Question 1

Antitrust laws may

Accepted Answer

A)  enhance the ability of firms to capture profits from a concentration of market power. 
B)  enhance the ability of firms to reduce economic losses. 
C)  restrict the ability of firms to operate at the socially efficient level of production. 
D)  restrict the ability of firms to merge. 
A)  enhance the ability of firms to capture profits from a concentration of market power. 
B)  enhance the ability of firms to reduce economic losses. 
C)  restrict the ability of firms to operate at the socially efficient level of production. 
D)  restrict the ability of firms to merge.

Question 2

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. What is Vincent's profit on a typical day?

Accepted Answer

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

Question 3

What are the four ways that government policymakers can respond to the problem of monopoly?

Accepted Answer

First, the government can try to make mo

Question 4

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 marginal revenue is

Accepted Answer

A)  always more than the price of its good. 
B)  always equal to the price of its good. 
C)  always less than the price of its good. 
D)  sometimes more and sometimes less than the price of its good. 
A)  always more than the price of its good. 
B)  always equal to the price of its good. 
C)  always less than the price of its good. 
D)  sometimes more and sometimes less than the price of its good.

Question 5

Figure 15-8  
-Refer to Figure 15-8. What is the socially efficient price and quantity?

Accepted Answer

A)  price = A; quantity = X 
B)  price = B; quantity = Y 
C)  price = B; quantity = X 
D)  price = C; quantity = X 
A)  price = A; quantity = X 
B)  price = B; quantity = Y 
C)  price = B; quantity = X 
D)  price = C; quantity = X

Question 6

Which of the following is an example of price discrimination?

Accepted Answer

A)  An online bookstore charges more for overnight shipping than standard shipping when customers buy books from it. 
B)  Airline tickets are more expensive for first-class seats than for coach. 
C)  Hotel rates for AAA members are lower than for nonmembers. 
D)  All of the above are correct. 
A)  An online bookstore charges more for overnight shipping than standard shipping when customers buy books from it. 
B)  Airline tickets are more expensive for first-class seats than for coach. 
C)  Hotel rates for AAA members are lower than for nonmembers. 
D)  All of the above are correct.

Question 7

The socially efficient level of production occurs where the marginal cost curve intersects

Accepted Answer

A)  average variable cost. 
B)  average total cost. 
C)  demand. 
D)  marginal revenue. 
A)  average variable cost. 
B)  average total cost. 
C)  demand. 
D)  marginal revenue.

Question 8

Which of the following statements is correct for both a monopolist and a perfectly competitive firm? i) The firm maximizes profits by equating marginal revenue with marginal cost.
Ii) The firm maximizes profits by equating price with marginal cost.
Iii) Demand equals marginal revenue.
Iv) Average revenue equals price.

Accepted Answer

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

Question 9

A perfectly competitive market

Accepted Answer

A)  may not be in the best interests of society, whereas a monopoly market promotes general economic well-being 
B)  promotes general economic well-being, whereas a monopoly market may not be in the best interests of society. 
C)  and a monopoly market are equally likely to promote general economic well-being. 
D)  is less likely to promote general economic well-being than a monopoly market. 
A)  may not be in the best interests of society, whereas a monopoly market promotes general economic well-being 
B)  promotes general economic well-being, whereas a monopoly market may not be in the best interests of society. 
C)  and a monopoly market are equally likely to promote general economic well-being. 
D)  is less likely to promote general economic well-being than a monopoly market.

Question 10

When the government creates a monopoly, the social loss may include

Accepted Answer

A)  declining marginal costs. 
B)  the cost of lawyers and lobbyists hired to convince lawmakers to continue the monopoly. 
C)  excessive monopoly profits. 
D)  diminishing marginal revenue. 
A)  declining marginal costs. 
B)  the cost of lawyers and lobbyists hired to convince lawmakers to continue the monopoly. 
C)  excessive monopoly profits. 
D)  diminishing marginal revenue.

Question 11

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 $50?

Accepted Answer

A)  $25,000 
B)  $75,000 
C)  $100,000 
D)  $150,000 
A)  $25,000 
B)  $75,000 
C)  $100,000 
D)  $150,000

Question 12

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 marginal cost of the 8th pair of shoes?

Accepted Answer

A)  $50 
B)  $60 
C)  $90 
D)  $110 
A)  $50 
B)  $60 
C)  $90 
D)  $110

Question 13

If a monopoly lowers its price, its

Accepted Answer

A)  total revenue must increase. 
B)  total revenue must decrease. 
C)  marginal revenue must increase. 
D)  marginal revenue must decrease. 
A)  total revenue must increase. 
B)  total revenue must decrease. 
C)  marginal revenue must increase. 
D)  marginal revenue must decrease.

Question 14

Figure 15-3  
-Refer to Figure 15-3. Which panel could represent the demand curve facing the soybean industry?

Accepted Answer

A)  Panel A 
B)  Panel B 
C)  Panel C 
D)  Panel D 
A)  Panel A 
B)  Panel B 
C)  Panel C 
D)  Panel D

Question 15

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 marginal cost of the 6th pair of shoes?

Accepted Answer

A)  $44 
B)  $46 
C)  $55 
D)  $60 
A)  $44 
B)  $46 
C)  $55 
D)  $60

Question 16

Table 15-12
The following table provides information on the price, quantity, and average total cost for a monopoly.
  
-Refer to Table 15-12. In order to maximize profits, the firm should produce

Accepted Answer

A)  4 units of output. 
B)  8 units of output. 
C)  12 units of output. 
D)  16 units of output. 
A)  4 units of output. 
B)  8 units of output. 
C)  12 units of output. 
D)  16 units of output.

Question 17

With no price discrimination, the monopolist sells every unit at the same price. Therefore

Accepted Answer

A)  marginal revenue is equal to price. 
B)  marginal revenue is equal to average revenue. 
C)  price is greater than marginal revenue. 
D)  Both a and b are correct. 
A)  marginal revenue is equal to price. 
B)  marginal revenue is equal to average revenue. 
C)  price is greater than marginal revenue. 
D)  Both a and b are correct.

Question 18

Encouraging firms to invest in research and development and individuals to engage in creative endeavors such as writing novels is one justification for

Accepted Answer

A)  resource monopolies. 
B)  natural monopolies. 
C)  government-created monopolies. 
D)  breaking up monopolies into smaller firms. 
A)  resource monopolies. 
B)  natural monopolies. 
C)  government-created monopolies. 
D)  breaking up monopolies into smaller firms.

Question 19

Monopolies use their market power to

Accepted Answer

A)  charge prices that equal minimum average total cost. 
B)  increase the quantity sold as they increase price. 
C)  charge a price that is higher than marginal cost. 
D)  dump excess supplies of their product on the market. 
A)  charge prices that equal minimum average total cost. 
B)  increase the quantity sold as they increase price. 
C)  charge a price that is higher than marginal cost. 
D)  dump excess supplies of their product on the market.

Question 20

Table 15-11
The following table shows quantity, price, and marginal cost information for a monopoly:
  
-Refer to Table 15-11. What level of output should the firm produce to maximize its profit?

Accepted Answer

A)  2 units 
B)  3 units 
C)  4 units 
D)  5 units 
A)  2 units 
B)  3 units 
C)  4 units 
D)  5 units

Exam 14: Monopoly

Antitrust laws may

What are the four ways that government policymakers can respond to the problem of 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 marginal revenue is

Figure 15-8 -Refer to Figure 15-8. What is the socially efficient price and quantity?

Which of the following is an example of price discrimination?

The socially efficient level of production occurs where the marginal cost curve intersects

A perfectly competitive market

When the government creates a monopoly, the social loss may include

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 marginal cost of the 8th pair of shoes?

If a monopoly lowers its price, its

Figure 15-3 -Refer to Figure 15-3. Which panel could represent the demand curve facing the soybean industry?

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 marginal cost of the 6th pair of shoes?

Table 15-12 The following table provides information on the price, quantity, and average total cost for a monopoly. -Refer to Table 15-12. In order to maximize profits, the firm should produce

With no price discrimination, the monopolist sells every unit at the same price. Therefore

Encouraging firms to invest in research and development and individuals to engage in creative endeavors such as writing novels is one justification for

Monopolies use their market power to

Table 15-11 The following table shows quantity, price, and marginal cost information for a monopoly: -Refer to Table 15-11. What level of output should the firm produce to maximize its profit?

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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