Question 1

Which of the following statements is correct?

Accepted Answer

A)  The benefits that accrue to a monopoly's owners are equal to the costs that are incurred by consumers of that firm's product. 
B)  The deadweight loss that arises in monopoly stems from the fact that the profit-maximizing monopoly firm produces a quantity of output that exceeds the socially-efficient quantity. 
C)  The deadweight loss caused by monopoly is similar to the deadweight loss caused by a tax on a product. 
D)  The primary social problem caused by monopoly is monopoly profit. 
A)  The benefits that accrue to a monopoly's owners are equal to the costs that are incurred by consumers of that firm's product. 
B)  The deadweight loss that arises in monopoly stems from the fact that the profit-maximizing monopoly firm produces a quantity of output that exceeds the socially-efficient quantity. 
C)  The deadweight loss caused by monopoly is similar to the deadweight loss caused by a tax on a product. 
D)  The primary social problem caused by monopoly is monopoly profit.

Question 2

The laws governing patents and copyrights

Accepted Answer

A)  promote monopolies. 
B)  are intended to serve private interests, not the public's interest. 
C)  have costs but not benefits. 
D)  eliminate the need for firms to engage in research and development. 
A)  promote monopolies. 
B)  are intended to serve private interests, not the public's interest. 
C)  have costs but not benefits. 
D)  eliminate the need for firms to engage in research and development.

Question 3

Table 15-6
A monopolist faces the following demand curve:
  
-Refer to Table 15-6. What is the marginal revenue from the sale of the 4th unit?

Accepted Answer

A)  $3 
B)  -$3 
C)  $9 
D)  $24 
A)  $3 
B)  -$3 
C)  $9 
D)  $24

Question 4

Figure 15-10  
-Refer to Figure 15-10. What area measures the deadweight loss?

Accepted Answer

A)  (B-F)*K 
B)  0.5[(P-O)*(L-O)] 
C)  0.5[(A-H)*(L-J)] 
D)  0.5[(B-F)*(L-K)] 
A)  (B-F)*K 
B)  0.5[(P-O)*(L-O)] 
C)  0.5[(A-H)*(L-J)] 
D)  0.5[(B-F)*(L-K)]

Question 5

"Monopolists do not worry about efficient production and minimizing costs since they can just pass along any increase in costs to their consumers." This statement is

Accepted Answer

A)  false; price increases will mean fewer sales, which may lower profits. 
B)  true; this is the primary reason why economists believe that monopolies result in economic inefficiency. 
C)  false; the monopolist is a price taker. 
D)  true; consumers in a monopoly market have no substitutes to turn to when the monopolist raises prices. 
A)  false; price increases will mean fewer sales, which may lower profits. 
B)  true; this is the primary reason why economists believe that monopolies result in economic inefficiency. 
C)  false; the monopolist is a price taker. 
D)  true; consumers in a monopoly market have no substitutes to turn to when the monopolist raises prices.

Question 6

Table 15-19
A monopolist faces the following demand curve:
  
-Refer to Table 15-19. If a monopolist faces a constant marginal cost of $3, how much output should the firm produce?

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 7

Figure 15-4  
-Refer to Figure 15-4. If the monopoly firm is currently producing Q3 units of output, then a decrease in output will necessarily cause profit to

Accepted Answer

A)  remain unchanged. 
B)  decrease. 
C)  increase as long as the new level of output is at least Q2. 
D)  increase as long as the new level of output is at least Q1. 
A)  remain unchanged. 
B)  decrease. 
C)  increase as long as the new level of output is at least Q2. 
D)  increase as long as the new level of output is at least Q1.

Question 8

Table 15-20
A monopolist faces the following demand curve:
  
-Refer to Table 15-20. If a monopolist faces a constant marginal cost of $5, 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 9

A market structure with barriers to entry is

Accepted Answer

A)  a monopoly. 
B)  oligopolistically competitive. 
C)  monopolistically competitive. 
D)  perfectly competitive. 
A)  a monopoly. 
B)  oligopolistically competitive. 
C)  monopolistically competitive. 
D)  perfectly competitive.

Question 10

Firms with substantial monopoly power are quite common because many goods are unique.

Accepted Answer

A) True 
 B)False

Question 11

Figure 15-7  
-Refer to Figure 15-7. In order to maximize profits, the monopolist should produce

Accepted Answer

A)  9 units. 
B)  12 units. 
C)  15 units. 
D)  more than 15 units. 
A)  9 units. 
B)  12 units. 
C)  15 units. 
D)  more than 15 units.

Question 12

Deadweight loss measures the loss in society's welfare that occurs because a monopolist does not produce the socially efficient level of output.

Accepted Answer

A) True 
 B)False

Question 13

Generic drugs enter the pharmaceutical drug market once

Accepted Answer

A)  the ingredients to the name brand drug have been discovered. 
B)  10 years have passed. 
C)  they are patented. 
D)  the patent on the name brand drug expires. 
A)  the ingredients to the name brand drug have been discovered. 
B)  10 years have passed. 
C)  they are patented. 
D)  the patent on the name brand drug expires.

Question 14

Figure 15-25  
-Refer to Figure 15-25. If a regulator requires this firm to charge a socially optimal price, how much deadweight loss results?

Accepted Answer

The answer of Figure 15-25  
-Refer to Figure 15-25....

Question 15

Figure 15-4  
-Refer to Figure 15-4. A profit-maximizing monopoly's total revenue is equal to

Accepted Answer

A)  P5 x Q3. 
B)  P4 x Q5. 
C)  (P5-P3) x Q3. 
D)  (P5-P4) x Q3. 
A)  P5 x Q3. 
B)  P4 x Q5. 
C)  (P5-P3) x Q3. 
D)  (P5-P4) x Q3.

Question 16

A perfectly competitive firm produces where

Accepted Answer

A)  marginal cost equals price, while a monopolist produces where price exceeds marginal cost. 
B)  marginal cost equals price, while a monopolist produces where marginal cost exceeds price. 
C)  price exceeds marginal cost, while a monopolist produces where marginal cost equals price. 
D)  marginal cost exceeds price, while a monopolist produces where marginal cost equals price. 
A)  marginal cost equals price, while a monopolist produces where price exceeds marginal cost. 
B)  marginal cost equals price, while a monopolist produces where marginal cost exceeds price. 
C)  price exceeds marginal cost, while a monopolist produces where marginal cost equals price. 
D)  marginal cost exceeds price, while a monopolist produces where marginal cost equals price.

Question 17

If a monopolist sells 100 units at $8 per unit and realizes an average total cost of $6 per unit, what is the monopolist's profit?

Accepted Answer

A)  $200 
B)  $400 
C)  $600 
D)  $800 
A)  $200 
B)  $400 
C)  $600 
D)  $800

Question 18

One characteristic of a monopoly market is that the product is virtually identical to products produced by competing firms.

Accepted Answer

A) True 
 B)False

Question 19

Scenario 15-10
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 15-10. What is Vincent's profit on a typical day?

Accepted Answer

A)  $660 
B)  $820 
C)  $1,350 
D)  $2,170 
A)  $660 
B)  $820 
C)  $1,350 
D)  $2,170

Question 20

Figure 15-6  
-Refer to Figure 15-6. What price will the monopolist charge?

Accepted Answer

A)  A 
B)  C 
C)  K 
D)  L 
A)  A 
B)  C 
C)  K 
D)  L

Exam 15: Monopoly

Which of the following statements is correct?

The laws governing patents and copyrights

Table 15-6 A monopolist faces the following demand curve: -Refer to Table 15-6. What is the marginal revenue from the sale of the 4th unit?

Figure 15-10 -Refer to Figure 15-10. What area measures the deadweight loss?

"Monopolists do not worry about efficient production and minimizing costs since they can just pass along any increase in costs to their consumers." This statement is

Table 15-19 A monopolist faces the following demand curve: -Refer to Table 15-19. If a monopolist faces a constant marginal cost of $3, how much output should the firm produce?

Figure 15-4 -Refer to Figure 15-4. If the monopoly firm is currently producing Q3 units of output, then a decrease in output will necessarily cause profit to

Table 15-20 A monopolist faces the following demand curve: -Refer to Table 15-20. If a monopolist faces a constant marginal cost of $5, how much output should the firm produce in order to maximize profit?

A market structure with barriers to entry is

Firms with substantial monopoly power are quite common because many goods are unique.

Figure 15-7 -Refer to Figure 15-7. In order to maximize profits, the monopolist should produce

Deadweight loss measures the loss in society's welfare that occurs because a monopolist does not produce the socially efficient level of output.

Generic drugs enter the pharmaceutical drug market once

Figure 15-25 -Refer to Figure 15-25. If a regulator requires this firm to charge a socially optimal price, how much deadweight loss results?

Figure 15-4 -Refer to Figure 15-4. A profit-maximizing monopoly's total revenue is equal to

A perfectly competitive firm produces where

If a monopolist sells 100 units at $8 per unit and realizes an average total cost of $6 per unit, what is the monopolist's profit?

One characteristic of a monopoly market is that the product is virtually identical to products produced by competing firms.

Figure 15-6 -Refer to Figure 15-6. What price will the monopolist charge?

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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