Question 1

When a certain monopoly sets its price at $8 it sells 64 units.When the monopoly sets its price at $10 it sells 60 units.The marginal revenue for the firm over this range is

Accepted Answer

A)  $11. 
B)  $22. 
C)  $33. 
D)  $44. 
A)  $11. 
B)  $22. 
C)  $33. 
D)  $44.

Question 2

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 quantity that maximizes economic profit?

Accepted Answer

A)  5 
B)  6 
C)  7 
D)  8 
A)  5 
B)  6 
C)  7 
D)  8

Question 3

The following table gives information on the price,quantity,and total cost of production for a monopolist.How much profit will the firm earn at the profit-maximizing price?

Accepted Answer

A)  $9 
B)  $12 
C)  $15 
D)  $18 
A)  $9 
B)  $12 
C)  $15 
D)  $18

Question 4

The De Beers Diamond company is not worried about differentiating its product from all other gemstones.

Accepted Answer

A) True 
 B)False

Question 5

Drug companies are allowed to be monopolists in the drugs they discover in order to

Accepted Answer

A)  allow drug companies to charge a price that is equal to their marginal cost. 
B)  discourage new firms from entering the drug market. 
C)  encourage research. 
D)  allow the government to earn patent revenue. 
A)  allow drug companies to charge a price that is equal to their marginal cost. 
B)  discourage new firms from entering the drug market. 
C)  encourage research. 
D)  allow the government to earn patent revenue.

Question 6

The deadweight loss that arises from a monopoly is a consequence of the fact that the monopoly

Accepted Answer

A)  quantity is lower than the socially-optimal quantity. 
B)  price equals marginal revenue. 
C)  price is the same as average revenue. 
D)  earns positive profits. 
A)  quantity is lower than the socially-optimal quantity. 
B)  price equals marginal revenue. 
C)  price is the same as average revenue. 
D)  earns positive profits.

Question 7

A monopoly firm can sell 150 units of output for $10 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 8

Figure 15-2        
-Refer to Figure 15-2.Which of the following statements is correct?

Accepted Answer

A)  Panel C represents the typical demand curve for a perfectly competitive firm. 
B)  Panel B represents the typical demand curve for a monopoly. 
C)  Panel B represents the typical demand curve for a perfectly competitive industry. 
D)  All of the above are correct. 
A)  Panel C represents the typical demand curve for a perfectly competitive firm. 
B)  Panel B represents the typical demand curve for a monopoly. 
C)  Panel B represents the typical demand curve for a perfectly competitive industry. 
D)  All of the above are correct.

Question 9

A monopoly

Accepted Answer

A)  can set the price it charges for its output and earn unlimited profits. 
B)  takes the market price as given and earns small but positive profits. 
C)  can set the price it charges for its output but faces a downward-sloping demand curve so it cannot earn unlimited profits. 
D)  can set the price it charges for its output but faces a horizontal demand curve so it can earn unlimited profits. 
A)  can set the price it charges for its output and earn unlimited profits. 
B)  takes the market price as given and earns small but positive profits. 
C)  can set the price it charges for its output but faces a downward-sloping demand curve so it cannot earn unlimited profits. 
D)  can set the price it charges for its output but faces a horizontal demand curve so it can earn unlimited profits.

Question 10

Competitive firms differ from monopolies in which of the following ways?

Accepted Answer

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

Question 11

Figure 15-12  
-Refer to Figure 15-12.If there are no fixed costs of production,monopoly profit with perfect price discrimination equals

Accepted Answer

A)  $1. 
B)  $1,562.5. 
C)  $3,125. 
D)  $6,250. 
A)  $1. 
B)  $1,562.5. 
C)  $3,125. 
D)  $6,250.

Question 12

Graphically depict the deadweight loss caused by a monopoly.How is this similar to the deadweight loss from taxation?

Accepted Answer

A profit-maximizing monopolist will choo

Question 13

Price discrimination adds to social welfare in the form of

Accepted Answer

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

Question 14

A monopolist faces the following demand curve:
 
The monopolist has total fixed costs of $40 and a constant marginal cost of $5.At the profit-maximizing level of output,the monopolist's average total cost is

Accepted Answer

A)  $9.00. 
B)  $7.50. 
C)  $6.74. 
D)  $5.82. 
A)  $9.00. 
B)  $7.50. 
C)  $6.74. 
D)  $5.82.

Question 15

Figure 15-1  
-Refer to Figure 15-1.The shape of the average total cost curve in the figure suggests an opportunity for a profit-maximizing monopolist to take advantage of

Accepted Answer

A)  economies of scale. 
B)  diseconomies of scale. 
C)  diminishing marginal product. 
D)  increasing marginal cost. 
A)  economies of scale. 
B)  diseconomies of scale. 
C)  diminishing marginal product. 
D)  increasing marginal cost.

Question 16

In a natural monopoly,

Accepted Answer

A)  society would be better off if antitrust laws were used to create many different firms in the market. 
B)  the marginal cost curve is positively sloped. 
C)  if the government requires marginal cost pricing,it will likely have to subsidize the firm. 
D)  the marginal revenue curve is horizontal. 
A)  society would be better off if antitrust laws were used to create many different firms in the market. 
B)  the marginal cost curve is positively sloped. 
C)  if the government requires marginal cost pricing,it will likely have to subsidize the firm. 
D)  the marginal revenue curve is horizontal.

Question 17

Which type of public policy toward monopolies is much more common in Europe than in the United States?

Accepted Answer

A)  antitrust laws 
B)  regulation 
C)  public ownership 
D)  "do nothing" 
A)  antitrust laws 
B)  regulation 
C)  public ownership 
D)  "do nothing"

Question 18

For a monopolist,when does marginal revenue exceed average revenue?

Accepted Answer

A)  never 
B)  when output is less than the profit-maximizing level of output 
C)  when output is greater than the profit-maximizing level of output 
D)  for all levels of output greater than zero 
A)  never 
B)  when output is less than the profit-maximizing level of output 
C)  when output is greater than the profit-maximizing level of output 
D)  for all levels of output greater than zero

Question 19

A monopolist's profits with price discrimination will be

Accepted Answer

A)  lower than if the firm charged a single,profit-maximizing price 
B)  the same as if the firm charged a single,profit-maximizing price. 
C)  higher than if the firm charged just one price because the firm will capture more consumer surplus. 
D)  higher than if the firm charged a single price because the costs of selling the good will be lower. 
A)  lower than if the firm charged a single,profit-maximizing price 
B)  the same as if the firm charged a single,profit-maximizing price. 
C)  higher than if the firm charged just one price because the firm will capture more consumer surplus. 
D)  higher than if the firm charged a single price because the costs of selling the good will be lower.

Question 20

Which of the following is not an example of a barrier to entry?

Accepted Answer

A)  Mighty Mitch's Mining Company owns a unique plot of land in Tanzania,under which lies the only large deposit of Tanzanite in the world. 
B)  A pharmaceutical company obtains a patent for a specific high blood pressure medication. 
C)  A musician obtains a copyright for her original song. 
D)  An entrepreneur opens a popular new restaurant. 
A)  Mighty Mitch's Mining Company owns a unique plot of land in Tanzania,under which lies the only large deposit of Tanzanite in the world. 
B)  A pharmaceutical company obtains a patent for a specific high blood pressure medication. 
C)  A musician obtains a copyright for her original song. 
D)  An entrepreneur opens a popular new restaurant.

Exam 15: Monopoly

When a certain monopoly sets its price at $8 it sells 64 units.When the monopoly sets its price at $10 it sells 60 units.The marginal revenue for the firm over this range is

The following table gives information on the price,quantity,and total cost of production for a monopolist.How much profit will the firm earn at the profit-maximizing price?

The De Beers Diamond company is not worried about differentiating its product from all other gemstones.

Drug companies are allowed to be monopolists in the drugs they discover in order to

The deadweight loss that arises from a monopoly is a consequence of the fact that the monopoly

A monopoly firm can sell 150 units of output for $10 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

Figure 15-2 -Refer to Figure 15-2.Which of the following statements is correct?

A monopoly

Competitive firms differ from monopolies in which of the following ways?

Figure 15-12 -Refer to Figure 15-12.If there are no fixed costs of production,monopoly profit with perfect price discrimination equals

Graphically depict the deadweight loss caused by a monopoly.How is this similar to the deadweight loss from taxation?

Price discrimination adds to social welfare in the form of

A monopolist faces the following demand curve: The monopolist has total fixed costs of $40 and a constant marginal cost of $5.At the profit-maximizing level of output,the monopolist's average total cost is

Figure 15-1 -Refer to Figure 15-1.The shape of the average total cost curve in the figure suggests an opportunity for a profit-maximizing monopolist to take advantage of

In a natural monopoly,

Which type of public policy toward monopolies is much more common in Europe than in the United States?

For a monopolist,when does marginal revenue exceed average revenue?

A monopolist's profits with price discrimination will be

Which of the following is not an example of a barrier to entry?

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

Filters

A monopoly firm can sell 150 units of output for $10 per unit.Alternatively,it can sell 151 units of output for $9.95 per unit.The marginal revenue of the 151^st unit of output is