Question 1

A monopolist maximizes profit by producing an output level where marginal cost equals price.

Accepted Answer

A) True 
 B)False

Question 2

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 3

Selling a good at a price determined by the intersection of the demand curve and the marginal cost curve is consistent with the i) socially-optimal level of output.
Ii) market solution for profit-maximizing competitive firms.
Iii) market solution for a profit-maximizing 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 4

Table 15-19
A monopolist faces the following demand curve:
  
-Refer to Table 15-19. If a monopolist faces a constant marginal cost of $7, how much output should the firm produce?

Accepted Answer

A)  3 units 
B)  4 units 
C)  5 units 
D)  6 units 
A)  3 units 
B)  4 units 
C)  5 units 
D)  6 units

Question 5

Table 15-9
Consider the following demand and cost information for a monopoly.
  
-Refer to Table 15-9. At the profit-maximizing price, how much profit will the monopoly earn?

Accepted Answer

A)  $8 
B)  $10 
C)  $12 
D)  $14 
A)  $8 
B)  $10 
C)  $12 
D)  $14

Question 6

Table 15-3
Consider the following demand and cost information for a monopoly.
  
-Refer to Table 15-3. The marginal cost of the 4th unit is

Accepted Answer

A)  $7. 
B)  $12. 
C)  $25. 
D)  $60. 
A)  $7. 
B)  $12. 
C)  $25. 
D)  $60.

Question 7

The three main sources of barriers to entry are monopoly resources, government regulation, and the firm's production process.

Accepted Answer

A) True 
 B)False

Question 8

For a monopoly, the socially efficient level of output occurs where

Accepted Answer

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

Question 9

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 10

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 $300 per ticket?

Accepted Answer

A)  $10,000 
B)  $15,000 
C)  $30,000 
D)  $45,000 
A)  $10,000 
B)  $15,000 
C)  $30,000 
D)  $45,000

Question 11

Table 15-19
A monopolist faces the following demand curve:
  
-Refer to Table 15-19. If a monopolist faces a constant marginal cost of $5, how much output should the firm produce in order to equate marginal revenue with marginal cost?

Accepted Answer

A)  3 units 
B)  4 units 
C)  5 units 
D)  6 units 
A)  3 units 
B)  4 units 
C)  5 units 
D)  6 units

Question 12

Amanda inherited the only local cable TV/Internet company in town after her father passed away. The company has a local monopoly on the delivery of high-speed Internet service. The company is completely unregulated by the government and is therefore free to operate as it wishes. Assume that Amanda understands the true power of her new monopoly. Which of the following statements is are) correct? i) She will be able to set the price of high-speed Internet service at whatever level she wishes.
Ii) The customers will be forced to purchase high-speed Internet service at whatever price she wants to set.
Iii) She will be able to achieve any profit level that she desires.

Accepted Answer

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

Question 13

If the ABC company owns the exclusive rights to mine land in Afghanistan for Lapis Lazuli, a rare stone used in jewelry which is found only in Afghanistan, the company benefits from a barrier to entry.

Accepted Answer

A) True 
 B)False

Question 14

The fundamental source of monopoly power is

Accepted Answer

A)  barriers to entry. 
B)  profit. 
C)  decreasing average total cost. 
D)  a product without close substitutes. 
A)  barriers to entry. 
B)  profit. 
C)  decreasing average total cost. 
D)  a product without close substitutes.

Question 15

The distribution of water to residents of a town and an infrequently used bridge are examples of

Accepted Answer

The answer of The distribution of water to residents of...

Question 16

Authors are allowed to be monopolists in the sale of their books in order to

Accepted Answer

A)  encourage authors to write more and better books. 
B)  correct for the negative externalities that the Internet and television impose. 
C)  satisfy literary advocacy groups that exercise their lobbying power. 
D)  promote a society in which people think for themselves and learn from whichever books they please. 
A)  encourage authors to write more and better books. 
B)  correct for the negative externalities that the Internet and television impose. 
C)  satisfy literary advocacy groups that exercise their lobbying power. 
D)  promote a society in which people think for themselves and learn from whichever books they please.

Question 17

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 profit will the airline earn if it engages in price discrimination?

Accepted Answer

A)  -$5,000 
B)  $40,000 
C)  $55,000 
D)  $75,000 
A)  -$5,000 
B)  $40,000 
C)  $55,000 
D)  $75,000

Question 18

Deadweight loss measures the loss in society's welfare that occurs because a monopolist does not produce the socially efficient level of output.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following statements is true? i) When a competitive firm sells an additional unit of output, its revenue increases by an amount less than the price.
Ii) When a monopoly firm sells an additional unit of output, its revenue increases by an amount less than the price.
Iii) Average revenue is the same as price for both competitive and monopoly firms.

Accepted Answer

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

Question 20

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

Accepted Answer

The amount

A monopolist maximizes profit by producing an output level where marginal cost equals price.

A monopolist that practices perfect price discrimination

Selling a good at a price determined by the intersection of the demand curve and the marginal cost curve is consistent with the i) socially-optimal level of output. Ii) market solution for profit-maximizing competitive firms. Iii) market solution for a profit-maximizing monopoly.

Table 15-19 A monopolist faces the following demand curve: -Refer to Table 15-19. If a monopolist faces a constant marginal cost of $7, how much output should the firm produce?

Table 15-9 Consider the following demand and cost information for a monopoly. -Refer to Table 15-9. At the profit-maximizing price, how much profit will the monopoly earn?

Table 15-3 Consider the following demand and cost information for a monopoly. -Refer to Table 15-3. The marginal cost of the 4th unit is

The three main sources of barriers to entry are monopoly resources, government regulation, and the firm's production process.

For a monopoly, the socially efficient level of output occurs where

A firm that is a natural monopoly

Table 15-19 A monopolist faces the following demand curve: -Refer to Table 15-19. If a monopolist faces a constant marginal cost of $5, how much output should the firm produce in order to equate marginal revenue with marginal cost?

If the ABC company owns the exclusive rights to mine land in Afghanistan for Lapis Lazuli, a rare stone used in jewelry which is found only in Afghanistan, the company benefits from a barrier to entry.

The fundamental source of monopoly power is

The distribution of water to residents of a town and an infrequently used bridge are examples of

Authors are allowed to be monopolists in the sale of their books in order to

Deadweight loss measures the loss in society's welfare that occurs because a monopolist does not produce the socially efficient level of output.

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

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 Costs of Production

Firms in Competitive Markets

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

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Exam 14: Monopoly

A monopolist maximizes profit by producing an output level where marginal cost equals price.

A monopolist that practices perfect price discrimination

Selling a good at a price determined by the intersection of the demand curve and the marginal cost curve is consistent with the i) socially-optimal level of output. Ii) market solution for profit-maximizing competitive firms. Iii) market solution for a profit-maximizing monopoly.

Table 15-19 A monopolist faces the following demand curve: -Refer to Table 15-19. If a monopolist faces a constant marginal cost of $7, how much output should the firm produce?

Table 15-9 Consider the following demand and cost information for a monopoly. -Refer to Table 15-9. At the profit-maximizing price, how much profit will the monopoly earn?

Table 15-3 Consider the following demand and cost information for a monopoly. -Refer to Table 15-3. The marginal cost of the 4th unit is

The three main sources of barriers to entry are monopoly resources, government regulation, and the firm's production process.

For a monopoly, the socially efficient level of output occurs where

A firm that is a natural monopoly

Table 15-19 A monopolist faces the following demand curve: -Refer to Table 15-19. If a monopolist faces a constant marginal cost of $5, how much output should the firm produce in order to equate marginal revenue with marginal cost?

If the ABC company owns the exclusive rights to mine land in Afghanistan for Lapis Lazuli, a rare stone used in jewelry which is found only in Afghanistan, the company benefits from a barrier to entry.

The fundamental source of monopoly power is

The distribution of water to residents of a town and an infrequently used bridge are examples of

Authors are allowed to be monopolists in the sale of their books in order to

Deadweight loss measures the loss in society's welfare that occurs because a monopolist does not produce the socially efficient level of output.

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

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 Costs of Production

Firms in Competitive Markets

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

Filters