due to the nature of the patent laws on pharmaceuticals,what happens to the market for such drugs

A monopolist faces market demand given by P = 80 - Q.For this market,MR = 80 - 2Q and MC = 2Q.What price will the monopolist charge in order to maximize profits

Let P = price,MR = marginal revenue,and MC = marginal cost.For a profit-maximizing monopolist,which of the following describes the relationship

Airlines often separate their customers into business travellers and personal travellers by giving a discount to those travellers who stay over a Saturday night.

During the life of a drug patent,the monopoly pharmaceutical firm maximizes profit by producing the quantity at which marginal revenue equals marginal cost.

When a monopolist increases the amount of output that it produces and sells,what happens to the price of its output

Figure 15-5 The figure depicts the demand, marginal-revenue, and marginal-cost curves of a profit-maximizing monopolist. -Refer to Figure 15-5.What is total surplus lost due to monopoly pricing

Why do many movie theatres sell discount tickets to senior citizens

What is generally the case for a monopolist's average revenue

What does encouraging firms to invest in research and development,and individuals to engage in creative endeavours such as writing novels,justify

A monopolist faces market demand given by P = 200 - Q.For this market,MR = 250 - 2Q and MC = 3Q.What price will the monopolist charge in order to maximize profits

Table 15-1 -Refer to Table 15-1.If the monopolist wants to maximize its revenue,how many units of its product should it sell

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

A monopolist faces market demand given by P = 250 - 0.5Q.For this market,MR = 250 - Q and MC = 100.What is the deadweight loss due to the monopoly

In order for antitrust laws to raise social welfare,what must the government do

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 Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Filters