Question 1

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

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 2

Figure 15-8  
-Refer to Figure 15-8. What area represents the total surplus lost due to monopoly pricing?

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 3

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 earn profits of

Accepted Answer

A)  $6,400. 
B)  $3,200. 
C)  $1,600. 
D)  $800. 
A)  $6,400. 
B)  $3,200. 
C)  $1,600. 
D)  $800.

Question 4

Patents, copyrights, and trademarks

Accepted Answer

A)  are examples of government-created monopolies. 
B)  allow their owners to reduce the costs of what they produce. 
C)  generate more revenue for the government than they cost consumers in the form of higher prices. 
D)  All of the above are correct. 
A)  are examples of government-created monopolies. 
B)  allow their owners to reduce the costs of what they produce. 
C)  generate more revenue for the government than they cost consumers in the form of higher prices. 
D)  All of the above are correct.

Question 5

Table 15-21
Tommy's Tie Company, a monopolist, has the following cost and revenue information. Assume that Tommy's is
able to engage in perfect price discrimination.  
-Refer to Table 15-21. If the monopolist can engage in perfect price discrimination, what is the marginal revenue from selling the 8th tie?

Accepted Answer

A)  $45 
B)  $60 
C)  $80 
D)  $95 
A)  $45 
B)  $60 
C)  $80 
D)  $95

Question 6

Table 15-3
Consider the following demand and cost information for a monopoly.  
-Refer to Table 15-3. To maximize profit, the monopolist sets price at

Accepted Answer

A)  $10. 
B)  $15. 
C)  $20. 
D)  $25. 
A)  $10. 
B)  $15. 
C)  $20. 
D)  $25.

Question 7

Table 15-10
The monopolist faces the following demand curve:  
-Refer to Table 15-10. If the monopolist has total fixed costs of $40 and a constant marginal cost of $5, how much profit can the firm earn at the profit-maximizing level of output?

Accepted Answer

A)  $128 
B)  $120 
C)  $80 
D)  $8 
A)  $128 
B)  $120 
C)  $80 
D)  $8

Question 8

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 9

In theory, perfect price discrimination

Accepted Answer

A)  decreases the monopolist's profits. 
B)  decreases consumer surplus. 
C)  increases deadweight loss. 
D)  reduces the number of consumers who purchase the monopoly's product. 
A)  decreases the monopolist's profits. 
B)  decreases consumer surplus. 
C)  increases deadweight loss. 
D)  reduces the number of consumers who purchase the monopoly's product.

Question 10

An industry is a natural monopoly when

Accepted Answer

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

Question 11

Which of the following statements is correct?

Accepted Answer

A)  Two examples of early antitrust laws are the Clinton and Stigler Antitrust Acts. 
B)  Antitrust laws automatically prevent mergers between companies that produce similar products. 
C)  Antitrust laws reduce the government's power to regulate private companies. 
D)  Antitrust laws can reduce social welfare if they prevent mergers that would lower costs through more efficient joint production. 
A)  Two examples of early antitrust laws are the Clinton and Stigler Antitrust Acts. 
B)  Antitrust laws automatically prevent mergers between companies that produce similar products. 
C)  Antitrust laws reduce the government's power to regulate private companies. 
D)  Antitrust laws can reduce social welfare if they prevent mergers that would lower costs through more efficient joint production.

Question 12

For a typical natural monopoly, average total cost is

Accepted Answer

A)  falling, and marginal cost is above average total cost. 
B)  falling, and marginal cost is below average total cost. 
C)  rising, and marginal cost is below average total cost. 
D)  rising, and marginal cost is above average total cost. 
A)  falling, and marginal cost is above average total cost. 
B)  falling, and marginal cost is below average total cost. 
C)  rising, and marginal cost is below average total cost. 
D)  rising, and marginal cost is above average total cost.

Question 13

Authors are allowed to be monopolists in the sale of their books in order to

Accepted Answer

A)  promote a society in which people think for themselves and learn from whichever books they please. 
B)  correct for the negative externalities that the Internet and television impose. 
C)  satisfy literary advocacy groups that exercise their lobbying power. 
D)  None of the above is correct. 
A)  promote a society in which people think for themselves and learn from whichever books they please. 
B)  correct for the negative externalities that the Internet and television impose. 
C)  satisfy literary advocacy groups that exercise their lobbying power. 
D)  None of the above is correct.

Question 14

Figure 15-25  
-Refer to Figure 15-25. If a regulator requires this firm to charge a fair return price, which letter represents the amount of output it will produce?

Accepted Answer

The answer of Figure 15-25  
-Refer to Figure 15-25....

Question 15

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 16

Which of the following is not a characteristic of a monopoly?

Accepted Answer

A)  barriers to entry 
B)  one seller 
C)  one buyer 
D)  a product without close substitutes 
A)  barriers to entry 
B)  one seller 
C)  one buyer 
D)  a product without close substitutes

Question 17

Figure 15-5  
-Refer to Figure 15-5. A profit-maximizing monopoly's total revenue is equal to

Accepted Answer

A)  P1 x Q1. 
B)  P2 x Q3. 
C)  P3 x Q4. 
D)  (P2-P4) x Q3. 
A)  P1 x Q1. 
B)  P2 x Q3. 
C)  P3 x Q4. 
D)  (P2-P4) x Q3.

Question 18

Figure 15-5  
-Refer to Figure 15-5. A profit-maximizing monopoly's profit is equal to

Accepted Answer

A)  P2 x Q3. 
B)  (P2-P4) x Q3. 
C)  (P2-P5) x Q3. 
D)  (P1-P6) x Q1. 
A)  P2 x Q3. 
B)  (P2-P4) x Q3. 
C)  (P2-P5) x Q3. 
D)  (P1-P6) x Q1.

Question 19

A monopolist maximizes profits by

Accepted Answer

A)  producing an output level where marginal revenue equals marginal cost. 
B)  charging a price equal to marginal revenue and marginal cost. 
C)  charging a price where marginal cost equals average total cost. 
D)  Both a and b are correct. 
A)  producing an output level where marginal revenue equals marginal cost. 
B)  charging a price equal to marginal revenue and marginal cost. 
C)  charging a price where marginal cost equals average total cost. 
D)  Both a and b are correct.

Question 20

Which of the following are necessary characteristics of a monopoly?

Accepted Answer

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

Exam 15: Monopoly

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

Figure 15-8 -Refer to Figure 15-8. What area represents the total surplus lost due to monopoly pricing?

Patents, copyrights, and trademarks

Table 15-3 Consider the following demand and cost information for a monopoly. -Refer to Table 15-3. To maximize profit, the monopolist sets price at

Table 15-10 The monopolist faces the following demand curve: -Refer to Table 15-10. If the monopolist has total fixed costs of $40 and a constant marginal cost of $5, how much profit can the firm earn at the profit-maximizing level of output?

In theory, perfect price discrimination

An industry is a natural monopoly when

Which of the following statements is correct?

For a typical natural monopoly, average total cost is

Authors are allowed to be monopolists in the sale of their books in order to

Figure 15-25 -Refer to Figure 15-25. If a regulator requires this firm to charge a fair return price, which letter represents the amount of output it will produce?

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

Which of the following is not a characteristic of a monopoly?

Figure 15-5 -Refer to Figure 15-5. A profit-maximizing monopoly's total revenue is equal to

Figure 15-5 -Refer to Figure 15-5. A profit-maximizing monopoly's profit is equal to

A monopolist maximizes profits by

Which of the following are necessary characteristics of a monopoly?

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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