Question 1

Figure 15-18  
-Refer to Figure 15-18. If the monopoly firm perfectly price discriminates, then the deadweight loss amounts to

Accepted Answer

A)  $0. 
B)  $1,000. 
C)  $2,000. 
D)  $4,000. 
A)  $0. 
B)  $1,000. 
C)  $2,000. 
D)  $4,000.

Question 2

Table 15-14
The following table gives information on the price, quantity, and total cost of production for a monopolist.
  
-Refer to Table 15-14. At what price does marginal revenue equal marginal cost?

Accepted Answer

A)  $5 
B)  $4 
C)  $3 
D)  $2 
A)  $5 
B)  $4 
C)  $3 
D)  $2

Question 3

The three main sources of barriers to entry are monopoly resources, government regulation, and the firm's production process.

Accepted Answer

A) True 
 B)False

Question 4

Competitive firms differ from monopolies in which of the following ways? (i) Competitive firms do not have to worry about the price effect lowering their total revenue.
(ii) Marginal revenue for a competitive firm equals price, while marginal revenue for a monopoly is less than the price it is able to charge.
(iii) Monopolies must lower their price in order to sell more of their product, while competitive firms do not.

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

Table 15-1
  
-Refer to Table 15-1. If the monopolist sells 8 units of its product, how much total revenue will it receive from the sale?

Accepted Answer

A)  $14 
B)  $40 
C)  $112 
D)  $164 
A)  $14 
B)  $40 
C)  $112 
D)  $164

Question 6

When a firm experiences continually declining average total costs, the firm is a

Accepted Answer

A)  government-created monopoly. 
B)  price taker. 
C)  natural monopoly. 
D)  revenue maximizer. 
A)  government-created monopoly. 
B)  price taker. 
C)  natural monopoly. 
D)  revenue maximizer.

Question 7

Scenario 15-11
Vincent operates a scenic tour business in Boston. He has one bus which can fit 50 people per tour and each tour lasts 2 hours. His total cost of operating one tour is fixed at $450. Vincent's cost is not reduced if he runs a tour with a partially full bus. While his cost is the same for all tours, Vincent charges each passenger his/her willingness to pay: adults $18 per trip, children $10 per trip, and senior citizens $12 per trip. At those rates, on a typical day Vincent's demand is:
   Assume that Vincent's customers are always available for the tour; therefore, he can fill his bus for each tour as long as there is sufficient total demand for the day.
-Refer to Scenario 15-11. What is Vincent's profit on a typical day?

Accepted Answer

The answer of Scenario 15-11
Vincent operates a scenic tour business...

Question 8

Which of the following statements comparing monopoly with competition is correct?

Accepted Answer

A)  A monopolist produces a higher level of output and charges a lower price than a competitive firm would. 
B)  With perfect price discrimination, the total surplus under monopoly can be the same as under competition. 
C)  With or without price discrimination, the consumer surplus under monopoly is at least as large as it would be under competition. 
D)  The deadweight loss associated with monopoly is caused by the positive economic profits of the monopolist; competitive firms do not earn a positive economic profit so there is no deadweight loss under competition. 
A)  A monopolist produces a higher level of output and charges a lower price than a competitive firm would. 
B)  With perfect price discrimination, the total surplus under monopoly can be the same as under competition. 
C)  With or without price discrimination, the consumer surplus under monopoly is at least as large as it would be under competition. 
D)  The deadweight loss associated with monopoly is caused by the positive economic profits of the monopolist; competitive firms do not earn a positive economic profit so there is no deadweight loss under competition.

Question 9

The profit-maximization problem for a monopolist differs from that of a competitive firm in which of the following ways?

Accepted Answer

A)  A competitive firm maximizes profit at the point where marginal revenue equals marginal cost; a monopolist maximizes profit at the point where marginal revenue exceeds marginal cost. 
B)  A competitive firm maximizes profit at the point where average revenue equals marginal cost; a monopolist maximizes profit at the point where average revenue exceeds marginal cost. 
C)  For a competitive firm, marginal revenue at the profit-maximizing level of output is equal to marginal revenue at all other levels of output; for a monopolist, marginal revenue at the profit-maximizing level of output is smaller than it is for larger levels of output. 
D)  For a profit-maximizing competitive firm, thinking at the margin is much more important than it is for a profit- maximizing monopolist. 
A)  A competitive firm maximizes profit at the point where marginal revenue equals marginal cost; a monopolist maximizes profit at the point where marginal revenue exceeds marginal cost. 
B)  A competitive firm maximizes profit at the point where average revenue equals marginal cost; a monopolist maximizes profit at the point where average revenue exceeds marginal cost. 
C)  For a competitive firm, marginal revenue at the profit-maximizing level of output is equal to marginal revenue at all other levels of output; for a monopolist, marginal revenue at the profit-maximizing level of output is smaller than it is for larger levels of output. 
D)  For a profit-maximizing competitive firm, thinking at the margin is much more important than it is for a profit- maximizing monopolist.

Question 10

Monopolists can achieve any level of profit they desire because they have unlimited market power.

Accepted Answer

A) True 
 B)False

Question 11

Why might economists prefer private ownership of monopolies over public ownership of monopolies?

Accepted Answer

The private monopolist is governed by th

Question 12

Give some examples of the benefits and costs of antitrust laws.

Accepted Answer

Benefits include promoting com

Question 13

Patents, copyrights, and trademarks

Accepted Answer

A)  are examples of government-created monopolies. 
B)  are examples of barriers to entry. 
C)  allow their owners to charge higher prices. 
D)  All of the above are correct. 
A)  are examples of government-created monopolies. 
B)  are examples of barriers to entry. 
C)  allow their owners to charge higher prices. 
D)  All of the above are correct.

Question 14

For a monopolist, when does marginal revenue exceed average revenue?

Accepted Answer

A)  never 
B)  when output is less than the profit-maximizing level of output 
C)  when output is greater than the profit-maximizing level of output 
D)  for all levels of output greater than zero 
A)  never 
B)  when output is less than the profit-maximizing level of output 
C)  when output is greater than the profit-maximizing level of output 
D)  for all levels of output greater than zero

Question 15

Which of the following would be most likely to have monopoly power?

Accepted Answer

A)  a long-distance telephone service provider 
B)  a local cable TV provider 
C)  a large department store 
D)  a gas station 
A)  a long-distance telephone service provider 
B)  a local cable TV provider 
C)  a large department store 
D)  a gas station

Question 16

Suppose when a monopolist produces 75 units its average revenue is $10 per unit, its marginal revenue is $5 per unit, its marginal cost is $6 per unit, and its average total cost is $5 per unit. What can we conclude about this monopolist?

Accepted Answer

A)  The monopolist is currently maximizing profits, and its total profits are $375. 
B)  The monopolist is currently maximizing profits, and its total profits are $300. 
C)  The monopolist is not currently maximizing profits; it should produce more units and charge a lower price to maximize profits. 
D)  The monopolist is not currently maximizing profits; it should produce fewer units and charge a higher price to maximize profits. 
A)  The monopolist is currently maximizing profits, and its total profits are $375. 
B)  The monopolist is currently maximizing profits, and its total profits are $300. 
C)  The monopolist is not currently maximizing profits; it should produce more units and charge a lower price to maximize profits. 
D)  The monopolist is not currently maximizing profits; it should produce fewer units and charge a higher price to maximize profits.

Question 17

A fundamental source of monopoly market power arises from

Accepted Answer

A)  perfectly elastic demand. 
B)  perfectly inelastic demand. 
C)  barriers to entry. 
D)  availability of "free" natural resources, such as water or air. 
A)  perfectly elastic demand. 
B)  perfectly inelastic demand. 
C)  barriers to entry. 
D)  availability of "free" natural resources, such as water or air.

Question 18

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 19

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 20

Table 15-12
The following table provides information on the price, quantity, and average total cost for a monopoly.
  
-Refer to Table 15-12. In order to maximize profits, the firm should produce

Accepted Answer

A)  4 units of output. 
B)  8 units of output. 
C)  12 units of output. 
D)  16 units of output. 
A)  4 units of output. 
B)  8 units of output. 
C)  12 units of output. 
D)  16 units of output.

Figure 15-18 -Refer to Figure 15-18. If the monopoly firm perfectly price discriminates, then the deadweight loss amounts to

Table 15-14 The following table gives information on the price, quantity, and total cost of production for a monopolist. -Refer to Table 15-14. At what price does marginal revenue equal marginal cost?

The three main sources of barriers to entry are monopoly resources, government regulation, and the firm's production process.

Table 15-1 -Refer to Table 15-1. If the monopolist sells 8 units of its product, how much total revenue will it receive from the sale?

When a firm experiences continually declining average total costs, the firm is a

Which of the following statements comparing monopoly with competition is correct?

The profit-maximization problem for a monopolist differs from that of a competitive firm in which of the following ways?

Monopolists can achieve any level of profit they desire because they have unlimited market power.

Why might economists prefer private ownership of monopolies over public ownership of monopolies?

Give some examples of the benefits and costs of antitrust laws.

Patents, copyrights, and trademarks

For a monopolist, when does marginal revenue exceed average revenue?

Which of the following would be most likely to have monopoly power?

Suppose when a monopolist produces 75 units its average revenue is $10 per unit, its marginal revenue is $5 per unit, its marginal cost is $6 per unit, and its average total cost is $5 per unit. What can we conclude about this monopolist?

A fundamental source of monopoly market power arises from

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?

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

Table 15-12 The following table provides information on the price, quantity, and average total cost for a monopoly. -Refer to Table 15-12. In order to maximize profits, the firm should produce

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

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Exam 15: Monopoly

Figure 15-18 -Refer to Figure 15-18. If the monopoly firm perfectly price discriminates, then the deadweight loss amounts to

Table 15-14 The following table gives information on the price, quantity, and total cost of production for a monopolist. -Refer to Table 15-14. At what price does marginal revenue equal marginal cost?

The three main sources of barriers to entry are monopoly resources, government regulation, and the firm's production process.

Table 15-1 -Refer to Table 15-1. If the monopolist sells 8 units of its product, how much total revenue will it receive from the sale?

When a firm experiences continually declining average total costs, the firm is a

Which of the following statements comparing monopoly with competition is correct?

The profit-maximization problem for a monopolist differs from that of a competitive firm in which of the following ways?

Monopolists can achieve any level of profit they desire because they have unlimited market power.

Why might economists prefer private ownership of monopolies over public ownership of monopolies?

Give some examples of the benefits and costs of antitrust laws.

Patents, copyrights, and trademarks

For a monopolist, when does marginal revenue exceed average revenue?

Which of the following would be most likely to have monopoly power?

Suppose when a monopolist produces 75 units its average revenue is $10 per unit, its marginal revenue is $5 per unit, its marginal cost is $6 per unit, and its average total cost is $5 per unit. What can we conclude about this monopolist?

A fundamental source of monopoly market power arises from

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?

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

Table 15-12 The following table provides information on the price, quantity, and average total cost for a monopoly. -Refer to Table 15-12. In order to maximize profits, the firm should produce

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

Filters