Question 1

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 diseconomies of scale. 
C)  would experience a lower 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 diseconomies of scale. 
C)  would experience a lower average total cost if more firms entered the market. 
D)  All of the above are correct.

Question 2

For a monopoly firm, which of the following equalities is always true?

Accepted Answer

A)  price = marginal revenue 
B)  price = average revenue 
C)  price = total revenue 
D)  marginal revenue = marginal cost 
A)  price = marginal revenue 
B)  price = average revenue 
C)  price = total revenue 
D)  marginal revenue = marginal cost

Question 3

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 4

The process of buying a good in one market at a low price and selling the good in another market for a higher price in order to profit from the price difference is known as

Accepted Answer

A)  sabotage. 
B)  conspiracy. 
C)  arbitrage. 
D)  collusion. 
A)  sabotage. 
B)  conspiracy. 
C)  arbitrage. 
D)  collusion.

Question 5

In the market for "home heating" consumers typically have several optionse.g., electricity, heating fuel, natural gas, propane, etc.), yet we often think of firms in this industry as behaving like monopolists. Discuss the context in which your electricity provider is a monopolist. Is this characterization universally applicable? Explain your answer.

Accepted Answer

In this case, the firms are monopolists

Question 6

The deadweight loss that arises from a monopoly is a consequence of the fact that the monopoly

Accepted Answer

A)  quantity is lower than the socially-optimal quantity. 
B)  price equals marginal revenue. 
C)  price is the same as average revenue. 
D)  earns positive profits. 
A)  quantity is lower than the socially-optimal quantity. 
B)  price equals marginal revenue. 
C)  price is the same as average revenue. 
D)  earns positive profits.

Question 7

Table 15-12
The following table provides information on the price, quantity, and average total cost for a monopoly.
  
-Refer to Table 15-12. At what price will the firm maximize its profit?

Accepted Answer

A)  $1 
B)  $2 
C)  $3 
D)  $4 
A)  $1 
B)  $2 
C)  $3 
D)  $4

Question 8

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 additional profit can the concert promoters earn by charging each customer their willingness to pay relative to charging a flat price of $50 per ticket?

Accepted Answer

A)  $25,000 
B)  $50,000 
C)  $75,000 
D)  $100,000 
A)  $25,000 
B)  $50,000 
C)  $75,000 
D)  $100,000

Question 9

Which of the following is not an example of price discrimination?

Accepted Answer

A)  A movie theater charges a lower price for a child's ticket than for an adult's ticket. 
B)  A university rebates part of the cost of tuition in the form of financial aid for needy students. 
C)  A local pizza chain offers a "buy three get one free" deal. 
D)  An ice cream parlor charges a higher price for ice cream than for sherbet. 
A)  A movie theater charges a lower price for a child's ticket than for an adult's ticket. 
B)  A university rebates part of the cost of tuition in the form of financial aid for needy students. 
C)  A local pizza chain offers a "buy three get one free" deal. 
D)  An ice cream parlor charges a higher price for ice cream than for sherbet.

Question 10

Scenario 15-10
Vincent operates a scenic tour business in Boston. He has one bus which can fit 50 people per tour and each tour lasts 2 hours. His total cost of operating one tour is fixed at $450. Vincent's cost is not reduced if he runs a tour with a partially full bus. While his cost is the same for all tours, Vincent charges each passenger his/her willingness to pay: adults $18 per trip, children $10 per trip, and senior citizens $12 per trip. At those rates, on a typical day Vincent's demand is:
   Assume that Vincent's customers are always available for the tour; therefore, he can fill his bus for each tour as long as there is sufficient total demand for the day.
-Refer to Scenario 15-10. What is Vincent's profit on a typical day?

Accepted Answer

A)  $660 
B)  $820 
C)  $1,350 
D)  $2,170 
A)  $660 
B)  $820 
C)  $1,350 
D)  $2,170

Question 11

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

Accepted Answer

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

Question 12

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 13

Figure 15-18  
-Refer to Figure 15-18. If the monopoly firm perfectly price discriminates, then consumer surplus amounts to

Accepted Answer

A)  $0. 
B)  $1,000. 
C)  $2,000. 
D)  $4,000. 
A)  $0. 
B)  $1,000. 
C)  $2,000. 
D)  $4,000.

Question 14

Table 15-11
The following table shows quantity, price, and marginal cost information for a monopoly:
  
-Refer to Table 15-11. What would be the firm's marginal revenue at the profit­maximizing level of output?

Accepted Answer

A)  $7 
B)  $6 
C)  $5 
D)  $1 
A)  $7 
B)  $6 
C)  $5 
D)  $1

Question 15

Scenario 15-9
Suppose executives at an art museum know that 100 adults are willing to pay $12 for admission to the museum on a weekday. Suppose the executives also know that 200 students are willing to pay $8 for admission on a weekday. The cost of operating the museum on a weekday is $2,000.
-Refer to Scenario 15-9. How much profit will the museum earn if it charges all customers $12 for admission?

Accepted Answer

A)  -$800 
B)  $100 
C)  $800 
D)  $1,200 
A)  -$800 
B)  $100 
C)  $800 
D)  $1,200

Question 16

The fundamental cause of monopoly is

Accepted Answer

The answer of The fundamental cause of monopoly is...

Question 17

State one benefit of government-granted monopolies like patents and copyrights.

Accepted Answer

increased

Question 18

Scenario 15-9
Suppose executives at an art museum know that 100 adults are willing to pay $12 for admission to the museum on a weekday. Suppose the executives also know that 200 students are willing to pay $8 for admission on a weekday. The cost of operating the museum on a weekday is $2,000.
-Refer to Scenario 15-9. How much additional profit will the museum earn if it engages in price discrimination compared to charging each customer $8 for admission?

Accepted Answer

A)  $0 
B)  $200 
C)  $400 
D)  $800 
A)  $0 
B)  $200 
C)  $400 
D)  $800

Question 19

Figure 15-17  
-Refer to Figure 15-17. Which of the following areas represents the profit earned by this profit-maximizing monopolist?

Accepted Answer

A)  BCFE 
B)  ABE 
C)  EFG 
D)  CFIH 
A)  BCFE 
B)  ABE 
C)  EFG 
D)  CFIH

Question 20

The output effect describes the situation when a monopolist sells more output and, all else equal, total revenue

Accepted Answer

A)  increases. 
B)  decreases. 
C)  is unchanged. 
D)  is maximized. 
A)  increases. 
B)  decreases. 
C)  is unchanged. 
D)  is maximized.

A firm that is a natural monopoly

For a monopoly firm, which of the following equalities is always true?

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

The process of buying a good in one market at a low price and selling the good in another market for a higher price in order to profit from the price difference is known as

The deadweight loss that arises from a monopoly is a consequence of the fact that the monopoly

Table 15-12 The following table provides information on the price, quantity, and average total cost for a monopoly. -Refer to Table 15-12. At what price will the firm maximize its profit?

Which of the following is not an example of price discrimination?

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

Figure 15-18 -Refer to Figure 15-18. If the monopoly firm perfectly price discriminates, then consumer surplus amounts to

Table 15-11 The following table shows quantity, price, and marginal cost information for a monopoly: -Refer to Table 15-11. What would be the firm's marginal revenue at the profitmaximizing level of output?

The fundamental cause of monopoly is

State one benefit of government-granted monopolies like patents and copyrights.

Figure 15-17 -Refer to Figure 15-17. Which of the following areas represents the profit earned by this profit-maximizing monopolist?

The output effect describes the situation when a monopolist sells more output and, all else equal, total 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 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

Exam 14: Monopoly

A firm that is a natural monopoly

For a monopoly firm, which of the following equalities is always true?

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

The process of buying a good in one market at a low price and selling the good in another market for a higher price in order to profit from the price difference is known as

The deadweight loss that arises from a monopoly is a consequence of the fact that the monopoly

Table 15-12 The following table provides information on the price, quantity, and average total cost for a monopoly. -Refer to Table 15-12. At what price will the firm maximize its profit?

Which of the following is not an example of price discrimination?

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

Figure 15-18 -Refer to Figure 15-18. If the monopoly firm perfectly price discriminates, then consumer surplus amounts to

Table 15-11 The following table shows quantity, price, and marginal cost information for a monopoly: -Refer to Table 15-11. What would be the firm's marginal revenue at the profit­maximizing level of output?

The fundamental cause of monopoly is

State one benefit of government-granted monopolies like patents and copyrights.

Figure 15-17 -Refer to Figure 15-17. Which of the following areas represents the profit earned by this profit-maximizing monopolist?

The output effect describes the situation when a monopolist sells more output and, all else equal, total 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 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

Table 15-11 The following table shows quantity, price, and marginal cost information for a monopoly: -Refer to Table 15-11. What would be the firm's marginal revenue at the profitmaximizing level of output?