Question 1

Exhibit 13-1   Refer to Exhibit 13-1.Total cost when the monopolist is maximizing profits is indicated by area:

Accepted Answer

A)  0CEQ1. 
B)  0BFQ2. 
C)  0ADQ1. 
D)  CADE. 
A)  0CEQ1. 
B)  0BFQ2. 
C)  0ADQ1. 
D)  CADE.

Question 2

If a regulatory board wanted to make sure that a natural monopoly chose a price resulting in the efficient level of output,it should set a price equal to:

Accepted Answer

A)  marginal cost. 
B)  average fixed cost. 
C)  average variable cost. 
D)  average total cost. 
A)  marginal cost. 
B)  average fixed cost. 
C)  average variable cost. 
D)  average total cost.

Question 3

Show Stoppers is a monopoly provider of ticket services for the concerts and sporting events and their current service charge is $10.00.In order to attract one more customer,they have to lower their service charge to $9.50.Show Stoppers' marginal revenue of this additional customer is:

Accepted Answer

A)  $9.50. 
B)  greater than $9.50. 
C)  less than $9.50. 
D)  between $10.00 and $9.50. 
A)  $9.50. 
B)  greater than $9.50. 
C)  less than $9.50. 
D)  between $10.00 and $9.50.

Question 4

When a monopolist is able to sell its product at different prices to different customers,it is likely engaging in:

Accepted Answer

A)  quality-adjusted pricing. 
B)  price discrimination. 
C)  price differentiation. 
D)  illegal activities. 
A)  quality-adjusted pricing. 
B)  price discrimination. 
C)  price differentiation. 
D)  illegal activities.

Question 5

Which of the following is true of successful price discriminators?

Accepted Answer

A)  They make greater profits than by charging everyone a uniform price 
B)  Their customers must have different willingness to pay. 
C)  Their customers must have difficulty reselling the good to other customers. 
D)  All of the above are true of successful price discriminators. 
A)  They make greater profits than by charging everyone a uniform price 
B)  Their customers must have different willingness to pay. 
C)  Their customers must have difficulty reselling the good to other customers. 
D)  All of the above are true of successful price discriminators.

Question 6

Which of the following is not generally true about a profit-maximizing monopolist?

Accepted Answer

A)  The monopolist faces a perfectly elastic demand curve. 
B)  The monopolist can potentially continue to earn economic profits in the long run. 
C)  The monopolist charges a price that exceeds marginal cost. 
D)  The monopolist chooses output where marginal revenue equals marginal cost. 
A)  The monopolist faces a perfectly elastic demand curve. 
B)  The monopolist can potentially continue to earn economic profits in the long run. 
C)  The monopolist charges a price that exceeds marginal cost. 
D)  The monopolist chooses output where marginal revenue equals marginal cost.

Question 7

U.S.public utilities are often:

Accepted Answer

A)  perfect competitors. 
B)  created through patent protection. 
C)  regulated natural monopolies. 
D)  employee-owned public enterprises. 
A)  perfect competitors. 
B)  created through patent protection. 
C)  regulated natural monopolies. 
D)  employee-owned public enterprises.

Question 8

If the demand curve facing a monopoly was 1 unit at $7,2 units at $6,3 units at $5,4 units at $4,and 5 units at $3,the marginal revenue from selling the third unit of output:

Accepted Answer

A)  is $5. 
B)  is $4. 
C)  is $3 
D)  is $1 
A)  is $5. 
B)  is $4. 
C)  is $3 
D)  is $1

Question 9

Graphically,the marginal revenue curve of a monopolist:

Accepted Answer

A)  lies below the demand curve of a monopolist. 
B)  is the same as the demand curve of a monopolist. 
C)  lies above the demand curve of a monopolist. 
D)  is the same as the marginal cost curve of a monopolist. 
A)  lies below the demand curve of a monopolist. 
B)  is the same as the demand curve of a monopolist. 
C)  lies above the demand curve of a monopolist. 
D)  is the same as the marginal cost curve of a monopolist.

Question 10

Monopoly profits cannot persist in the long run,because there are barriers to entry.

Accepted Answer

A) True 
 B)False

Question 11

Exhibit 13-4 The following diagram contains information on cost and revenue curves facing a regulated monopoly.   Refer to Exhibit 13-4.If regulators set a price according to marginal-cost pricing,the firm will:

Accepted Answer

A)  earn positive economic profits. 
B)  make zero economic profits. 
C)  suffer an economic loss. 
D)  earn the same level of profits as it would absent regulation. 
A)  earn positive economic profits. 
B)  make zero economic profits. 
C)  suffer an economic loss. 
D)  earn the same level of profits as it would absent regulation.

Question 12

A profit-maximizing monopolist will choose to operate along the inelastic portion of its demand curve.

Accepted Answer

A) True 
 B)False

Question 13

A monopolist can sell 20 units a week at a price of $10 per unit.To sell 21 units a week,it would have to lower its price to $9 per unit.The marginal revenue of the 21st unit would be:

Accepted Answer

A)  $9. 
B)  -$11 
C)  -$12 
D)  -$20 
A)  $9. 
B)  -$11 
C)  -$12 
D)  -$20

Question 14

A monopoly firm is charging the price the market will bear at a level of output where MC equals $6 and is increasing,MR equals $9,and average variable cost equals $5.To maximize profits,the firm should:

Accepted Answer

A)  increase both output and price. 
B)  increase output but decrease the price. 
C)  decrease output and increase the price. 
D)  decrease both output and price. 
A)  increase both output and price. 
B)  increase output but decrease the price. 
C)  decrease output and increase the price. 
D)  decrease both output and price.

Question 15

Exhibit 13-6   Refer to Exhibit 13-6.In perfect price discrimination,consumer surplus is:

Accepted Answer

A)  a 
B)  a + b 
C)  a + b + c 
D)  zero 
A)  a 
B)  a + b 
C)  a + b + c 
D)  zero

Question 16

Which of the following is false about quantity discounts?

Accepted Answer

A)  Quantity discounts are a form of price discrimination which allow a seller to charge a higher price for the first unit than for later units. 
B)  Quantity discounts allow price discriminating producers to extract additional consumer surplus from customers. 
C)  Price discrimination, such as offering quantity discounts, can result in a greater output, and thus greater consumer surplus and producer surplus, by a monopolist than if price discrimination was not possible. 
D)  Quantity discounts benefit those customers who would not buy any of a monopolist's product at the price that the monopolist would charge if it could not price discriminate. 
A)  Quantity discounts are a form of price discrimination which allow a seller to charge a higher price for the first unit than for later units. 
B)  Quantity discounts allow price discriminating producers to extract additional consumer surplus from customers. 
C)  Price discrimination, such as offering quantity discounts, can result in a greater output, and thus greater consumer surplus and producer surplus, by a monopolist than if price discrimination was not possible. 
D)  Quantity discounts benefit those customers who would not buy any of a monopolist's product at the price that the monopolist would charge if it could not price discriminate.

Question 17

Exhibit 13-7   Refer to Exhibit 13-7.If customers are charged 4 cents during the non-peak period,it is:

Accepted Answer

A)  not efficient because the marginal benefit is greater than the marginal cost 
B)  efficient because marginal benefit is equal to the marginal cost 
C)  cannot determine 
D)  none of the above 
A)  not efficient because the marginal benefit is greater than the marginal cost 
B)  efficient because marginal benefit is equal to the marginal cost 
C)  cannot determine 
D)  none of the above

Question 18

"Monopolists do not worry about efficient production and cost saving since they can just pass along any increase in costs to their consumers." Is this statement true? Explain your answer.

Accepted Answer

This statement is not true.An

Question 19

The practice of selling a product to different customers at different prices when marginal cost is the same is known as:

Accepted Answer

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

Question 20

Exhibit 13-6   Refer to Exhibit 13-6.In perfect price discrimination,producer surplus is area:

Accepted Answer

A)  a 
B)  a + b + c 
C)  a + b + c + d + e 
D)  zero 
A)  a 
B)  a + b + c 
C)  a + b + c + d + e 
D)  zero

Exam 13: Monopoly and Antitrust

Exhibit 13-1 Refer to Exhibit 13-1.Total cost when the monopolist is maximizing profits is indicated by area:

If a regulatory board wanted to make sure that a natural monopoly chose a price resulting in the efficient level of output,it should set a price equal to:

Show Stoppers is a monopoly provider of ticket services for the concerts and sporting events and their current service charge is $10.00.In order to attract one more customer,they have to lower their service charge to $9.50.Show Stoppers' marginal revenue of this additional customer is:

When a monopolist is able to sell its product at different prices to different customers,it is likely engaging in:

Which of the following is true of successful price discriminators?

Which of the following is not generally true about a profit-maximizing monopolist?

U.S.public utilities are often:

If the demand curve facing a monopoly was 1 unit at $7,2 units at $6,3 units at $5,4 units at $4,and 5 units at $3,the marginal revenue from selling the third unit of output:

Graphically,the marginal revenue curve of a monopolist:

Monopoly profits cannot persist in the long run,because there are barriers to entry.

Exhibit 13-4 The following diagram contains information on cost and revenue curves facing a regulated monopoly. Refer to Exhibit 13-4.If regulators set a price according to marginal-cost pricing,the firm will:

A profit-maximizing monopolist will choose to operate along the inelastic portion of its demand curve.

A monopolist can sell 20 units a week at a price of $10 per unit.To sell 21 units a week,it would have to lower its price to $9 per unit.The marginal revenue of the 21st unit would be:

A monopoly firm is charging the price the market will bear at a level of output where MC equals $6 and is increasing,MR equals $9,and average variable cost equals $5.To maximize profits,the firm should:

Exhibit 13-6 Refer to Exhibit 13-6.In perfect price discrimination,consumer surplus is:

Which of the following is false about quantity discounts?

Exhibit 13-7 Refer to Exhibit 13-7.If customers are charged 4 cents during the non-peak period,it is:

"Monopolists do not worry about efficient production and cost saving since they can just pass along any increase in costs to their consumers." Is this statement true? Explain your answer.

The practice of selling a product to different customers at different prices when marginal cost is the same is known as:

Exhibit 13-6 Refer to Exhibit 13-6.In perfect price discrimination,producer surplus is area:

The Role and Method of Economics

Economics: Eight Powerful Ideas

Scarcity, Trade-Offs, and Production Possibilities

Demand, Supply, and Market Equilibrium

Markets in Motion and Price Controls

Elasticities

Market Efficiency and Welfare

Market Failure

Public Finance and Public Choice

Consumer Choice Theory

The Firm: Production and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition and Product Differentiation

Oligopoly and Strategic Behavior

The Markets for Labor, Capital, and Land

Income, Poverty, and Health Care

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Measuring Economic Performance

Economic Growth in the Global Economy

Financial Markets, Saving, and Investment

Aggregate Demand and Aggregate Supply

The Aggregate Expenditure Model

Monetary Institutions

The Federal Reserve System and Monetary Policy

Issues in Macroeconomic Theory and Policy

International Trade

International Finance

Filters

A monopolist can sell 20 units a week at a price of $10 per unit.To sell 21 units a week,it would have to lower its price to $9 per unit.The marginal revenue of the 21^st unit would be: