Question 1

State two examples of government-created monopolies.

Accepted Answer

patents
co

Question 2

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. Vincent is considering changing his pricing strategy. Which of the following options results in the highest profit per day?

Accepted Answer

A)  Charge a single price of $10 to all passengers. 
B)  Charge a single price of $12 to all passengers. 
C)  Charge a single price of $18 to all passengers. 
D)  Continue charging each buyer his/her willingness to pay. 
A)  Charge a single price of $10 to all passengers. 
B)  Charge a single price of $12 to all passengers. 
C)  Charge a single price of $18 to all passengers. 
D)  Continue charging each buyer his/her willingness to pay.

Question 3

Figure 15-23  
-Refer to Figure 15-23. If a regulator requires the firm to charge an average cost price, what is the amount of profit or loss earned by the firm?

Accepted Answer

The answer of Figure 15-23  
-Refer to Figure 15-23....

Question 4

Splitting up a monopoly is often justified on the grounds that

Accepted Answer

A)  consumers prefer dealing with small firms. 
B)  small firms have lower costs. 
C)  competition is inherently efficient. 
D)  small firms produce higher quality products. 
A)  consumers prefer dealing with small firms. 
B)  small firms have lower costs. 
C)  competition is inherently efficient. 
D)  small firms produce higher quality products.

Question 5

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 engages in price discrimination?

Accepted Answer

A)  $800 
B)  $1,200 
C)  $1,600 
D)  $2,800 
A)  $800 
B)  $1,200 
C)  $1,600 
D)  $2,800

Question 6

Figure 15-23  
-Refer to Figure 15-23. If the firm profit-maximizes, what price will it charge?

Accepted Answer

The answer of Figure 15-23  
-Refer to Figure 15-23....

Question 7

Price discrimination

Accepted Answer

A)  is illegal in the United States and Europe. 
B)  can occur in both perfectly competitive and monopoly markets. 
C)  is illogical because it does not maximize profits. 
D)  can maximize profits if the seller can prevent the resale of goods between customers. 
A)  is illegal in the United States and Europe. 
B)  can occur in both perfectly competitive and monopoly markets. 
C)  is illogical because it does not maximize profits. 
D)  can maximize profits if the seller can prevent the resale of goods between customers.

Question 8

The simplest way for a monopoly to arise is for a single firm to

Accepted Answer

A)  decrease its price below its competitors' prices. 
B)  decrease production to increase demand for its product. 
C)  make pricing decisions jointly with other firms. 
D)  own a key resource. 
A)  decrease its price below its competitors' prices. 
B)  decrease production to increase demand for its product. 
C)  make pricing decisions jointly with other firms. 
D)  own a key resource.

Question 9

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 additional profit can the concert promoters earn by charging each customer their willingness to pay relative to charging a flat price of $150 per ticket?

Accepted Answer

A)  $25,000 
B)  $50,000 
C)  $75,000 
D)  $100,000 
A)  $25,000 
B)  $50,000 
C)  $75,000 
D)  $100,000

Question 10

Which of the following can eliminate the inefficiency inherent in monopoly pricing?

Accepted Answer

A)  arbitrage 
B)  cost-plus pricing 
C)  price discrimination 
D)  regulations that force monopolies to reduce their levels of output 
A)  arbitrage 
B)  cost-plus pricing 
C)  price discrimination 
D)  regulations that force monopolies to reduce their levels of output

Question 11

For a monopolist, when does marginal revenue exceed average revenue?

Accepted Answer

A)  never 
B)  when output is less than the profit-maximizing level of output 
C)  when output is greater than the profit-maximizing level of output 
D)  for all levels of output greater than zero 
A)  never 
B)  when output is less than the profit-maximizing level of output 
C)  when output is greater than the profit-maximizing level of output 
D)  for all levels of output greater than zero

Question 12

A monopolist's profits with price discrimination will be

Accepted Answer

A)  lower than if the firm charged a single, profit-maximizing price 
B)  the same as if the firm charged a single, profit-maximizing price. 
C)  higher than if the firm charged just one price because the firm will capture more consumer surplus. 
D)  higher than if the firm charged a single price because the costs of selling the good will be lower. 
A)  lower than if the firm charged a single, profit-maximizing price 
B)  the same as if the firm charged a single, profit-maximizing price. 
C)  higher than if the firm charged just one price because the firm will capture more consumer surplus. 
D)  higher than if the firm charged a single price because the costs of selling the good will be lower.

Question 13

The key issue in determining the efficiency of public versus private ownership of a monopoly is

Accepted Answer

A)  the tendency for efficient management of publicly owned enterprises. 
B)  the inability of private monopolies to get rid of managers that are doing a bad job. 
C)  the propensity of private monopolies to generate excessive profits. 
D)  how ownership of the firm affects the cost of production. 
A)  the tendency for efficient management of publicly owned enterprises. 
B)  the inability of private monopolies to get rid of managers that are doing a bad job. 
C)  the propensity of private monopolies to generate excessive profits. 
D)  how ownership of the firm affects the cost of production.

Question 14

Table 15-12
The following table provides information on the price, quantity, and average total cost for a monopoly.
  
-Refer to Table 15-12. If the firm produces the profit-maximizing level of output, it will earn profits of

Accepted Answer

A)  $24. 
B)  $18. 
C)  $15. 
D)  $12. 
A)  $24. 
B)  $18. 
C)  $15. 
D)  $12.

Question 15

Figure 15-23  
-Refer to Figure 15-23. If a regulator requires the firm to charge an average cost price, what price will the firm charge?

Accepted Answer

The answer of Figure 15-23  
-Refer to Figure 15-23....

Question 16

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 total variable cost of production when Sally produces six pairs of shoes?

Accepted Answer

A)  $100 
B)  $295 
C)  $600 
D)  $620 
A)  $100 
B)  $295 
C)  $600 
D)  $620

Question 17

Figure 15-8  
-Refer to Figure 15-8. What is the area of deadweight loss?

Accepted Answer

A)  the rectangle A-
C) *X 
B)  the triangle 1/2[A-
C) *Y-X)] 
C)  the triangle 1/2[A-
B) *Y-X)] 
D)  the rectangle A-
C) *X plus the triangle 1/2[A-
C) *Y-X)] 
A)  the rectangle A-
C) *X 
B)  the triangle 1/2[A-
C) *Y-X)] 
C)  the triangle 1/2[A-
B) *Y-X)] 
D)  the rectangle A-
C) *X plus the triangle 1/2[A-
C) *Y-X)]

Question 18

Economic welfare is generally measured by i) profit.
Ii) total surplus.
Iii) the price consumers pay for the product.

Accepted Answer

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

Question 19

A monopolist faces a

Accepted Answer

A)  horizontal demand curve. 
B)  vertical demand curve. 
C)  downward-sloping demand curve. 
D)  U-shaped demand curve. 
A)  horizontal demand curve. 
B)  vertical demand curve. 
C)  downward-sloping demand curve. 
D)  U-shaped demand curve.

Question 20

A monopoly can earn positive profits because it

Accepted Answer

A)  can sell unlimited quantities at any price it chooses. 
B)  takes the market price as given and can sell unlimited quantities. 
C)  can set the price it charges for its output but faces a horizontal demand curve. 
D)  can maintain a price such that total revenues will exceed total costs. 
A)  can sell unlimited quantities at any price it chooses. 
B)  takes the market price as given and can sell unlimited quantities. 
C)  can set the price it charges for its output but faces a horizontal demand curve. 
D)  can maintain a price such that total revenues will exceed total costs.

Exam 14: Monopoly

State two examples of government-created monopolies.

Figure 15-23 -Refer to Figure 15-23. If a regulator requires the firm to charge an average cost price, what is the amount of profit or loss earned by the firm?

Splitting up a monopoly is often justified on the grounds that

Figure 15-23 -Refer to Figure 15-23. If the firm profit-maximizes, what price will it charge?

Price discrimination

The simplest way for a monopoly to arise is for a single firm to

Which of the following can eliminate the inefficiency inherent in monopoly pricing?

For a monopolist, when does marginal revenue exceed average revenue?

A monopolist's profits with price discrimination will be

The key issue in determining the efficiency of public versus private ownership of a monopoly is

Table 15-12 The following table provides information on the price, quantity, and average total cost for a monopoly. -Refer to Table 15-12. If the firm produces the profit-maximizing level of output, it will earn profits of

Figure 15-23 -Refer to Figure 15-23. If a regulator requires the firm to charge an average cost price, what price will the firm charge?

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 total variable cost of production when Sally produces six pairs of shoes?

Figure 15-8 -Refer to Figure 15-8. What is the area of deadweight loss?

Economic welfare is generally measured by i) profit. Ii) total surplus. Iii) the price consumers pay for the product.

A monopolist faces a

A monopoly can earn positive profits because it

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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