Question 1

Figure 15-6  
-Refer to Figure 15-6. What area measures the monopolist's profit?

Accepted Answer

A)  (K-
C) *W 
B)  (L-
A) *T 
C)  (K-
B) *W 
D)  0.5[(K-
C) *(Z-T)] 
A)  (K-
C) *W 
B)  (L-
A) *T 
C)  (K-
B) *W 
D)  0.5[(K-
C) *(Z-T)]

Question 2

Figure 15-14  
-Refer to Figure 15-14. If the monopoly operates at an output level less than Q0, then an increase in output toward (but not exceeding) Q0 would

Accepted Answer

A)  raise the price and raise total surplus. 
B)  lower the price and raise total surplus. 
C)  raise the price and lower total surplus. 
D)  lower the price and lower total surplus. 
A)  raise the price and raise total surplus. 
B)  lower the price and raise total surplus. 
C)  raise the price and lower total surplus. 
D)  lower the price and lower total surplus.

Question 3

Describe how government is involved in creating a monopoly. Why might the government create one? Give an example.

Accepted Answer

The government can create a monopoly by

Question 4

In the market for "home heating" consumers typically have several options (e.g., electricity, heating fuel, natural gas, propane, etc.), yet we often think of firms in this industry as behaving like monopolists. Discuss the context in which your electricity provider is a monopolist. Is this characterization universally applicable? Explain your answer.

Accepted Answer

In this case, the firms are monopolists

Question 5

Many economists criticize monopolists because they

Accepted Answer

A)  charge a price that equals marginal cost rather than a price that equals average cost. 
B)  do not innovate. 
C)  produce a large quantity of waste. 
D)  produce less than the socially efficient level of output. 
A)  charge a price that equals marginal cost rather than a price that equals average cost. 
B)  do not innovate. 
C)  produce a large quantity of waste. 
D)  produce less than the socially efficient level of output.

Question 6

Authors are allowed to be monopolists in the sale of their books in order to

Accepted Answer

A)  promote a society in which people think for themselves and learn from whichever books they please. 
B)  correct for the negative externalities that the Internet and television impose. 
C)  satisfy literary advocacy groups that exercise their lobbying power. 
D)  None of the above is correct. 
A)  promote a society in which people think for themselves and learn from whichever books they please. 
B)  correct for the negative externalities that the Internet and television impose. 
C)  satisfy literary advocacy groups that exercise their lobbying power. 
D)  None of the above is correct.

Question 7

When a certain monopoly sets its price at $8 it sells 64 units. When the monopoly sets its price at $10 it sells 60 units. The marginal revenue for the firm over this range is

Accepted Answer

A)  $11. 
B)  $22. 
C)  $33. 
D)  $44. 
A)  $11. 
B)  $22. 
C)  $33. 
D)  $44.

Question 8

If the government regulates the price a natural monopolist can charge to be equal to the firm's marginal cost, the government will likely need to subsidize the firm.

Accepted Answer

A) True 
 B)False

Question 9

A monopolist maximizes profit by producing an output level where marginal cost equals price.

Accepted Answer

A) True 
 B)False

Question 10

Scenario 15-9
Suppose executives at an art museum know that 100 adults are willing to pay $12 for admission to the museum on a weekday. Suppose the executives also know that 200 students are willing to pay $8 for admission on a weekday. The cost of operating the museum on a weekday is $2,000.
-Refer to Scenario 15-9. How much profit will the museum earn if it charges all customers $12 for admission?

Accepted Answer

A)  -$800 
B)  $100 
C)  $800 
D)  $1,200 
A)  -$800 
B)  $100 
C)  $800 
D)  $1,200

Question 11

Figure 15-7  
-Refer to Figure 15-7. A profit-maximizing monopolist would earn profits of

Accepted Answer

A)  $96. 
B)  $117. 
C)  $120. 
D)  $126. 
A)  $96. 
B)  $117. 
C)  $120. 
D)  $126.

Question 12

For a typical natural monopoly, average total cost is

Accepted Answer

A)  falling, and marginal cost is above average total cost. 
B)  falling, and marginal cost is below average total cost. 
C)  rising, and marginal cost is below average total cost. 
D)  rising, and marginal cost is above average total cost. 
A)  falling, and marginal cost is above average total cost. 
B)  falling, and marginal cost is below average total cost. 
C)  rising, and marginal cost is below average total cost. 
D)  rising, and marginal cost is above average total cost.

Question 13

Which of the following strategies is not an effective strategy to reduce monopoly inefficiency?

Accepted Answer

A)  antitrust laws 
B)  price discrimination 
C)  doing nothing 
D)  breaking up a natural monopoly into more than one firm 
A)  antitrust laws 
B)  price discrimination 
C)  doing nothing 
D)  breaking up a natural monopoly into more than one firm

Question 14

Figure 15-17  
-Refer to Figure 15-17. Which of the following statements best describes the changes that would occur if this firm were to switch from operating as a single price profit-maximizing monopolist to perfect price discrimination?

Accepted Answer

A)  The quantity would increase from I to J, the profit would increase from BCFE to ACG, and the deadweight loss would decrease from EFG to zero. 
B)  The quantity would remain constant, the profit would increase from BCFE to ABCFE and the deadweight loss would decrease from EFG to zero. 
C)  The quantity would decrease from J to I, the profit would decrease from ACG to BCFE, and the deadweight loss would increase from EFG to ACG. 
D)  The quantity would increase from I to J, the profit would decrease from BCFE to EFG, and the deadweight loss remain constant. 
A)  The quantity would increase from I to J, the profit would increase from BCFE to ACG, and the deadweight loss would decrease from EFG to zero. 
B)  The quantity would remain constant, the profit would increase from BCFE to ABCFE and the deadweight loss would decrease from EFG to zero. 
C)  The quantity would decrease from J to I, the profit would decrease from ACG to BCFE, and the deadweight loss would increase from EFG to ACG. 
D)  The quantity would increase from I to J, the profit would decrease from BCFE to EFG, and the deadweight loss remain constant.

Question 15

An industry is a natural monopoly when (i) the government assists the firm in maintaining the monopoly.
(ii) a single firm owns a key resource.
(iii) a single firm can supply a good or service to an entire market at a smaller cost than could two or more firms.

Accepted Answer

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

Question 16

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

Accepted Answer

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

Question 17

When a natural monopoly exists, it is

Accepted Answer

A)  always cost effective for government-owned firms to produce the product. 
B)  never cost effective for one firm to produce the product. 
C)  always cost effective for two or more private firms to produce the product. 
D)  never cost effective for two or more private firms to produce the product. 
A)  always cost effective for government-owned firms to produce the product. 
B)  never cost effective for one firm to produce the product. 
C)  always cost effective for two or more private firms to produce the product. 
D)  never cost effective for two or more private firms to produce the product.

Question 18

The fundamental cause of monopoly is

Accepted Answer

A)  incompetent management in competitive firms. 
B)  the zero-profit feature of long-run equilibrium in competitive markets. 
C)  advertising. 
D)  barriers to entry. 
A)  incompetent management in competitive firms. 
B)  the zero-profit feature of long-run equilibrium in competitive markets. 
C)  advertising. 
D)  barriers to entry.

Question 19

If a monopolist can sell 7 units when the price is $4 and 8 units when the price is $3, then the marginal revenue of selling the eighth unit is equal to

Accepted Answer

A)  $3. 
B)  $4. 
C)  $24. 
D)  -$4. 
A)  $3. 
B)  $4. 
C)  $24. 
D)  -$4.

Question 20

Figure 15-4  
-Refer to Figure 15-4. The marginal cost curve for a monopoly firm is depicted by curve

Accepted Answer

A)  A. 
B)  B. 
C)  C. 
D)  D. 
A)  A. 
B)  B. 
C)  C. 
D)  D.

Figure 15-6 -Refer to Figure 15-6. What area measures the monopolist's profit?

Figure 15-14 -Refer to Figure 15-14. If the monopoly operates at an output level less than Q0, then an increase in output toward (but not exceeding) Q0 would

Describe how government is involved in creating a monopoly. Why might the government create one? Give an example.

Many economists criticize monopolists because they

Authors are allowed to be monopolists in the sale of their books in order to

When a certain monopoly sets its price at $8 it sells 64 units. When the monopoly sets its price at $10 it sells 60 units. The marginal revenue for the firm over this range is

If the government regulates the price a natural monopolist can charge to be equal to the firm's marginal cost, the government will likely need to subsidize the firm.

A monopolist maximizes profit by producing an output level where marginal cost equals price.

Figure 15-7 -Refer to Figure 15-7. A profit-maximizing monopolist would earn profits of

For a typical natural monopoly, average total cost is

Which of the following strategies is not an effective strategy to reduce monopoly inefficiency?

Figure 15-17 -Refer to Figure 15-17. Which of the following statements best describes the changes that would occur if this firm were to switch from operating as a single price profit-maximizing monopolist to perfect price discrimination?

An industry is a natural monopoly when (i) the government assists the firm in maintaining the monopoly. (ii) a single firm owns a key resource. (iii) a single firm can supply a good or service to an entire market at a smaller cost than could two or more firms.

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

When a natural monopoly exists, it is

The fundamental cause of monopoly is

If a monopolist can sell 7 units when the price is $4 and 8 units when the price is $3, then the marginal revenue of selling the eighth unit is equal to

Figure 15-4 -Refer to Figure 15-4. The marginal cost curve for a monopoly firm is depicted by curve

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 15-6 -Refer to Figure 15-6. What area measures the monopolist's profit?

Figure 15-14 -Refer to Figure 15-14. If the monopoly operates at an output level less than Q0, then an increase in output toward (but not exceeding) Q0 would

Describe how government is involved in creating a monopoly. Why might the government create one? Give an example.

Many economists criticize monopolists because they

Authors are allowed to be monopolists in the sale of their books in order to

When a certain monopoly sets its price at $8 it sells 64 units. When the monopoly sets its price at $10 it sells 60 units. The marginal revenue for the firm over this range is

If the government regulates the price a natural monopolist can charge to be equal to the firm's marginal cost, the government will likely need to subsidize the firm.

A monopolist maximizes profit by producing an output level where marginal cost equals price.

Figure 15-7 -Refer to Figure 15-7. A profit-maximizing monopolist would earn profits of

For a typical natural monopoly, average total cost is

Which of the following strategies is not an effective strategy to reduce monopoly inefficiency?

Figure 15-17 -Refer to Figure 15-17. Which of the following statements best describes the changes that would occur if this firm were to switch from operating as a single price profit-maximizing monopolist to perfect price discrimination?

An industry is a natural monopoly when (i) the government assists the firm in maintaining the monopoly. (ii) a single firm owns a key resource. (iii) a single firm can supply a good or service to an entire market at a smaller cost than could two or more firms.

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

When a natural monopoly exists, it is

The fundamental cause of monopoly is

If a monopolist can sell 7 units when the price is $4 and 8 units when the price is $3, then the marginal revenue of selling the eighth unit is equal to

Figure 15-4 -Refer to Figure 15-4. The marginal cost curve for a monopoly firm is depicted by curve

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