Question 1

A monopolist faces market demand given by P = 140 - Q.For this market,MR = 140 - 2Q and MC = 20.What price will the monopolist charge in order to maximize profits

Accepted Answer

A) $40 
B) $50 
C) $80 
D) $100 
A) $40 
B) $50 
C) $80 
D) $100

Question 2

Since natural monopolies have a declining average-cost curve,what effect would regulating natural monopolies by setting price equal to marginal cost have

Accepted Answer

A) It would cause the monopolist to operate at a loss. 
B) It would result in a less than optimal total surplus. 
C) It would maximize producer surplus. 
D) It would encourage research in order to recoup lost profits. 
A) It would cause the monopolist to operate at a loss. 
B) It would result in a less than optimal total surplus. 
C) It would maximize producer surplus. 
D) It would encourage research in order to recoup lost profits.

Question 3

If the government deems a newly invented drug to be truly original,the pharmaceutical company is given the exclusive right to manufacture and sell the drug for 50 years.

Accepted Answer

A) True 
 B)False

Question 4

When a firm's average-total-cost curve continually declines,what is the firm considered

Accepted Answer

A) a government-created monopoly 
B) a natural monopoly 
C) a revenue monopoly 
D) a subsidized monopoly 
A) a government-created monopoly 
B) a natural monopoly 
C) a revenue monopoly 
D) a subsidized monopoly

Question 5

Kureha Corporation holds 70 percent of the market as a supplier for polymer,which is used to make the compact battery for smartphones.Why is Kureha Corporation considered as a classic example of a monopoly

Accepted Answer

A) It is a government-created corporation. 
B) It arises from the ownership of a key resource. 
C) It results in very little advertising of the product that the monopolist produces. 
D) It was broken up by the government a long time ago. 
A) It is a government-created corporation. 
B) It arises from the ownership of a key resource. 
C) It results in very little advertising of the product that the monopolist produces. 
D) It was broken up by the government a long time ago.

Question 6

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 unable to price discriminate,what price will it choose to maximize its profit and what is the amount of the profit

Accepted Answer

A) price = $25; profit = $400,000 
B) price = $25; profit = $500,000 
C) price = $150; profit = $450,000 
D) price = $150; profit = $600,000 
A) price = $25; profit = $400,000 
B) price = $25; profit = $500,000 
C) price = $150; profit = $450,000 
D) price = $150; profit = $600,000

Question 7

When will a monopolist choose to increase output

Accepted Answer

A) when market price increases 
B) when marginal revenue is positive 
C) when marginal revenue exceeds marginal cost at the present level of output 
D) when marginal revenue is less than marginal cost at the present level of output 
A) when market price increases 
B) when marginal revenue is positive 
C) when marginal revenue exceeds marginal cost at the present level of output 
D) when marginal revenue is less than marginal cost at the present level of output

Question 8

Figure 15-2
The figure below reflects the cost and revenue structure for a monopoly firm.
  
-Refer to Figure 15-2.If the monopoly firm is currently producing Q₃ units of output,what will a decrease in output necessarily cause profit to do

Accepted Answer

A) decrease 
B) remain unchanged 
C) increase as long as the new level of output is at least Q₁ 
D) increase as long as the new level of output is at least Q₂ 
A) decrease 
B) remain unchanged 
C) increase as long as the new level of output is at least Q₁ 
D) increase as long as the new level of output is at least Q₂

Question 9

The socially efficient level of production occurs where the marginal-cost curve intersects which of the following curves

Accepted Answer

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

Question 10

What type of monopoly are patent and copyright laws major sources of

Accepted Answer

A) natural monopolies 
B) government-created monopolies 
C) resource monopolies 
D) product monopolies 
A) natural monopolies 
B) government-created monopolies 
C) resource monopolies 
D) product monopolies

Question 11

Scenario 15-2
​​
A monopoly firm maximizes its profit by producing 500 units output (so Q = 500).At that level of output, its marginal revenue is $32, its average revenue is $42, and its average total cost is $36.
-Refer to Scenario 15-2.At Q = 500,what is the firm's total cost

Accepted Answer

A) $15,000 
B) $18,000 
C) $21,000 
D) $22,500 
A) $15,000 
B) $18,000 
C) $21,000 
D) $22,500

Question 12

A monopolist faces market demand given by P = 100 - 3Q.For this market,MR = 100 - 5Q and MC = 25.What quantity of output will the monopolist produce in order to maximize profits

Accepted Answer

A) 15 
B) 25.0 
C) 62.5 
D) 75.0 
A) 15 
B) 25.0 
C) 62.5 
D) 75.0

Question 13

What is one problem with regulating a monopolist on the basis of cost

Accepted Answer

A) Regulators are unable to control prices and/or production effectively. 
B) It does not provide an incentive for the monopolist to reduce its cost. 
C) A monopolist's costs, by definition, are higher than costs of perfectly competitive firms. 
D) A monopolist is still able to generate excessive economic profits. 
A) Regulators are unable to control prices and/or production effectively. 
B) It does not provide an incentive for the monopolist to reduce its cost. 
C) A monopolist's costs, by definition, are higher than costs of perfectly competitive firms. 
D) A monopolist is still able to generate excessive economic profits.

Question 14

Figure 15-7
The figure depicts the demand, marginal-revenue, and marginal-cost curves of a profit-maximizing monopolist.
  
-Refer to Figure 15-7.If the monopoly firm is NOT allowed to price discriminate,what is consumer surplus

Accepted Answer

A) $0 
B) $500 
C) $1000 
D) $2000 
A) $0 
B) $500 
C) $1000 
D) $2000

Question 15

The proper level of government intervention when dealing with a monopoly is ambiguous.

Accepted Answer

A) True 
 B)False

Question 16

A diamond company,who owned 90 percent of the market share for diamonds in 1980s,advertised heavily to promote the sale of all diamonds.This is evidence that it held the monopoly power of the diamond market in the 1980s.

Accepted Answer

A) True 
 B)False

Question 17

When a natural monopoly exists,how cost effective is it to produce the product

Accepted Answer

A) It is generally cost effective for government-owned firms to produce the product. 
B) It is generally not cost effective for one firm to produce the product. 
C) It is generally cost effective for two or more private firms to produce the product. 
D) It is generally not cost effective for two or more private firms to produce the product. 
A) It is generally cost effective for government-owned firms to produce the product. 
B) It is generally not cost effective for one firm to produce the product. 
C) It is generally cost effective for two or more private firms to produce the product. 
D) It is generally not cost effective for two or more private firms to produce the product.

Question 18

What is one problem with government regulation of monopolies

Accepted Answer

A) A benevolent government is likely to be interested in generating profits for political gain. 
B) Regulated industries typically have rising average costs. 
C) The government typically has little incentive to reduce costs. 
D) A government-regulated outcome will increase the profitability of the monopoly. 
A) A benevolent government is likely to be interested in generating profits for political gain. 
B) Regulated industries typically have rising average costs. 
C) The government typically has little incentive to reduce costs. 
D) A government-regulated outcome will increase the profitability of the monopoly.

Question 19

A monopolist faces market demand given by P = 200 - Q.For this market,MR = 200 - 2Q and MC = 3Q.What is the deadweight loss due to the monopoly

Accepted Answer

A) $0 
B) $100 
C) $200 
D) $400 
A) $0 
B) $100 
C) $200 
D) $400

Question 20

A monopolist faces market demand given by P = 60 - Q.For this market,MR = 90 - 2Q and MC = Q.What price will the monopolist charge in order to maximize profits

Accepted Answer

A) $20 
B) $30 
C) $40 
D) $50 
A) $20 
B) $30 
C) $40 
D) $50

Exam 15: Monopoly

A monopolist faces market demand given by P = 140 - Q.For this market,MR = 140 - 2Q and MC = 20.What price will the monopolist charge in order to maximize profits

Since natural monopolies have a declining average-cost curve,what effect would regulating natural monopolies by setting price equal to marginal cost have

If the government deems a newly invented drug to be truly original,the pharmaceutical company is given the exclusive right to manufacture and sell the drug for 50 years.

When a firm's average-total-cost curve continually declines,what is the firm considered

Kureha Corporation holds 70 percent of the market as a supplier for polymer,which is used to make the compact battery for smartphones.Why is Kureha Corporation considered as a classic example of a monopoly

When will a monopolist choose to increase output

Figure 15-2 The figure below reflects the cost and revenue structure for a monopoly firm. -Refer to Figure 15-2.If the monopoly firm is currently producing Q₃ units of output,what will a decrease in output necessarily cause profit to do

The socially efficient level of production occurs where the marginal-cost curve intersects which of the following curves

What type of monopoly are patent and copyright laws major sources of

Scenario 15-2 ​​ A monopoly firm maximizes its profit by producing 500 units output (so Q = 500).At that level of output, its marginal revenue is $32, its average revenue is $42, and its average total cost is $36. -Refer to Scenario 15-2.At Q = 500,what is the firm's total cost

A monopolist faces market demand given by P = 100 - 3Q.For this market,MR = 100 - 5Q and MC = 25.What quantity of output will the monopolist produce in order to maximize profits

What is one problem with regulating a monopolist on the basis of cost

Figure 15-7 The figure depicts the demand, marginal-revenue, and marginal-cost curves of a profit-maximizing monopolist. -Refer to Figure 15-7.If the monopoly firm is NOT allowed to price discriminate,what is consumer surplus

The proper level of government intervention when dealing with a monopoly is ambiguous.

A diamond company,who owned 90 percent of the market share for diamonds in 1980s,advertised heavily to promote the sale of all diamonds.This is evidence that it held the monopoly power of the diamond market in the 1980s.

When a natural monopoly exists,how cost effective is it to produce the product

What is one problem with government regulation of monopolies

A monopolist faces market demand given by P = 200 - Q.For this market,MR = 200 - 2Q and MC = 3Q.What is the deadweight loss due to the monopoly

A monopolist faces market demand given by P = 60 - Q.For this market,MR = 90 - 2Q and MC = Q.What price will the monopolist charge in order to maximize profits

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

Scenario 15-2 A monopoly firm maximizes its profit by producing 500 units output (so Q = 500).At that level of output, its marginal revenue is $32, its average revenue is $42, and its average total cost is $36. -Refer to Scenario 15-2.At Q = 500,what is the firm's total cost