Question 1

A common solution to monopoly in European countries is public ownership.

Accepted Answer

A) True 
 B)False

Question 2

Table 15-20
A monopolist faces the following demand curve:
  
-Refer to Table 15-20. If a monopolist faces a constant marginal cost of $2, 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 3

Why might economists prefer private ownership of monopolies over public ownership of monopolies?

Accepted Answer

The private monopolist is governed by th

Question 4

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 5

Monopoly firms have

Accepted Answer

A)  downward-sloping demand curves, so they can sell as much output as they desire at the market price. 
B)  downward-sloping demand curves, so they can sell only the specific price-quantity combinations that lie on the demand curve. 
C)  horizontal demand curves, so they can sell as much output as they desire at the market price. 
D)  horizontal demand curves, so they can sell only a limited quantity of output at each price. 
A)  downward-sloping demand curves, so they can sell as much output as they desire at the market price. 
B)  downward-sloping demand curves, so they can sell only the specific price-quantity combinations that lie on the demand curve. 
C)  horizontal demand curves, so they can sell as much output as they desire at the market price. 
D)  horizontal demand curves, so they can sell only a limited quantity of output at each price.

Question 6

Figure 15-23  
-Refer to Figure 15-23. What type of monopoly is shown in the figure?

Accepted Answer

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

Question 7

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 8

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

Accepted Answer

A)  allow drug companies to charge a price that is equal to their marginal cost. 
B)  discourage new firms from entering the drug market. 
C)  encourage research. 
D)  allow the government to earn patent revenue. 
A)  allow drug companies to charge a price that is equal to their marginal cost. 
B)  discourage new firms from entering the drug market. 
C)  encourage research. 
D)  allow the government to earn patent revenue.

Question 9

Table 15-10
The monopolist faces the following demand curve:
  
-Refer to Table 15-10. If the monopolist has total fixed costs of $40 and a constant marginal cost of $5, how much profit can the firm earn at the profit-maximizing level of output?

Accepted Answer

A)  $128 
B)  $120 
C)  $80 
D)  $8 
A)  $128 
B)  $120 
C)  $80 
D)  $8

Question 10

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 11

Table 15-18
A monopolist faces the following demand curve:
   Suppose marginal cost is constant at $8 per unit.
-Refer to Table 15-18. Suppose the firm depicted in the table is selling a prescription drug for which it had a patent, but the patent has expired. As new firms enter the market and sell the generic version of this drug competitively, what quantity will be sold?

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

For a monopoly firm, the shape and position of the demand curve play a role in determining the i) profit-maximizing price.
Ii) shape and position of the marginal-cost curve.
Iii) shape and position of the marginal-revenue curve.

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 13

For a monopoly firm,

Accepted Answer

A)  price always exceeds average revenue. 
B)  price always exceeds marginal revenue. 
C)  any price-quantity combination will maximize profits. 
D)  All of the above are correct. 
A)  price always exceeds average revenue. 
B)  price always exceeds marginal revenue. 
C)  any price-quantity combination will maximize profits. 
D)  All of the above are correct.

Question 14

Figure 15-2  
-Refer to Figure 15-2. Which of the following reasons describes the fundamental barrier to entry for the monopoly in the figure?

Accepted Answer

A)  monopoly resources 
B)  government regulation 
C)  the production process 
D)  Both a and b are correct. 
A)  monopoly resources 
B)  government regulation 
C)  the production process 
D)  Both a and b are correct.

Question 15

Figure 15-8  
-Refer to Figure 15-8. What is the monopoly price and quantity?

Accepted Answer

A)  price = A; quantity = X 
B)  price = B; quantity = Y 
C)  price = B; quantity = X 
D)  price = C; quantity = X 
A)  price = A; quantity = X 
B)  price = B; quantity = Y 
C)  price = B; quantity = X 
D)  price = C; quantity = X

Question 16

Figure 15-7  
-Refer to Figure 15-7. A profit-maximizing monopolist would earn profits of

Accepted Answer

A)  $96. 
B)  $117. 
C)  $120. 
D)  $126. 
A)  $96. 
B)  $117. 
C)  $120. 
D)  $126.

Question 17

Which of the following is a characteristic of a monopoly?

Accepted Answer

A)  low fixed costs as a portion of total costs 
B)  free entry and exit 
C)  barriers to entry 
D)  declining marginal cost 
A)  low fixed costs as a portion of total costs 
B)  free entry and exit 
C)  barriers to entry 
D)  declining marginal cost

Question 18

Figure 15-15  
-Refer to Figure 15-15. To maximize its profit, a monopolist would choose which of the following outcomes?

Accepted Answer

A)  Q = 30 and P = 30 
B)  Q = 30 and P = 60 
C)  Q = 45 and P = 45 
D)  Q = 60 and P = 30 
A)  Q = 30 and P = 30 
B)  Q = 30 and P = 60 
C)  Q = 45 and P = 45 
D)  Q = 60 and P = 30

Question 19

Scenario 15-11
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 15-11. One of Vincent's friends tells him he would be more profitable if he charged a single price of $18. Assuming no changes in consumer demand, what would Vincent's profit be if he charged every customer $18?

Accepted Answer

The answer of Scenario 15-11
Vincent operates a scenic tour business...

Question 20

A monopoly market is characterized by

Accepted Answer

A)  many buyers and sellers. 
B)  "natural" products. 
C)  barriers to entry. 
D)  a Nash equilibrium. 
A)  many buyers and sellers. 
B)  "natural" products. 
C)  barriers to entry. 
D)  a Nash equilibrium.

Exam 14: Monopoly

A common solution to monopoly in European countries is public ownership.

Table 15-20 A monopolist faces the following demand curve: -Refer to Table 15-20. If a monopolist faces a constant marginal cost of $2, how much output should the firm produce in order to maximize profit?

Why might economists prefer private ownership of monopolies over public ownership of monopolies?

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?

Monopoly firms have

Figure 15-23 -Refer to Figure 15-23. What type of monopoly is shown in the figure?

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

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

Table 15-10 The monopolist faces the following demand curve: -Refer to Table 15-10. If the monopolist has total fixed costs of $40 and a constant marginal cost of $5, how much profit can the firm earn at the profit-maximizing level of output?

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?

For a monopoly firm, the shape and position of the demand curve play a role in determining the i) profit-maximizing price. Ii) shape and position of the marginal-cost curve. Iii) shape and position of the marginal-revenue curve.

For a monopoly firm,

Figure 15-2 -Refer to Figure 15-2. Which of the following reasons describes the fundamental barrier to entry for the monopoly in the figure?

Figure 15-8 -Refer to Figure 15-8. What is the monopoly price and quantity?

Figure 15-7 -Refer to Figure 15-7. A profit-maximizing monopolist would earn profits of

Which of the following is a characteristic of a monopoly?

Figure 15-15 -Refer to Figure 15-15. To maximize its profit, a monopolist would choose which of the following outcomes?

A monopoly market is characterized by

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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