Question 1

Drug companies are allowed to be monopolists in the drugs they discover in order to

Accepted Answer

A)  allow drug companies to charge a price that is equal to their marginal cost. 
B)  discourage new firms from entering the drug market. 
C)  allow the government to earn patent revenue. 
D)  None of the above is correct. 
A)  allow drug companies to charge a price that is equal to their marginal cost. 
B)  discourage new firms from entering the drug market. 
C)  allow the government to earn patent revenue. 
D)  None of the above is correct.

Question 2

Table 15-7
Sally owns the only shoe store in town. She has the following cost and revenue information.
  
-Refer to Table 15-7. Sally will maximize her profits by selling

Accepted Answer

A)  3 pairs of shoes. 
B)  4 pairs of shoes. 
C)  6 pairs of shoes. 
D)  7 pairs of shoes. 
A)  3 pairs of shoes. 
B)  4 pairs of shoes. 
C)  6 pairs of shoes. 
D)  7 pairs of shoes.

Question 3

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

Accepted Answer

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

Question 4

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

Accepted Answer

A)  Crystal charges a higher price than her competitors for her hair-styling services. 
B)  Dan charges a lower price than his competitors for his dry-walling services. 
C)  Jackie offers free samples of her loose-meat sandwiches to attract new customers. 
D)  Roseanne obtains a copyright for a short story that she wrote and published. 
A)  Crystal charges a higher price than her competitors for her hair-styling services. 
B)  Dan charges a lower price than his competitors for his dry-walling services. 
C)  Jackie offers free samples of her loose-meat sandwiches to attract new customers. 
D)  Roseanne obtains a copyright for a short story that she wrote and published.

Question 5

Figure 15-5  
-Refer to Figure 15-5. A profit-maximizing monopoly will produce an output level of

Accepted Answer

A)  Q1. 
B)  Q2. 
C)  Q3. 
D)  Q4. 
A)  Q1. 
B)  Q2. 
C)  Q3. 
D)  Q4.

Question 6

Figure 15-19  
-Refer to Figure 15-19. If the monopoly firm perfectly price discriminates, then the deadweight loss amounts to

Accepted Answer

A)  $0. 
B)  $1,562.50. 
C)  $3,125. 
D)  $6,250. 
A)  $0. 
B)  $1,562.50. 
C)  $3,125. 
D)  $6,250.

Question 7

Suppose a profit-maximizing monopolist faces a constant marginal cost of $10, 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 $4,000.

Accepted Answer

A) True 
 B)False

Question 8

Figure 15-19  
-Refer to Figure 15-19. If there are no fixed costs of production, monopoly profit without price discrimination equals

Accepted Answer

A)  $0. 
B)  $1,562.50. 
C)  $3,125. 
D)  $6,250. 
A)  $0. 
B)  $1,562.50. 
C)  $3,125. 
D)  $6,250.

Question 9

Figure 15-19  
-Refer to Figure 15-19. If there are no fixed costs of production, monopoly profit with perfect price discrimination equals

Accepted Answer

A)  $1. 
B)  $1,562.5. 
C)  $3,125. 
D)  $6,250. 
A)  $1. 
B)  $1,562.5. 
C)  $3,125. 
D)  $6,250.

Question 10

The assessment by George Stigler concerning the tradeoffs between "market failure" and "political failure" in the American economy provides support for which of the following solutions to the problems of monopolies?

Accepted Answer

A)  public ownership of monopolies 
B)  government regulation of monopolies 
C)  government incentives to promote competition in monopolized industries 
D)  doing nothing at all 
A)  public ownership of monopolies 
B)  government regulation of monopolies 
C)  government incentives to promote competition in monopolized industries 
D)  doing nothing at all

Question 11

Figure 15-23  
-Refer to Figure 15-23. If a regulator requires the firm to charge a marginal cost price, what quantity will the firm produce?

Accepted Answer

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

Question 12

Which of the following is not a characteristic of a monopoly?

Accepted Answer

A)  the seller has market power 
B)  one seller 
C)  free entry and exit 
D)  a product without close substitutes 
A)  the seller has market power 
B)  one seller 
C)  free entry and exit 
D)  a product without close substitutes

Question 13

Like competitive firms, monopolies charge a price equal to marginal cost.

Accepted Answer

A) True 
 B)False

Question 14

Deadweight loss

Accepted Answer

A)  measures monopoly inefficiency. 
B)  exceeds monopoly profits. 
C)  equals monopoly profits. 
D)  equals monopoly revenues minus profits. 
A)  measures monopoly inefficiency. 
B)  exceeds monopoly profits. 
C)  equals monopoly profits. 
D)  equals monopoly revenues minus profits.

Question 15

Table 15-4
A monopolist faces the following demand curve:
  
-Refer to Table 15-4. The monopolist will not produce

Accepted Answer

A)  5 units or fewer under any circumstances. 
B)  7.5 units or fewer under any circumstances. 
C)  7.5 units or more under any circumstances. 
D)  10 units or more under any circumstances. 
A)  5 units or fewer under any circumstances. 
B)  7.5 units or fewer under any circumstances. 
C)  7.5 units or more under any circumstances. 
D)  10 units or more under any circumstances.

Question 16

Figure 15-22  
-Refer to Figure 15-22. If the monopolist uses perfect price discrimination, what price will it charge?

Accepted Answer

The amount

Question 17

Antitrust laws may

Accepted Answer

A)  enhance the ability of firms to capture profits from a concentration of market power. 
B)  enhance the ability of firms to reduce economic losses. 
C)  restrict the ability of firms to operate at the socially efficient level of production. 
D)  restrict the ability of firms to merge. 
A)  enhance the ability of firms to capture profits from a concentration of market power. 
B)  enhance the ability of firms to reduce economic losses. 
C)  restrict the ability of firms to operate at the socially efficient level of production. 
D)  restrict the ability of firms to merge.

Question 18

By selling hardcover books to die-hard fans and paperback books to less enthusiastic readers, the publisher is able to price discriminate and raise its profits.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A)  2 units 
B)  3 units 
C)  4 units 
D)  5 units 
A)  2 units 
B)  3 units 
C)  4 units 
D)  5 units

Question 20

Table 15-9
Consider the following demand and cost information for a monopoly.
  
-Refer to Table 15-9. What is the marginal cost of the 4th unit?

Accepted Answer

A)  $4 
B)  $14 
C)  $31 
D)  $62 
A)  $4 
B)  $14 
C)  $31 
D)  $62

Exam 15: Monopoly

Drug companies are allowed to be monopolists in the drugs they discover in order to

Table 15-7 Sally owns the only shoe store in town. She has the following cost and revenue information. -Refer to Table 15-7. Sally will maximize her profits by selling

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

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

Figure 15-5 -Refer to Figure 15-5. A profit-maximizing monopoly will produce an output level of

Figure 15-19 -Refer to Figure 15-19. If the monopoly firm perfectly price discriminates, then the deadweight loss amounts to

Figure 15-19 -Refer to Figure 15-19. If there are no fixed costs of production, monopoly profit without price discrimination equals

Figure 15-19 -Refer to Figure 15-19. If there are no fixed costs of production, monopoly profit with perfect price discrimination equals

The assessment by George Stigler concerning the tradeoffs between "market failure" and "political failure" in the American economy provides support for which of the following solutions to the problems of monopolies?

Figure 15-23 -Refer to Figure 15-23. If a regulator requires the firm to charge a marginal cost price, what quantity will the firm produce?

Which of the following is not a characteristic of a monopoly?

Like competitive firms, monopolies charge a price equal to marginal cost.

Deadweight loss

Table 15-4 A monopolist faces the following demand curve: -Refer to Table 15-4. The monopolist will not produce

Figure 15-22 -Refer to Figure 15-22. If the monopolist uses perfect price discrimination, what price will it charge?

Antitrust laws may

By selling hardcover books to die-hard fans and paperback books to less enthusiastic readers, the publisher is able to price discriminate and raise its profits.

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

Table 15-9 Consider the following demand and cost information for a monopoly. -Refer to Table 15-9. What is the marginal cost of the 4th unit?

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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