Question 1

The economic inefficiency of a monopolist can be measured by the

Accepted Answer

A)  number of consumers who are unable to purchase the product because of its high price. 
B)  excess profit generated by monopoly firms. 
C)  poor quality of service offered by monopoly firms. 
D)  deadweight loss. 
A)  number of consumers who are unable to purchase the product because of its high price. 
B)  excess profit generated by monopoly firms. 
C)  poor quality of service offered by monopoly firms. 
D)  deadweight loss.

Question 2

When a firm operates under conditions of monopoly, its price is

Accepted Answer

A)  not constrained. 
B)  constrained by marginal cost. 
C)  constrained by demand. 
D)  constrained only by its social agenda. 
A)  not constrained. 
B)  constrained by marginal cost. 
C)  constrained by demand. 
D)  constrained only by its social agenda.

Question 3

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 cost of the 6th pair of shoes?

Accepted Answer

A)  $44 
B)  $46 
C)  $55 
D)  $60 
A)  $44 
B)  $46 
C)  $55 
D)  $60

Question 4

A firm that is the sole seller of a product without close substitutes is

Accepted Answer

A)  perfectly competitive. 
B)  monopolistically competitive. 
C)  an oligopolist. 
D)  a monopolist. 
A)  perfectly competitive. 
B)  monopolistically competitive. 
C)  an oligopolist. 
D)  a monopolist.

Question 5

A benefit of a monopoly is

Accepted Answer

A)  lower prices. 
B)  a wide variety of similar products. 
C)  decreasing long-run average total costs. 
D)  greater creativity by authors who can copyright their novels. 
A)  lower prices. 
B)  a wide variety of similar products. 
C)  decreasing long-run average total costs. 
D)  greater creativity by authors who can copyright their novels.

Question 6

Figure 15-20  
-Refer to Figure 15-20. The deadweight loss caused by a profit-maximizing monopoly amounts to

Accepted Answer

A)  $225. 
B)  $450. 
C)  $900. 
D)  $1,350. 
A)  $225. 
B)  $450. 
C)  $900. 
D)  $1,350.

Question 7

Monopoly pricing prevents some mutually beneficial trades from taking place. These unrealized, mutually beneficial trades are

Accepted Answer

A)  not a concern if a market is perfectly competitive. 
B)  a deadweight loss to society. 
C)  a function of the reduction in the quantity produced by a monopolist in comparison to a competitive market. 
D)  All of the above are correct. 
A)  not a concern if a market is perfectly competitive. 
B)  a deadweight loss to society. 
C)  a function of the reduction in the quantity produced by a monopolist in comparison to a competitive market. 
D)  All of the above are correct.

Question 8

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

Accepted Answer

A)  P2 x Q3. 
B)  P4 x Q3. 
C)  P5 x Q3. 
D)  (P2-P5) x Q3. 
A)  P2 x Q3. 
B)  P4 x Q3. 
C)  P5 x Q3. 
D)  (P2-P5) x Q3.

Question 9

Figure 15-17  
-Refer to Figure 15-17. Which of the following areas represents the deadweight loss from this profit-maximizing monopolist?

Accepted Answer

A)  ABE 
B)  BCFE 
C)  EFG 
D)  ACG 
A)  ABE 
B)  BCFE 
C)  EFG 
D)  ACG

Question 10

Figure 15-1  
-Refer to Figure 15-1. The shape of the average total cost curve reveals information about the nature of the barrier to entry that might exist in a monopoly market. Which of the following monopoly types best coincides with the figure?

Accepted Answer

A)  ownership of a key resource by a single firm 
B)  natural monopoly 
C)  government-created monopoly 
D)  a patent or copyright monopoly 
A)  ownership of a key resource by a single firm 
B)  natural monopoly 
C)  government-created monopoly 
D)  a patent or copyright monopoly

Question 11

The deadweight loss that arises from a monopoly is a consequence of the fact that the monopoly

Accepted Answer

A)  quantity is lower than the socially-optimal quantity. 
B)  price equals marginal revenue. 
C)  price is the same as average revenue. 
D)  earns positive profits. 
A)  quantity is lower than the socially-optimal quantity. 
B)  price equals marginal revenue. 
C)  price is the same as average revenue. 
D)  earns positive profits.

Question 12

The marginal revenue curve for a monopoly firm starts at the same point on the vertical axis as the (i) average revenue curve.
(ii) marginal cost curve.
(iii) demand curve.

Accepted Answer

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

Question 13

Table 15-8
The following table provides information on the price, quantity, and average total cost for a monopoly.
  
-Refer to Table 15-8. What is the maximum profit that the monopolist can earn?

Accepted Answer

A)  $10 
B)  $20 
C)  $30 
D)  $40 
A)  $10 
B)  $20 
C)  $30 
D)  $40

Question 14

To maximize total surplus with a monopoly firm, a benevolent social planner would choose the level of output where

Accepted Answer

A)  MR = MC. 
B)  MR intersects the demand curve. 
C)  MC intersects the demand curve. 
D)  MR exceeds MC by the greatest amount. 
A)  MR = MC. 
B)  MR intersects the demand curve. 
C)  MC intersects the demand curve. 
D)  MR exceeds MC by the greatest amount.

Question 15

Figure 15-15  
-Refer to Figure 15-15. To maximize its profit, a monopolist would choose which of the following outcomes?

Accepted Answer

A)  Q = 30 and P = 30 
B)  Q = 30 and P = 60 
C)  Q = 45 and P = 45 
D)  Q = 60 and P = 30 
A)  Q = 30 and P = 30 
B)  Q = 30 and P = 60 
C)  Q = 45 and P = 45 
D)  Q = 60 and P = 30

Question 16

Consider a profit-maximizing monopoly pricing under the following conditions. The profit-maximizing quantity is 40 units, the profit-maximizing price is $160, and the marginal cost of the 40th unit is $120. If the good were produced in a perfectly competitive market, the equilibrium quantity would be 50, and the equilibrium price would be $150. The demand curve and marginal cost curves are linear. What is the value of the deadweight loss created by the monopolist?

Accepted Answer

A)  $40 
B)  $100 
C)  $200 
D)  $400 
A)  $40 
B)  $100 
C)  $200 
D)  $400

Question 17

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 3rd unit?

Accepted Answer

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

Question 18

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 charge a price of

Accepted Answer

A)  $40. 
B)  $50. 
C)  $20. 
D)  $10. 
A)  $40. 
B)  $50. 
C)  $20. 
D)  $10.

Question 19

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

Accepted Answer

A)  $81. 
B)  $144. 
C)  $225. 
D)  $240. 
A)  $81. 
B)  $144. 
C)  $225. 
D)  $240.

Question 20

Price discrimination is prohibited by antitrust laws.

Accepted Answer

A) True 
 B)False

The economic inefficiency of a monopolist can be measured by the

When a firm operates under conditions of monopoly, its price is

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 cost of the 6th pair of shoes?

A firm that is the sole seller of a product without close substitutes is

A benefit of a monopoly is

Figure 15-20 -Refer to Figure 15-20. The deadweight loss caused by a profit-maximizing monopoly amounts to

Monopoly pricing prevents some mutually beneficial trades from taking place. These unrealized, mutually beneficial trades are

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

Figure 15-17 -Refer to Figure 15-17. Which of the following areas represents the deadweight loss from this profit-maximizing monopolist?

Figure 15-1 -Refer to Figure 15-1. The shape of the average total cost curve reveals information about the nature of the barrier to entry that might exist in a monopoly market. Which of the following monopoly types best coincides with the figure?

The deadweight loss that arises from a monopoly is a consequence of the fact that the monopoly

The marginal revenue curve for a monopoly firm starts at the same point on the vertical axis as the (i) average revenue curve. (ii) marginal cost curve. (iii) demand curve.

Table 15-8 The following table provides information on the price, quantity, and average total cost for a monopoly. -Refer to Table 15-8. What is the maximum profit that the monopolist can earn?

To maximize total surplus with a monopoly firm, a benevolent social planner would choose the level of output where

Figure 15-15 -Refer to Figure 15-15. To maximize its profit, a monopolist would choose which of the following outcomes?

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 3rd unit?

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

Price discrimination is prohibited by antitrust laws.

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

The economic inefficiency of a monopolist can be measured by the

When a firm operates under conditions of monopoly, its price is

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 cost of the 6th pair of shoes?

A firm that is the sole seller of a product without close substitutes is

A benefit of a monopoly is

Figure 15-20 -Refer to Figure 15-20. The deadweight loss caused by a profit-maximizing monopoly amounts to

Monopoly pricing prevents some mutually beneficial trades from taking place. These unrealized, mutually beneficial trades are

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

Figure 15-17 -Refer to Figure 15-17. Which of the following areas represents the deadweight loss from this profit-maximizing monopolist?

Figure 15-1 -Refer to Figure 15-1. The shape of the average total cost curve reveals information about the nature of the barrier to entry that might exist in a monopoly market. Which of the following monopoly types best coincides with the figure?

The deadweight loss that arises from a monopoly is a consequence of the fact that the monopoly

The marginal revenue curve for a monopoly firm starts at the same point on the vertical axis as the (i) average revenue curve. (ii) marginal cost curve. (iii) demand curve.

Table 15-8 The following table provides information on the price, quantity, and average total cost for a monopoly. -Refer to Table 15-8. What is the maximum profit that the monopolist can earn?

To maximize total surplus with a monopoly firm, a benevolent social planner would choose the level of output where

Figure 15-15 -Refer to Figure 15-15. To maximize its profit, a monopolist would choose which of the following outcomes?

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 3rd unit?

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

Price discrimination is prohibited by antitrust laws.

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