Question 1

Figure 15-8  
-Refer to Figure 15-8. What is the socially efficient price and quantity?

Accepted Answer

A)  price = A; quantity = X 
B)  price = B; quantity = Y 
C)  price = B; quantity = X 
D)  price = C; quantity = X 
A)  price = A; quantity = X 
B)  price = B; quantity = Y 
C)  price = B; quantity = X 
D)  price = C; quantity = X

Question 2

After the patent runs out on a brand name drug, generic drugs enter the market. What happens next in the market?

Accepted Answer

A)  Price increases, and total surplus decreases. 
B)  Price decreases, and total surplus decreases. 
C)  Price decreases, and total surplus increases. 
D)  Price increases, and total surplus increases. 
A)  Price increases, and total surplus decreases. 
B)  Price decreases, and total surplus decreases. 
C)  Price decreases, and total surplus increases. 
D)  Price increases, and total surplus increases.

Question 3

In order to sell more of its product, a monopolist must

Accepted Answer

A)  lobby the government for a subsidy. 
B)  lower its price. 
C)  advertise. 
D)  enact barriers to entry in related markets. 
A)  lobby the government for a subsidy. 
B)  lower its price. 
C)  advertise. 
D)  enact barriers to entry in related markets.

Question 4

Price discrimination

Accepted Answer

A)  forces monopolies to charge a lower price as a result of government regulation. 
B)  is an attempt by a monopoly to prevent some customers from purchasing its product by charging a high price. 
C)  is an attempt by a monopoly to increases its profit by selling the same good to different customers at different prices. 
D)  increases the consumer surplus associated with a monopolistic market. 
A)  forces monopolies to charge a lower price as a result of government regulation. 
B)  is an attempt by a monopoly to prevent some customers from purchasing its product by charging a high price. 
C)  is an attempt by a monopoly to increases its profit by selling the same good to different customers at different prices. 
D)  increases the consumer surplus associated with a monopolistic market.

Question 5

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. If the monopolist can engage in perfect price discrimination, what is the total revenue when 7 ties are sold?

Accepted Answer

A)  $650 
B)  $700 
C)  $910 
D)  $1080 
A)  $650 
B)  $700 
C)  $910 
D)  $1080

Question 6

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. If the monopolist can engage in perfect price discrimination, what is the total revenue when 3 ties are sold?

Accepted Answer

A)  $140 
B)  $420 
C)  $450 
D)  $620 
A)  $140 
B)  $420 
C)  $450 
D)  $620

Question 7

Perfect price discrimination describes a situation in which the monopolist

Accepted Answer

A)  knows the exact willingness to pay of each of its customers. 
B)  charges exactly two different prices to exactly two different groups of customers. 
C)  maximizes consumer surplus. 
D)  experiences a zero economic profit. 
A)  knows the exact willingness to pay of each of its customers. 
B)  charges exactly two different prices to exactly two different groups of customers. 
C)  maximizes consumer surplus. 
D)  experiences a zero economic profit.

Question 8

When a monopolist is able to sell its product at different prices, it is engaging in

Accepted Answer

A)  distribution pricing. 
B)  quality-adjusted pricing. 
C)  arbitrage. 
D)  price discrimination. 
A)  distribution pricing. 
B)  quality-adjusted pricing. 
C)  arbitrage. 
D)  price discrimination.

Question 9

Figure 15-4  
-Refer to Figure 15-4. The marginal revenue 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.

Question 10

For a monopoly, the socially efficient level of output occurs where

Accepted Answer

A)  marginal revenue equals marginal cost. 
B)  average revenue equals marginal cost. 
C)  marginal revenue equals average total cost. 
D)  average revenue equals average total cost. 
A)  marginal revenue equals marginal cost. 
B)  average revenue equals marginal cost. 
C)  marginal revenue equals average total cost. 
D)  average revenue equals average total cost.

Question 11

Some prescription drugs sell for more in the United States than they do in other countries. Which of the following statements about this issue is most likely to be true?

Accepted Answer

A)  Drug companies are engaging in price discrimination, and this practice certainly reduces global social welfare. 
B)  Global social welfare could be improved if the price in the United States were reduced to the price charged in other countries. 
C)  Global social welfare could be improved if the price in the other countries were increased to the price charged in the United States. 
D)  Drug companies are engaging in price discrimination, but this might improve global social welfare if it gives more people access to the drugs. 
A)  Drug companies are engaging in price discrimination, and this practice certainly reduces global social welfare. 
B)  Global social welfare could be improved if the price in the United States were reduced to the price charged in other countries. 
C)  Global social welfare could be improved if the price in the other countries were increased to the price charged in the United States. 
D)  Drug companies are engaging in price discrimination, but this might improve global social welfare if it gives more people access to the drugs.

Question 12

Granting a pharmaceutical company a patent for a new medicine will lead to (i) a product that is priced higher than it would be without the exclusive rights.
(ii) incentives for pharmaceutical companies to invest in research and development.
(iii) higher quantities of output than without the patent.

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 13

Suppose a monopolist is able to charge each customer a price equal to that customer's willingness­to­pay for the product. Then the monopolist is engaging in

Accepted Answer

A)  marginal cost pricing. 
B)  arbitrage pricing. 
C)  voodoo economics. 
D)  perfect price discrimination. 
A)  marginal cost pricing. 
B)  arbitrage pricing. 
C)  voodoo economics. 
D)  perfect price discrimination.

Question 14

What do economists call the business practice of selling the same good at difference prices to different customers?

Accepted Answer

A)  price discrimination 
B)  collusion 
C)  compensating differential 
D)  Both a and b are correct 
A)  price discrimination 
B)  collusion 
C)  compensating differential 
D)  Both a and b are correct

Question 15

Antitrust laws have economic benefits that outweigh the costs if they

Accepted Answer

A)  prevent mergers that would decrease competition and lower the costs of production. 
B)  prevent mergers that would decrease competition and raise the costs of production. 
C)  allow mergers that would decrease competition and raise the costs of production. 
D)  None of the above is correct because antitrust laws never have economic benefits that outweigh the costs. 
A)  prevent mergers that would decrease competition and lower the costs of production. 
B)  prevent mergers that would decrease competition and raise the costs of production. 
C)  allow mergers that would decrease competition and raise the costs of production. 
D)  None of the above is correct because antitrust laws never have economic benefits that outweigh the costs.

Question 16

Which of the following statements is not correct?

Accepted Answer

A)  The government may use antitrust laws to prevent a merger if the government believes the merger will reduce competition and increase prices. 
B)  By regulating a natural monopoly where price equals average total cost, the monopoly earns zero profits. 
C)  An advantage of private ownership over public ownership is that private business owners tend to fire inefficient managers. 
D)  The government should always intervene to improve monopoly inefficiency. 
A)  The government may use antitrust laws to prevent a merger if the government believes the merger will reduce competition and increase prices. 
B)  By regulating a natural monopoly where price equals average total cost, the monopoly earns zero profits. 
C)  An advantage of private ownership over public ownership is that private business owners tend to fire inefficient managers. 
D)  The government should always intervene to improve monopoly inefficiency.

Question 17

Amanda inherited the only local cable TV/Internet company in town after her father passed away. The company has a local monopoly on the delivery of high-speed Internet service. The company is completely unregulated by the government and is therefore free to operate as it wishes. Assume that Amanda understands the true power of her new monopoly. Which of the following statements is (are) correct? (i) She will be able to set the price of high-speed Internet service at whatever level she wishes.
(ii) The customers will be forced to purchase high-speed Internet service at whatever price she wants to set.
(iii) She will be able to achieve any profit level that she desires.

Accepted Answer

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

Question 18

The key issue in determining the efficiency of public versus private ownership of a monopoly is

Accepted Answer

A)  the tendency for efficient management of publicly owned enterprises. 
B)  the inability of private monopolies to get rid of managers that are doing a bad job. 
C)  the propensity of private monopolies to generate excessive profits. 
D)  how ownership of the firm affects the cost of production. 
A)  the tendency for efficient management of publicly owned enterprises. 
B)  the inability of private monopolies to get rid of managers that are doing a bad job. 
C)  the propensity of private monopolies to generate excessive profits. 
D)  how ownership of the firm affects the cost of production.

Question 19

Figure 15-24  
-Refer to Figure 15-24. Which letter represents the profit-maximizing quantity chosen by the single price monopolist?

Accepted Answer

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

Question 20

Table 15-18
A monopolist faces the following demand curve:
   Suppose marginal cost is constant at $8 per unit.
-Refer to Table 15-18. When the price effect on revenue is greater than the output effect, marginal revenue is

Accepted Answer

A)  positive. This occurs with the 3rd unit of output. 
B)  positive. This occurs with the 4th unit of output. 
C)  negative. This occurs with the 5th unit of output. 
D)  negative. This occurs with the 6th unit of output. 
A)  positive. This occurs with the 3rd unit of output. 
B)  positive. This occurs with the 4th unit of output. 
C)  negative. This occurs with the 5th unit of output. 
D)  negative. This occurs with the 6th unit of output.

Exam 15: Monopoly

Figure 15-8 -Refer to Figure 15-8. What is the socially efficient price and quantity?

After the patent runs out on a brand name drug, generic drugs enter the market. What happens next in the market?

In order to sell more of its product, a monopolist must

Price discrimination

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. If the monopolist can engage in perfect price discrimination, what is the total revenue when 7 ties are sold?

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. If the monopolist can engage in perfect price discrimination, what is the total revenue when 3 ties are sold?

Perfect price discrimination describes a situation in which the monopolist

When a monopolist is able to sell its product at different prices, it is engaging in

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

For a monopoly, the socially efficient level of output occurs where

Some prescription drugs sell for more in the United States than they do in other countries. Which of the following statements about this issue is most likely to be true?

Suppose a monopolist is able to charge each customer a price equal to that customer's willingness­to­pay for the product. Then the monopolist is engaging in

What do economists call the business practice of selling the same good at difference prices to different customers?

Antitrust laws have economic benefits that outweigh the costs if they

Which of the following statements is not correct?

The key issue in determining the efficiency of public versus private ownership of a monopoly is

Figure 15-24 -Refer to Figure 15-24. Which letter represents the profit-maximizing quantity chosen by the single price monopolist?

Table 15-18 A monopolist faces the following demand curve: Suppose marginal cost is constant at $8 per unit. -Refer to Table 15-18. When the price effect on revenue is greater than the output effect, marginal revenue 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

Suppose a monopolist is able to charge each customer a price equal to that customer's willingnesstopay for the product. Then the monopolist is engaging in