Question 1

Which of the following is an example of public ownership of a monopoly?

Accepted Answer

A)  DeBeers 
B)  Microsoft 
C)  U.S. Postal Service 
D)  AT&T 
A)  DeBeers 
B)  Microsoft 
C)  U.S. Postal Service 
D)  AT&T

Question 2

Table 15-22
  
-Refer to Table 15-22. The average revenue of the 50th unit of output is

Accepted Answer

The answer of Table 15-22
  
-Refer to Table 15-22....

Question 3

For a monopolist, marginal revenue is

Accepted Answer

A)  positive when the demand effect is greater than the supply effect. 
B)  positive when the monopoly effect is greater than the competitive effect. 
C)  negative when the price effect is greater than the output effect. 
D)  negative when the output effect is greater than the price effect. 
A)  positive when the demand effect is greater than the supply effect. 
B)  positive when the monopoly effect is greater than the competitive effect. 
C)  negative when the price effect is greater than the output effect. 
D)  negative when the output effect is greater than the price effect.

Question 4

Patent and copyright laws

Accepted Answer

A)  encourage creative activity. 
B)  promote competition among firms. 
C)  discourage creative activity. 
D)  Both a and b are correct. 
A)  encourage creative activity. 
B)  promote competition among firms. 
C)  discourage creative activity. 
D)  Both a and b are correct.

Question 5

Figure 15-4  
-Refer to Figure 15-4. The demand 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 6

Suppose a profit-maximizing monopolist faces a constant marginal cost of $20, produces an output level of 100 units, and charges a price of $50. The socially efficient level of output is 200 units. Assume that the demand curve and marginal revenue curve are the typical downward-sloping straight lines. The monopoly deadweight loss equals $1,500.

Accepted Answer

A) True 
 B)False

Question 7

Suppose a monopolist chooses the price and production level that maximizes its profit. From that point, to increase society's economic welfare, output would need to be increased as long as

Accepted Answer

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

Question 8

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 chemist receives a patent for a new skin cream. 
C)  An entrepreneur opens a cupcake bakery. 
D)  A taxi cab driver in New York City obtains a license to legally provide transportation in New York City. 
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 chemist receives a patent for a new skin cream. 
C)  An entrepreneur opens a cupcake bakery. 
D)  A taxi cab driver in New York City obtains a license to legally provide transportation in New York City.

Question 9

A monopoly chooses to supply the market with a quantity of a product that is determined by the intersection of the

Accepted Answer

A)  marginal cost and demand curves. 
B)  average total cost and demand curves. 
C)  marginal revenue and average total cost curves. 
D)  marginal revenue and marginal cost curves. 
A)  marginal cost and demand curves. 
B)  average total cost and demand curves. 
C)  marginal revenue and average total cost curves. 
D)  marginal revenue and marginal cost curves.

Question 10

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

Accepted Answer

A)  P2 x Q3. 
B)  (P2-P4) x Q3. 
C)  (P2-P5) x Q3. 
D)  (P1-P6) x Q1. 
A)  P2 x Q3. 
B)  (P2-P4) x Q3. 
C)  (P2-P5) x Q3. 
D)  (P1-P6) x Q1.

Question 11

Scenario 15-1
Consider a transportation corporation named Reading's that has just completed the development of a new light rail system in Minneapolis. Currently, there are plenty of seats on the train, and it is never crowded. Its capacity far exceeds the needs of the city. After just a few years of operation, the shareholders of Reading's experienced incredibly high rates of return on their investment due to the profitability of the corporation.
-Refer to Scenario 15-1. Which of the following statements is most likely to be true? (i) New entrants to the market know they will have a smaller market share than Reading's
Currently has.
(ii) Reading's is most likely experiencing decreasing average total cost.
(iii) Reading's is a natural monopoly.

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 12

A monopoly firm can sell 150 units of output for $10 per unit. Alternatively, it can sell 151 units of output for $9.90 per unit. The marginal revenue of the 151st unit of output is

Accepted Answer

A)  -$5.10. 
B)  -$0.10. 
C)  $2.45. 
D)  $5.10. 
A)  -$5.10. 
B)  -$0.10. 
C)  $2.45. 
D)  $5.10.

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 produce an output level of

Accepted Answer

A)  80 units. 
B)  40 units. 
C)  20 units. 
D)  10 units. 
A)  80 units. 
B)  40 units. 
C)  20 units. 
D)  10 units.

Question 14

If a monopolist is able to perfectly price discriminate,

Accepted Answer

A)  consumer surplus is always increased. 
B)  total surplus is always decreased. 
C)  consumer surplus and deadweight losses are transformed into monopoly profits. 
D)  the price effect dominates the output effect on monopoly revenue. 
A)  consumer surplus is always increased. 
B)  total surplus is always decreased. 
C)  consumer surplus and deadweight losses are transformed into monopoly profits. 
D)  the price effect dominates the output effect on monopoly revenue.

Question 15

A movie theater can increase its profits through price discrimination by charging a higher price to adults and a lower price to children if it

Accepted Answer

A)  can prevent children from buying the lower-priced tickets and selling them to adults. 
B)  has some degree of monopoly pricing power. 
C)  can easily distinguish between the two groups of customers. 
D)  All of the above are correct. 
A)  can prevent children from buying the lower-priced tickets and selling them to adults. 
B)  has some degree of monopoly pricing power. 
C)  can easily distinguish between the two groups of customers. 
D)  All of the above are correct.

Question 16

Which of the following is not a difference between monopolies and perfectly competitive markets?

Accepted Answer

A)  Monopolies can earn profits in the long run while perfectly competitive firms break even. 
B)  Monopolies charge a price higher than marginal cost while perfectly competitive firms charge a price equal to marginal cost. 
C)  Monopolies choose to produce the quantity at which marginal revenue equals marginal cost while perfectly competitive firms do not. 
D)  Monopolies face downward sloping demand curves while perfectly competitive firms face horizontal demand curves. 
A)  Monopolies can earn profits in the long run while perfectly competitive firms break even. 
B)  Monopolies charge a price higher than marginal cost while perfectly competitive firms charge a price equal to marginal cost. 
C)  Monopolies choose to produce the quantity at which marginal revenue equals marginal cost while perfectly competitive firms do not. 
D)  Monopolies face downward sloping demand curves while perfectly competitive firms face horizontal demand curves.

Question 17

The amount of power that a monopoly has depends on whether there are close substitutes for its product.

Accepted Answer

A) True 
 B)False

Question 18

A firm that is a natural monopoly

Accepted Answer

A)  is not likely to be concerned about new entrants eroding its monopoly power. 
B)  is taking advantage of economies of scale. 
C)  would experience a higher average total cost if more firms entered the market. 
D)  All of the above are correct. 
A)  is not likely to be concerned about new entrants eroding its monopoly power. 
B)  is taking advantage of economies of scale. 
C)  would experience a higher average total cost if more firms entered the market. 
D)  All of the above are correct.

Question 19

Table 15-15
A monopolist faces the following demand curve:
  
-Refer to Table 15-15. The monopolist has total fixed costs of $40 and a constant marginal cost of $5. At the profit-maximizing level of output, the monopolist's profit is

Accepted Answer

A)  $88. 
B)  $8. 
C)  $6. 
D)  We do not have enough information to determine profit. 
A)  $88. 
B)  $8. 
C)  $6. 
D)  We do not have enough information to determine profit.

Question 20

Table 15-3
Consider the following demand and cost information for a monopoly.
  
-Refer to Table 15-3. The marginal revenue of the 2nd unit is

Accepted Answer

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

Which of the following is an example of public ownership of a monopoly?

Table 15-22 -Refer to Table 15-22. The average revenue of the 50th unit of output is

For a monopolist, marginal revenue is

Patent and copyright laws

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

Suppose a monopolist chooses the price and production level that maximizes its profit. From that point, to increase society's economic welfare, output would need to be increased as long as

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

A monopoly chooses to supply the market with a quantity of a product that is determined by the intersection of the

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

A monopoly firm can sell 150 units of output for $10 per unit. Alternatively, it can sell 151 units of output for $9.90 per unit. The marginal revenue of the 151st unit of output is

If a monopolist is able to perfectly price discriminate,

A movie theater can increase its profits through price discrimination by charging a higher price to adults and a lower price to children if it

Which of the following is not a difference between monopolies and perfectly competitive markets?

The amount of power that a monopoly has depends on whether there are close substitutes for its product.

A firm that is a natural monopoly

Table 15-15 A monopolist faces the following demand curve: -Refer to Table 15-15. The monopolist has total fixed costs of $40 and a constant marginal cost of $5. At the profit-maximizing level of output, the monopolist's profit is

Table 15-3 Consider the following demand and cost information for a monopoly. -Refer to Table 15-3. The marginal revenue of the 2nd unit 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

Which of the following is an example of public ownership of a monopoly?

Table 15-22 -Refer to Table 15-22. The average revenue of the 50th unit of output is

For a monopolist, marginal revenue is

Patent and copyright laws

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

Suppose a monopolist chooses the price and production level that maximizes its profit. From that point, to increase society's economic welfare, output would need to be increased as long as

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

A monopoly chooses to supply the market with a quantity of a product that is determined by the intersection of the

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

A monopoly firm can sell 150 units of output for $10 per unit. Alternatively, it can sell 151 units of output for $9.90 per unit. The marginal revenue of the 151st unit of output is

If a monopolist is able to perfectly price discriminate,

A movie theater can increase its profits through price discrimination by charging a higher price to adults and a lower price to children if it

Which of the following is not a difference between monopolies and perfectly competitive markets?

The amount of power that a monopoly has depends on whether there are close substitutes for its product.

A firm that is a natural monopoly

Table 15-15 A monopolist faces the following demand curve: -Refer to Table 15-15. The monopolist has total fixed costs of $40 and a constant marginal cost of $5. At the profit-maximizing level of output, the monopolist's profit is

Table 15-3 Consider the following demand and cost information for a monopoly. -Refer to Table 15-3. The marginal revenue of the 2nd unit 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