Question 1

Which of the following is an example of a barrier to entry?

Accepted Answer

A)  Matthew offers free samples of his latest flavored coffee drink to entice customers to buy a cup. 
B)  Mark charges a lower price to students than to faculty for his tattoo services. 
C)  Luke charges a higher hourly price to business students than to liberal arts students for his economics tutoring. 
D)  John obtained a copyright for the song he wrote and recorded. 
A)  Matthew offers free samples of his latest flavored coffee drink to entice customers to buy a cup. 
B)  Mark charges a lower price to students than to faculty for his tattoo services. 
C)  Luke charges a higher hourly price to business students than to liberal arts students for his economics tutoring. 
D)  John obtained a copyright for the song he wrote and recorded.

Question 2

A monopolist produces where P > MC = MR.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following statements is correct?

Accepted Answer

A)  Two examples of early antitrust laws are the Clinton and Stigler Antitrust Acts. 
B)  Antitrust laws automatically prevent mergers between companies that produce similar products. 
C)  Antitrust laws reduce the government's power to regulate private companies. 
D)  Antitrust laws can reduce social welfare if they prevent mergers that would lower costs through more efficient joint production. 
A)  Two examples of early antitrust laws are the Clinton and Stigler Antitrust Acts. 
B)  Antitrust laws automatically prevent mergers between companies that produce similar products. 
C)  Antitrust laws reduce the government's power to regulate private companies. 
D)  Antitrust laws can reduce social welfare if they prevent mergers that would lower costs through more efficient joint production.

Question 4

Figure 15-2  
-Refer to Figure 15-2. Which of the following reasons describes the fundamental barrier to entry for the monopoly in the figure?

Accepted Answer

A)  monopoly resources 
B)  government regulation 
C)  the production process 
D)  Both a and b are correct. 
A)  monopoly resources 
B)  government regulation 
C)  the production process 
D)  Both a and b are correct.

Question 5

Which of the following statements is true about patents and copyrights? (i) They have benefits and costs.
(ii) They lead to higher prices.
(iii) They enhance the ability of monopolists to earn above-average profits.

Accepted Answer

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

Question 6

Because many good substitutes exist for a competitive firm's product, the demand curve that it faces is

Accepted Answer

A)  unit-elastic. 
B)  perfectly inelastic. 
C)  perfectly elastic. 
D)  inelastic only over a certain region. 
A)  unit-elastic. 
B)  perfectly inelastic. 
C)  perfectly elastic. 
D)  inelastic only over a certain region.

Question 7

Private ownership of a monopoly may benefit society because the monopoly will have an incentive to

Accepted Answer

A)  charge a price that is consistent with that of a benevolent social planner. 
B)  charge a price that prevents some people from buying. 
C)  price its good according to the intersection of marginal cost and average revenue. 
D)  lower its costs to earn a higher profit. 
A)  charge a price that is consistent with that of a benevolent social planner. 
B)  charge a price that prevents some people from buying. 
C)  price its good according to the intersection of marginal cost and average revenue. 
D)  lower its costs to earn a higher profit.

Question 8

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 additional profit can the airline earn by charging each customer their willingness to pay relative to charging a flat price of $600 per ticket?

Accepted Answer

A)  $15,000 
B)  $25,000 
C)  $40,000 
D)  $70,000 
A)  $15,000 
B)  $25,000 
C)  $40,000 
D)  $70,000

Question 9

Which of the following is not an example of a barrier to entry?

Accepted Answer

A)  Mighty Mitch's Mining Company owns a unique plot of land in Tanzania, under which lies the only large deposit of Tanzanite in the world. 
B)  A pharmaceutical company obtains a patent for a specific high blood pressure medication. 
C)  A musician obtains a copyright for her original song. 
D)  An entrepreneur opens a popular new restaurant. 
A)  Mighty Mitch's Mining Company owns a unique plot of land in Tanzania, under which lies the only large deposit of Tanzanite in the world. 
B)  A pharmaceutical company obtains a patent for a specific high blood pressure medication. 
C)  A musician obtains a copyright for her original song. 
D)  An entrepreneur opens a popular new restaurant.

Question 10

University financial aid can be viewed as a type of price discrimination.

Accepted Answer

A) True 
 B)False

Question 11

Financial aid to college students, quantity discounts, and senior citizen discounts are all examples of

Accepted Answer

A)  consumer surplus. 
B)  deadweight loss. 
C)  price discrimination. 
D)  nonprofit pricing strategies. 
A)  consumer surplus. 
B)  deadweight loss. 
C)  price discrimination. 
D)  nonprofit pricing strategies.

Question 12

Which of the following is a characteristic of a monopoly?

Accepted Answer

A)  rising average total costs 
B)  one buyer 
C)  rising fixed costs 
D)  a product without close substitutes 
A)  rising average total costs 
B)  one buyer 
C)  rising fixed costs 
D)  a product without close substitutes

Question 13

Figure 15-23  
-Refer to Figure 15-23. If a regulator requires the firm to charge an average cost price, what is the amount of profit or loss earned by the firm?

Accepted Answer

The answer of Figure 15-23  
-Refer to Figure 15-23....

Question 14

Antitrust laws allow the government to

Accepted Answer

A)  prevent mergers. 
B)  break up companies. 
C)  promote competition. 
D)  All of the above are correct. 
A)  prevent mergers. 
B)  break up companies. 
C)  promote competition. 
D)  All of the above are correct.

Question 15

Explain how a profit-maximizing monopolist chooses its level of output and the price of its goods.

Accepted Answer

A profit-maximizing monopolist produces

Question 16

Figure 15-23  
-Refer to Figure 15-23. If the firm profit-maximizes, what amount of output will it produce?

Accepted Answer

The answer of Figure 15-23  
-Refer to Figure 15-23....

Question 17

Table 15-11
The following table shows quantity, price, and marginal cost information for a monopoly:
  
-Refer to Table 15-11. What price should the firm charge to maximize its profit?

Accepted Answer

A)  $4 
B)  $5 
C)  $6 
D)  $7 
A)  $4 
B)  $5 
C)  $6 
D)  $7

Question 18

When a monopolist increases the quantity that it sells, price decreases, which, all else equal, decreases total revenue; this is called the price effect.

Accepted Answer

A) True 
 B)False

Question 19

Figure 15-23  
-Refer to Figure 15-23. If the firm profit-maximizes, how much profit will it earn?

Accepted Answer

The answer of Figure 15-23  
-Refer to Figure 15-23....

Question 20

Scenario 15-8
Mega Media Cable TV is able to purchase an exclusive right to sell a premium sports channel in its market area. Let's assume that Mega Media pays $100,000 a year for the exclusive marketing rights to the sports channel. Since Mega Media has already installed cable to all of the homes in its market area, the marginal cost of delivering the sports channel to subscribers is zero. The manager of Mega Media needs to know what price to charge for the sports channel service to maximize her profit. Before setting price, she hires an economist to estimate demand for the sports channel. The economist discovers that there are two types of subscribers who value premium sporting channels. First are the 3,000 die-hard sports fans who will pay as much as $150 a year for the new channel. Second, the premium sports channel will appeal to 20,000 occasional sports viewers who will pay as much as $25 a year for a subscription to it.
-Refer to Scenario 15-8. How much profit will Mega Media Cable TV earn if it sets the price at $25?

Accepted Answer

A)  $350,000 
B)  $450,000 
C)  $475,000 
D)  $575,000 
A)  $350,000 
B)  $450,000 
C)  $475,000 
D)  $575,000

Which of the following is an example of a barrier to entry?

A monopolist produces where P > MC = MR.

Which of the following statements is correct?

Figure 15-2 -Refer to Figure 15-2. Which of the following reasons describes the fundamental barrier to entry for the monopoly in the figure?

Which of the following statements is true about patents and copyrights? (i) They have benefits and costs. (ii) They lead to higher prices. (iii) They enhance the ability of monopolists to earn above-average profits.

Because many good substitutes exist for a competitive firm's product, the demand curve that it faces is

Private ownership of a monopoly may benefit society because the monopoly will have an incentive to

Which of the following is not an example of a barrier to entry?

University financial aid can be viewed as a type of price discrimination.

Financial aid to college students, quantity discounts, and senior citizen discounts are all examples of

Which of the following is a characteristic of a monopoly?

Figure 15-23 -Refer to Figure 15-23. If a regulator requires the firm to charge an average cost price, what is the amount of profit or loss earned by the firm?

Antitrust laws allow the government to

Explain how a profit-maximizing monopolist chooses its level of output and the price of its goods.

Figure 15-23 -Refer to Figure 15-23. If the firm profit-maximizes, what amount of output will it produce?

Table 15-11 The following table shows quantity, price, and marginal cost information for a monopoly: -Refer to Table 15-11. What price should the firm charge to maximize its profit?

When a monopolist increases the quantity that it sells, price decreases, which, all else equal, decreases total revenue; this is called the price effect.

Figure 15-23 -Refer to Figure 15-23. If the firm profit-maximizes, how much profit will it earn?

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

Which of the following is an example of a barrier to entry?

A monopolist produces where P > MC = MR.

Which of the following statements is correct?

Figure 15-2 -Refer to Figure 15-2. Which of the following reasons describes the fundamental barrier to entry for the monopoly in the figure?

Which of the following statements is true about patents and copyrights? (i) They have benefits and costs. (ii) They lead to higher prices. (iii) They enhance the ability of monopolists to earn above-average profits.

Because many good substitutes exist for a competitive firm's product, the demand curve that it faces is

Private ownership of a monopoly may benefit society because the monopoly will have an incentive to

Which of the following is not an example of a barrier to entry?

University financial aid can be viewed as a type of price discrimination.

Financial aid to college students, quantity discounts, and senior citizen discounts are all examples of

Which of the following is a characteristic of a monopoly?

Figure 15-23 -Refer to Figure 15-23. If a regulator requires the firm to charge an average cost price, what is the amount of profit or loss earned by the firm?

Antitrust laws allow the government to

Explain how a profit-maximizing monopolist chooses its level of output and the price of its goods.

Figure 15-23 -Refer to Figure 15-23. If the firm profit-maximizes, what amount of output will it produce?

Table 15-11 The following table shows quantity, price, and marginal cost information for a monopoly: -Refer to Table 15-11. What price should the firm charge to maximize its profit?

When a monopolist increases the quantity that it sells, price decreases, which, all else equal, decreases total revenue; this is called the price effect.

Figure 15-23 -Refer to Figure 15-23. If the firm profit-maximizes, how much profit will it earn?

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