Question 1

Figure 15-9  
-Refer to Figure 15-9. The deadweight loss caused by a profit-maximizing monopoly amounts to

Accepted Answer

A)  $250. 
B)  $500. 
C)  $750. 
D)  $1,000. 
A)  $250. 
B)  $500. 
C)  $750. 
D)  $1,000.

Question 2

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 3

For a long while, electricity producers were thought to be a classic example of a natural monopoly. People held this view because

Accepted Answer

A)  the average cost of producing units of electricity by one producer in a specific region was lower than if the same quantity were produced by two or more producers in the same region. 
B)  the average cost of producing units of electricity by one producer in a specific region was higher than if the same quantity were produced by two or more produced in the same region. 
C)  the marginal cost of producing units of electricity by one producer in a specific region was higher than if the same quantity were produced by two or more producers in the same region. 
D)  electricity is a special non-excludable good that could never be sold in a competitive market. 
A)  the average cost of producing units of electricity by one producer in a specific region was lower than if the same quantity were produced by two or more producers in the same region. 
B)  the average cost of producing units of electricity by one producer in a specific region was higher than if the same quantity were produced by two or more produced in the same region. 
C)  the marginal cost of producing units of electricity by one producer in a specific region was higher than if the same quantity were produced by two or more producers in the same region. 
D)  electricity is a special non-excludable good that could never be sold in a competitive market.

Question 4

Table 15-3
Consider the following demand and cost information for a monopoly.
  
-Refer to Table 15-3. The marginal revenue of the 2nd unit is

Accepted Answer

A)  $10. 
B)  $15. 
C)  $20. 
D)  $25. 
A)  $10. 
B)  $15. 
C)  $20. 
D)  $25.

Question 5

Because many good substitutes exist for a competitive firm's product, the demand curve that it faces is

Accepted Answer

A)  unit-elastic. 
B)  perfectly inelastic. 
C)  perfectly elastic. 
D)  inelastic only over a certain region. 
A)  unit-elastic. 
B)  perfectly inelastic. 
C)  perfectly elastic. 
D)  inelastic only over a certain region.

Question 6

What are the three main sources of barriers to entry for monopolies?

Accepted Answer

monopoly resources g

Question 7

Comparing firms in perfectly competitive markets to monopoly firms, which results in a deadweight loss?

Accepted Answer

The answer of Comparing firms in perfectly competitive markets to...

Question 8

The supply curve for the monopolist

Accepted Answer

A)  is horizontal. 
B)  is vertical. 
C)  is upward sloping. 
D)  does not exist. 
A)  is horizontal. 
B)  is vertical. 
C)  is upward sloping. 
D)  does not exist.

Question 9

Which of the following are necessary characteristics of a monopoly? i) The firm is the sole seller of its product.
Ii) The firm's product does not have close substitutes.
Iii) The firm generates a large economic profit.
Iv) The firm is located in a small geographic market.

Accepted Answer

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

Question 10

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 11

In order for antitrust laws to raise social welfare, the government must

Accepted Answer

A)  disallow synergy benefits from accruing to monopolists. 
B)  disallow any mergers from taking place. 
C)  be able to determine which mergers are desirable and which are not. 
D)  always attempt to keep markets in their most competitive form. 
A)  disallow synergy benefits from accruing to monopolists. 
B)  disallow any mergers from taking place. 
C)  be able to determine which mergers are desirable and which are not. 
D)  always attempt to keep markets in their most competitive form.

Question 12

Suppose that a professional photographer takes a prize-winning digital photo. She can sell a 5"x7" color print of the photo for $10. She can also sell the digital file for $20. There are 500 people willing to buy the color print and 2,000 people willing to buy the digital file. Assume the costs to the photographer are zero and that the people who purchase the digital file cannot resell the file itself or any prints made from it. What should she do in order to maximize her profits?

Accepted Answer

A)  earn $5,000 by selling only the color prints 
B)  earn $40,000 by selling only the digital files 
C)  earn $45,000 by selling both the color prints and the digital files at their respective prices 
D)  We do not have enough information with which to answer this question. 
A)  earn $5,000 by selling only the color prints 
B)  earn $40,000 by selling only the digital files 
C)  earn $45,000 by selling both the color prints and the digital files at their respective prices 
D)  We do not have enough information with which to answer this question.

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

The monopolist's profit-maximizing quantity of output is determined by the intersection of which of the following two curves?

Accepted Answer

A)  marginal cost and demand 
B)  marginal cost and marginal revenue 
C)  average total cost and marginal revenue 
D)  average variable cost and average revenue 
A)  marginal cost and demand 
B)  marginal cost and marginal revenue 
C)  average total cost and marginal revenue 
D)  average variable cost and average revenue

Question 15

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 16

Table 15-21
Tommy's Tie Company, a monopolist, has the following cost and revenue information. Assume that Tommy's is
able to engage in perfect price discrimination.
  
-Refer to Table 15-21. What are Tommy's Ties Company's fixed costs?

Accepted Answer

A)  $100 
B)  $150 
C)  $354 
D)  $654 
A)  $100 
B)  $150 
C)  $354 
D)  $654

Question 17

Figure 15-19  
-Refer to Figure 15-19. If the monopoly firm is not allowed to price discriminate, 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 18

What do economists call the business practice of selling the same good at difference prices to different customers?

Accepted Answer

A)  price discrimination 
B)  collusion 
C)  compensating differential 
D)  Both a and b are correct 
A)  price discrimination 
B)  collusion 
C)  compensating differential 
D)  Both a and b are correct

Question 19

Explain how a profit-maximizing monopolist chooses its level of output and the price of its goods.

Accepted Answer

A profit-maximizing monopolist produces

Question 20

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

Accepted Answer

A)  increase the availability of expensive but useful medications. 
B)  increase the overall welfare of society through better health because drug companies continually produce better medications. 
C)  encourage research. 
D)  All of the above are correct. 
A)  increase the availability of expensive but useful medications. 
B)  increase the overall welfare of society through better health because drug companies continually produce better medications. 
C)  encourage research. 
D)  All of the above are correct.

Exam 14: Monopoly

Figure 15-9 -Refer to Figure 15-9. The deadweight loss caused by a profit-maximizing monopoly amounts to

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

For a long while, electricity producers were thought to be a classic example of a natural monopoly. People held this view because

Table 15-3 Consider the following demand and cost information for a monopoly. -Refer to Table 15-3. The marginal revenue of the 2nd unit is

Because many good substitutes exist for a competitive firm's product, the demand curve that it faces is

What are the three main sources of barriers to entry for monopolies?

Comparing firms in perfectly competitive markets to monopoly firms, which results in a deadweight loss?

The supply curve for the monopolist

Which of the following are necessary characteristics of a monopoly? i) The firm is the sole seller of its product. Ii) The firm's product does not have close substitutes. Iii) The firm generates a large economic profit. Iv) The firm is located in a small geographic market.

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

In order for antitrust laws to raise social welfare, the government must

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

The monopolist's profit-maximizing quantity of output is determined by the intersection of which of the following two curves?

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

Table 15-21 Tommy's Tie Company, a monopolist, has the following cost and revenue information. Assume that Tommy's is able to engage in perfect price discrimination. -Refer to Table 15-21. What are Tommy's Ties Company's fixed costs?

Figure 15-19 -Refer to Figure 15-19. If the monopoly firm is not allowed to price discriminate, then the deadweight loss amounts to

What do economists call the business practice of selling the same good at difference prices to different customers?

Explain how a profit-maximizing monopolist chooses its level of output and the price of its goods.

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

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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