Question 1

One difference between a perfectly competitive firm and a monopoly is that a perfectly competitive firm produces where

Accepted Answer

A)  marginal cost equals price,while a monopolist produces where price exceeds marginal cost. 
B)  marginal cost equals price,while a monopolist produces where marginal cost exceeds price. 
C)  price exceeds marginal cost,while a monopolist produces where marginal cost equals price. 
D)  marginal cost exceeds price,while a monopolist produces where marginal cost equals price. 
A)  marginal cost equals price,while a monopolist produces where price exceeds marginal cost. 
B)  marginal cost equals price,while a monopolist produces where marginal cost exceeds price. 
C)  price exceeds marginal cost,while a monopolist produces where marginal cost equals price. 
D)  marginal cost exceeds price,while a monopolist produces where marginal cost equals price.

Question 2

Which of the following statements is not correct?

Accepted Answer

A)  Part of the deadweight loss associated with monopoly is measured by the monopolist's economic profit. 
B)  Marginal cost is always less than average total cost in a natural monopoly. 
C)  Discount coupons available free to the public are a type of price discrimination. 
D)  Anti-trust laws make it harder for firms to create synergies. 
A)  Part of the deadweight loss associated with monopoly is measured by the monopolist's economic profit. 
B)  Marginal cost is always less than average total cost in a natural monopoly. 
C)  Discount coupons available free to the public are a type of price discrimination. 
D)  Anti-trust laws make it harder for firms to create synergies.

Question 3

Which of the following is a characteristic of a natural monopoly?

Accepted Answer

A)  Average cost exceeds marginal cost over large regions of output. 
B)  Increasing the number of firms increases each firm's average total cost. 
C)  One firm can supply output at a lower cost than two firms. 
D)  All of the above are correct. 
A)  Average cost exceeds marginal cost over large regions of output. 
B)  Increasing the number of firms increases each firm's average total cost. 
C)  One firm can supply output at a lower cost than two firms. 
D)  All of the above are correct.

Question 4

Figure 15-11  
-Refer to Figure 15-11.If the monopoly firm perfectly price discriminates,then consumer surplus amounts to

Accepted Answer

A)  $0. 
B)  $250. 
C)  $500. 
D)  $1,000. 
A)  $0. 
B)  $250. 
C)  $500. 
D)  $1,000.

Question 5

Which of the following statements is correct?

Accepted Answer

A)  The benefits that accrue to a monopoly's owners are equal to the costs that are incurred by consumers of that firm's product. 
B)  The deadweight loss that arises in monopoly stems from the fact that the profit-maximizing monopoly firm produces a quantity of output that exceeds the socially-efficient quantity. 
C)  The deadweight loss caused by monopoly is similar to the deadweight loss caused by a tax on a product. 
D)  The primary social problem caused by monopoly is monopoly profit. 
A)  The benefits that accrue to a monopoly's owners are equal to the costs that are incurred by consumers of that firm's product. 
B)  The deadweight loss that arises in monopoly stems from the fact that the profit-maximizing monopoly firm produces a quantity of output that exceeds the socially-efficient quantity. 
C)  The deadweight loss caused by monopoly is similar to the deadweight loss caused by a tax on a product. 
D)  The primary social problem caused by monopoly is monopoly profit.

Question 6

Which of the following are necessary characteristics of a monopoly?

Accepted Answer

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

Question 7

Generic drugs enter the pharmaceutical drug market once

Accepted Answer

A)  the ingredients to the name brand drug have been discovered. 
B)  10 years have passed. 
C)  they are patented. 
D)  the patent on the name brand drug expires. 
A)  the ingredients to the name brand drug have been discovered. 
B)  10 years have passed. 
C)  they are patented. 
D)  the patent on the name brand drug expires.

Question 8

Figure 15-4  
-Refer to Figure 15-4.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 9

Table 15-6
Dreher's Designer Shirt Company,a monopolist,has the following cost and revenue information.Assume that Dreher's is able to engage in perfect price discrimination.
  
-Refer to Table 15-6.If the monopolist can engage in perfect price discrimination,what is the marginal revenue from selling the 5th shirt?

Accepted Answer

A)  $80 
B)  $100 
C)  $110 
D)  $120 
A)  $80 
B)  $100 
C)  $110 
D)  $120

Question 10

Some 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.

Question 11

Scenario 15-6
An airline knows that there are two types of travelers: business travelers and vacationers.For a particular flight,there are 100 business travelers who will pay $600 for a ticket while there are 50 vacationers who will pay $300 for a ticket.There are 150 seats available on the plane.Suppose the cost to the airline of providing the flight is $20,000,which includes the cost of the pilots,flight attendants,fuel,etc.
-Refer to Scenario 15-6.How much profit will the airline earn if it sets the price of a ticket at $300?

Accepted Answer

A)  -$15,000 
B)  -$5,000 
C)  $25,000 
D)  $45,000 
A)  -$15,000 
B)  -$5,000 
C)  $25,000 
D)  $45,000

Question 12

Figure 15-3  
-Refer to Figure 15-3.How much output will the monopolist produce?

Accepted Answer

A)  O 
B)  J 
C)  K 
D)  L 
A)  O 
B)  J 
C)  K 
D)  L

Question 13

A perfectly price-discriminating monopolist is able to

Accepted Answer

A)  maximize profit and produce a socially-optimal level of output. 
B)  maximize profit,but not produce a socially-optimal level of output. 
C)  produce a socially-optimal level of output,but not maximize profit. 
D)  exercise illegal preferences regarding the race and/or gender of its employees. 
A)  maximize profit and produce a socially-optimal level of output. 
B)  maximize profit,but not produce a socially-optimal level of output. 
C)  produce a socially-optimal level of output,but not maximize profit. 
D)  exercise illegal preferences regarding the race and/or gender of its employees.

Question 14

Private ownership of a monopoly may benefit society because the monopoly will have an incentive to

Accepted Answer

A)  charge a price that is consistent with that of a benevolent social planner. 
B)  charge a price that prevents some people from buying. 
C)  price its good according to the intersection of marginal cost and average revenue. 
D)  lower its costs to earn a higher profit. 
A)  charge a price that is consistent with that of a benevolent social planner. 
B)  charge a price that prevents some people from buying. 
C)  price its good according to the intersection of marginal cost and average revenue. 
D)  lower its costs to earn a higher profit.

Question 15

Figure 15-7  
-Refer to Figure 15-7.What is the socially efficient price and quantity?

Accepted Answer

A)  price = F;quantity = A 
B)  price = G;quantity = B 
C)  price = G;quantity = A 
D)  price = D;quantity = A 
A)  price = F;quantity = A 
B)  price = G;quantity = B 
C)  price = G;quantity = A 
D)  price = D;quantity = A

Question 16

Scenario 15-5
Mega Media Cable TV is able to purchase an exclusive right to sell a premium sports channel in its market area.Let's assume that Mega Media pays $100,000 a year for the exclusive marketing rights to the sports channel.Since Mega Media has already installed cable to all of the homes in its market area,the marginal cost of delivering the sports channel to subscribers is zero.The manager of Mega Media needs to know what price to charge for the sports channel service to maximize her profit.Before setting price,she hires an economist to estimate demand for the sports channel.The economist discovers that there are two types of subscribers who value premium sporting channels.First are the 3,000 die-hard sports fans who will pay as much as $150 a year for the new channel.Second,the premium sports channel will appeal to about 20,000 occasional sports viewers who will pay as much as $25 a year for a subscription to it.
-Refer to Scenario 15-5.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 = $450,000 
B)  price = $25;profit = $350,000 
C)  price = $150;profit = $500,000 
D)  price = $150;profit = $400,000 
A)  price = $25;profit = $450,000 
B)  price = $25;profit = $350,000 
C)  price = $150;profit = $500,000 
D)  price = $150;profit = $400,000

Question 17

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 total revenue from selling 6 shirts?

Accepted Answer

A)  $100 
B)  $600 
C)  $625 
D)  $660 
A)  $100 
B)  $600 
C)  $625 
D)  $660

Question 18

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 total variable cost of production when six units are produced?

Accepted Answer

A)  $100 
B)  $295 
C)  $600 
D)  $620 
A)  $100 
B)  $295 
C)  $600 
D)  $620

Question 19

The market demand curve for a monopolist is typically

Accepted Answer

A)  unit price elastic. 
B)  downward sloping. 
C)  horizontal. 
D)  vertical. 
A)  unit price elastic. 
B)  downward sloping. 
C)  horizontal. 
D)  vertical.

Question 20

Figure 15-5  
-Refer to Figure 15-5.A profit-maximizing monopoly's total cost is equal to

Accepted Answer

A)  P4 x Q3. 
B)  P2 x Q3. 
C)  P1 x Q3. 
D)  (P4-P1)x Q3. 
A)  P4 x Q3. 
B)  P2 x Q3. 
C)  P1 x Q3. 
D)  (P4-P1)x Q3.

Exam 15: Monopoly

One difference between a perfectly competitive firm and a monopoly is that a perfectly competitive firm produces where

Which of the following statements is not correct?

Which of the following is a characteristic of a natural monopoly?

Figure 15-11 -Refer to Figure 15-11.If the monopoly firm perfectly price discriminates,then consumer surplus amounts to

Which of the following statements is correct?

Which of the following are necessary characteristics of a monopoly?

Generic drugs enter the pharmaceutical drug market once

Figure 15-4 -Refer to Figure 15-4.The marginal revenue curve for a monopoly firm is depicted by curve

Some 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?

Figure 15-3 -Refer to Figure 15-3.How much output will the monopolist produce?

A perfectly price-discriminating monopolist is able to

Private ownership of a monopoly may benefit society because the monopoly will have an incentive to

Figure 15-7 -Refer to Figure 15-7.What is the socially efficient price and quantity?

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 total revenue from selling 6 shirts?

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 total variable cost of production when six units are produced?

The market demand curve for a monopolist is typically

Figure 15-5 -Refer to Figure 15-5.A profit-maximizing monopoly's total cost is equal to

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

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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