Question 1

For a profit-maximizing monopolist,when should output be increased to enhance economic well-being

Accepted Answer

A) as long as average revenue exceeds marginal cost 
B) as long as average revenue exceeds average total cost 
C) as long as marginal revenue exceeds marginal cost 
D) as long as marginal revenue exceeds average total cost 
A) as long as average revenue exceeds marginal cost 
B) as long as average revenue exceeds average total cost 
C) as long as marginal revenue exceeds marginal cost 
D) as long as marginal revenue exceeds average total cost

Question 2

How is a monopolist's profit-maximizing quantity of output determined

Accepted Answer

A) by the intersection of the marginal-revenue curve and the marginal-cost curve 
B) by the intersection of the marginal-revenue curve and the average-total-cost curve 
C) by the intersection of the average revenue curve and the marginal-cost curve 
D) by the intersection of the demand curve and the average-total-cost curve 
A) by the intersection of the marginal-revenue curve and the marginal-cost curve 
B) by the intersection of the marginal-revenue curve and the average-total-cost curve 
C) by the intersection of the average revenue curve and the marginal-cost curve 
D) by the intersection of the demand curve and the average-total-cost curve

Question 3

What shape of demand curves do competitive firms have,and how much output can they sell

Accepted Answer

A) They have downward-sloping demand curves, and they can sell as much output as they desire at the market price. 
B) They have downward-sloping demand curves, and they can sell only a limited quantity of output at each price. 
C) They have horizontal demand curves, and they can sell as much output as they desire at the market price. 
D) They have horizontal demand curves, and they can sell only a limited quantity of output at each price. 
A) They have downward-sloping demand curves, and they can sell as much output as they desire at the market price. 
B) They have downward-sloping demand curves, and they can sell only a limited quantity of output at each price. 
C) They have horizontal demand curves, and they can sell as much output as they desire at the market price. 
D) They have horizontal demand curves, and they can sell only a limited quantity of output at each price.

Question 4

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

Accepted Answer

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

Question 5

Which statement represents 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 taker and has a downward-sloping demand 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 taker and has a downward-sloping demand curve. 
D) A monopoly firm is a price maker and has an upward-sloping supply curve.

Question 6

A monopoly firm can sell 200 units of output for $36.00 per unit.Alternatively,it can sell 201 units of output for $35.50 per unit.What is the marginal revenue of the 201st unit of output

Accepted Answer

A) -$35.50 
B) -$64.50 
C) $64.50 
D) $35.50 
A) -$35.50 
B) -$64.50 
C) $64.50 
D) $35.50

Question 7

Price discrimination explains why many universities often set rules that determine prices of admission (or financial aid).What characteristic of students is this based on

Accepted Answer

A) their age 
B) their financial resources 
C) their high school GPA 
D) their gender 
A) their age 
B) their financial resources 
C) their high school GPA 
D) their gender

Question 8

When does a natural monopoly arise

Accepted Answer

A) when there are constant returns to scale over the relevant range of output 
B) when there are economies of scale over the relevant range of output 
C) when one firm owns a key natural resource 
D) when the government gives a single firm the exclusive right to produce a particular good or service 
A) when there are constant returns to scale over the relevant range of output 
B) when there are economies of scale over the relevant range of output 
C) when one firm owns a key natural resource 
D) when the government gives a single firm the exclusive right to produce a particular good or service

Question 9

What shape of demand curves do monopoly firms have,and how much output can they sell

Accepted Answer

A) They have downward-sloping demand curves, and they can sell as much output as they desire at the market price. 
B) They have downward-sloping demand curves, and they can sell only a limited quantity of output at each price. 
C) They have horizontal demand curves, and they can sell as much output as they desire at the market price. 
D) They have horizontal demand curves, and they can sell only a limited quantity of output at each price. 
A) They have downward-sloping demand curves, and they can sell as much output as they desire at the market price. 
B) They have downward-sloping demand curves, and they can sell only a limited quantity of output at each price. 
C) They have horizontal demand curves, and they can sell as much output as they desire at the market price. 
D) They have horizontal demand curves, and they can sell only a limited quantity of output at each price.

Question 10

When does a natural monopoly occur

Accepted Answer

A) when the product is sold in its natural state (such as water or diamonds) 
B) when there are economies of scale over the relevant range of output 
C) when the firm is characterized by a rising marginal-cost curve 
D) when production requires the use of free natural resources, such as water or air 
A) when the product is sold in its natural state (such as water or diamonds) 
B) when there are economies of scale over the relevant range of output 
C) when the firm is characterized by a rising marginal-cost curve 
D) when production requires the use of free natural resources, such as water or air

Question 11

Assume that a monopolist decides to maximize revenue rather than profit. How does this operating objective change the size of the deadweight loss? If you are a “benevolent” manager of a monopoly firm and are interested in reducing the deadweight loss of monopoly, should you maximize profits or maximize revenue? Carefully explain your answer.

Accepted Answer

A revenue maximizer operates where MR =

Question 12

Figure 15-2
The figure below reflects the cost and revenue structure for a monopoly firm.
  
-Refer to Figure 15-2.Which curve depicts the marginal-revenue curve for a monopoly firm

Accepted Answer

A) A 
B) B 
C) C 
D) D 
A) A 
B) B 
C) C 
D) D

Question 13

In theory,which outcome occurs with perfect price discrimination

Accepted Answer

A) It decreases the monopolist's profits. 
B) It decreases consumer surplus. 
C) It increases deadweight loss. 
D) It decreases total output. 
A) It decreases the monopolist's profits. 
B) It decreases consumer surplus. 
C) It increases deadweight loss. 
D) It decreases total output.

Question 14

Scenario 15-1
Consider the market for water in a small town in the Old West.Assume that the only source of water is the underground aquifer that lies directly below the town.Wells are used to supply water to the entire town.
-Refer to Scenario 15-1.Assume that Jack is the sole owner of all the wells in town.He decides to move to a more suitable climate and sells the wells to a couple of dozen different town residents.What will be the result

Accepted Answer

A) The town residents will likely be worse off. 
B) The price of water is likely to rise. 
C) The individual water sellers will not have as many customers as Jack had. 
D) More water will be offered for sale. 
A) The town residents will likely be worse off. 
B) The price of water is likely to rise. 
C) The individual water sellers will not have as many customers as Jack had. 
D) More water will be offered for sale.

Question 15

For which item is it sometimes meaningful for a monopoly to consider negative values

Accepted Answer

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

Question 16

Table 15-1
  
-Refer to Table 15-1.What is the marginal revenue for the monopolist for the sixth unit sold

Accepted Answer

A) $3 
B) $5 
C) $8 
D) $11 
A) $3 
B) $5 
C) $8 
D) $11

Question 17

What do we know about a monopoly's marginal cost

Accepted Answer

A) It will be less than its average fixed cost. 
B) It will be less than the price per unit of its product. 
C) It will exceed its marginal revenue. 
D) It will equal its average total cost. 
A) It will be less than its average fixed cost. 
B) It will be less than the price per unit of its product. 
C) It will exceed its marginal revenue. 
D) It will equal its average total cost.

Question 18

Which of the following is NOT an example of price discrimination

Accepted Answer

A) Airline charges a lower price for round trips than single trips. 
B) Many colleges and universities give financial aid to needy students. 
C) Discount coupons are available free to the public. 
D) Prices are different at different gas stations throughout the city. 
A) Airline charges a lower price for round trips than single trips. 
B) Many colleges and universities give financial aid to needy students. 
C) Discount coupons are available free to the public. 
D) Prices are different at different gas stations throughout the city.

Question 19

Under which circumstance can a firm that has a monopoly on water (which is a necessity) charge a high price for water

Accepted Answer

A) only if the marginal cost of producing water is high 
B) even if the marginal cost of producing water is low 
C) only if the firm is a natural monopoly 
D) even if the demand for water is low 
A) only if the marginal cost of producing water is high 
B) even if the marginal cost of producing water is low 
C) only if the firm is a natural monopoly 
D) even if the demand for water is low

For a profit-maximizing monopolist,when should output be increased to enhance economic well-being

How is a monopolist's profit-maximizing quantity of output determined

What shape of demand curves do competitive firms have,and how much output can they sell

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

Which statement represents a monopoly firm

A monopoly firm can sell 200 units of output for $36.00 per unit.Alternatively,it can sell 201 units of output for $35.50 per unit.What is the marginal revenue of the 201st unit of output

Price discrimination explains why many universities often set rules that determine prices of admission (or financial aid).What characteristic of students is this based on

When does a natural monopoly arise

What shape of demand curves do monopoly firms have,and how much output can they sell

When does a natural monopoly occur

Figure 15-2 The figure below reflects the cost and revenue structure for a monopoly firm. -Refer to Figure 15-2.Which curve depicts the marginal-revenue curve for a monopoly firm

In theory,which outcome occurs with perfect price discrimination

For which item is it sometimes meaningful for a monopoly to consider negative values

Table 15-1 -Refer to Table 15-1.What is the marginal revenue for the monopolist for the sixth unit sold

What do we know about a monopoly's marginal cost

Which of the following is NOT an example of price discrimination

Under which circumstance can a firm that has a monopoly on water (which is a necessity) charge a high price for water

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

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Exam 15: Monopoly

For a profit-maximizing monopolist,when should output be increased to enhance economic well-being

How is a monopolist's profit-maximizing quantity of output determined

What shape of demand curves do competitive firms have,and how much output can they sell

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

Which statement represents a monopoly firm

A monopoly firm can sell 200 units of output for $36.00 per unit.Alternatively,it can sell 201 units of output for $35.50 per unit.What is the marginal revenue of the 201st unit of output

Price discrimination explains why many universities often set rules that determine prices of admission (or financial aid).What characteristic of students is this based on

When does a natural monopoly arise

What shape of demand curves do monopoly firms have,and how much output can they sell

When does a natural monopoly occur

Figure 15-2 The figure below reflects the cost and revenue structure for a monopoly firm. -Refer to Figure 15-2.Which curve depicts the marginal-revenue curve for a monopoly firm

In theory,which outcome occurs with perfect price discrimination

For which item is it sometimes meaningful for a monopoly to consider negative values

Table 15-1 -Refer to Table 15-1.What is the marginal revenue for the monopolist for the sixth unit sold

What do we know about a monopoly's marginal cost

Which of the following is NOT an example of price discrimination

Under which circumstance can a firm that has a monopoly on water (which is a necessity) charge a high price for water

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