Question 1

Which of the following governmental actions would eliminate some or all of the inefficiency that results from monopoly pricing? The government could

Accepted Answer

A)  regulate the monopoly. 
B)  prohibited the monopoly from price discriminating. 
C)  force the monopoly to operate at a point where its marginal revenue is equal to its marginal cost. 
D)  None of the above would eliminate any inefficiency associated with a monopoly. 
A)  regulate the monopoly. 
B)  prohibited the monopoly from price discriminating. 
C)  force the monopoly to operate at a point where its marginal revenue is equal to its marginal cost. 
D)  None of the above would eliminate any inefficiency associated with a monopoly.

Question 2

Figure 15-9  
-Refer to Figure 15-9. The monopolist's maximum profit

Accepted Answer

A)  is $1,600. 
B)  is $2,000. 
C)  is $2,500. 
D)  cannot be determined from the diagram. 
A)  is $1,600. 
B)  is $2,000. 
C)  is $2,500. 
D)  cannot be determined from the diagram.

Question 3

Scenario 15-2
Consider a local, privately-owned electrical cooperative named Poweshiek Power Company (PPCo). PPCo has just completed a clean-coal-burning electrical power plant in Iowa. Currently, PPCo can meet the electricity needs of all residents in the county. In fact, its capacity far exceeds the needs of the county. After just a few years of operation, the shareholders of PPCo experienced incredibly high rates of return on their investment due to the profitability of the corporation.
-Refer to Scenario 15-2. 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 PPCo currently has.
(ii) PPCo is most likely experiencing rising marginal cost.
(iii) PPCo is a natural monopoly.
(iv) PPCo is most likely experiencing declining average total cost.

Accepted Answer

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

Question 4

Average revenue for a monopoly is the total revenue divided by the quantity produced.

Accepted Answer

A) True 
 B)False

Question 5

If a social planner were running a monopoly, that planner could achieve an efficient outcome by charging the price that is determined by the

Accepted Answer

A)  minimum point on the average total cost curve. 
B)  intersection of the average total cost curve and the demand curve. 
C)  intersection of the marginal cost curve and the demand curve. 
D)  intersection of the marginal cost curve and the marginal revenue curve. 
A)  minimum point on the average total cost curve. 
B)  intersection of the average total cost curve and the demand curve. 
C)  intersection of the marginal cost curve and the demand curve. 
D)  intersection of the marginal cost curve and the marginal revenue curve.

Question 6

Scenario 15-6
The concert promoters of a heavy-metal band, WeR2Loud, know that there are two types of concert-goers: die- hard fans and casual fans. For a particular WeR2Loud concert, there are 1,000 die-hard fans who will pay $150 for a ticket and 500 casual fans who will pay $50 for a ticket. There are 1,500 seats available at the concert venue. Suppose the cost of putting on the concert is $50,000, which includes the cost of the band, lighting, security, etc.
-Refer to Scenario 15-6. How much profit will the concert promoters earn if they set the price of each ticket at $50?

Accepted Answer

A)  $25,000 
B)  $75,000 
C)  $100,000 
D)  $150,000 
A)  $25,000 
B)  $75,000 
C)  $100,000 
D)  $150,000

Question 7

Round-trip airline tickets are usually cheaper if you stay over a Saturday night before you fly back. What is the reason for this price discrepancy?

Accepted Answer

A)  Airlines are practicing imperfect price discrimination to raise their profits. 
B)  Airlines charge a different rate based on the different nature of peoples' travel needs. 
C)  Airlines are attempting to charge people based on their willingness to pay. 
D)  All of the above are correct. 
A)  Airlines are practicing imperfect price discrimination to raise their profits. 
B)  Airlines charge a different rate based on the different nature of peoples' travel needs. 
C)  Airlines are attempting to charge people based on their willingness to pay. 
D)  All of the above are correct.

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is not one of the ways that antitrust laws promote competition?

Accepted Answer

A)  Antitrust laws allow the government to prevent mergers. 
B)  Antitrust laws allow the government to break up companies into smaller ones. 
C)  Antitrust laws prevent companies from coordinating their activities in ways that make markets less competitive. 
D)  Antitrust laws allow the government to shut down any firm the government believes has monopoly power. 
A)  Antitrust laws allow the government to prevent mergers. 
B)  Antitrust laws allow the government to break up companies into smaller ones. 
C)  Antitrust laws prevent companies from coordinating their activities in ways that make markets less competitive. 
D)  Antitrust laws allow the government to shut down any firm the government believes has monopoly power.

Question 10

Price discrimination can increase both the monopolist's profits and society's welfare.

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A)  of little concern to society. 
B)  a deadweight loss to society. 
C)  a sunk cost to society. 
D)  also observed in competitive markets. 
A)  of little concern to society. 
B)  a deadweight loss to society. 
C)  a sunk cost to society. 
D)  also observed in competitive markets.

Question 12

If a monopolist can practice perfect price discrimination, the monopolist will

Accepted Answer

A)  eliminate consumer surplus. 
B)  eliminate deadweight loss. 
C)  maximize profits. 
D)  All of the above are correct. 
A)  eliminate consumer surplus. 
B)  eliminate deadweight loss. 
C)  maximize profits. 
D)  All of the above are correct.

Question 13

Figure 15-22  
-Refer to Figure 15-22. How much consumer surplus results if this single-price monopolist profit-maximizes?

Accepted Answer

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

Question 14

A perfectly price-discriminating monopolist is able to

Accepted Answer

A)  maximize profit and produce a socially-optimal level of output. 
B)  maximize profit, but not produce a socially-optimal level of output. 
C)  produce a socially-optimal level of output, but not maximize profit. 
D)  exercise illegal preferences regarding the race and/or gender of its employees. 
A)  maximize profit and produce a socially-optimal level of output. 
B)  maximize profit, but not produce a socially-optimal level of output. 
C)  produce a socially-optimal level of output, but not maximize profit. 
D)  exercise illegal preferences regarding the race and/or gender of its employees.

Question 15

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

Accepted Answer

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

Question 16

A monopoly's marginal cost will

Accepted Answer

A)  be less than its average fixed cost. 
B)  be less than the price per unit of its product. 
C)  exceed its marginal revenue. 
D)  equal its average total cost. 
A)  be less than its average fixed cost. 
B)  be less than the price per unit of its product. 
C)  exceed its marginal revenue. 
D)  equal its average total cost.

Question 17

Table 15-2
Tanya has the following demand curve for selling taffy. Assume that Tanya has a marginal cost of $3 per unit.
  
-Refer to Table 15-2. What is Tanya's profit-maximizing price?

Accepted Answer

A)  $2 
B)  $4 
C)  $6 
D)  $8 
A)  $2 
B)  $4 
C)  $6 
D)  $8

Question 18

Table 15-9
Consider the following demand and cost information for a monopoly.
  
-Refer to Table 15-9. What price should the monopoly charge to maximize profit?

Accepted Answer

A)  $16 
B)  $20 
C)  $24 
D)  $28 
A)  $16 
B)  $20 
C)  $24 
D)  $28

Question 19

A monopolist that practices perfect price discrimination

Accepted Answer

A)  creates no deadweight loss. 
B)  charges one group of buyers a higher price than another group, such as offering a student discount. 
C)  charges a higher price but produces the same monopoly level of output as when a single price is charged. 
D)  charges some customers a price below marginal cost because costs are covered by the high-priced buyers. 
A)  creates no deadweight loss. 
B)  charges one group of buyers a higher price than another group, such as offering a student discount. 
C)  charges a higher price but produces the same monopoly level of output as when a single price is charged. 
D)  charges some customers a price below marginal cost because costs are covered by the high-priced buyers.

Question 20

Table 15-4
A monopolist faces the following demand curve:
  
-Refer to Table 15-4. If the monopolist produces 5 units, what is its average revenue?

Accepted Answer

A)  $100 
B)  $20 
C)  $5 
D)  $4 
A)  $100 
B)  $20 
C)  $5 
D)  $4

Which of the following governmental actions would eliminate some or all of the inefficiency that results from monopoly pricing? The government could

Figure 15-9 -Refer to Figure 15-9. The monopolist's maximum profit

Average revenue for a monopoly is the total revenue divided by the quantity produced.

If a social planner were running a monopoly, that planner could achieve an efficient outcome by charging the price that is determined by the

Round-trip airline tickets are usually cheaper if you stay over a Saturday night before you fly back. What is the reason for this price discrepancy?

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

Which of the following is not one of the ways that antitrust laws promote competition?

Price discrimination can increase both the monopolist's profits and society's welfare.

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

If a monopolist can practice perfect price discrimination, the monopolist will

Figure 15-22 -Refer to Figure 15-22. How much consumer surplus results if this single-price monopolist profit-maximizes?

A perfectly price-discriminating monopolist is able to

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

A monopoly's marginal cost will

Table 15-2 Tanya has the following demand curve for selling taffy. Assume that Tanya has a marginal cost of $3 per unit. -Refer to Table 15-2. What is Tanya's profit-maximizing price?

Table 15-9 Consider the following demand and cost information for a monopoly. -Refer to Table 15-9. What price should the monopoly charge to maximize profit?

A monopolist that practices perfect price discrimination

Table 15-4 A monopolist faces the following demand curve: -Refer to Table 15-4. If the monopolist produces 5 units, what is its average revenue?

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 governmental actions would eliminate some or all of the inefficiency that results from monopoly pricing? The government could

Figure 15-9 -Refer to Figure 15-9. The monopolist's maximum profit

Average revenue for a monopoly is the total revenue divided by the quantity produced.

If a social planner were running a monopoly, that planner could achieve an efficient outcome by charging the price that is determined by the

Round-trip airline tickets are usually cheaper if you stay over a Saturday night before you fly back. What is the reason for this price discrepancy?

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

Which of the following is not one of the ways that antitrust laws promote competition?

Price discrimination can increase both the monopolist's profits and society's welfare.

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

If a monopolist can practice perfect price discrimination, the monopolist will

Figure 15-22 -Refer to Figure 15-22. How much consumer surplus results if this single-price monopolist profit-maximizes?

A perfectly price-discriminating monopolist is able to

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

A monopoly's marginal cost will

Table 15-2 Tanya has the following demand curve for selling taffy. Assume that Tanya has a marginal cost of $3 per unit. -Refer to Table 15-2. What is Tanya's profit-maximizing price?

Table 15-9 Consider the following demand and cost information for a monopoly. -Refer to Table 15-9. What price should the monopoly charge to maximize profit?

A monopolist that practices perfect price discrimination

Table 15-4 A monopolist faces the following demand curve: -Refer to Table 15-4. If the monopolist produces 5 units, what is its average revenue?

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