Question 1

Generic drugs enter the pharmaceutical drug market once

Accepted Answer

A)  the ingredients to the name brand drug have been discovered. 
B)  10 years have passed. 
C)  they are patented. 
D)  the patent on the name brand drug expires. 
A)  the ingredients to the name brand drug have been discovered. 
B)  10 years have passed. 
C)  they are patented. 
D)  the patent on the name brand drug expires.

Question 2

Antitrust laws have economic benefits that outweigh the costs if they

Accepted Answer

A)  prevent mergers that would decrease competition and lower the costs of production. 
B)  prevent mergers that would decrease competition and raise the costs of production. 
C)  allow mergers that would decrease competition and raise the costs of production. 
D)  None of the above is correct because antitrust laws never have economic benefits that outweigh the costs. 
A)  prevent mergers that would decrease competition and lower the costs of production. 
B)  prevent mergers that would decrease competition and raise the costs of production. 
C)  allow mergers that would decrease competition and raise the costs of production. 
D)  None of the above is correct because antitrust laws never have economic benefits that outweigh the costs.

Question 3

For a profit-maximizing monopolist,

Accepted Answer

A) P > MR = MC. B) P = MR = MC. C) P > MR > MC. D) MR < MC < P. A) P > MR = MC. B) P = MR = MC. C) P > MR > MC. D) MR < MC < P.

Question 4

Many movie theaters allow discount tickets to be sold to senior citizens because

Accepted Answer

A)  senior-citizen laws mandate such discounts. 
B)  goodwill efforts earn community respect and win loyal patrons. 
C)  the theaters are profit maximizers. 
D)  senior citizens lobby city councils for lower prices. 
A)  senior-citizen laws mandate such discounts. 
B)  goodwill efforts earn community respect and win loyal patrons. 
C)  the theaters are profit maximizers. 
D)  senior citizens lobby city councils for lower prices.

Question 5

Table 15-6
A monopolist faces the following demand curve:
  
-Refer to Table 15-6. Suppose the monopolist has total fixed costs equal to $5 and a variable cost equal to $4 per unit for all units produced. What would the total profit be if she charged $6 per unit for her product?

Accepted Answer

A)  $1 
B)  $3 
C)  $8 
D)  $15 
A)  $1 
B)  $3 
C)  $8 
D)  $15

Question 6

Because a monopolist must lower its price in order to sell another unit of output,

Accepted Answer

A)  marginal revenue is less than price. 
B)  long-term economic profits will be zero. 
C)  total revenue increases as price increases. 
D)  average revenue is less than price. 
A)  marginal revenue is less than price. 
B)  long-term economic profits will be zero. 
C)  total revenue increases as price increases. 
D)  average revenue is less than price.

Question 7

Figure 15-24  
-Refer to Figure 15-24. Which letter represents the profit-maximizing quantity chosen by the single price monopolist?

Accepted Answer

The answer of Figure 15-24  
-Refer to Figure 15-24....

Question 8

Table 15-20
A monopolist faces the following demand curve:
  
-Refer to Table 15-20. If a monopolist faces a constant marginal cost of $5, how much output should the firm produce in order to maximize 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 9

Which of the following formulas would correctly calculate a monopolist's profit?

Accepted Answer

A)  profit = price - marginal cost 
B)  profit = price - average total cost 
C)  profit = price - marginal cost) × quantity 
D)  profit = price - average total cost) × quantity 
A)  profit = price - marginal cost 
B)  profit = price - average total cost 
C)  profit = price - marginal cost) × quantity 
D)  profit = price - average total cost) × quantity

Question 10

One problem with regulating a monopolist on the basis of cost is that

Accepted Answer

A)  by focusing on costs, the regulators ignore profits. 
B)  it does not provide an incentive for the monopolist to reduce its cost. 
C)  a monopolist's costs, by definition, are higher than costs of perfectly competitive firms. 
D)  a monopolist is still able to generate excessive economic profits. 
A)  by focusing on costs, the regulators ignore profits. 
B)  it does not provide an incentive for the monopolist to reduce its cost. 
C)  a monopolist's costs, by definition, are higher than costs of perfectly competitive firms. 
D)  a monopolist is still able to generate excessive economic profits.

Question 11

A market structure with barriers to entry is

Accepted Answer

A)  a monopoly. 
B)  oligopolistically competitive. 
C)  monopolistically competitive. 
D)  perfectly competitive. 
A)  a monopoly. 
B)  oligopolistically competitive. 
C)  monopolistically competitive. 
D)  perfectly competitive.

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

The difference in total surplus between the socially efficient level of production and the monopolist's level of production is

Accepted Answer

A)  offset by regulatory revenues. 
B)  called a deadweight loss. 
C)  equal to the monopolist's profit. 
D)  Both b and c are correct. 
A)  offset by regulatory revenues. 
B)  called a deadweight loss. 
C)  equal to the monopolist's profit. 
D)  Both b and c are correct.

Question 14

Antitrust laws give the Justice Department the authority to challenge potential mergers between companies in an effort to safeguard society from monopoly power.

Accepted Answer

A) True 
 B)False

Question 15

If the monopolist's linear demand curve intersects the quantity axis at Q = 30, then the monopolist's marginal revenue will be equal to zero at

Accepted Answer

A)  Q = 10. 
B)  Q = 15. 
C)  Q = 20. 
D)  Q = 30. 
A)  Q = 10. 
B)  Q = 15. 
C)  Q = 20. 
D)  Q = 30.

Question 16

Consider a profit-maximizing monopoly pricing under the following conditions. The profit-maximizing price charged for goods produced is $12.The intersection of the marginal revenue and marginal cost curves occurs where output is 10 units and marginal cost is $6. The socially efficient level of production is 12 units. The demand curve and marginal cost curves are linear. What is the value of the deadweight loss created by the monopolist?

Accepted Answer

A)  $4 
B)  $6 
C)  $12 
D)  $16 
A)  $4 
B)  $6 
C)  $12 
D)  $16

Question 17

Table 15-7
Sally owns the only shoe store in town. She has the following cost and revenue information.
  
-Refer to Table 15-7. What is the total revenue from selling 8 pairs of shoes?

Accepted Answer

A)  $90 
B)  $695 
C)  $720 
D)  $800 
A)  $90 
B)  $695 
C)  $720 
D)  $800

Question 18

When a certain monopoly sets its price at $8 it sells 64 units. When the monopoly sets its price at $10 it sells 62 units. The marginal revenue for the firm over this range is

Accepted Answer

A)  $22. 
B)  $27. 
C)  $54. 
D)  $108. 
A)  $22. 
B)  $27. 
C)  $54. 
D)  $108.

Question 19

Figure 15-20  
-Refer to Figure 15-20. The deadweight loss caused by a profit-maximizing monopoly amounts to

Accepted Answer

A)  $225. 
B)  $450. 
C)  $900. 
D)  $1,350. 
A)  $225. 
B)  $450. 
C)  $900. 
D)  $1,350.

Question 20

The marginal revenue curve for a monopoly firm starts at the same point on the vertical axis as the i) average revenue curve.
Ii) marginal cost curve.
Iii) demand curve.

Accepted Answer

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

Exam 14: Monopoly

Generic drugs enter the pharmaceutical drug market once

Antitrust laws have economic benefits that outweigh the costs if they

For a profit-maximizing monopolist,

Many movie theaters allow discount tickets to be sold to senior citizens because

Table 15-6 A monopolist faces the following demand curve: -Refer to Table 15-6. Suppose the monopolist has total fixed costs equal to $5 and a variable cost equal to $4 per unit for all units produced. What would the total profit be if she charged $6 per unit for her product?

Because a monopolist must lower its price in order to sell another unit of output,

Figure 15-24 -Refer to Figure 15-24. Which letter represents the profit-maximizing quantity chosen by the single price monopolist?

Table 15-20 A monopolist faces the following demand curve: -Refer to Table 15-20. If a monopolist faces a constant marginal cost of $5, how much output should the firm produce in order to maximize profit?

Which of the following formulas would correctly calculate a monopolist's profit?

One problem with regulating a monopolist on the basis of cost is that

A market structure with barriers to entry is

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

The difference in total surplus between the socially efficient level of production and the monopolist's level of production is

Antitrust laws give the Justice Department the authority to challenge potential mergers between companies in an effort to safeguard society from monopoly power.

If the monopolist's linear demand curve intersects the quantity axis at Q = 30, then the monopolist's marginal revenue will be equal to zero at

Table 15-7 Sally owns the only shoe store in town. She has the following cost and revenue information. -Refer to Table 15-7. What is the total revenue from selling 8 pairs of shoes?

When a certain monopoly sets its price at $8 it sells 64 units. When the monopoly sets its price at $10 it sells 62 units. The marginal revenue for the firm over this range is

Figure 15-20 -Refer to Figure 15-20. The deadweight loss caused by a profit-maximizing monopoly amounts to

The marginal revenue curve for a monopoly firm starts at the same point on the vertical axis as the i) average revenue curve. Ii) marginal cost curve. Iii) demand curve.

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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