Question 1

Exhibit 13-2   Refer to Exhibit 13-2.The region bounded by P*ABC represents:

Accepted Answer

A)  total costs. 
B)  total losses. 
C)  total profits. 
D)  total consumer surplus. 
A)  total costs. 
B)  total losses. 
C)  total profits. 
D)  total consumer surplus.

Question 2

What is the maximum amount of profit that the firm below could generate?

Accepted Answer

A)  $2,220 
B)  $3,000 
C)  $3,300 
D)  $3,700 
A)  $2,220 
B)  $3,000 
C)  $3,300 
D)  $3,700

Question 3

If a firm seeks to maximize total revenue,it should produce the quantity where:

Accepted Answer

A)  marginal revenue equals zero. 
B)  elasticity of demand is less than one. 
C)  elasticity of demand is greater than one. 
D)  marginal revenue is maximized. 
A)  marginal revenue equals zero. 
B)  elasticity of demand is less than one. 
C)  elasticity of demand is greater than one. 
D)  marginal revenue is maximized.

Question 4

A monopolist can sell 6 units per day at $8 per unit,or 7 units per day at $7 per unit.Its marginal revenue for the seventh unit of output is:

Accepted Answer

A)  $49. 
B)  $7. 
C)  $1. 
D)  $-1 
A)  $49. 
B)  $7. 
C)  $1. 
D)  $-1

Question 5

Which of the following types of firms practices price discrimination?

Accepted Answer

A)  airlines 
B)  movie theaters 
C)  colleges 
D)  all of the above 
A)  airlines 
B)  movie theaters 
C)  colleges 
D)  all of the above

Question 6

In perfect price discrimination,which of the following are reduced to zero?

Accepted Answer

A)  Consumer surplus and producer surplus 
B)  Producer surplus and deadweight loss 
C)  Consumer surplus and deadweight loss 
D)  Producer surplus and total welfare 
A)  Consumer surplus and producer surplus 
B)  Producer surplus and deadweight loss 
C)  Consumer surplus and deadweight loss 
D)  Producer surplus and total welfare

Question 7

Exhibit 13-3 A monopoly producer of canned iced coffee produces with the following costs:
  Consumers demand iced coffee according to the following demand schedule:
  Refer to Exhibit 13-3.At the profit-maximizing level of output,the firm's profits equal:

Accepted Answer

A)  $2.35. 
B)  $8.25. 
C)  $10.00. 
D)  $10.25. 
A)  $2.35. 
B)  $8.25. 
C)  $10.00. 
D)  $10.25.

Question 8

The U.S.Postal Service historically has had a monopoly over the market for the delivery of first-class letters in the United States.

Accepted Answer

A) True 
 B)False

Question 9

Exhibit 13-6   Refer to Exhibit 13-6.In single price monopoly,deadweight loss is area:

Accepted Answer

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

Question 10

Average cost regulation of a natural monopoly does not involve:

Accepted Answer

A)  production at a socially inefficient level of output. 
B)  a tendency for average total cost curves to shift upward over time. 
C)  a subsidy. 
D)  production at the output level at which demand intersects the average total cost curve. 
A)  production at a socially inefficient level of output. 
B)  a tendency for average total cost curves to shift upward over time. 
C)  a subsidy. 
D)  production at the output level at which demand intersects the average total cost curve.

Question 11

Which of the following can serve as a barrier to entry?

Accepted Answer

A)  legal restrictions 
B)  patents 
C)  control of scarce inputs or resources 
D)  all of the above 
A)  legal restrictions 
B)  patents 
C)  control of scarce inputs or resources 
D)  all of the above

Question 12

A market structure in which only one firm survives because of economies of scale:

Accepted Answer

A)  is called a structural monopoly. 
B)  is called a patented monopoly. 
C)  is called a natural monopoly. 
D)  is called a government monopoly. 
A)  is called a structural monopoly. 
B)  is called a patented monopoly. 
C)  is called a natural monopoly. 
D)  is called a government monopoly.

Question 13

Exhibit 13-4 The following diagram contains information on cost and revenue curves facing a regulated monopoly.   Refer to Exhibit 13-4.If the government is able to regulate the monopolist using marginal-cost pricing,what price and output combinations are expected to result?

Accepted Answer

A)  P5 and Q2 
B)  P2 and Q2 
C)  P4 and Q3 
D)  P6 and Q4 
A)  P5 and Q2 
B)  P2 and Q2 
C)  P4 and Q3 
D)  P6 and Q4

Question 14

Which of the following is generally true of monopoly?

Accepted Answer

A)  Price exceeds marginal cost. 
B)  Marginal revenue is less than price. 
C)  Output is restricted relative to the socially efficient level. 
D)  All of the above are generally true of monopoly. 
A)  Price exceeds marginal cost. 
B)  Marginal revenue is less than price. 
C)  Output is restricted relative to the socially efficient level. 
D)  All of the above are generally true of monopoly.

Question 15

Exhibit 13-6   Refer to Exhibit 13-6.In perfect price discrimination,total welfare is area:

Accepted Answer

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

Question 16

At a given output level,a monopolist earns a profit only if:

Accepted Answer

A)  the slope of the total revenue curve exceeds the slope of the total cost curve. 
B)  the height of the marginal revenue curve at the output produced exceeds the height of the marginal cost curve at that output. 
C)  the height of the demand curve at the output produced exceeds the height of the marginal revenue curve at that output. 
D)  the height of the demand curve at the output produced exceeds the height of the average total cost curve at that output. 
A)  the slope of the total revenue curve exceeds the slope of the total cost curve. 
B)  the height of the marginal revenue curve at the output produced exceeds the height of the marginal cost curve at that output. 
C)  the height of the demand curve at the output produced exceeds the height of the marginal revenue curve at that output. 
D)  the height of the demand curve at the output produced exceeds the height of the average total cost curve at that output.

Question 17

Does the monopolist have an incentive to reduce cost under average cost pricing? How can this be overcome?

Accepted Answer

Under average cost pricing,the monopolis

Question 18

The DeBeers Diamond Company,which owns most of the South African diamond production,has market power over the diamond trade.This market power was obtained through:

Accepted Answer

A)  illegal means. 
B)  control of a scarce resource. 
C)  patent protection. 
D)  government licensing. 
A)  illegal means. 
B)  control of a scarce resource. 
C)  patent protection. 
D)  government licensing.

Question 19

Exhibit 13-6   Refer to Exhibit 13-6.In perfect price discrimination,deadweight loss is area:

Accepted Answer

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

Question 20

Ceteris paribus,in which of the following cases would we expect economic profits to be greatest?

Accepted Answer

A)  an unregulated monopolist who is able to price discriminate. 
B)  an unregulated monopolist who is unable to price discriminate. 
C)  a regulated monopolist required to charge a price no greater than marginal cost. 
D)  a regulated monopolist required to charge a price no greater than average cost. 
A)  an unregulated monopolist who is able to price discriminate. 
B)  an unregulated monopolist who is unable to price discriminate. 
C)  a regulated monopolist required to charge a price no greater than marginal cost. 
D)  a regulated monopolist required to charge a price no greater than average cost.

Exam 13: Monopoly and Antitrust

Exhibit 13-2 Refer to Exhibit 13-2.The region bounded by P*ABC represents:

What is the maximum amount of profit that the firm below could generate?

If a firm seeks to maximize total revenue,it should produce the quantity where:

A monopolist can sell 6 units per day at $8 per unit,or 7 units per day at $7 per unit.Its marginal revenue for the seventh unit of output is:

Which of the following types of firms practices price discrimination?

In perfect price discrimination,which of the following are reduced to zero?

Exhibit 13-3 A monopoly producer of canned iced coffee produces with the following costs: Consumers demand iced coffee according to the following demand schedule: Refer to Exhibit 13-3.At the profit-maximizing level of output,the firm's profits equal:

The U.S.Postal Service historically has had a monopoly over the market for the delivery of first-class letters in the United States.

Exhibit 13-6 Refer to Exhibit 13-6.In single price monopoly,deadweight loss is area:

Average cost regulation of a natural monopoly does not involve:

Which of the following can serve as a barrier to entry?

A market structure in which only one firm survives because of economies of scale:

Exhibit 13-4 The following diagram contains information on cost and revenue curves facing a regulated monopoly. Refer to Exhibit 13-4.If the government is able to regulate the monopolist using marginal-cost pricing,what price and output combinations are expected to result?

Which of the following is generally true of monopoly?

Exhibit 13-6 Refer to Exhibit 13-6.In perfect price discrimination,total welfare is area:

At a given output level,a monopolist earns a profit only if:

Does the monopolist have an incentive to reduce cost under average cost pricing? How can this be overcome?

The DeBeers Diamond Company,which owns most of the South African diamond production,has market power over the diamond trade.This market power was obtained through:

Exhibit 13-6 Refer to Exhibit 13-6.In perfect price discrimination,deadweight loss is area:

Ceteris paribus,in which of the following cases would we expect economic profits to be greatest?

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

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