Question 1

When a firm operates under conditions of monopoly, its price is

Accepted Answer

A)  not constrained. 
B)  constrained by marginal cost. 
C)  constrained by demand. 
D)  constrained only by its social agenda. 
A)  not constrained. 
B)  constrained by marginal cost. 
C)  constrained by demand. 
D)  constrained only by its social agenda.

Question 2

Which of the following is not an example of a barrier to entry?

Accepted Answer

A)  A soybean farmer is the first in her county to use a new brand of fertilizer. 
B)  Microsoft obtains a copyright for its Windows operating system. 
C)  A pharmaceutical company obtains a patent for a new medication to treat migraine headaches. 
D)  A taxi cab driver in New York City obtains a license to legally provide transportation in New York City. 
A)  A soybean farmer is the first in her county to use a new brand of fertilizer. 
B)  Microsoft obtains a copyright for its Windows operating system. 
C)  A pharmaceutical company obtains a patent for a new medication to treat migraine headaches. 
D)  A taxi cab driver in New York City obtains a license to legally provide transportation in New York City.

Question 3

Table 15-9
Consider the following demand and cost information for a monopoly.
  
-Refer to Table 15-9. What price should the monopoly charge to maximize profit?

Accepted Answer

A)  $16 
B)  $20 
C)  $24 
D)  $28 
A)  $16 
B)  $20 
C)  $24 
D)  $28

Question 4

For a monopoly, marginal revenue is often greater than the price it charges for its good.

Accepted Answer

A) True 
 B)False

Question 5

When an industry is a natural monopoly,

Accepted Answer

A)  it is characterized by constant returns to scale. 
B)  it is characterized by diseconomies of scale. 
C)  a larger number of firms may lead to a lower average cost. 
D)  a larger number of firms will lead to a higher average cost. 
A)  it is characterized by constant returns to scale. 
B)  it is characterized by diseconomies of scale. 
C)  a larger number of firms may lead to a lower average cost. 
D)  a larger number of firms will lead to a higher average cost.

Question 6

The socially efficient quantity is found where the demand curve intersects the marginal cost curve.

Accepted Answer

A) True 
 B)False

Question 7

For a monopoly, the level of output at which marginal revenue equals zero is also the level of output at which

Accepted Answer

A)  average revenue is zero. 
B)  profit is maximized. 
C)  total revenue is maximized. 
D)  marginal cost is zero. 
A)  average revenue is zero. 
B)  profit is maximized. 
C)  total revenue is maximized. 
D)  marginal cost is zero.

Question 8

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 quantity that maximizes economic profit?

Accepted Answer

A)  5 ties 
B)  6 ties 
C)  7 ties 
D)  8 ties 
A)  5 ties 
B)  6 ties 
C)  7 ties 
D)  8 ties

Question 9

A monopolist's supply curve is vertical.

Accepted Answer

A) True 
 B)False

Question 10

Figure 15-24  
-Refer to Figure 15-24. Use the letters in the figure to identify the profit area if this firm were able to perfectly price discriminate.

Accepted Answer

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

Question 11

Scenario 15-9
Suppose executives at an art museum know that 100 adults are willing to pay $12 for admission to the museum on a weekday. Suppose the executives also know that 200 students are willing to pay $8 for admission on a weekday. The cost of operating the museum on a weekday is $2,000.
-Refer to Scenario 15-9. How much profit will the museum earn if it charges all customers $8 for admission?

Accepted Answer

A)  $200 
B)  $400 
C)  $800 
D)  $2,400 
A)  $200 
B)  $400 
C)  $800 
D)  $2,400

Question 12

In a natural monopoly,

Accepted Answer

A)  society would be better off if antitrust laws were used to create many different firms in the market. 
B)  the marginal cost curve is positively sloped. 
C)  if the government requires marginal cost pricing, it will likely have to subsidize the firm. 
D)  the marginal revenue curve is horizontal. 
A)  society would be better off if antitrust laws were used to create many different firms in the market. 
B)  the marginal cost curve is positively sloped. 
C)  if the government requires marginal cost pricing, it will likely have to subsidize the firm. 
D)  the marginal revenue curve is horizontal.

Question 13

Figure 15-22  
-Refer to Figure 15-22. Which is more efficient, single price profit maximization or perfect price discrimination?

Accepted Answer

perfect pr

Question 14

Which of the following is an example of a barrier to entry? i) A key resource is owned by a single firm.
Ii) The costs of production make a single producer more efficient than a large number of producers.
Iii) The government has given the existing monopolist the exclusive right to produce the good.

Accepted Answer

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

Question 15

When there are economies of scale over the relevant range of output for a monopoly, the monopoly

Accepted Answer

A)  is a natural monopoly. 
B)  is a government-granted monopoly. 
C)  has monopoly power due to the ownership of a patent or copyright. 
D)  has monopoly power due to the ownership of a key production resource. 
A)  is a natural monopoly. 
B)  is a government-granted monopoly. 
C)  has monopoly power due to the ownership of a patent or copyright. 
D)  has monopoly power due to the ownership of a key production resource.

Question 16

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 is the profit-maximizing price?

Accepted Answer

A)  $6 
B)  $9 
C)  $12 
D)  $15 
A)  $6 
B)  $9 
C)  $12 
D)  $15

Question 17

Assume that a monopolist decides to maximize revenue rather than profit. How does this operating objective change the size of the deadweight loss? If you are a "benevolent" manager of a monopoly firm and are interested in reducing the deadweight loss of monopoly, should you maximize profits or maximize revenue? Explain your answer.

Accepted Answer

A revenue maximizer operates where MR =

Question 18

When a single firm can supply a good or service to an entire market at a lower cost than could two or more firms, the industry is known as a

Accepted Answer

The answer of When a single firm can supply a...

Question 19

Table 15-19
A monopolist faces the following demand curve:
  
-Refer to Table 15-19. If a monopolist faces a constant marginal cost of $3, how much output should the firm produce?

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 20

Figure 15-4  
-Refer to Figure 15-4. The marginal cost 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.

Exam 14: Monopoly

When a firm operates under conditions of monopoly, its price is

Which of the following is not an example of a barrier to entry?

Table 15-9 Consider the following demand and cost information for a monopoly. -Refer to Table 15-9. What price should the monopoly charge to maximize profit?

For a monopoly, marginal revenue is often greater than the price it charges for its good.

When an industry is a natural monopoly,

The socially efficient quantity is found where the demand curve intersects the marginal cost curve.

For a monopoly, the level of output at which marginal revenue equals zero is also the level of output at which

A monopolist's supply curve is vertical.

Figure 15-24 -Refer to Figure 15-24. Use the letters in the figure to identify the profit area if this firm were able to perfectly price discriminate.

In a natural monopoly,

Figure 15-22 -Refer to Figure 15-22. Which is more efficient, single price profit maximization or perfect price discrimination?

Which of the following is an example of a barrier to entry? i) A key resource is owned by a single firm. Ii) The costs of production make a single producer more efficient than a large number of producers. Iii) The government has given the existing monopolist the exclusive right to produce the good.

When there are economies of scale over the relevant range of output for a monopoly, the monopoly

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 is the profit-maximizing price?

When a single firm can supply a good or service to an entire market at a lower cost than could two or more firms, the industry is known as a

Table 15-19 A monopolist faces the following demand curve: -Refer to Table 15-19. If a monopolist faces a constant marginal cost of $3, how much output should the firm produce?

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