Question 1

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

Accepted Answer

A)  Mighty Mitch's Mining Company owns a unique plot of land in Tanzania, under which lies the only large deposit of Tanzanite in the world. 
B)  A chemist receives a patent for a new skin cream. 
C)  An entrepreneur opens a cupcake bakery. 
D)  A taxi cab driver in New York City obtains a license to legally provide transportation in New York City. 
A)  Mighty Mitch's Mining Company owns a unique plot of land in Tanzania, under which lies the only large deposit of Tanzanite in the world. 
B)  A chemist receives a patent for a new skin cream. 
C)  An entrepreneur opens a cupcake bakery. 
D)  A taxi cab driver in New York City obtains a license to legally provide transportation in New York City.

Question 2

Figure 15-7  
-Refer to Figure 15-7. A profit-maximizing monopolist would incur total costs of

Accepted Answer

A)  $81. 
B)  $120. 
C)  $144. 
D)  $240. 
A)  $81. 
B)  $120. 
C)  $144. 
D)  $240.

Question 3

Antitrust laws allow the government to

Accepted Answer

A)  prevent mergers. 
B)  break up companies. 
C)  promote competition. 
D)  All of the above are correct. 
A)  prevent mergers. 
B)  break up companies. 
C)  promote competition. 
D)  All of the above are correct.

Question 4

The fundamental cause of monopolies is barriers to entry.

Accepted Answer

A) True 
 B)False

Question 5

The De Beers Diamond company is not worried about differentiating its product from all other gemstones.

Accepted Answer

A) True 
 B)False

Question 6

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 are Sally's fixed costs?

Accepted Answer

A)  $0 
B)  $100 
C)  $600 
D)  $745 
A)  $0 
B)  $100 
C)  $600 
D)  $745

Question 7

A monopolist will choose to increase output when

Accepted Answer

A)  market price increases. 
B)  at all levels of output, marginal cost increases. 
C)  at the present level of output, marginal revenue exceeds marginal cost. 
D)  the demand curve shifts to the left. 
A)  market price increases. 
B)  at all levels of output, marginal cost increases. 
C)  at the present level of output, marginal revenue exceeds marginal cost. 
D)  the demand curve shifts to the left.

Question 8

Figure 15-24  
-Refer to Figure 15-24. Use the letters in the figure to identify the area of deadweight loss for the single price monopolist.

Accepted Answer

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

Question 9

Table 15-17
A monopolist faces the following demand curve:
  
-Refer to Table 15-17. If the marginal cost of production is constant at $18 per unit, this profit-maximizing monopolist will choose to produce

Accepted Answer

A)  20 units. 
B)  30 units. 
C)  40 units. 
D)  50 units. 
A)  20 units. 
B)  30 units. 
C)  40 units. 
D)  50 units.

Question 10

For a typical natural monopoly, average total cost is

Accepted Answer

A)  rising, often because marginal costs are very large. 
B)  rising, often because fixed costs are very large. 
C)  declining, often because marginal costs are very large. 
D)  declining, often because fixed costs are very large. 
A)  rising, often because marginal costs are very large. 
B)  rising, often because fixed costs are very large. 
C)  declining, often because marginal costs are very large. 
D)  declining, often because fixed costs are very large.

Question 11

A monopoly firm is a price

Accepted Answer

A)  taker and has no supply curve. 
B)  maker and has no supply curve 
C)  taker and has an upward-sloping supply curve. 
D)  maker and has an upward-sloping supply curve. 
A)  taker and has no supply curve. 
B)  maker and has no supply curve 
C)  taker and has an upward-sloping supply curve. 
D)  maker and has an upward-sloping supply curve.

Question 12

Price discrimination

Accepted Answer

A)  forces monopolies to charge a lower price as a result of government regulation. 
B)  is an attempt by a monopoly to prevent some customers from purchasing its product by charging a high price. 
C)  is an attempt by a monopoly to increases its profit by selling the same good to different customers at different prices. 
D)  increases the consumer surplus associated with a monopolistic market. 
A)  forces monopolies to charge a lower price as a result of government regulation. 
B)  is an attempt by a monopoly to prevent some customers from purchasing its product by charging a high price. 
C)  is an attempt by a monopoly to increases its profit by selling the same good to different customers at different prices. 
D)  increases the consumer surplus associated with a monopolistic market.

Question 13

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

Accepted Answer

A)  Panel C represents the typical demand curve for a perfectly competitive firm, and Panel B represents the typical demand curve for a monopoly. 
B)  Panel B represents the typical demand curve for a perfectly competitive firm, and Panel A represents the typical demand curve for a monopoly. 
C)  Panel A represents the typical demand curve for a perfectly competitive firm, and Panel C represents the typical demand curve for a monopoly. 
D)  Panel C represents the typical demand curve for a perfectly competitive firm, and Panel D represents the typical demand curve for a monopoly. 
A)  Panel C represents the typical demand curve for a perfectly competitive firm, and Panel B represents the typical demand curve for a monopoly. 
B)  Panel B represents the typical demand curve for a perfectly competitive firm, and Panel A represents the typical demand curve for a monopoly. 
C)  Panel A represents the typical demand curve for a perfectly competitive firm, and Panel C represents the typical demand curve for a monopoly. 
D)  Panel C represents the typical demand curve for a perfectly competitive firm, and Panel D represents the typical demand curve for a monopoly.

Question 14

In the majority of cases where there is a natural monopoly in the United States, the government usually deals with the problem

Accepted Answer

A)  by splitting the natural monopoly into smaller companies. 
B)  through regulation. 
C)  by turning the natural monopoly into a public enterprise. 
D)  by doing nothing. 
A)  by splitting the natural monopoly into smaller companies. 
B)  through regulation. 
C)  by turning the natural monopoly into a public enterprise. 
D)  by doing nothing.

Question 15

Which of the following statements is not correct?

Accepted Answer

A)  The competitive firm produces where P = MC. 
B)  The monopolist produces where P = MC. 
C)  The competitive firm produces where MR = MC. 
D)  The monopolist produces where MR = MC. 
A)  The competitive firm produces where P = MC. 
B)  The monopolist produces where P = MC. 
C)  The competitive firm produces where MR = MC. 
D)  The monopolist produces where MR = MC.

Question 16

A monopolist produces where P > MC = MR.

Accepted Answer

A) True 
 B)False

Question 17

Table 15-17
A monopolist faces the following demand curve:
  
-Refer to Table 15-17. Which of the following statements best describes the relationship between the price and the marginal revenue associated with values in the table?

Accepted Answer

A)  The price and marginal revenue are the same. 
B)  The price is greater than or equal to the marginal revenue. 
C)  The price is less than or equal to the marginal revenue. 
D)  The relationship cannot be determined from the information given. 
A)  The price and marginal revenue are the same. 
B)  The price is greater than or equal to the marginal revenue. 
C)  The price is less than or equal to the marginal revenue. 
D)  The relationship cannot be determined from the information given.

Question 18

Figure 15-24  
-Refer to Figure 15-24. Which letter represents the profit-maximizing price chosen by the single price monopolist?

Accepted Answer

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

Question 19

Scenario 15-7
Black Box Cable TV is able to purchase an exclusive right to sell a premium movie channel PMC) in its market area. Let's assume that Black Box Cable pays $150,000 a year for the exclusive marketing rights to PMC. Since Black Box has already installed cable to all of the homes in its market area, the marginal cost of delivering PMC to subscribers is zero. The manager of Black Box needs to know what price to charge for the PMC service to maximize her profit. Before setting price, she hires an economist to estimate demand for the PMC service. The economist discovers that there are two types of subscribers who value premium movie channels. First are the 4,000 die-hard TV viewers who will pay as much as $150 a year for the new PMC premium channel. Second, the PMC channel will appeal to 20,000 occasional TV viewers who will pay as much as $20 a year for a subscription to PMC.
-Refer to Scenario 15-7. If Black Box Cable TV is able to price discriminate, what would be the maximum amount of profit it could generate?

Accepted Answer

A)  $500,000 
B)  $600,000 
C)  $850,000 
D)  $925,000 
A)  $500,000 
B)  $600,000 
C)  $850,000 
D)  $925,000

Question 20

A monopolist does not have a supply curve because the firm's decision about how much to supply is impossible to separate from the demand curve it faces.

Accepted Answer

A) True 
 B)False

Exam 14: Monopoly

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

Figure 15-7 -Refer to Figure 15-7. A profit-maximizing monopolist would incur total costs of

Antitrust laws allow the government to

The fundamental cause of monopolies is barriers to entry.

The De Beers Diamond company is not worried about differentiating its product from all other gemstones.

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 are Sally's fixed costs?

A monopolist will choose to increase output when

Figure 15-24 -Refer to Figure 15-24. Use the letters in the figure to identify the area of deadweight loss for the single price monopolist.

Table 15-17 A monopolist faces the following demand curve: -Refer to Table 15-17. If the marginal cost of production is constant at $18 per unit, this profit-maximizing monopolist will choose to produce

For a typical natural monopoly, average total cost is

A monopoly firm is a price

Price discrimination

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

In the majority of cases where there is a natural monopoly in the United States, the government usually deals with the problem

Which of the following statements is not correct?

A monopolist produces where P > MC = MR.

Table 15-17 A monopolist faces the following demand curve: -Refer to Table 15-17. Which of the following statements best describes the relationship between the price and the marginal revenue associated with values in the table?

Figure 15-24 -Refer to Figure 15-24. Which letter represents the profit-maximizing price chosen by the single price monopolist?

A monopolist does not have a supply curve because the firm's decision about how much to supply is impossible to separate from the demand curve it faces.

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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