Question 1

Table 15-1
  
-Refer to Table 15-1.If the monopolist wants to maximize its revenue,how many units of its product should it sell?

Accepted Answer

A)  4 
B)  5 
C)  6 
D)  8 
A)  4 
B)  5 
C)  6 
D)  8

Question 2

For a monopolist,

Accepted Answer

A)  average revenue is always greater than the price of the good. 
B)  marginal revenue is always less than the price of the good. 
C)  marginal cost is always greater than average total cost. 
D)  marginal revenue equals marginal cost at the point where total revenue is maximized. 
A)  average revenue is always greater than the price of the good. 
B)  marginal revenue is always less than the price of the good. 
C)  marginal cost is always greater than average total cost. 
D)  marginal revenue equals marginal cost at the point where total revenue is maximized.

Question 3

Price discrimination is prohibited by antitrust laws.

Accepted Answer

A) True 
 B)False

Question 4

The deadweight loss associated with a monopoly occurs because the monopolist

Accepted Answer

A)  maximizes profits. 
B)  produces an output level less than the socially optimal level. 
C)  produces an output level greater than the socially optimal level. 
D)  equates marginal revenue with marginal cost. 
A)  maximizes profits. 
B)  produces an output level less than the socially optimal level. 
C)  produces an output level greater than the socially optimal level. 
D)  equates marginal revenue with marginal cost.

Question 5

Figure 15-12  
-Refer to Figure 15-12.If the monopoly firm perfectly price discriminates,then the deadweight loss amounts to

Accepted Answer

A)  $0. 
B)  $1,562.50. 
C)  $3,125. 
D)  $6,250. 
A)  $0. 
B)  $1,562.50. 
C)  $3,125. 
D)  $6,250.

Question 6

Figure 15-8  
-Refer to Figure 15-8.The deadweight loss caused by a profit-maximizing monopoly amounts to

Accepted Answer

A)  $150. 
B)  $200. 
C)  $250. 
D)  $500. 
A)  $150. 
B)  $200. 
C)  $250. 
D)  $500.

Question 7

Reduced competition through merging of companies will raise social welfare

Accepted Answer

A)  if the cost from the synergies exceeds the benefit of increased market power. 
B)  if the benefit from the synergies exceeds the social cost of increased market power. 
C)  always. 
D)  never. 
A)  if the cost from the synergies exceeds the benefit of increased market power. 
B)  if the benefit from the synergies exceeds the social cost of increased market power. 
C)  always. 
D)  never.

Question 8

One example of price discrimination occurs in the publishing industry when a publisher initially releases an expensive hardcover edition of a popular novel and later releases a cheaper paperback edition.Use this example to demonstrate the benefits and potential pitfalls of a price discrimination pricing strategy.

Accepted Answer

The answer should address the three basi

Question 9

In theory,perfect price discrimination

Accepted Answer

A)  decreases the monopolist's profits. 
B)  decreases consumer surplus. 
C)  increases deadweight loss. 
D)  reduces the number of consumers who purchase the monopoly's product. 
A)  decreases the monopolist's profits. 
B)  decreases consumer surplus. 
C)  increases deadweight loss. 
D)  reduces the number of consumers who purchase the monopoly's product.

Question 10

A movie theater can increase its profits through price discrimination by charging a higher price to adults and a lower price to children if it

Accepted Answer

A)  can prevent children from buying the lower-priced tickets and selling them to adults. 
B)  has some degree of monopoly pricing power. 
C)  can easily distinguish between the two groups of customers. 
D)  All of the above are correct. 
A)  can prevent children from buying the lower-priced tickets and selling them to adults. 
B)  has some degree of monopoly pricing power. 
C)  can easily distinguish between the two groups of customers. 
D)  All of the above are correct.

Question 11

For a typical natural monopoly,average total cost is

Accepted Answer

A)  falling,and marginal cost is above average total cost. 
B)  falling,and marginal cost is below average total cost. 
C)  rising,and marginal cost is below average total cost. 
D)  rising,and marginal cost is above average total cost. 
A)  falling,and marginal cost is above average total cost. 
B)  falling,and marginal cost is below average total cost. 
C)  rising,and marginal cost is below average total cost. 
D)  rising,and marginal cost is above average total cost.

Question 12

For a monopolist,marginal revenue is

Accepted Answer

A)  equal to price,as it is for a perfectly competitive firm. 
B)  less than price,as it is for a perfectly competitive firm. 
C)  equal to price,whereas marginal revenue is less than price for a perfectly competitive firm. 
D)  less than price,whereas marginal revenue is equal to price for a perfectly competitive firm. 
A)  equal to price,as it is for a perfectly competitive firm. 
B)  less than price,as it is for a perfectly competitive firm. 
C)  equal to price,whereas marginal revenue is less than price for a perfectly competitive firm. 
D)  less than price,whereas marginal revenue is equal to price for a perfectly competitive firm.

Question 13

Figure 15-4  
-Refer to Figure 15-4.The average total cost 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 14

Natural monopolies differ from other forms of monopoly because they

Accepted Answer

A)  are not subject to barriers to entry. 
B)  are not regulated by government. 
C)  generally don't make a profit. 
D)  are generally not worried about competition eroding their monopoly position in the market. 
A)  are not subject to barriers to entry. 
B)  are not regulated by government. 
C)  generally don't make a profit. 
D)  are generally not worried about competition eroding their monopoly position in the market.

Question 15

An industry is a natural monopoly when

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 16

Suppose most people regard emeralds,rubies,and sapphires as close substitutes for diamonds.Then DeBeers,a large diamond company,has

Accepted Answer

A)  less incentive to advertise than it would otherwise have. 
B)  less market power than it would otherwise have. 
C)  more control over the price of diamonds than it would otherwise have. 
D)  higher profits than it would otherwise have. 
A)  less incentive to advertise than it would otherwise have. 
B)  less market power than it would otherwise have. 
C)  more control over the price of diamonds than it would otherwise have. 
D)  higher profits than it would otherwise have.

Question 17

A natural monopoly occurs when

Accepted Answer

A)  the product is sold in its natural state,such as water or diamonds. 
B)  there are economies of scale over the relevant range of output. 
C)  the firm is characterized by a rising marginal cost curve. 
D)  production requires the use of free natural resources,such as water or air. 
A)  the product is sold in its natural state,such as water or diamonds. 
B)  there are economies of scale over the relevant range of output. 
C)  the firm is characterized by a rising marginal cost curve. 
D)  production requires the use of free natural resources,such as water or air.

Question 18

Due to the nature of the patent laws on pharmaceuticals,the market for such drugs

Accepted Answer

A)  always remains a competitive market. 
B)  always remains a monopolistic market. 
C)  switches from competitive to monopolistic once the firm's patent runs out. 
D)  switches from monopolistic to competitive once the firm's patent runs out. 
A)  always remains a competitive market. 
B)  always remains a monopolistic market. 
C)  switches from competitive to monopolistic once the firm's patent runs out. 
D)  switches from monopolistic to competitive once the firm's patent runs out.

Question 19

Perfect price discrimination

Accepted Answer

A)  eliminates deadweight loss. 
B)  reduces profits to the monopolist. 
C)  decreases the total quantity sold by the monopolist. 
D)  requires arbitrage in order for the monopolist to maximize profits. 
A)  eliminates deadweight loss. 
B)  reduces profits to the monopolist. 
C)  decreases the total quantity sold by the monopolist. 
D)  requires arbitrage in order for the monopolist to maximize profits.

Question 20

Which of the following statements is not correct?

Accepted Answer

A)  The competitive firm produces where P = MC. 
B)  The monopolist produces where P = MC. 
C)  The competitive firm produces where MR = MC. 
D)  The monopolist produces where MR = MC. 
A)  The competitive firm produces where P = MC. 
B)  The monopolist produces where P = MC. 
C)  The competitive firm produces where MR = MC. 
D)  The monopolist produces where MR = MC.

Exam 15: Monopoly

Table 15-1 -Refer to Table 15-1.If the monopolist wants to maximize its revenue,how many units of its product should it sell?

For a monopolist,

Price discrimination is prohibited by antitrust laws.

The deadweight loss associated with a monopoly occurs because the monopolist

Figure 15-12 -Refer to Figure 15-12.If the monopoly firm perfectly price discriminates,then the deadweight loss amounts to

Figure 15-8 -Refer to Figure 15-8.The deadweight loss caused by a profit-maximizing monopoly amounts to

Reduced competition through merging of companies will raise social welfare

In theory,perfect price discrimination

A movie theater can increase its profits through price discrimination by charging a higher price to adults and a lower price to children if it

For a typical natural monopoly,average total cost is

For a monopolist,marginal revenue is

Figure 15-4 -Refer to Figure 15-4.The average total cost curve for a monopoly firm is depicted by curve

Natural monopolies differ from other forms of monopoly because they

An industry is a natural monopoly when

Suppose most people regard emeralds,rubies,and sapphires as close substitutes for diamonds.Then DeBeers,a large diamond company,has

A natural monopoly occurs when

Due to the nature of the patent laws on pharmaceuticals,the market for such drugs

Perfect price discrimination

Which of the following statements is not correct?

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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