Exam 15: Monopoly

Which of the following statements is correct? Monopolies are socially inefficient because they (i) charge a price above marginal cost. (ii) produce too little output. (iii) earn profits at the expense of consumers. (iv) maximize the market's total surplus.

A patent gives a single person or firm the exclusive right to sell some good or service for a specific period of time.

A benefit to society of the patent and copyright laws is that those laws

Many movie theaters allow discount tickets to be sold to senior citizens because

Which of the following formulas would correctly calculate a monopolist's profit?

A natural monopoly has economies of scale for most if not all of its range of output.

The De Beers Diamond company is not worried about differentiating its product from all other gemstones.

Which of the following is an example of price discrimination?

Table 15-8 The following table provides information on the price, quantity, and average total cost for a monopoly. -Refer to Table 15-8. At what price will the monopolist maximize his profit?

Table 15-18 A monopolist faces the following demand curve: Suppose marginal cost is constant at $8 per unit. -Refer to Table 15-18. Suppose the firm depicted in the table is selling a prescription drug for which it had a patent, but the patent has expired. As new firms enter the market and sell the generic version of this drug competitively, what quantity will be sold?

A monopolist earns higher profits by charging one price than by practicing price discrimination.

Price discrimination requires the firm to

Figure 15-22 -Refer to Figure 15-22. How much profit will this monopolist earn if it charges each consumer the same price?

A monopolist's average revenue is always

When a monopolist increases the amount of output that it produces and sells, the price of its output

A reduction in a monopolist's fixed costs would

Figure 15-9 -Refer to Figure 15-9. To maximize total surplus, a benevolent social planner would choose which of the following outcomes?

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

The reason to regulate utilities instead of using antitrust laws to promote competition is that a utility is usually a

The government may choose to do nothing to reduce monopoly inefficiency because the "fix" may be worse than the problem.