Question 1

Figure 15-11  
-Refer to Figure 15-11. Which area represents the deadweight loss from monopoly?

Accepted Answer

A)  J 
B)  H 
C)  A+B+C+D+F+I+J+H 
D)  J+H 
A)  J 
B)  H 
C)  A+B+C+D+F+I+J+H 
D)  J+H

Question 2

Figure 15-14  
-Refer to Figure 15-14. If the monopoly operates at an output level less than Q0, then an increase in output toward but not exceeding) Q0 would

Accepted Answer

A)  raise the price and raise total surplus. 
B)  lower the price and raise total surplus. 
C)  raise the price and lower total surplus. 
D)  lower the price and lower total surplus. 
A)  raise the price and raise total surplus. 
B)  lower the price and raise total surplus. 
C)  raise the price and lower total surplus. 
D)  lower the price and lower total surplus.

Question 3

If a product can be produced by a natural monopoly, society will benefit in the form of lower prices if the monopolist is broken up into several smaller firms.

Accepted Answer

A) True 
 B)False

Question 4

Government intervention is always preferable to doing nothing when reducing the social inefficiencies of monopoly.

Accepted Answer

A) True 
 B)False

Question 5

Table 15-3
Consider the following demand and cost information for a monopoly.
  
-Refer to Table 15-3. The maximum profit this monopolist can earn is

Accepted Answer

A)  $5. 
B)  $15. 
C)  $16. 
D)  $28. 
A)  $5. 
B)  $15. 
C)  $16. 
D)  $28.

Question 6

Price discrimination is prohibited by antitrust laws.

Accepted Answer

A) True 
 B)False

Question 7

Microsoft faces very little competition from other firms for its Windows software. Why isn't the price of the software $1,000 per copy?

Accepted Answer

A)  because the government would not allow such a high price 
B)  because stockholders would not allow such a high price 
C)  because the company would sell so few copies that they would earn higher profits by selling at a lower price 
D)  All of the above are correct. 
A)  because the government would not allow such a high price 
B)  because stockholders would not allow such a high price 
C)  because the company would sell so few copies that they would earn higher profits by selling at a lower price 
D)  All of the above are correct.

Question 8

Many economists criticize monopolists because they

Accepted Answer

A)  charge a price that equals marginal cost rather than a price that equals average cost. 
B)  do not innovate. 
C)  produce a large quantity of waste. 
D)  produce less than the socially efficient level of output. 
A)  charge a price that equals marginal cost rather than a price that equals average cost. 
B)  do not innovate. 
C)  produce a large quantity of waste. 
D)  produce less than the socially efficient level of output.

Question 9

Average revenue for a monopoly is the total revenue divided by the quantity produced.

Accepted Answer

A) True 
 B)False

Question 10

One solution to the problems of marginal-cost pricing of a regulated natural monopolist is average cost pricing. In this model, the monopolist is allowed to price its production at average total cost. How does average-cost pricing differ from marginal-cost pricing? Does this solution maximize social well-being?

Accepted Answer

Under average-cost pricing, the monopoli

Question 11

A monopolist

Accepted Answer

A)  has a supply curve that is upward-sloping, just like a competitive firm. 
B)  does not have a supply curve because the monopolist sets its price at the same time it chooses the quantity to supply. 
C)  has a horizontal supply curve, just like a competitive firm. 
D)  does not have a supply curve because marginal revenue exceeds the price it charges for its products. 
A)  has a supply curve that is upward-sloping, just like a competitive firm. 
B)  does not have a supply curve because the monopolist sets its price at the same time it chooses the quantity to supply. 
C)  has a horizontal supply curve, just like a competitive firm. 
D)  does not have a supply curve because marginal revenue exceeds the price it charges for its products.

Question 12

In order to sell more of its product, a monopolist must

Accepted Answer

A)  sell to the government. 
B)  sell in international markets. 
C)  lower its price. 
D)  use its market power to force up the price of complementary products. 
A)  sell to the government. 
B)  sell in international markets. 
C)  lower its price. 
D)  use its market power to force up the price of complementary products.

Question 13

Table 15-19
A monopolist faces the following demand curve:
  
-Refer to Table 15-19. If a monopolist faces a constant marginal cost of $1, how much output should the firm produce in order to equate marginal revenue with marginal cost?

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 14

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. If the monopolist can engage in perfect price discrimination, what is the total revenue when 3 ties are sold?

Accepted Answer

A)  $140 
B)  $420 
C)  $450 
D)  $620 
A)  $140 
B)  $420 
C)  $450 
D)  $620

Question 15

Figure 15-22  
-Refer to Figure 15-22. How much profit will this monopolist earn if it charges each consumer the same price?

Accepted Answer

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

Question 16

Figure 15-18  
-Refer to Figure 15-18. If the monopoly firm perfectly price discriminates, then the deadweight loss 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 17

Because a monopolist does not face competition from other firms, the outcome in a market with a monopoly

Accepted Answer

A)  does not illustrate profit maximization. 
B)  is often not in the best interest of society. 
C)  is characterized by unlimited profits. 
D)  would be improved if the government produced the product rather than a private firm. 
A)  does not illustrate profit maximization. 
B)  is often not in the best interest of society. 
C)  is characterized by unlimited profits. 
D)  would be improved if the government produced the product rather than a private firm.

Question 18

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 set the price of each ticket at $150?

Accepted Answer

A)  $75,000 
B)  $100,000 
C)  $150,000 
D)  $175,000 
A)  $75,000 
B)  $100,000 
C)  $150,000 
D)  $175,000

Question 19

A monopoly

Accepted Answer

A)  can set the price it charges for its output and earn unlimited profits. 
B)  takes the market price as given and earns small but positive profits. 
C)  can set the price it charges for its output but faces a downward-sloping demand curve so it cannot earn unlimited profits. 
D)  can set the price it charges for its output but faces a horizontal demand curve so it can earn unlimited profits. 
A)  can set the price it charges for its output and earn unlimited profits. 
B)  takes the market price as given and earns small but positive profits. 
C)  can set the price it charges for its output but faces a downward-sloping demand curve so it cannot earn unlimited profits. 
D)  can set the price it charges for its output but faces a horizontal demand curve so it can earn unlimited profits.

Question 20

Deadweight loss measures the loss in society's welfare that occurs because a monopolist can earn profits without the concern of new firms entering its industry.

Accepted Answer

A) True 
 B)False

Exam 14: Monopoly

Figure 15-11 -Refer to Figure 15-11. Which area represents the deadweight loss from monopoly?

Figure 15-14 -Refer to Figure 15-14. If the monopoly operates at an output level less than Q0, then an increase in output toward but not exceeding) Q0 would

If a product can be produced by a natural monopoly, society will benefit in the form of lower prices if the monopolist is broken up into several smaller firms.

Government intervention is always preferable to doing nothing when reducing the social inefficiencies of monopoly.

Table 15-3 Consider the following demand and cost information for a monopoly. -Refer to Table 15-3. The maximum profit this monopolist can earn is

Price discrimination is prohibited by antitrust laws.

Microsoft faces very little competition from other firms for its Windows software. Why isn't the price of the software $1,000 per copy?

Many economists criticize monopolists because they

Average revenue for a monopoly is the total revenue divided by the quantity produced.

A monopolist

In order to sell more of its product, a monopolist must

Table 15-19 A monopolist faces the following demand curve: -Refer to Table 15-19. If a monopolist faces a constant marginal cost of $1, how much output should the firm produce in order to equate marginal revenue with marginal cost?

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. If the monopolist can engage in perfect price discrimination, what is the total revenue when 3 ties are sold?

Figure 15-22 -Refer to Figure 15-22. How much profit will this monopolist earn if it charges each consumer the same price?

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

Because a monopolist does not face competition from other firms, the outcome in a market with a monopoly

A monopoly

Deadweight loss measures the loss in society's welfare that occurs because a monopolist can earn profits without the concern of new firms entering its industry.

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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