Question 1

Figure 15-11  
-Refer to Figure 15-11.If there are no fixed costs of production,monopoly profit with perfect price discrimination equals

Accepted Answer

A)  $500. 
B)  $1,000. 
C)  $2,000. 
D)  $4,000. 
A)  $500. 
B)  $1,000. 
C)  $2,000. 
D)  $4,000.

Question 2

A profit-maximizing monopolist will produce the level of output at which

Accepted Answer

A)  average revenue is equal to average total cost. 
B)  average revenue is equal to marginal cost. 
C)  marginal revenue is equal to marginal cost. 
D)  total revenue is equal to opportunity cost. 
A)  average revenue is equal to average total cost. 
B)  average revenue is equal to marginal cost. 
C)  marginal revenue is equal to marginal cost. 
D)  total revenue is equal to opportunity cost.

Question 3

One problem with regulating a monopolist on the basis of cost is that

Accepted Answer

A)  by focusing on costs,the regulators ignore profits. 
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)  by focusing on costs,the regulators ignore profits. 
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 4

The amount of power that a monopoly has depends on whether there are close substitutes for its product.

Accepted Answer

A) True 
 B)False

Question 5

Additional firms often do not try to compete with a natural monopoly because

Accepted Answer

A)  they fear retaliation in the form of pricing wars from the natural monopolist. 
B)  they are unsure of the size of the market in general. 
C)  they know they cannot achieve the same low costs that the natural monopolist enjoys. 
D)  the natural monopoly doesn't make a huge profit. 
A)  they fear retaliation in the form of pricing wars from the natural monopolist. 
B)  they are unsure of the size of the market in general. 
C)  they know they cannot achieve the same low costs that the natural monopolist enjoys. 
D)  the natural monopoly doesn't make a huge profit.

Question 6

The socially efficient level of production occurs where the marginal cost curve intersects

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 7

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 8

Which of the following is an example of public ownership of a monopoly?

Accepted Answer

A)  DeBeers 
B)  Microsoft 
C)  U.S.Postal Service 
D)  AT&T 
A)  DeBeers 
B)  Microsoft 
C)  U.S.Postal Service 
D)  AT&T

Question 9

If a monopolist has zero marginal costs,it will produce

Accepted Answer

A)  the output at which total revenue is maximized. 
B)  in the range in which marginal revenue is still increasing. 
C)  at the point at which marginal revenue is at a maximum. 
D)  in the range in which marginal revenue is negative. 
A)  the output at which total revenue is maximized. 
B)  in the range in which marginal revenue is still increasing. 
C)  at the point at which marginal revenue is at a maximum. 
D)  in the range in which marginal revenue is negative.

Question 10

Marginal revenue can become negative for

Accepted Answer

A)  both competitive and monopoly firms. 
B)  competitive firms but not for monopoly firms. 
C)  monopoly firms but not for competitive firms. 
D)  neither competitive nor monopoly firms. 
A)  both competitive and monopoly firms. 
B)  competitive firms but not for monopoly firms. 
C)  monopoly firms but not for competitive firms. 
D)  neither competitive nor monopoly firms.

Question 11

Table 15-3
George has the following demand curve for selling vegemite sandwiches.Assume that George has a marginal cost of $3 per unit.
  
-Refer to Table 15-3.What is George's profit-maximizing level of output?

Accepted Answer

A)  1 
B)  2 
C)  3 
D)  4 
A)  1 
B)  2 
C)  3 
D)  4

Question 12

A monopoly creates a deadweight loss to society because it earns both short-run and long-run positive economic profits.

Accepted Answer

A) True 
 B)False

Question 13

Suppose when a monopolist produces 50 units its average revenue is $8 per unit,its marginal revenue is $4 per unit,its marginal cost is $4 per unit,and its average total cost is $3 per unit.What can we conclude about this monopolist?

Accepted Answer

A)  The monopolist is currently maximizing profits,and its total profits are $200. 
B)  The monopolist is currently maximizing profits,and its total profits are $250. 
C)  The monopolist is not currently maximizing its profits;it should produce more units and charge a lower price to maximize profit. 
D)  The monopolist is not currently maximizing its profits;it should produce fewer units and charger a higher price to maximize profit. 
A)  The monopolist is currently maximizing profits,and its total profits are $200. 
B)  The monopolist is currently maximizing profits,and its total profits are $250. 
C)  The monopolist is not currently maximizing its profits;it should produce more units and charge a lower price to maximize profit. 
D)  The monopolist is not currently maximizing its profits;it should produce fewer units and charger a higher price to maximize profit.

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is an example of a barrier to entry?

Accepted Answer

A)  Matthew offers free samples of his latest flavored coffee drink to entice customers to buy a cup. 
B)  Mark charges a lower price to students than to faculty for his tattoo services. 
C)  Luke charges a higher hourly price to business students than to liberal arts students for his economics tutoring. 
D)  John obtained a copyright for the song he wrote and recorded. 
A)  Matthew offers free samples of his latest flavored coffee drink to entice customers to buy a cup. 
B)  Mark charges a lower price to students than to faculty for his tattoo services. 
C)  Luke charges a higher hourly price to business students than to liberal arts students for his economics tutoring. 
D)  John obtained a copyright for the song he wrote and recorded.

Question 16

Antitrust laws have economic benefits that outweigh the costs if they

Accepted Answer

A)  prevent mergers that would decrease competition and lower the costs of production. 
B)  prevent mergers that would decrease competition and raise the costs of production. 
C)  allow mergers that would decrease competition and raise the costs of production. 
D)  None of the above is correct because antitrust laws never have economic benefits that outweigh the costs. 
A)  prevent mergers that would decrease competition and lower the costs of production. 
B)  prevent mergers that would decrease competition and raise the costs of production. 
C)  allow mergers that would decrease competition and raise the costs of production. 
D)  None of the above is correct because antitrust laws never have economic benefits that outweigh the costs.

Question 17

Table 15-5
  
-Consider a profit-maximizing monopoly pricing under the following conditions.The profit-maximizing price charged for goods produced is $12.The intersection of the marginal revenue and marginal cost curves occurs where output is 10 units and marginal cost is $6.The socially efficient level of production is 12 units.The demand curve and marginal cost curves are linear.What is the deadweight loss?

Accepted Answer

A)  $4 
B)  $6 
C)  $12 
D)  $16 
A)  $4 
B)  $6 
C)  $12 
D)  $16

Question 18

Price discrimination

Accepted Answer

A)  is illegal in the United States and Europe. 
B)  can occur in both perfectly competitive and monopoly markets. 
C)  is illogical because it does not maximize profits. 
D)  can maximize profits if the seller can prevent the resale of goods between customers. 
A)  is illegal in the United States and Europe. 
B)  can occur in both perfectly competitive and monopoly markets. 
C)  is illogical because it does not maximize profits. 
D)  can maximize profits if the seller can prevent the resale of goods between customers.

Question 19

In a competitive market,a firm's supply curve dictates the amount it will supply.In a monopoly market the

Accepted Answer

A)  same is true. 
B)  supply curve conceptually makes sense,but in practice is never used. 
C)  supply curve will have limited predictive capacity. 
D)  decision about how much to supply is impossible to separate from the demand curve it faces. 
A)  same is true. 
B)  supply curve conceptually makes sense,but in practice is never used. 
C)  supply curve will have limited predictive capacity. 
D)  decision about how much to supply is impossible to separate from the demand curve it faces.

Question 20

A monopolist maximizes profits by

Accepted Answer

A)  producing an output level where marginal revenue equals marginal cost. 
B)  charging a price that is greater than marginal revenue. 
C)  earning a profit of (P - M
C) x Q. 
D)  Both a and b are correct. 
A)  producing an output level where marginal revenue equals marginal cost. 
B)  charging a price that is greater than marginal revenue. 
C)  earning a profit of (P - M
C) x Q. 
D)  Both a and b are correct.

Exam 15: Monopoly

Figure 15-11 -Refer to Figure 15-11.If there are no fixed costs of production,monopoly profit with perfect price discrimination equals

A profit-maximizing monopolist will produce the level of output at which

One problem with regulating a monopolist on the basis of cost is that

The amount of power that a monopoly has depends on whether there are close substitutes for its product.

Additional firms often do not try to compete with a natural monopoly because

The socially efficient level of production occurs where the marginal cost curve intersects

Which of the following statements is not correct?

Which of the following is an example of public ownership of a monopoly?

If a monopolist has zero marginal costs,it will produce

Marginal revenue can become negative for

Table 15-3 George has the following demand curve for selling vegemite sandwiches.Assume that George has a marginal cost of $3 per unit. -Refer to Table 15-3.What is George's profit-maximizing level of output?

A monopoly creates a deadweight loss to society because it earns both short-run and long-run positive economic profits.

Suppose when a monopolist produces 50 units its average revenue is $8 per unit,its marginal revenue is $4 per unit,its marginal cost is $4 per unit,and its average total cost is $3 per unit.What can we conclude about this monopolist?

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

Which of the following is an example of a barrier to entry?

Antitrust laws have economic benefits that outweigh the costs if they

Price discrimination

In a competitive market,a firm's supply curve dictates the amount it will supply.In a monopoly market the

A monopolist maximizes profits by

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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