Question 1

A rational pricing strategy for a profit-maximizing monopolist is

Accepted Answer

A)  price discrimination. 
B)  price segregation. 
C)  synergy pricing. 
D)  average cost pricing. 
A)  price discrimination. 
B)  price segregation. 
C)  synergy pricing. 
D)  average cost pricing.

Question 2

Table 15-20
A monopolist faces the following demand curve:
  
-Refer to Table 15-20. If a monopolist faces a constant marginal cost of $20, how much output should the firm produce in order to maximize profit?

Accepted Answer

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

Question 3

Splitting up a monopoly is often justified on the grounds that

Accepted Answer

A)  consumers prefer dealing with small firms. 
B)  small firms have lower costs. 
C)  competition is inherently efficient. 
D)  small firms produce higher quality products. 
A)  consumers prefer dealing with small firms. 
B)  small firms have lower costs. 
C)  competition is inherently efficient. 
D)  small firms produce higher quality products.

Question 4

A monopolist produces an output level where marginal revenue equals marginal cost and charges a price where marginal cost equals average total cost.

Accepted Answer

A) True 
 B)False

Question 5

Declining average total cost with increased production is one of the defining characteristics of a natural monopoly.

Accepted Answer

A) True 
 B)False

Question 6

Table 15-13
The following table gives information on the price, quantity, and total cost of production for a monopolist.
  
-Refer to Table 15-13. How much profit will the firm earn at the profit-maximizing price?

Accepted Answer

A)  $9 
B)  $12 
C)  $15 
D)  $18 
A)  $9 
B)  $12 
C)  $15 
D)  $18

Question 7

A monopoly market is characterized by

Accepted Answer

A)  many buyers and sellers. 
B)  "natural" products. 
C)  barriers to entry. 
D)  a Nash equilibrium. 
A)  many buyers and sellers. 
B)  "natural" products. 
C)  barriers to entry. 
D)  a Nash equilibrium.

Question 8

Figure 15-11  
-Refer to Figure 15-11. Which area represents the deadweight loss from monopoly?

Accepted Answer

A)  J 
B)  H 
C)  A+B+C+D+F+I+J+H 
D)  J+H 
A)  J 
B)  H 
C)  A+B+C+D+F+I+J+H 
D)  J+H

Question 9

Figure 15-24  
-Refer to Figure 15-24. Use the letters in the figure to identify the profit area for the single price monopolist.

Accepted Answer

The answer of Figure 15-24  
-Refer to Figure 15-24....

Question 10

Comparing firms in perfectly competitive markets to monopoly firms, which results in a deadweight loss?

Accepted Answer

The answer of Comparing firms in perfectly competitive markets to...

Question 11

Table 15-7
Sally owns the only shoe store in town. She has the following cost and revenue information.
  
-Refer to Table 15-7. What is the average revenue when Sally sells 7 pairs of shoes?

Accepted Answer

A)  $40 
B)  $90 
C)  $100 
D)  $700 
A)  $40 
B)  $90 
C)  $100 
D)  $700

Question 12

Table 15-6
A monopolist faces the following demand curve:
  
-Refer to Table 15-6. Suppose the monopolist has total fixed costs equal to $5 and a variable cost equal to $4 per unit for all units produced. What is the total profit if she operates at her profit-maximizing price?

Accepted Answer

A)  $1 
B)  $7 
C)  $9 
D)  $11 
A)  $1 
B)  $7 
C)  $9 
D)  $11

Question 13

Figure 15-23  
-Refer to Figure 15-23. If a regulator requires the firm to charge an average cost price, what quantity will the firm produce?

Accepted Answer

The answer of Figure 15-23  
-Refer to Figure 15-23....

Question 14

Table 15-18
A monopolist faces the following demand curve:
   Suppose marginal cost is constant at $8 per unit.
-Refer to Table 15-18 The monopolist's profit­maximizing level of output is

Accepted Answer

A)  3 units. 
B)  4 units. 
C)  5 units. 
D)  6 units. 
A)  3 units. 
B)  4 units. 
C)  5 units. 
D)  6 units.

Question 15

Policymakers are discussing various proposals regarding how to deal with natural monopolies. Senator Huff wants to regulate natural monopolies by equating price with average total cost. Huff contends that such a policy will ensure that monopolies make every effort to reduce costs. Senator Puff wants the government to own natural monopolies. Puff argues that government-owned monopolies usually do a better job of holding down costs than privately owned monopolies. Which senator's argument is correct?

Accepted Answer

A)  Senator Huff 
B)  Senator Puff 
C)  both senators 
D)  neither senator 
A)  Senator Huff 
B)  Senator Puff 
C)  both senators 
D)  neither senator

Question 16

State two examples of government-created monopolies.

Accepted Answer

patents
co

Question 17

Table 15-18
A monopolist faces the following demand curve:
   Suppose marginal cost is constant at $8 per unit.
-Refer to Table 15-18. The monopolist's total revenue from selling 4 units of output is

Accepted Answer

A)  $4. 
B)  $16. 
C)  $32. 
D)  $48. 
A)  $4. 
B)  $16. 
C)  $32. 
D)  $48.

Question 18

Table 15-7
Sally owns the only shoe store in town. She has the following cost and revenue information.
  
-Refer to Table 15-7. What are Sally's fixed costs?

Accepted Answer

A)  $0 
B)  $100 
C)  $600 
D)  $745 
A)  $0 
B)  $100 
C)  $600 
D)  $745

Question 19

Which of the following statements is not correct?

Accepted Answer

A)  The government may use antitrust laws to break up an existing company to improve competition. 
B)  The government may break up a natural monopoly to lower the price charged to customers. 
C)  Private ownership is typically preferred to public ownership. 
D)  Sometimes the best strategy is for the government to do nothing about monopoly inefficiency because the "fix" may be worse than the problem. 
A)  The government may use antitrust laws to break up an existing company to improve competition. 
B)  The government may break up a natural monopoly to lower the price charged to customers. 
C)  Private ownership is typically preferred to public ownership. 
D)  Sometimes the best strategy is for the government to do nothing about monopoly inefficiency because the "fix" may be worse than the problem.

Question 20

When a certain monopoly sets its price at $8 it sells 64 units. When the monopoly sets its price at $9 it sells 62 units. The marginal revenue for the firm over this range is

Accepted Answer

A)  $18. 
B)  $23. 
C)  $46. 
D)  $92. 
A)  $18. 
B)  $23. 
C)  $46. 
D)  $92.

Exam 15: Monopoly

A rational pricing strategy for a profit-maximizing monopolist is

Table 15-20 A monopolist faces the following demand curve: -Refer to Table 15-20. If a monopolist faces a constant marginal cost of $20, how much output should the firm produce in order to maximize profit?

Splitting up a monopoly is often justified on the grounds that

A monopolist produces an output level where marginal revenue equals marginal cost and charges a price where marginal cost equals average total cost.

Declining average total cost with increased production is one of the defining characteristics of a natural monopoly.

Table 15-13 The following table gives information on the price, quantity, and total cost of production for a monopolist. -Refer to Table 15-13. How much profit will the firm earn at the profit-maximizing price?

A monopoly market is characterized by

Figure 15-11 -Refer to Figure 15-11. Which area represents the deadweight loss from monopoly?

Figure 15-24 -Refer to Figure 15-24. Use the letters in the figure to identify the profit area for the single price monopolist.

Comparing firms in perfectly competitive markets to monopoly firms, which results in a deadweight loss?

Table 15-7 Sally owns the only shoe store in town. She has the following cost and revenue information. -Refer to Table 15-7. What is the average revenue when Sally sells 7 pairs of shoes?

Table 15-6 A monopolist faces the following demand curve: -Refer to Table 15-6. Suppose the monopolist has total fixed costs equal to $5 and a variable cost equal to $4 per unit for all units produced. What is the total profit if she operates at her profit-maximizing price?

Figure 15-23 -Refer to Figure 15-23. If a regulator requires the firm to charge an average cost price, what quantity will the firm produce?

Table 15-18 A monopolist faces the following demand curve: Suppose marginal cost is constant at $8 per unit. -Refer to Table 15-18 The monopolist's profit­maximizing level of output is

State two examples of government-created monopolies.

Table 15-18 A monopolist faces the following demand curve: Suppose marginal cost is constant at $8 per unit. -Refer to Table 15-18. The monopolist's total revenue from selling 4 units of output is

Table 15-7 Sally owns the only shoe store in town. She has the following cost and revenue information. -Refer to Table 15-7. What are Sally's fixed costs?

Which of the following statements is not correct?

When a certain monopoly sets its price at $8 it sells 64 units. When the monopoly sets its price at $9 it sells 62 units. The marginal revenue for the firm over this range is

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

Table 15-18 A monopolist faces the following demand curve: Suppose marginal cost is constant at $8 per unit. -Refer to Table 15-18 The monopolist's profitmaximizing level of output is