Question 1

A movie theater can increase its profits through price discrimination by charging a higher price to adults and a lower price to children if

Accepted Answer

A)  adults buy more popcorn than children. 
B)  the cost of showing a movie to children is less than the cost of showing a movie to adults. 
C)  it has some degree of monopoly-pricing power. 
D)  All of the above are correct. 
A)  adults buy more popcorn than children. 
B)  the cost of showing a movie to children is less than the cost of showing a movie to adults. 
C)  it has some degree of monopoly-pricing power. 
D)  All of the above are correct.

Question 2

Suppose ABC Aluminum Inc. owns 80% of the world's bauxite, a mineral used in the production of aluminum. Which of the following reasons describes the fundamental barrier to entry for the aluminum industry?

Accepted Answer

A)  monopoly resources 
B)  government regulation 
C)  the production process 
D)  Both a and b are correct. 
A)  monopoly resources 
B)  government regulation 
C)  the production process 
D)  Both a and b are correct.

Question 3

A natural monopoly has economies of scale for most if not all of its range of output.

Accepted Answer

A) True 
 B)False

Question 4

Table 15-6
A monopolist faces the following demand curve:  
-Refer to Table 15-6. Suppose the monopolist has total fixed costs equal to $5 and a variable cost equal to $4 per unit for all units produced. What is the profit-maximizing price?

Accepted Answer

A)  $6 
B)  $9 
C)  $12 
D)  $15 
A)  $6 
B)  $9 
C)  $12 
D)  $15

Question 5

A benefit to society of the patent and copyright laws is that those laws

Accepted Answer

A)  help to keep prices down. 
B)  help to prevent a single firm from acquiring ownership of a key resource. 
C)  encourage creative activity. 
D)  discourage the production of inefficient products. 
A)  help to keep prices down. 
B)  help to prevent a single firm from acquiring ownership of a key resource. 
C)  encourage creative activity. 
D)  discourage the production of inefficient products.

Question 6

Which of the following is a characteristic of a natural monopoly?

Accepted Answer

A)  Fixed costs are typically a small portion of total costs. 
B)  Average total cost declines over large regions of output. 
C)  The product sold is a natural resource such as diamonds or water. 
D)  All of the above are correct. 
A)  Fixed costs are typically a small portion of total costs. 
B)  Average total cost declines over large regions of output. 
C)  The product sold is a natural resource such as diamonds or water. 
D)  All of the above are correct.

Question 7

When a monopolist reduces the quantity of output it produces and sells, the

Accepted Answer

A)  price of its output increases. 
B)  price of its output remains constant. 
C)  price of its output decreases. 
D)  profits for the firm always decrease. 
A)  price of its output increases. 
B)  price of its output remains constant. 
C)  price of its output decreases. 
D)  profits for the firm always decrease.

Question 8

Table 15-8
The following table provides information on the price, quantity, and average total cost for a monopoly.  
-Refer to Table 15-8. At what price will the monopolist maximize his profit?

Accepted Answer

A)  $6 
B)  $12 
C)  $18 
D)  $24 
A)  $6 
B)  $12 
C)  $18 
D)  $24

Question 9

Name brand drugs are able to continue capitalizing on their market power even after generic drugs enter the market because

Accepted Answer

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

Question 10

Table 15-6
A monopolist faces the following demand curve:  
-Refer to Table 15-6. Suppose the monopolist has total fixed costs equal to $5 and a variable cost equal to $4 per unit for all units produced. What would the total profit be if she charged $6 per unit for her product?

Accepted Answer

A)  $1 
B)  $3 
C)  $8 
D)  $15 
A)  $1 
B)  $3 
C)  $8 
D)  $15

Question 11

When a monopolist is able to sell its product at different prices, it is engaging in

Accepted Answer

A)  distribution pricing. 
B)  quality-adjusted pricing. 
C)  arbitrage. 
D)  price discrimination. 
A)  distribution pricing. 
B)  quality-adjusted pricing. 
C)  arbitrage. 
D)  price discrimination.

Question 12

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 13

The laws governing patents and copyrights

Accepted Answer

A)  eliminate the need for firms to engage in research and development. 
B)  are intended to serve private interests, not the public's interest. 
C)  reduce fixed costs for firms that obtain them. 
D)  None of the above is correct. 
A)  eliminate the need for firms to engage in research and development. 
B)  are intended to serve private interests, not the public's interest. 
C)  reduce fixed costs for firms that obtain them. 
D)  None of the above is correct.

Question 14

The fundamental cause of monopoly is

Accepted Answer

The answer of The fundamental cause of monopoly is...

Question 15

The reason to regulate utilities instead of using antitrust laws to promote competition is that a utility is usually a

Accepted Answer

A)  profit-maximizing monopoly. 
B)  producer of externalities. 
C)  revenue-maximizing monopoly. 
D)  natural monopoly. 
A)  profit-maximizing monopoly. 
B)  producer of externalities. 
C)  revenue-maximizing monopoly. 
D)  natural monopoly.

Question 16

Price discrimination is a rational strategy for a profit-maximizing monopolist when

Accepted Answer

A)  the monopolist finds itself able to produce only limited quantities of output. 
B)  consumers are unable to be segmented into identifiable markets. 
C)  the monopolist wishes to increase the deadweight loss that results from profit-maximizing behavior. 
D)  there is no opportunity for arbitrage across market segments. 
A)  the monopolist finds itself able to produce only limited quantities of output. 
B)  consumers are unable to be segmented into identifiable markets. 
C)  the monopolist wishes to increase the deadweight loss that results from profit-maximizing behavior. 
D)  there is no opportunity for arbitrage across market segments.

Question 17

A natural monopoly occurs when

Accepted Answer

A)  the product is sold in its natural state, such as water or diamonds. 
B)  there are economies of scale over the relevant range of output. 
C)  the firm is characterized by a rising marginal cost curve. 
D)  production requires the use of free natural resources, such as water or air. 
A)  the product is sold in its natural state, such as water or diamonds. 
B)  there are economies of scale over the relevant range of output. 
C)  the firm is characterized by a rising marginal cost curve. 
D)  production requires the use of free natural resources, such as water or air.

Question 18

A monopolist produces where P > MC = MR.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following formulas would correctly calculate a monopolist's profit?

Accepted Answer

A)  profit = price - marginal cost 
B)  profit = price - average total cost 
C)  profit = (price - marginal cost) × quantity 
D)  profit = (price - average total cost) × quantity 
A)  profit = price - marginal cost 
B)  profit = price - average total cost 
C)  profit = (price - marginal cost) × quantity 
D)  profit = (price - average total cost) × quantity

Question 20

Suppose most people regard emeralds, rubies, and sapphires as close substitutes for diamonds. Then DeBeers, a large diamond company, has

Accepted Answer

A)  less incentive to advertise than it would otherwise have. 
B)  less market power than it would otherwise have. 
C)  more control over the price of diamonds than it would otherwise have. 
D)  higher profits than it would otherwise have. 
A)  less incentive to advertise than it would otherwise have. 
B)  less market power than it would otherwise have. 
C)  more control over the price of diamonds than it would otherwise have. 
D)  higher profits than it would otherwise have.

Exam 15: Monopoly

A movie theater can increase its profits through price discrimination by charging a higher price to adults and a lower price to children if

Suppose ABC Aluminum Inc. owns 80% of the world's bauxite, a mineral used in the production of aluminum. Which of the following reasons describes the fundamental barrier to entry for the aluminum industry?

A natural monopoly has economies of scale for most if not all of its range of output.

Table 15-6 A monopolist faces the following demand curve: -Refer to Table 15-6. Suppose the monopolist has total fixed costs equal to $5 and a variable cost equal to $4 per unit for all units produced. What is the profit-maximizing price?

A benefit to society of the patent and copyright laws is that those laws

Which of the following is a characteristic of a natural monopoly?

When a monopolist reduces the quantity of output it produces and sells, the

Table 15-8 The following table provides information on the price, quantity, and average total cost for a monopoly. -Refer to Table 15-8. At what price will the monopolist maximize his profit?

Name brand drugs are able to continue capitalizing on their market power even after generic drugs enter the market because

Table 15-6 A monopolist faces the following demand curve: -Refer to Table 15-6. Suppose the monopolist has total fixed costs equal to $5 and a variable cost equal to $4 per unit for all units produced. What would the total profit be if she charged $6 per unit for her product?

When a monopolist is able to sell its product at different prices, it is engaging in

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

The laws governing patents and copyrights

The fundamental cause of monopoly is

The reason to regulate utilities instead of using antitrust laws to promote competition is that a utility is usually a

Price discrimination is a rational strategy for a profit-maximizing monopolist when

A natural monopoly occurs when

A monopolist produces where P > MC = MR.

Which of the following formulas would correctly calculate a monopolist's profit?

Suppose most people regard emeralds, rubies, and sapphires as close substitutes for diamonds. Then DeBeers, a large diamond company, has

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

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