Question 1

If a monopoly lowers its price,its

Accepted Answer

A)  total revenue must increase. 
B)  total revenue must decrease. 
C)  marginal revenue must increase. 
D)  marginal revenue must decrease. 
A)  total revenue must increase. 
B)  total revenue must decrease. 
C)  marginal revenue must increase. 
D)  marginal revenue must decrease.

Question 2

When a monopoly increases its output and sales,

Accepted Answer

A)  both the output effect and the price effect work to increase total revenue. 
B)  the output effect works to increase total revenue,and the price effect works to decrease total revenue. 
C)  the output effect works to decrease total revenue,and the price effect works to increase total revenue. 
D)  both the output effect and the price effect work to decrease total revenue. 
A)  both the output effect and the price effect work to increase total revenue. 
B)  the output effect works to increase total revenue,and the price effect works to decrease total revenue. 
C)  the output effect works to decrease total revenue,and the price effect works to increase total revenue. 
D)  both the output effect and the price effect work to decrease total revenue.

Question 3

The practice of selling the same goods to different customers at different prices,but with the same marginal cost,is known as

Accepted Answer

A)  price segregation. 
B)  price discrimination. 
C)  arbitrage. 
D)  monopoly pricing. 
A)  price segregation. 
B)  price discrimination. 
C)  arbitrage. 
D)  monopoly pricing.

Question 4

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.What are Dreher's Designer Shirt Company's fixed costs?

Accepted Answer

A)  $100 
B)  $150 
C)  $354 
D)  $654 
A)  $100 
B)  $150 
C)  $354 
D)  $654

Question 5

For a monopoly,marginal revenue is often greater than the price they charge for their good.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is the most likely reason the city council in New York City consistently denies licenses to independent van drivers selling rides to the public?

Accepted Answer

A)  Allowing the vans to operate would reduce social welfare. 
B)  The van drivers engage in price discrimination. 
C)  Allowing the vans to operate would allow them to unfairly take advantage of poor residents. 
D)  The vans are a threat to the public transit monopoly,which makes campaign contributions to the city council members. 
A)  Allowing the vans to operate would reduce social welfare. 
B)  The van drivers engage in price discrimination. 
C)  Allowing the vans to operate would allow them to unfairly take advantage of poor residents. 
D)  The vans are a threat to the public transit monopoly,which makes campaign contributions to the city council members.

Question 7

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 able to price discriminate,what would be the maximum amount of profit it could generate?

Accepted Answer

A)  $950,000 
B)  $850,000 
C)  $400,000 
D)  $350,000 
A)  $950,000 
B)  $850,000 
C)  $400,000 
D)  $350,000

Question 8

A firm cannot price discriminate if

Accepted Answer

A)  its has declining marginal revenue. 
B)  it operates in a competitive market. 
C)  buyers only reveal the price they are willing to pay for the product. 
D)  it has a constant marginal cost. 
A)  its has declining marginal revenue. 
B)  it operates in a competitive market. 
C)  buyers only reveal the price they are willing to pay for the product. 
D)  it has a constant marginal cost.

Question 9

Like competitive firms,monopolies charge a price equal to marginal cost.

Accepted Answer

A) True 
 B)False

Question 10

A firm that is the sole seller of a product without close substitutes is

Accepted Answer

A)  perfectly competitive. 
B)  monopolistically competitive. 
C)  an oligopolist. 
D)  a monopolist. 
A)  perfectly competitive. 
B)  monopolistically competitive. 
C)  an oligopolist. 
D)  a monopolist.

Question 11

The marginal revenue curve for a monopoly firm starts at the same point on the vertical axis as the

Accepted Answer

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

Question 12

The task of economic regulation is to

Accepted Answer

A)  protect monopoly profits. 
B)  approximate the results of the competitive market. 
C)  replace competition with government ownership. 
D)  increase competition within the market. 
A)  protect monopoly profits. 
B)  approximate the results of the competitive market. 
C)  replace competition with government ownership. 
D)  increase competition within the market.

Question 13

Table 15-2
Dreher's Designer Shirt Company,a monopolist,has the following cost and revenue information.
  
-Refer to Table 15-2.What is total profit at the profit-maximizing quantity?

Accepted Answer

A)  $100 
B)  $245 
C)  $265 
D)  $395 
A)  $100 
B)  $245 
C)  $265 
D)  $395

Question 14

The George Stigler quote,"...the degree of 'market failure' for the American economy is much smaller than the 'political failure' arising from the imperfections of economic policies ..." illustrates the advantage of which type of public policy toward monopolies?

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 15

A natural monopolist's ability to price its product is

Accepted Answer

A)  constrained by the market demand curve. 
B)  constrained by market supply. 
C)  not affected by market demand. 
D)  enhanced by regulatory control of the government. 
A)  constrained by the market demand curve. 
B)  constrained by market supply. 
C)  not affected by market demand. 
D)  enhanced by regulatory control of the government.

Question 16

Because many good substitutes exist for a competitive firm's product,the demand curve that it faces is

Accepted Answer

A)  unit-elastic. 
B)  perfectly inelastic. 
C)  perfectly elastic. 
D)  inelastic only over a certain region. 
A)  unit-elastic. 
B)  perfectly inelastic. 
C)  perfectly elastic. 
D)  inelastic only over a certain region.

Question 17

Which of the following statements is correct?

Accepted Answer

A)  The demand curve facing a competitive firm is horizontal,as is the demand curve facing a monopolist. 
B)  The demand curve facing a competitive firm is downward sloping,whereas the demand curve facing a monopolist is horizontal. 
C)  The demand curve facing a competitive firm is horizontal,whereas the demand curve facing a monopolist is downward sloping. 
D)  The demand curve facing a competitive firm is downward sloping,as is the demand curve facing a monopolist. 
A)  The demand curve facing a competitive firm is horizontal,as is the demand curve facing a monopolist. 
B)  The demand curve facing a competitive firm is downward sloping,whereas the demand curve facing a monopolist is horizontal. 
C)  The demand curve facing a competitive firm is horizontal,whereas the demand curve facing a monopolist is downward sloping. 
D)  The demand curve facing a competitive firm is downward sloping,as is the demand curve facing a monopolist.

Question 18

The laws governing patents and copyrights

Accepted Answer

A)  promote monopolies. 
B)  are intended to serve private interests,not the public's interest. 
C)  have costs but not benefits. 
D)  eliminate the need for firms to engage in research and development. 
A)  promote monopolies. 
B)  are intended to serve private interests,not the public's interest. 
C)  have costs but not benefits. 
D)  eliminate the need for firms to engage in research and development.

Question 19

Firms with substantial monopoly power are quite common because many goods are truly unique.

Accepted Answer

A) True 
 B)False

Question 20

The socially efficient quantity is found where the demand curve intersects the marginal cost curve.

Accepted Answer

A) True 
 B)False

Exam 15: Monopoly

If a monopoly lowers its price,its

When a monopoly increases its output and sales,

The practice of selling the same goods to different customers at different prices,but with the same marginal cost,is known as

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.What are Dreher's Designer Shirt Company's fixed costs?

For a monopoly,marginal revenue is often greater than the price they charge for their good.

Which of the following is the most likely reason the city council in New York City consistently denies licenses to independent van drivers selling rides to the public?

A firm cannot price discriminate if

Like competitive firms,monopolies charge a price equal to marginal cost.

A firm that is the sole seller of a product without close substitutes is

The marginal revenue curve for a monopoly firm starts at the same point on the vertical axis as the

The task of economic regulation is to

Table 15-2 Dreher's Designer Shirt Company,a monopolist,has the following cost and revenue information. -Refer to Table 15-2.What is total profit at the profit-maximizing quantity?

The George Stigler quote,"...the degree of 'market failure' for the American economy is much smaller than the 'political failure' arising from the imperfections of economic policies ..." illustrates the advantage of which type of public policy toward monopolies?

A natural monopolist's ability to price its product is

Because many good substitutes exist for a competitive firm's product,the demand curve that it faces is

Which of the following statements is correct?

The laws governing patents and copyrights

Firms with substantial monopoly power are quite common because many goods are truly unique.

The socially efficient quantity is found where the demand curve intersects the marginal cost curve.

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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