Question 1

Government intervention is always preferable to doing nothing when reducing the social inefficiencies of monopoly.

Accepted Answer

A) True 
 B)False

Question 2

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 additional profit can the airline earn by charging each customer their willingness to pay relative to charging a flat price of $600 per ticket?

Accepted Answer

A)  $15,000 
B)  $25,000 
C)  $40,000 
D)  $70,000 
A)  $15,000 
B)  $25,000 
C)  $40,000 
D)  $70,000

Question 3

A monopolist that can practice perfect price discrimination will not impose a deadweight loss on society.

Accepted Answer

A) True 
 B)False

Question 4

Figure 15-20  
-Refer to Figure 15-20. The consumer surplus at the monopolist's profit­maximizing price is

Accepted Answer

A)  $450. 
B)  $900. 
C)  $1,350. 
D)  $2,025. 
A)  $450. 
B)  $900. 
C)  $1,350. 
D)  $2,025.

Question 5

Figure 15-4  
-Refer to Figure 15-4. A profit-maximizing monopoly's total revenue is equal to

Accepted Answer

A)  P5 x Q3. 
B)  P4 x Q5. 
C)  (P5-P3) x Q3. 
D)  (P5-P4) x Q3. 
A)  P5 x Q3. 
B)  P4 x Q5. 
C)  (P5-P3) x Q3. 
D)  (P5-P4) x Q3.

Question 6

Average revenue for a monopoly is the total revenue divided by the quantity produced.

Accepted Answer

A) True 
 B)False

Question 7

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 8

Figure 15-7  
-Refer to Figure 15-7. In order to maximize profits, the monopolist should charge a price of

Accepted Answer

A)  $9. 
B)  $12. 
C)  $20. 
D)  $23. 
A)  $9. 
B)  $12. 
C)  $20. 
D)  $23.

Question 9

Figure 15-22  
-Refer to Figure 15-22. How much profit will this monopolist earn if it charges each consumer the same price?

Accepted Answer

The answer of Figure 15-22  
-Refer to Figure 15-22....

Question 10

The profit that a monopolist earns represents a loss to society that is measured through deadweight loss.

Accepted Answer

A) True 
 B)False

Question 11

Figure 15-22  
-Refer to Figure 15-22. If the monopolist uses perfect price discrimination, how much profit does the firm earn?

Accepted Answer

The answer of Figure 15-22  
-Refer to Figure 15-22....

Question 12

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 13

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 revenue from selling 6 pairs of shoes?

Accepted Answer

A)  $100 
B)  $600 
C)  $625 
D)  $660 
A)  $100 
B)  $600 
C)  $625 
D)  $660

Question 14

In order for a firm to maximize profits through price discrimination, the firm must have some market power and be able to prevent arbitrage.

Accepted Answer

A) True 
 B)False

Question 15

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 16

Table 15-16
A monopolist faces the following demand curve:  
-Refer to Table 15-16. The monopolist has total fixed costs of $40 and a constant marginal cost of $5. At the profit-maximizing level of output, the monopolist's average total cost is

Accepted Answer

A)  $9.00. 
B)  $7.50. 
C)  $6.74. 
D)  $5.82. 
A)  $9.00. 
B)  $7.50. 
C)  $6.74. 
D)  $5.82.

Question 17

Scenario 15-4
Suppose a monopolist has a demand curve that can be expressed as P=90-Q. The monopolist's marginal revenue curve can be expressed as MR=90-2Q. The monopolist has constant marginal costs and average total costs of $10.
-Refer to Scenario 15-4. The profit-maximizing monopolist will produce an output level of

Accepted Answer

A)  80 units. 
B)  40 units. 
C)  20 units. 
D)  10 units. 
A)  80 units. 
B)  40 units. 
C)  20 units. 
D)  10 units.

Question 18

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 19

For a monopoly, the socially efficient level of output occurs where

Accepted Answer

A)  marginal revenue equals marginal cost. 
B)  average revenue equals marginal cost. 
C)  marginal revenue equals average total cost. 
D)  average revenue equals average total cost. 
A)  marginal revenue equals marginal cost. 
B)  average revenue equals marginal cost. 
C)  marginal revenue equals average total cost. 
D)  average revenue equals average total cost.

Question 20

Because many good substitutes exist for a competitive firm's product, the demand curve that it faces is

Accepted Answer

A)  unit-elastic. 
B)  perfectly inelastic. 
C)  perfectly elastic. 
D)  inelastic only over a certain region. 
A)  unit-elastic. 
B)  perfectly inelastic. 
C)  perfectly elastic. 
D)  inelastic only over a certain region.

Exam 15: Monopoly

Government intervention is always preferable to doing nothing when reducing the social inefficiencies of monopoly.

A monopolist that can practice perfect price discrimination will not impose a deadweight loss on society.

Figure 15-20 -Refer to Figure 15-20. The consumer surplus at the monopolist's profit­maximizing price is

Figure 15-4 -Refer to Figure 15-4. A profit-maximizing monopoly's total revenue is equal to

Average revenue for a monopoly is the total revenue divided by the quantity produced.

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?

Figure 15-7 -Refer to Figure 15-7. In order to maximize profits, the monopolist should charge a price of

Figure 15-22 -Refer to Figure 15-22. How much profit will this monopolist earn if it charges each consumer the same price?

The profit that a monopolist earns represents a loss to society that is measured through deadweight loss.

Figure 15-22 -Refer to Figure 15-22. If the monopolist uses perfect price discrimination, how much profit does the firm earn?

A monopoly firm is a price

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 revenue from selling 6 pairs of shoes?

In order for a firm to maximize profits through price discrimination, the firm must have some market power and be able to prevent arbitrage.

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

Table 15-16 A monopolist faces the following demand curve: -Refer to Table 15-16. The monopolist has total fixed costs of $40 and a constant marginal cost of $5. At the profit-maximizing level of output, the monopolist's average total cost is

If a monopoly lowers its price, its

For a monopoly, the socially efficient level of output occurs where

Because many good substitutes exist for a competitive firm's product, the demand curve that it faces is

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

Figure 15-20 -Refer to Figure 15-20. The consumer surplus at the monopolist's profitmaximizing price is