Question 1

One method used to control the ability of firms to capture monopoly profit in the United States is through

Accepted Answer

A)  government purchase of products produced by monopolists. 
B)  government distribution of a monopolist's excess production. 
C)  enforcement of antitrust laws. 
D)  regulation of firms in highly competitive markets. 
A)  government purchase of products produced by monopolists. 
B)  government distribution of a monopolist's excess production. 
C)  enforcement of antitrust laws. 
D)  regulation of firms in highly competitive markets.

Question 2

Government intervention always reduces monopoly deadweight loss.

Accepted Answer

A) True 
 B)False

Question 3

The legislation passed by Congress in 1890 to reduce the market power of large and powerful "trusts" was the

Accepted Answer

A)  Morgan Act. 
B)  Sherman Act. 
C)  Clayton Act. 
D)  14th Amendment. 
A)  Morgan Act. 
B)  Sherman Act. 
C)  Clayton Act. 
D)  14th Amendment.

Question 4

Table 15-3
Consider the following demand and cost information for a monopoly.
  
-Refer to Table 15-3. To maximize profit, the monopolist sets price at

Accepted Answer

A)  $10. 
B)  $15. 
C)  $20. 
D)  $25. 
A)  $10. 
B)  $15. 
C)  $20. 
D)  $25.

Question 5

Figure 15-25  
-Refer to Figure 15-25. If a regulator requires this firm to charge a socially optimal price, which letter represents the amount of output it will produce?

Accepted Answer

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

Question 6

The market demand curve for a monopolist is typically

Accepted Answer

A)  unit price elastic. 
B)  downward sloping. 
C)  horizontal. 
D)  vertical. 
A)  unit price elastic. 
B)  downward sloping. 
C)  horizontal. 
D)  vertical.

Question 7

When a single firm can supply a product to an entire market at a lower cost than could two or more firms, the industry is called a

Accepted Answer

A)  resource industry. 
B)  exclusive industry. 
C)  government monopoly. 
D)  natural monopoly. 
A)  resource industry. 
B)  exclusive industry. 
C)  government monopoly. 
D)  natural monopoly.

Question 8

A monopolist faces the following demand curve:   The monopolist has fixed costs of $1,000 and has a constant marginal cost of $2 per unit. If the monopolist were able to perfectly price discriminate, how many units would it sell?

Accepted Answer

A)  400 
B)  500 
C)  900 
D)  4,200 
A)  400 
B)  500 
C)  900 
D)  4,200

Question 9

The task of economic regulation is to

Accepted Answer

A)  protect monopoly profits. 
B)  approximate the results of the competitive market. 
C)  replace competition with government ownership. 
D)  increase competition within the market. 
A)  protect monopoly profits. 
B)  approximate the results of the competitive market. 
C)  replace competition with government ownership. 
D)  increase competition within the market.

Question 10

Comparing firms in perfectly competitive markets to monopoly firms, which charges higher prices?

Accepted Answer

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

Question 11

Which of the following statements is not correct?

Accepted Answer

A)  Part of the deadweight loss associated with monopoly is measured by the monopolist's economic profit. 
B)  Marginal cost is always less than average total cost in a natural monopoly. 
C)  Discount coupons available free to the public are a type of price discrimination. 
D)  Anti-trust laws make it harder for firms to create synergies. 
A)  Part of the deadweight loss associated with monopoly is measured by the monopolist's economic profit. 
B)  Marginal cost is always less than average total cost in a natural monopoly. 
C)  Discount coupons available free to the public are a type of price discrimination. 
D)  Anti-trust laws make it harder for firms to create synergies.

Question 12

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 marginal revenue from selling the 2nd pair of shoes?

Accepted Answer

A)  $140 
B)  $150 
C)  $160 
D)  $170 
A)  $140 
B)  $150 
C)  $160 
D)  $170

Question 13

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 earn profits 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 14

Monopolies are inefficient because they (i) eliminate barriers to entry.
(ii) price their product at a level where marginal revenue exceeds marginal cost.
(iii) restrict output below the socially efficient level of production.

Accepted Answer

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

Question 15

Figure 15-18  
-Refer to Figure 15-18. If there are no fixed costs of production, monopoly profit with perfect price discrimination equals

Accepted Answer

A)  $0. 
B)  $1,000. 
C)  $2,000. 
D)  $4,000. 
A)  $0. 
B)  $1,000. 
C)  $2,000. 
D)  $4,000.

Question 16

Scenario 15-5
An airline knows that there are two types of travelers: business travelers and vacationers. For a particular flight, there are 100 business travelers who will pay $600 for a ticket while there are 50 vacationers who will pay $300 for a ticket. There are 150 seats available on the plane. Suppose the cost to the airline of providing the flight is $20,000, which includes the cost of the pilots, flight attendants, fuel, etc.
-Refer to Scenario 15-5. How much profit will the airline earn if it engages in price discrimination?

Accepted Answer

A)  -$5,000 
B)  $40,000 
C)  $55,000 
D)  $75,000 
A)  -$5,000 
B)  $40,000 
C)  $55,000 
D)  $75,000

Question 17

In a natural monopoly,

Accepted Answer

A)  society would be better off if antitrust laws were used to create many different firms in the market. 
B)  the marginal cost curve is positively sloped. 
C)  if the government requires marginal cost pricing, it will likely have to subsidize the firm. 
D)  the marginal revenue curve is horizontal. 
A)  society would be better off if antitrust laws were used to create many different firms in the market. 
B)  the marginal cost curve is positively sloped. 
C)  if the government requires marginal cost pricing, it will likely have to subsidize the firm. 
D)  the marginal revenue curve is horizontal.

Question 18

One problem with regulating a monopolist on the basis of cost is that

Accepted Answer

A)  by focusing on costs, the regulators ignore profits. 
B)  it does not provide an incentive for the monopolist to reduce its cost. 
C)  a monopolist's costs, by definition, are higher than costs of perfectly competitive firms. 
D)  a monopolist is still able to generate excessive economic profits. 
A)  by focusing on costs, the regulators ignore profits. 
B)  it does not provide an incentive for the monopolist to reduce its cost. 
C)  a monopolist's costs, by definition, are higher than costs of perfectly competitive firms. 
D)  a monopolist is still able to generate excessive economic profits.

Question 19

Which of the following is an example of a barrier to entry? (i) A key resource is owned by a single firm.
(ii) The costs of production make a single producer more efficient than a large number of producers.
(iii) The government has given the existing monopolist the exclusive right to produce the good.

Accepted Answer

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

Question 20

For a monopolist, when the price effect is greater than the output effect, marginal revenue is

Accepted Answer

A)  positive. 
B)  negative. 
C)  zero. 
D)  maximized. 
A)  positive. 
B)  negative. 
C)  zero. 
D)  maximized.

One method used to control the ability of firms to capture monopoly profit in the United States is through

Government intervention always reduces monopoly deadweight loss.

The legislation passed by Congress in 1890 to reduce the market power of large and powerful "trusts" was the

Table 15-3 Consider the following demand and cost information for a monopoly. -Refer to Table 15-3. To maximize profit, the monopolist sets price at

Figure 15-25 -Refer to Figure 15-25. If a regulator requires this firm to charge a socially optimal price, which letter represents the amount of output it will produce?

The market demand curve for a monopolist is typically

When a single firm can supply a product to an entire market at a lower cost than could two or more firms, the industry is called a

A monopolist faces the following demand curve: The monopolist has fixed costs of $1,000 and has a constant marginal cost of $2 per unit. If the monopolist were able to perfectly price discriminate, how many units would it sell?

The task of economic regulation is to

Comparing firms in perfectly competitive markets to monopoly firms, which charges higher prices?

Which of the following statements is not correct?

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 marginal revenue from selling the 2nd pair of shoes?

Monopolies are inefficient because they (i) eliminate barriers to entry. (ii) price their product at a level where marginal revenue exceeds marginal cost. (iii) restrict output below the socially efficient level of production.

Figure 15-18 -Refer to Figure 15-18. If there are no fixed costs of production, monopoly profit with perfect price discrimination equals

In a natural monopoly,

One problem with regulating a monopolist on the basis of cost is that

For a monopolist, when the price effect 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

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Exam 15: Monopoly

One method used to control the ability of firms to capture monopoly profit in the United States is through

Government intervention always reduces monopoly deadweight loss.

The legislation passed by Congress in 1890 to reduce the market power of large and powerful "trusts" was the

Table 15-3 Consider the following demand and cost information for a monopoly. -Refer to Table 15-3. To maximize profit, the monopolist sets price at

Figure 15-25 -Refer to Figure 15-25. If a regulator requires this firm to charge a socially optimal price, which letter represents the amount of output it will produce?

The market demand curve for a monopolist is typically

When a single firm can supply a product to an entire market at a lower cost than could two or more firms, the industry is called a

A monopolist faces the following demand curve: The monopolist has fixed costs of $1,000 and has a constant marginal cost of $2 per unit. If the monopolist were able to perfectly price discriminate, how many units would it sell?

The task of economic regulation is to

Comparing firms in perfectly competitive markets to monopoly firms, which charges higher prices?

Which of the following statements is not correct?

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 marginal revenue from selling the 2nd pair of shoes?

Monopolies are inefficient because they (i) eliminate barriers to entry. (ii) price their product at a level where marginal revenue exceeds marginal cost. (iii) restrict output below the socially efficient level of production.

Figure 15-18 -Refer to Figure 15-18. If there are no fixed costs of production, monopoly profit with perfect price discrimination equals

In a natural monopoly,

One problem with regulating a monopolist on the basis of cost is that

For a monopolist, when the price effect 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