Question 1

Table 15-4
A monopolist faces the following demand curve:
  
-Refer to Table 15-4. In order to maximize total revenues, the monopolist should produce

Accepted Answer

A)  5 units. 
B)  7.5 units. 
C)  10 units. 
D)  12.5 units. 
A)  5 units. 
B)  7.5 units. 
C)  10 units. 
D)  12.5 units.

Question 2

Suppose a firm has a monopoly on the sale of a computer game and faces a downward-sloping demand curve. When selling the 50th game, the firm will always receive

Accepted Answer

A)  less marginal revenue on the 50th game than it received on the 49th game. 
B)  more average revenue on the 50th game than it received on the 49th game. 
C)  more total revenue on the 50 games than it received on the first 49 games. 
D)  Both b and c are correct. 
A)  less marginal revenue on the 50th game than it received on the 49th game. 
B)  more average revenue on the 50th game than it received on the 49th game. 
C)  more total revenue on the 50 games than it received on the first 49 games. 
D)  Both b and c are correct.

Question 3

Which of the following statements is correct for a monopolist? (i) The firm maximizes profits by equating marginal revenue with marginal cost.
(ii) The firm maximizes profits by equating price with marginal cost.
(iii) Demand equals marginal revenue.
(iv) Average revenue equals price.

Accepted Answer

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

Question 4

Price discrimination

Accepted Answer

A)  is illegal in the United States and Europe. 
B)  can occur in both perfectly competitive and monopoly markets. 
C)  is illogical because it does not maximize profits. 
D)  can maximize profits if the seller can prevent the resale of goods between customers. 
A)  is illegal in the United States and Europe. 
B)  can occur in both perfectly competitive and monopoly markets. 
C)  is illogical because it does not maximize profits. 
D)  can maximize profits if the seller can prevent the resale of goods between customers.

Question 5

Drug companies are allowed to be monopolists in the drugs they discover in order to

Accepted Answer

A)  allow drug companies to charge a price that is equal to their marginal cost. 
B)  discourage new firms from entering the drug market. 
C)  encourage research. 
D)  allow the government to earn patent revenue. 
A)  allow drug companies to charge a price that is equal to their marginal cost. 
B)  discourage new firms from entering the drug market. 
C)  encourage research. 
D)  allow the government to earn patent revenue.

Question 6

A natural monopoly occurs when

Accepted Answer

A)  the product is sold in its natural state, such as water or diamonds. 
B)  there are economies of scale over the relevant range of output. 
C)  the firm is characterized by a rising marginal cost curve. 
D)  production requires the use of free natural resources, such as water or air. 
A)  the product is sold in its natural state, such as water or diamonds. 
B)  there are economies of scale over the relevant range of output. 
C)  the firm is characterized by a rising marginal cost curve. 
D)  production requires the use of free natural resources, such as water or air.

Question 7

Encouraging firms to invest in research and development and individuals to engage in creative endeavors such as writing novels is one justification for

Accepted Answer

A)  resource monopolies. 
B)  natural monopolies. 
C)  government-created monopolies. 
D)  breaking up monopolies into smaller firms. 
A)  resource monopolies. 
B)  natural monopolies. 
C)  government-created monopolies. 
D)  breaking up monopolies into smaller firms.

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

The first major piece of antitrust legislation was the

Accepted Answer

A)  Clayton Act. 
B)  Obama Care Act. 
C)  Sherman Act. 
D)  Clinton Act. 
A)  Clayton Act. 
B)  Obama Care Act. 
C)  Sherman Act. 
D)  Clinton Act.

Question 10

Figure 15-19  
-Refer to Figure 15-19. If the monopoly firm perfectly price discriminates, then consumer surplus amounts to

Accepted Answer

A)  $0. 
B)  $1,562.50. 
C)  $3,125. 
D)  $6,250. 
A)  $0. 
B)  $1,562.50. 
C)  $3,125. 
D)  $6,250.

Question 11

As a monopolist increases the quantity of output it sells, the price consumers are willing to pay for the good

Accepted Answer

A)  is unaffected. 
B)  decreases. 
C)  increases. 
D)  There is not enough information given in answer the question. 
A)  is unaffected. 
B)  decreases. 
C)  increases. 
D)  There is not enough information given in answer the question.

Question 12

Figure 15-5  
-Refer to Figure 15-5. A profit-maximizing monopoly's total revenue is equal to

Accepted Answer

A)  P1 x Q1. 
B)  P2 x Q3. 
C)  P3 x Q4. 
D)  (P2-P4) x Q3. 
A)  P1 x Q1. 
B)  P2 x Q3. 
C)  P3 x Q4. 
D)  (P2-P4) x Q3.

Question 13

Patent and copyright laws are major sources of

Accepted Answer

A)  natural monopolies. 
B)  government-created monopolies. 
C)  resource monopolies. 
D)  antitrust regulation. 
A)  natural monopolies. 
B)  government-created monopolies. 
C)  resource monopolies. 
D)  antitrust regulation.

Question 14

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

Accepted Answer

A)  a national florist 
B)  an online bookstore 
C)  a local restaurant 
D)  a local electrical cooperative 
A)  a national florist 
B)  an online bookstore 
C)  a local restaurant 
D)  a local electrical cooperative

Question 15

A profit-maximizing monopolist charges a price of $12. The intersection of the marginal revenue and marginal cost curves occurs where output is 10 units and marginal cost is $6. Average total cost for 10 units of output is $5. What is the monopolist's profit?

Accepted Answer

A)  $60 
B)  $70 
C)  $100 
D)  $120 
A)  $60 
B)  $70 
C)  $100 
D)  $120

Question 16

One solution to the problems of marginal-cost pricing of a regulated natural monopolist is average cost pricing. In this model, the monopolist is allowed to price its production at average total cost. How does average-cost pricing differ from marginal-cost pricing? Does this solution maximize social well-being?

Accepted Answer

Under average-cost pricing, the monopoli

Question 17

Table 15-21
Tommy's Tie Company, a monopolist, has the following cost and revenue information. Assume that Tommy's is
able to engage in perfect price discrimination.
  
-Refer to Table 15-21. What are Tommy's Ties Company's fixed costs?

Accepted Answer

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

Question 18

Which of the following is not a reason for the existence of a monopoly?

Accepted Answer

A)  sole ownership of a key resource 
B)  patents 
C)  copyrights 
D)  diseconomies of scale 
A)  sole ownership of a key resource 
B)  patents 
C)  copyrights 
D)  diseconomies of scale

Question 19

Scenario 15-4
Suppose a monopolist has a demand curve that can be expressed as P=90-Q. The monopolist's marginal revenue curve can be expressed as MR=90-2Q. The monopolist has constant marginal costs and average total costs of $10.
-Refer to Scenario 15-4. The profit-maximizing monopolist will have a deadweight loss of

Accepted Answer

A)  $6,400. 
B)  $3,200. 
C)  $1,600. 
D)  $800. 
A)  $6,400. 
B)  $3,200. 
C)  $1,600. 
D)  $800.

Question 20

Graphically depict the deadweight loss caused by a monopoly. How is this similar to the deadweight loss from taxation?

Accepted Answer

A profit-maximizing monopolist will choo

Table 15-4 A monopolist faces the following demand curve: -Refer to Table 15-4. In order to maximize total revenues, the monopolist should produce

Suppose a firm has a monopoly on the sale of a computer game and faces a downward-sloping demand curve. When selling the 50^t^hgame, the firm will always receive

Which of the following statements is correct for a monopolist? (i) The firm maximizes profits by equating marginal revenue with marginal cost. (ii) The firm maximizes profits by equating price with marginal cost. (iii) Demand equals marginal revenue. (iv) Average revenue equals price.

Price discrimination

Drug companies are allowed to be monopolists in the drugs they discover in order to

A natural monopoly occurs when

Encouraging firms to invest in research and development and individuals to engage in creative endeavors such as writing novels is one justification for

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

The first major piece of antitrust legislation was the

Figure 15-19 -Refer to Figure 15-19. If the monopoly firm perfectly price discriminates, then consumer surplus amounts to

As a monopolist increases the quantity of output it sells, the price consumers are willing to pay for the good

Figure 15-5 -Refer to Figure 15-5. A profit-maximizing monopoly's total revenue is equal to

Patent and copyright laws are major sources of

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

A profit-maximizing monopolist charges a price of $12. The intersection of the marginal revenue and marginal cost curves occurs where output is 10 units and marginal cost is $6. Average total cost for 10 units of output is $5. What is the monopolist's profit?

Table 15-21 Tommy's Tie Company, a monopolist, has the following cost and revenue information. Assume that Tommy's is able to engage in perfect price discrimination. -Refer to Table 15-21. What are Tommy's Ties Company's fixed costs?

Which of the following is not a reason for the existence of a monopoly?

Graphically depict the deadweight loss caused by a monopoly. How is this similar to the deadweight loss from taxation?

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

Exam 15: Monopoly

Table 15-4 A monopolist faces the following demand curve: -Refer to Table 15-4. In order to maximize total revenues, the monopolist should produce

Suppose a firm has a monopoly on the sale of a computer game and faces a downward-sloping demand curve. When selling the 50th game, the firm will always receive

Which of the following statements is correct for a monopolist? (i) The firm maximizes profits by equating marginal revenue with marginal cost. (ii) The firm maximizes profits by equating price with marginal cost. (iii) Demand equals marginal revenue. (iv) Average revenue equals price.

Price discrimination

Drug companies are allowed to be monopolists in the drugs they discover in order to

A natural monopoly occurs when

Encouraging firms to invest in research and development and individuals to engage in creative endeavors such as writing novels is one justification for

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

The first major piece of antitrust legislation was the

Figure 15-19 -Refer to Figure 15-19. If the monopoly firm perfectly price discriminates, then consumer surplus amounts to

As a monopolist increases the quantity of output it sells, the price consumers are willing to pay for the good

Figure 15-5 -Refer to Figure 15-5. A profit-maximizing monopoly's total revenue is equal to

Patent and copyright laws are major sources of

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

A profit-maximizing monopolist charges a price of $12. The intersection of the marginal revenue and marginal cost curves occurs where output is 10 units and marginal cost is $6. Average total cost for 10 units of output is $5. What is the monopolist's profit?

Table 15-21 Tommy's Tie Company, a monopolist, has the following cost and revenue information. Assume that Tommy's is able to engage in perfect price discrimination. -Refer to Table 15-21. What are Tommy's Ties Company's fixed costs?

Which of the following is not a reason for the existence of a monopoly?

Graphically depict the deadweight loss caused by a monopoly. How is this similar to the deadweight loss from taxation?

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

Suppose a firm has a monopoly on the sale of a computer game and faces a downward-sloping demand curve. When selling the 50^t^hgame, the firm will always receive