Question 1

Table 15-4
A monopolist faces the following demand curve:
  
-Refer to Table 15-4. If the monopolist produces 10 units, what is its average revenue?

Accepted Answer

A)  $100 
B)  $15 
C)  $10 
D)  $1 
A)  $100 
B)  $15 
C)  $10 
D)  $1

Question 2

Price discrimination is a rational strategy for a profit-maximizing monopolist when

Accepted Answer

A)  the monopolist finds itself able to produce only limited quantities of output. 
B)  consumers are unable to be segmented into identifiable markets. 
C)  the monopolist wishes to increase the deadweight loss that results from profit-maximizing behavior. 
D)  there is no opportunity for arbitrage across market segments. 
A)  the monopolist finds itself able to produce only limited quantities of output. 
B)  consumers are unable to be segmented into identifiable markets. 
C)  the monopolist wishes to increase the deadweight loss that results from profit-maximizing behavior. 
D)  there is no opportunity for arbitrage across market segments.

Question 3

In reality, perfect price discrimination is

Accepted Answer

A)  used by about 75 percent of all monopolies. 
B)  used by about 50 percent of all monopolies. 
C)  seldom used by monopolies because it leads to lower profits. 
D)  rarely possible. 
A)  used by about 75 percent of all monopolies. 
B)  used by about 50 percent of all monopolies. 
C)  seldom used by monopolies because it leads to lower profits. 
D)  rarely possible.

Question 4

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 profit will the concert promoters earn if they engage in price discrimination?

Accepted Answer

A)  $100,000 
B)  $125,000 
C)  $150,000 
D)  $175,000 
A)  $100,000 
B)  $125,000 
C)  $150,000 
D)  $175,000

Question 5

If a monopolist is able to perfectly price discriminate,

Accepted Answer

A)  consumer surplus is always increased. 
B)  total surplus is always decreased. 
C)  consumer surplus and deadweight losses are transformed into monopoly profits. 
D)  the price effect dominates the output effect on monopoly revenue. 
A)  consumer surplus is always increased. 
B)  total surplus is always decreased. 
C)  consumer surplus and deadweight losses are transformed into monopoly profits. 
D)  the price effect dominates the output effect on monopoly revenue.

Question 6

Antitrust laws allow the government to

Accepted Answer

A)  collect revenues through the antitrust tax. 
B)  break up companies. 
C)  purchase privately-held companies through eminent domain. 
D)  All of the above are correct. 
A)  collect revenues through the antitrust tax. 
B)  break up companies. 
C)  purchase privately-held companies through eminent domain. 
D)  All of the above are correct.

Question 7

Some companies merge in order to lower costs through efficient joint production.

Accepted Answer

A) True 
 B)False

Question 8

Figure 15-4  
-Refer to Figure 15-4. If the monopoly firm is currently producing Q3 units of output, then a decrease in output will necessarily cause profit to

Accepted Answer

A)  remain unchanged. 
B)  decrease. 
C)  increase as long as the new level of output is at least Q2. 
D)  increase as long as the new level of output is at least Q1. 
A)  remain unchanged. 
B)  decrease. 
C)  increase as long as the new level of output is at least Q2. 
D)  increase as long as the new level of output is at least Q1.

Question 9

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

Accepted Answer

A)  promote a society in which people think for themselves and learn from whichever books they please. 
B)  correct for the negative externalities that the Internet and television impose. 
C)  satisfy literary advocacy groups that exercise their lobbying power. 
D)  None of the above is correct. 
A)  promote a society in which people think for themselves and learn from whichever books they please. 
B)  correct for the negative externalities that the Internet and television impose. 
C)  satisfy literary advocacy groups that exercise their lobbying power. 
D)  None of the above is correct.

Question 10

Give some examples of the benefits and costs of antitrust laws.

Accepted Answer

Benefits include promoting com

Question 11

Figure 15-4  
-Refer to Figure 15-4. The marginal revenue curve for a monopoly firm is depicted by curve

Accepted Answer

A)  A. 
B)  B. 
C)  C. 
D)  D. 
A)  A. 
B)  B. 
C)  C. 
D)  D.

Question 12

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

Accepted Answer

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

Question 13

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 sets the price of each ticket at $300?

Accepted Answer

A)  -$15,000 
B)  -$5,000 
C)  $25,000 
D)  $45,000 
A)  -$15,000 
B)  -$5,000 
C)  $25,000 
D)  $45,000

Question 14

Competitive firms differ from monopolies in which of the following ways? i) Competitive firms do not have to worry about the price effect lowering their total revenue.
Ii) Marginal revenue for a competitive firm equals price, while marginal revenue for a monopoly is less than the price it is able to charge.
Iii) Monopolies must lower their price in order to sell more of their product, while competitive firms do not.

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 15

Table 15-4
A monopolist faces the following demand curve:
  
-Refer to Table 15-4. If the monopolist produces 5 units, what is its average revenue?

Accepted Answer

A)  $100 
B)  $20 
C)  $5 
D)  $4 
A)  $100 
B)  $20 
C)  $5 
D)  $4

Question 16

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, what is the profit-maximizing level of output?

Accepted Answer

A)  7 units 
B)  16 units 
C)  23 units 
D)  31 units 
A)  7 units 
B)  16 units 
C)  23 units 
D)  31 units

Question 17

Reduced competition through merging of companies will raise social welfare

Accepted Answer

A)  if the social cost from the synergies exceeds the benefit of increased market power. 
B)  if the benefit from the synergies exceeds the social cost of increased market power. 
C)  always. 
D)  never. 
A)  if the social cost from the synergies exceeds the benefit of increased market power. 
B)  if the benefit from the synergies exceeds the social cost of increased market power. 
C)  always. 
D)  never.

Question 18

A monopolist produces where P = MC = MR.

Accepted Answer

A) True 
 B)False

Question 19

Allowing an inventor to have the exclusive rights to market her new invention will lead to i) a product that is priced higher than it would be without the exclusive rights.
Ii) desirable behavior in the sense that inventors are encouraged to invent.
Iii) higher profits for the inventor.

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 20

The deadweight loss associated with a monopoly occurs because the monopolist

Accepted Answer

A)  maximizes profits. 
B)  produces an output level less than the socially optimal level. 
C)  produces an output level greater than the socially optimal level. 
D)  equates marginal revenue with marginal cost. 
A)  maximizes profits. 
B)  produces an output level less than the socially optimal level. 
C)  produces an output level greater than the socially optimal level. 
D)  equates marginal revenue with marginal cost.

Exam 14: Monopoly

Table 15-4 A monopolist faces the following demand curve: -Refer to Table 15-4. If the monopolist produces 10 units, what is its average revenue?

Price discrimination is a rational strategy for a profit-maximizing monopolist when

In reality, perfect price discrimination is

If a monopolist is able to perfectly price discriminate,

Antitrust laws allow the government to

Some companies merge in order to lower costs through efficient joint production.

Figure 15-4 -Refer to Figure 15-4. If the monopoly firm is currently producing Q3 units of output, then a decrease in output will necessarily cause profit to

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

Give some examples of the benefits and costs of antitrust laws.

Figure 15-4 -Refer to Figure 15-4. The marginal revenue curve for a monopoly firm is depicted by curve

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

Table 15-4 A monopolist faces the following demand curve: -Refer to Table 15-4. If the monopolist produces 5 units, what is its average revenue?

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, what is the profit-maximizing level of output?

Reduced competition through merging of companies will raise social welfare

A monopolist produces where P = MC = MR.

Allowing an inventor to have the exclusive rights to market her new invention will lead to i) a product that is priced higher than it would be without the exclusive rights. Ii) desirable behavior in the sense that inventors are encouraged to invent. Iii) higher profits for the inventor.

The deadweight loss associated with a monopoly occurs because the monopolist

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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