Question 1

The fundamental cause of monopoly is

Accepted Answer

A)  incompetent management in competitive firms. 
B)  the zero-profit feature of long-run equilibrium in competitive markets. 
C)  advertising. 
D)  barriers to entry. 
A)  incompetent management in competitive firms. 
B)  the zero-profit feature of long-run equilibrium in competitive markets. 
C)  advertising. 
D)  barriers to entry.

Question 2

Which of the following statements is true?

Accepted Answer

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

Question 3

The economic inefficiency of a monopolist can be measured by the

Accepted Answer

A)  number of consumers who are unable to purchase the product because of its high price. 
B)  excess profit generated by monopoly firms. 
C)  poor quality of service offered by monopoly firms. 
D)  deadweight loss. 
A)  number of consumers who are unable to purchase the product because of its high price. 
B)  excess profit generated by monopoly firms. 
C)  poor quality of service offered by monopoly firms. 
D)  deadweight loss.

Question 4

Scenario 15-1
Consider a transportation corporation named C.R.Evans that has just completed the development of a new subway system in a medium-sized town in the Northwest.Currently,there are plenty of seats on the subway,and it is never crowded.Its capacity far exceeds the needs of the city.After just a few years of operation,the shareholders of C.R.Evans experienced incredible rates of return on their investment,due to the profitability of the corporation.
-Refer to Scenario 15-1.Which of the following statements are most likely to be true?

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 5

Scenario 15-4
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 delivering 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 4,000 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 $20 a year for a subscription to PMC.
-Refer to Scenario 15-4.What is the deadweight loss associated with the nondiscriminating pricing policy compared to the price discriminating policy?

Accepted Answer

A)  $375,000 
B)  $400,000 
C)  $475,000 
D)  It cannot be determined from the information provided. 
A)  $375,000 
B)  $400,000 
C)  $475,000 
D)  It cannot be determined from the information provided.

Question 6

A monopolist produces where P = MC = MR.

Accepted Answer

A) True 
 B)False

Question 7

Scenario 15-2
A monopoly firm maximizes its profit by producing Q = 500 units of output.At that level of output,its marginal revenue is $30,its average revenue is $60,and its average total cost is $34.
-Refer to Scenario 15-2.At Q = 500,the firm's total revenue is

Accepted Answer

A)  $13,000. 
B)  $15,000. 
C)  $17,000. 
D)  $30,000. 
A)  $13,000. 
B)  $15,000. 
C)  $17,000. 
D)  $30,000.

Exam 15: Monopoly

The fundamental cause of monopoly is

Which of the following statements is true?

The economic inefficiency of a monopolist can be measured by the

A monopolist produces where P = MC = MR.

Scenario 15-2 A monopoly firm maximizes its profit by producing Q = 500 units of output.At that level of output,its marginal revenue is $30,its average revenue is $60,and its average total cost is $34. -Refer to Scenario 15-2.At Q = 500,the firm's total revenue is

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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