Question 1

Table 15-18
A monopolist faces the following demand curve:
   Suppose marginal cost is constant at $8 per unit.
-Refer to Table 15-18 The monopolist's profit­maximizing level of output is

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 2

In a market characterized by monopoly, the market demand curve is

Accepted Answer

A)  upward sloping. 
B)  horizontal. 
C)  downward sloping. 
D)  vertical. 
A)  upward sloping. 
B)  horizontal. 
C)  downward sloping. 
D)  vertical.

Question 3

The amount of power that a monopoly has depends on whether there are close substitutes for its product.

Accepted Answer

A) True 
 B)False

Question 4

Figure 15-6  
-Refer to Figure 15-6. How much output will the monopolist produce?

Accepted Answer

A)  O 
B)  T 
C)  W 
D)  Z 
A)  O 
B)  T 
C)  W 
D)  Z

Question 5

When a monopolist reduces the quantity of output it produces and sells, the

Accepted Answer

A)  price of its output increases. 
B)  price of its output remains constant. 
C)  price of its output decreases. 
D)  profits for the firm always decrease. 
A)  price of its output increases. 
B)  price of its output remains constant. 
C)  price of its output decreases. 
D)  profits for the firm always decrease.

Question 6

Which of the following is a characteristic of a natural monopoly?

Accepted Answer

A)  Average cost exceeds marginal cost over large regions of output. 
B)  Increasing the number of firms increases each firm's average total cost. 
C)  One firm can supply output at a lower cost than two firms. 
D)  All of the above are correct. 
A)  Average cost exceeds marginal cost over large regions of output. 
B)  Increasing the number of firms increases each firm's average total cost. 
C)  One firm can supply output at a lower cost than two firms. 
D)  All of the above are correct.

Question 7

Figure 15-24  
-Refer to Figure 15-24. If this firm were able to perfectly price discriminate, which letter represents the amount of output it would produce?

Accepted Answer

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

Question 8

Which of the following is not correct?

Accepted Answer

A)  Antitrust laws may prevent mergers that would actually raise social welfare. 
B)  Public ownership is the most common public policy toward monopolies in the United States. 
C)  Regulation is a common strategy for a natural monopoly. 
D)  Sometimes the best public policy toward a monopoly may be to do nothing. 
A)  Antitrust laws may prevent mergers that would actually raise social welfare. 
B)  Public ownership is the most common public policy toward monopolies in the United States. 
C)  Regulation is a common strategy for a natural monopoly. 
D)  Sometimes the best public policy toward a monopoly may be to do nothing.

Question 9

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 $12. Assuming no changes in consumer demand, what would Vincent's profit be if he charged every customer $12?

Accepted Answer

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

Question 10

Scenario 15-10
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 15-10. What is Vincent's total revenue on a typical day?

Accepted Answer

A)  $1,500 
B)  $1,800 
C)  $2,170 
D)  $2,700 
A)  $1,500 
B)  $1,800 
C)  $2,170 
D)  $2,700

Question 11

Figure 15-3  
-Refer to Figure 15-3. Which of the following statements is correct?

Accepted Answer

A)  Panel B represents the typical demand curve for a perfectly competitive industry. 
B)  Panel A represents the typical demand curve for a monopoly. 
C)  Panel C represents the typical demand curve for a perfectly competitive firm. 
D)  All of the above are correct. 
A)  Panel B represents the typical demand curve for a perfectly competitive industry. 
B)  Panel A represents the typical demand curve for a monopoly. 
C)  Panel C represents the typical demand curve for a perfectly competitive firm. 
D)  All of the above are correct.

Question 12

Which of the following governmental actions would eliminate some or all of the inefficiency that results from monopoly pricing? The government could

Accepted Answer

A)  regulate the monopoly. 
B)  prohibited the monopoly from price discriminating. 
C)  force the monopoly to operate at a point where its marginal revenue is equal to its marginal cost. 
D)  None of the above would eliminate any inefficiency associated with a monopoly. 
A)  regulate the monopoly. 
B)  prohibited the monopoly from price discriminating. 
C)  force the monopoly to operate at a point where its marginal revenue is equal to its marginal cost. 
D)  None of the above would eliminate any inefficiency associated with a monopoly.

Question 13

Figure 15-18  
-Refer to Figure 15-18. If there are no fixed costs of production, monopoly profit with perfect price discrimination equals

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 14

A monopolist's average revenue is always

Accepted Answer

A)  equal to marginal revenue. 
B)  greater than the price of its product. 
C)  equal to the price of its product. 
D)  less than the price of its product. 
A)  equal to marginal revenue. 
B)  greater than the price of its product. 
C)  equal to the price of its product. 
D)  less than the price of its product.

Question 15

Scenario 15-1
Consider a transportation corporation named Reading's that has just completed the development of a new light rail system in Minneapolis. Currently, there are plenty of seats on the train, and it is never crowded. Its capacity far exceeds the needs of the city. After just a few years of operation, the shareholders of Reading's experienced incredibly high rates of return on their investment due to the profitability of the corporation.
-Refer to Scenario 15-1. Which of the following statements is most likely to be true? i) New entrants to the market know they will have a smaller market share than Reading's
Currently has.
Ii) Reading's is a natural monopoly.
Iii) Reading's is most likely experiencing increasing average total cost.

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 16

Perfect price discrimination

Accepted Answer

A)  eliminates deadweight loss. 
B)  reduces profits to the monopolist. 
C)  decreases the total quantity sold by the monopolist. 
D)  requires arbitrage in order for the monopolist to maximize profits. 
A)  eliminates deadweight loss. 
B)  reduces profits to the monopolist. 
C)  decreases the total quantity sold by the monopolist. 
D)  requires arbitrage in order for the monopolist to maximize profits.

Question 17

Patents, copyrights, and trademarks

Accepted Answer

A)  are examples of government-created monopolies. 
B)  allow their owners to reduce the costs of what they produce. 
C)  generate more revenue for the government than they cost consumers in the form of higher prices. 
D)  All of the above are correct. 
A)  are examples of government-created monopolies. 
B)  allow their owners to reduce the costs of what they produce. 
C)  generate more revenue for the government than they cost consumers in the form of higher prices. 
D)  All of the above are correct.

Question 18

Some prescription drugs sell for more in the United States than they do in other countries. Which of the following statements about this issue is most likely to be true?

Accepted Answer

A)  Drug companies are engaging in price discrimination, and this practice certainly reduces global social welfare. 
B)  Global social welfare could be improved if the price in the United States were reduced to the price charged in other countries. 
C)  Global social welfare could be improved if the price in the other countries were increased to the price charged in the United States. 
D)  Drug companies are engaging in price discrimination, but this might improve global social welfare if it gives more people access to the drugs. 
A)  Drug companies are engaging in price discrimination, and this practice certainly reduces global social welfare. 
B)  Global social welfare could be improved if the price in the United States were reduced to the price charged in other countries. 
C)  Global social welfare could be improved if the price in the other countries were increased to the price charged in the United States. 
D)  Drug companies are engaging in price discrimination, but this might improve global social welfare if it gives more people access to the drugs.

Question 19

One method used to control the ability of firms to capture monopoly profit in the United States is through

Accepted Answer

A)  government purchase of products produced by monopolists. 
B)  government distribution of a monopolist's excess production. 
C)  enforcement of antitrust laws. 
D)  regulation of firms in highly competitive markets. 
A)  government purchase of products produced by monopolists. 
B)  government distribution of a monopolist's excess production. 
C)  enforcement of antitrust laws. 
D)  regulation of firms in highly competitive markets.

Question 20

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 average revenue when Sally sells 7 pairs of shoes?

Accepted Answer

A)  $40 
B)  $90 
C)  $100 
D)  $700 
A)  $40 
B)  $90 
C)  $100 
D)  $700

Exam 14: Monopoly

Table 15-18 A monopolist faces the following demand curve: Suppose marginal cost is constant at $8 per unit. -Refer to Table 15-18 The monopolist's profit­maximizing level of output is

In a market characterized by monopoly, the market demand curve is

The amount of power that a monopoly has depends on whether there are close substitutes for its product.

Figure 15-6 -Refer to Figure 15-6. How much output will the monopolist produce?

When a monopolist reduces the quantity of output it produces and sells, the

Which of the following is a characteristic of a natural monopoly?

Figure 15-24 -Refer to Figure 15-24. If this firm were able to perfectly price discriminate, which letter represents the amount of output it would produce?

Which of the following is not correct?

Figure 15-3 -Refer to Figure 15-3. Which of the following statements is correct?

Which of the following governmental actions would eliminate some or all of the inefficiency that results from monopoly pricing? The government could

Figure 15-18 -Refer to Figure 15-18. If there are no fixed costs of production, monopoly profit with perfect price discrimination equals

A monopolist's average revenue is always

Perfect price discrimination

Patents, copyrights, and trademarks

Some prescription drugs sell for more in the United States than they do in other countries. Which of the following statements about this issue is most likely to be true?

One method used to control the ability of firms to capture monopoly profit in the United States is through

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 average revenue when Sally sells 7 pairs of shoes?

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

Filters

Table 15-18 A monopolist faces the following demand curve: Suppose marginal cost is constant at $8 per unit. -Refer to Table 15-18 The monopolist's profitmaximizing level of output is