Question 1

By offering lower prices to customers who buy a large quantity, a monopoly is price discriminating.

Accepted Answer

A) True 
 B)False

Question 2

A monopolist

Accepted Answer

A)  has a supply curve that is upward-sloping, just like a competitive firm. 
B)  does not have a supply curve because the monopolist sets its price at the same time it chooses the quantity to supply. 
C)  has a horizontal supply curve, just like a competitive firm. 
D)  does not have a supply curve because marginal revenue exceeds the price it charges for its products. 
A)  has a supply curve that is upward-sloping, just like a competitive firm. 
B)  does not have a supply curve because the monopolist sets its price at the same time it chooses the quantity to supply. 
C)  has a horizontal supply curve, just like a competitive firm. 
D)  does not have a supply curve because marginal revenue exceeds the price it charges for its products.

Question 3

The price effect describes the situation when a monopolist lowers the price of output and, all else equal, total revenue

Accepted Answer

A)  increases. 
B)  decreases. 
C)  is unchanged. 
D)  is maximized. 
A)  increases. 
B)  decreases. 
C)  is unchanged. 
D)  is maximized.

Question 4

The government may choose to do nothing to reduce monopoly inefficiency because the "fix" may be worse than the problem.

Accepted Answer

A) True 
 B)False

Question 5

If a monopolist sells 100 units at $8 per unit and realizes an average total cost of $6 per unit, what is the monopolist's profit?

Accepted Answer

A)  $200 
B)  $400 
C)  $600 
D)  $800 
A)  $200 
B)  $400 
C)  $600 
D)  $800

Question 6

Declining average total cost with increased production is one of the defining characteristics of a natural monopoly.

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 total variable cost of production when Sally produces six pairs of shoes?

Accepted Answer

A)  $100 
B)  $295 
C)  $600 
D)  $620 
A)  $100 
B)  $295 
C)  $600 
D)  $620

Question 8

A patent gives a single person or firm the exclusive right to sell some good or service forever.

Accepted Answer

A) True 
 B)False

Question 9

The monopolist's profit-maximizing quantity of output is determined by the intersection of which of the following two curves?

Accepted Answer

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

Question 10

Figure 15-23  
-Refer to Figure 15-23. If a regulator requires the firm to charge an average cost price, what price will the firm charge?

Accepted Answer

The answer of Figure 15-23  
-Refer to Figure 15-23....

Question 11

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 12

There has been much discussion of deregulating electricity and natural gas delivery companies in the United States. Discuss the likely effect of deregulation on prices in these two industries.

Accepted Answer

If deregulation leads to increased compe

Question 13

During the life of a drug patent, the monopoly pharmaceutical firm maximizes profit by producing the quantity at which marginal revenue equals marginal cost.

Accepted Answer

A) True 
 B)False

Question 14

Figure 15-22  
-Refer to Figure 15-22. Which is more efficient, single price profit maximization or perfect price discrimination?

Accepted Answer

perfect pr

Question 15

When a monopolist increases the amount of output that it produces and sells, the price of its output

Accepted Answer

A)  stays the same. 
B)  increases. 
C)  decreases. 
D)  may increase or decrease depending on the price elasticity of demand. 
A)  stays the same. 
B)  increases. 
C)  decreases. 
D)  may increase or decrease depending on the price elasticity of demand.

Question 16

Table 15-17
A monopolist faces the following demand curve:  
-Refer to Table 15-17. Which of the following statements best describes the relationship between the price and the marginal revenue associated with values in the table?

Accepted Answer

A)  The price and marginal revenue are the same. 
B)  The price is greater than or equal to the marginal revenue. 
C)  The price is less than or equal to the marginal revenue. 
D)  The relationship cannot be determined from the information given. 
A)  The price and marginal revenue are the same. 
B)  The price is greater than or equal to the marginal revenue. 
C)  The price is less than or equal to the marginal revenue. 
D)  The relationship cannot be determined from the information given.

Question 17

The proper level of government intervention is unclear when dealing with a monopoly.

Accepted Answer

A) True 
 B)False

Question 18

A market force that can prevent firms from price discriminating is

Accepted Answer

A)  fluctuating resource prices. 
B)  arbitrage. 
C)  high fixed costs. 
D)  marginal-cost pricing. 
A)  fluctuating resource prices. 
B)  arbitrage. 
C)  high fixed costs. 
D)  marginal-cost pricing.

Question 19

Because natural monopolies have a declining average cost curve, regulating natural monopolies by setting price equal to marginal cost would

Accepted Answer

A)  cause the monopolist to operate at a loss. 
B)  result in a less than optimal total surplus. 
C)  maximize producer surplus. 
D)  result in higher profits for the monopoly. 
A)  cause the monopolist to operate at a loss. 
B)  result in a less than optimal total surplus. 
C)  maximize producer surplus. 
D)  result in higher profits for the monopoly.

Question 20

Figure 15-23  
-Refer to Figure 15-23. If a regulator requires the firm to charge a marginal cost price, what quantity will the firm produce?

Accepted Answer

The answer of Figure 15-23  
-Refer to Figure 15-23....

Exam 15: Monopoly

By offering lower prices to customers who buy a large quantity, a monopoly is price discriminating.

A monopolist

The price effect describes the situation when a monopolist lowers the price of output and, all else equal, total revenue

The government may choose to do nothing to reduce monopoly inefficiency because the "fix" may be worse than the problem.

If a monopolist sells 100 units at $8 per unit and realizes an average total cost of $6 per unit, what is the monopolist's profit?

Declining average total cost with increased production is one of the defining characteristics of a natural monopoly.

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 variable cost of production when Sally produces six pairs of shoes?

A patent gives a single person or firm the exclusive right to sell some good or service forever.

The monopolist's profit-maximizing quantity of output is determined by the intersection of which of the following two curves?

Figure 15-23 -Refer to Figure 15-23. If a regulator requires the firm to charge an average cost price, what price will the firm charge?

A perfectly competitive market

There has been much discussion of deregulating electricity and natural gas delivery companies in the United States. Discuss the likely effect of deregulation on prices in these two industries.

During the life of a drug patent, the monopoly pharmaceutical firm maximizes profit by producing the quantity at which marginal revenue equals marginal cost.

Figure 15-22 -Refer to Figure 15-22. Which is more efficient, single price profit maximization or perfect price discrimination?

When a monopolist increases the amount of output that it produces and sells, the price of its output

Table 15-17 A monopolist faces the following demand curve: -Refer to Table 15-17. Which of the following statements best describes the relationship between the price and the marginal revenue associated with values in the table?

The proper level of government intervention is unclear when dealing with a monopoly.

A market force that can prevent firms from price discriminating is

Because natural monopolies have a declining average cost curve, regulating natural monopolies by setting price equal to marginal cost would

Figure 15-23 -Refer to Figure 15-23. If a regulator requires the firm to charge a marginal cost price, what quantity will the firm produce?

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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