Question 1

Price discrimination can increase both the monopolist's profits and society's welfare.

Accepted Answer

A) True 
 B)False

Question 2

The deadweight loss for a monopolist equals one-half of its profits for any given level of output.

Accepted Answer

A) True 
 B)False

Question 3

Scenario 15-2
Consider a local, privately-owned electrical cooperative named Poweshiek Power Company (PPCo). PPCo has just completed a clean-coal-burning electrical power plant in Iowa. Currently, PPCo can meet the electricity needs of all residents in the county. In fact, its capacity far exceeds the needs of the county. After just a few years of operation, the shareholders of PPCo experienced incredibly high rates of return on their investment due to the profitability of the corporation.
-Refer to Scenario 15-2. PPCo will continue to be a monopolist in the electricity industry only if

Accepted Answer

A)  population growth leads to an increased demand for electricity. 
B)  there are no new entrants to the market. 
C)  the price of natural gas decreases. 
D)  All of the above are correct. 
A)  population growth leads to an increased demand for electricity. 
B)  there are no new entrants to the market. 
C)  the price of natural gas decreases. 
D)  All of the above are correct.

Question 4

Table 15-6
A monopolist faces the following demand curve:  
-Refer to Table 15-6. What is the marginal revenue from the sale of the 2nd unit?

Accepted Answer

A)  $3 
B) $3. 
C) $9 
D) $24 
A)  $3 
B) $3. 
C) $9 
D) $24

Question 5

Figure 15-5  
-Refer to Figure 15-5. A profit-maximizing monopoly will charge a price of

Accepted Answer

A)  P1. 
B)  P2. 
C)  P3. 
D)  P4. 
A)  P1. 
B)  P2. 
C)  P3. 
D)  P4.

Question 6

Scenario 15-5
An airline knows that there are two types of travelers: business travelers and vacationers. For a particular flight, there are 100 business travelers who will pay $600 for a ticket while there are 50 vacationers who will pay $300 for a ticket. There are 150 seats available on the plane. Suppose the cost to the airline of providing the flight is $20,000, which includes the cost of the pilots, flight attendants, fuel, etc.
-Refer to Scenario 15-5. How much profit will the airline earn if it engages in price discrimination?

Accepted Answer

A)  -$5,000 
B)  $40,000 
C)  $55,000 
D)  $75,000 
A)  -$5,000 
B)  $40,000 
C)  $55,000 
D)  $75,000

Question 7

Which of the following statements is true about patents and copyrights?

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 8

Table 15-1  
-Refer to Table 15-1. What is the marginal revenue for the monopolist for the sixth unit sold?

Accepted Answer

A)  $3 
B)  $5 
C)  $11 
D)  $17 
A)  $3 
B)  $5 
C)  $11 
D)  $17

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 profit will the concert promoters earn if they engage in price discrimination?

Accepted Answer

A)  $100,000 
B)  $125,000 
C)  $150,000 
D)  $175,000 
A)  $100,000 
B)  $125,000 
C)  $150,000 
D)  $175,000

Question 10

Suppose a monopolist is able to charge each customer a price equal to that customer's willingness­to­pay for the product. Then the monopolist is engaging in

Accepted Answer

A)  marginal cost pricing. 
B)  arbitrage pricing. 
C)  voodoo economics. 
D)  perfect price discrimination. 
A)  marginal cost pricing. 
B)  arbitrage pricing. 
C)  voodoo economics. 
D)  perfect price discrimination.

Question 11

Figure 15-5  
-Refer to Figure 15-5. A profit-maximizing monopoly will produce an output level of

Accepted Answer

A)  Q1. 
B)  Q2. 
C)  Q3. 
D)  Q4. 
A)  Q1. 
B)  Q2. 
C)  Q3. 
D)  Q4.

Question 12

Marginal revenue for a monopolist is computed as

Accepted Answer

A)  average revenue divided by quantity sold. 
B)  average revenue times quantity divided by price. 
C)  total revenue divided by quantity sold. 
D)  change in total revenue per one unit increase in quantity sold. 
A)  average revenue divided by quantity sold. 
B)  average revenue times quantity divided by price. 
C)  total revenue divided by quantity sold. 
D)  change in total revenue per one unit increase in quantity sold.

Question 13

Figure 15-19  
-Refer to Figure 15-19. If there are no fixed costs of production, monopoly profit without price discrimination equals

Accepted Answer

A)  $0. 
B)  $1,562.50. 
C)  $3,125. 
D)  $6,250. 
A)  $0. 
B)  $1,562.50. 
C)  $3,125. 
D)  $6,250.

Question 14

One problem with regulating a monopolist on the basis of cost is that

Accepted Answer

A)  by focusing on costs, the regulators ignore profits. 
B)  it does not provide an incentive for the monopolist to reduce its cost. 
C)  a monopolist's costs, by definition, are higher than costs of perfectly competitive firms. 
D)  a monopolist is still able to generate excessive economic profits. 
A)  by focusing on costs, the regulators ignore profits. 
B)  it does not provide an incentive for the monopolist to reduce its cost. 
C)  a monopolist's costs, by definition, are higher than costs of perfectly competitive firms. 
D)  a monopolist is still able to generate excessive economic profits.

Question 15

Which of the following is an example of a barrier to entry?

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 16

At the profit-maximizing quantity of output for a monopolist, average revenue, marginal revenue, and price are all equal.

Accepted Answer

A) True 
 B)False

Question 17

Explain how a profit-maximizing monopolist chooses its level of output and the price of its goods.

Accepted Answer

A profit-maximizing monopolist produces

Question 18

Bob's Butcher Shop is the only place within 100 miles that sells bison burgers. Assuming that Bob is maximizing his profit, which of the following statements is true?

Accepted Answer

A)  The price of Bob's bison burgers will be less than Bob's marginal cost. 
B)  The price of Bob's bison burgers will exceed Bob's marginal cost. 
C)  The price of Bob's bison burgers will equal Bob's marginal cost. 
D)  Costs are irrelevant to Bob because he is a monopolist. 
A)  The price of Bob's bison burgers will be less than Bob's marginal cost. 
B)  The price of Bob's bison burgers will exceed Bob's marginal cost. 
C)  The price of Bob's bison burgers will equal Bob's marginal cost. 
D)  Costs are irrelevant to Bob because he is a monopolist.

Question 19

Comparing firms in perfectly competitive markets to monopoly firms, which charges higher prices?

Accepted Answer

The answer of Comparing firms in perfectly competitive markets to...

Question 20

Table 15-9
Consider the following demand and cost information for a monopoly.  
-Refer to Table 15-9. What is the marginal cost of the 4th unit?

Accepted Answer

A)  $4 
B)  $14 
C)  $31 
D)  $62 
A)  $4 
B)  $14 
C)  $31 
D)  $62

Exam 15: Monopoly

Price discrimination can increase both the monopolist's profits and society's welfare.

The deadweight loss for a monopolist equals one-half of its profits for any given level of output.

Table 15-6 A monopolist faces the following demand curve: -Refer to Table 15-6. What is the marginal revenue from the sale of the 2nd unit?

Figure 15-5 -Refer to Figure 15-5. A profit-maximizing monopoly will charge a price of

Which of the following statements is true about patents and copyrights?

Table 15-1 -Refer to Table 15-1. What is the marginal revenue for the monopolist for the sixth unit sold?

Suppose a monopolist is able to charge each customer a price equal to that customer's willingness­to­pay for the product. Then the monopolist is engaging in

Figure 15-5 -Refer to Figure 15-5. A profit-maximizing monopoly will produce an output level of

Marginal revenue for a monopolist is computed as

Figure 15-19 -Refer to Figure 15-19. If there are no fixed costs of production, monopoly profit without price discrimination equals

One problem with regulating a monopolist on the basis of cost is that

Which of the following is an example of a barrier to entry?

At the profit-maximizing quantity of output for a monopolist, average revenue, marginal revenue, and price are all equal.

Explain how a profit-maximizing monopolist chooses its level of output and the price of its goods.

Bob's Butcher Shop is the only place within 100 miles that sells bison burgers. Assuming that Bob is maximizing his profit, which of the following statements is true?

Comparing firms in perfectly competitive markets to monopoly firms, which charges higher prices?

Table 15-9 Consider the following demand and cost information for a monopoly. -Refer to Table 15-9. What is the marginal cost of the 4th unit?

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 Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

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

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters

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