Question 1

If a social planner were running a monopoly, that planner could achieve an efficient outcome by charging the price that is determined by the

Accepted Answer

A)  minimum point on the average total cost curve. 
B)  intersection of the average total cost curve and the demand curve. 
C)  intersection of the marginal cost curve and the demand curve. 
D)  intersection of the marginal cost curve and the marginal revenue curve. 
A)  minimum point on the average total cost curve. 
B)  intersection of the average total cost curve and the demand curve. 
C)  intersection of the marginal cost curve and the demand curve. 
D)  intersection of the marginal cost curve and the marginal revenue curve.

Question 2

The assessment by George Stigler concerning the tradeoffs between "market failure" and "political failure" in the American economy provides support for which of the following solutions to the problems of monopolies?

Accepted Answer

A)  public ownership of monopolies 
B)  government regulation of monopolies 
C)  government incentives to promote competition in monopolized industries 
D)  doing nothing at all 
A)  public ownership of monopolies 
B)  government regulation of monopolies 
C)  government incentives to promote competition in monopolized industries 
D)  doing nothing at all

Question 3

The socially efficient level of production occurs where the marginal cost curve intersects

Accepted Answer

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

Question 4

The best solution to the problem of welfare loss from monopoly is public ownership.

Accepted Answer

A) True 
 B)False

Question 5

Antitrust laws give the Justice Department the authority to challenge potential mergers between companies in an effort to safeguard society from monopoly power.

Accepted Answer

A) True 
 B)False

Question 6

Consider a profit-maximizing monopoly pricing under the following conditions. The profit-maximizing quantity is 40 units, the profit-maximizing price is $160, and the marginal cost of the 40th unit is $120. If the good were produced in a perfectly competitive market, the equilibrium quantity would be 50, and the equilibrium price would be $150. The demand curve and marginal cost curves are linear. What is the value of the deadweight loss created by the monopolist?

Accepted Answer

A)  $40 
B)  $100 
C)  $200 
D)  $400 
A)  $40 
B)  $100 
C)  $200 
D)  $400

Question 7

The process of buying a good in one market at a low price and selling the good in another market for a higher price in order to profit from the price difference is known as

Accepted Answer

A)  sabotage. 
B)  conspiracy. 
C)  arbitrage. 
D)  collusion. 
A)  sabotage. 
B)  conspiracy. 
C)  arbitrage. 
D)  collusion.

Question 8

Patents, copyrights, and trademarks

Accepted Answer

A)  are examples of government-created monopolies. 
B)  are examples of barriers to entry. 
C)  allow their owners to charge higher prices. 
D)  All of the above are correct. 
A)  are examples of government-created monopolies. 
B)  are examples of barriers to entry. 
C)  allow their owners to charge higher prices. 
D)  All of the above are correct.

Question 9

Figure 15-1  
-Refer to Figure 15-1. Considering the relationship between average total cost and marginal cost, the marginal cost curve for this firm must

Accepted Answer

A)  lie entirely above the average total cost curve. 
B)  lie entirely below the average total cost curve. 
C)  be U-shaped. 
D)  be horizontal. 
A)  lie entirely above the average total cost curve. 
B)  lie entirely below the average total cost curve. 
C)  be U-shaped. 
D)  be horizontal.

Question 10

A government-created monopoly arises when

Accepted Answer

A)  government spending in a certain industry gives rise to monopoly power. 
B)  the government exercises its market control by encouraging competition among sellers. 
C)  the government gives a firm the exclusive right to sell some good or service. 
D)  Both a and c are correct. 
A)  government spending in a certain industry gives rise to monopoly power. 
B)  the government exercises its market control by encouraging competition among sellers. 
C)  the government gives a firm the exclusive right to sell some good or service. 
D)  Both a and c are correct.

Question 11

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 charge a price of

Accepted Answer

A)  $50. 
B)  $40. 
C)  $20. 
D)  $10. 
A)  $50. 
B)  $40. 
C)  $20. 
D)  $10.

Question 12

The difference in total surplus between the socially efficient level of production and the monopolist's level of production is

Accepted Answer

A)  offset by regulatory revenues. 
B)  called a deadweight loss. 
C)  equal to the monopolist's profit. 
D)  Both b and c are correct. 
A)  offset by regulatory revenues. 
B)  called a deadweight loss. 
C)  equal to the monopolist's profit. 
D)  Both b and c are correct.

Question 13

Figure 15-9  
-Refer to Figure 15-9. To maximize its profit, a monopolist would choose which of the following outcomes?

Accepted Answer

A)  100 units of output and a price of $20 per unit 
B)  100 units of output and a price of $40 per unit 
C)  150 units of output and a price of $30 per unit 
D)  200 units of output and a price of $40 per unit 
A)  100 units of output and a price of $20 per unit 
B)  100 units of output and a price of $40 per unit 
C)  150 units of output and a price of $30 per unit 
D)  200 units of output and a price of $40 per unit

Question 14

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 8 pairs of shoes?

Accepted Answer

A)  $90 
B)  $695 
C)  $720 
D)  $800 
A)  $90 
B)  $695 
C)  $720 
D)  $800

Question 15

Which of the following is not an example of a barrier to entry?

Accepted Answer

A)  A soybean farmer is the first in her county to use a new brand of fertilizer. 
B)  Microsoft obtains a copyright for its Windows operating system. 
C)  A pharmaceutical company obtains a patent for a new medication to treat migraine headaches. 
D)  A taxi cab driver in New York City obtains a license to legally provide transportation in New York City. 
A)  A soybean farmer is the first in her county to use a new brand of fertilizer. 
B)  Microsoft obtains a copyright for its Windows operating system. 
C)  A pharmaceutical company obtains a patent for a new medication to treat migraine headaches. 
D)  A taxi cab driver in New York City obtains a license to legally provide transportation in New York City.

Question 16

Figure 15-24  
-Refer to Figure 15-24. Which letter represents the profit-maximizing quantity chosen by the single price monopolist?

Accepted Answer

The answer of Figure 15-24  
-Refer to Figure 15-24....

Question 17

A monopolist produces

Accepted Answer

A)  more than the socially efficient quantity of output but at a higher price than in a competitive market. 
B)  less than the socially efficient quantity of output but at a higher price than in a competitive market. 
C)  the socially efficient quantity of output but at a higher price than in a competitive market. 
D)  possibly more or possibly less than the socially efficient quantity of output, but definitely at a higher price than in a competitive market. 
A)  more than the socially efficient quantity of output but at a higher price than in a competitive market. 
B)  less than the socially efficient quantity of output but at a higher price than in a competitive market. 
C)  the socially efficient quantity of output but at a higher price than in a competitive market. 
D)  possibly more or possibly less than the socially efficient quantity of output, but definitely at a higher price than in a competitive market.

Question 18

Price discrimination is the business practice of

Accepted Answer

A)  bundling related products to increase total sales. 
B)  selling the same good at different prices to different customers. 
C)  pricing above marginal cost. 
D)  hiring marketing experts to increase consumers' brand loyalty. 
A)  bundling related products to increase total sales. 
B)  selling the same good at different prices to different customers. 
C)  pricing above marginal cost. 
D)  hiring marketing experts to increase consumers' brand loyalty.

Question 19

Amanda inherited the only local cable TV/Internet company in town after her father passed away. The company has a local monopoly on the delivery of high-speed Internet service. The company is completely unregulated by the government and is therefore free to operate as it wishes. Assume that Amanda understands the true power of her new monopoly. Which of the following statements is (are) correct?

Accepted Answer

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

Question 20

Table 15-18
A monopolist faces the following demand curve:   Suppose marginal cost is constant at $8 per unit.
-Refer to Table 15-18. The monopolist's marginal revenue from selling the second unit of output is

Accepted Answer

A)  $8. 
B)  $14. 
C)  $16. 
D)  $24. 
A)  $8. 
B)  $14. 
C)  $16. 
D)  $24.

Exam 15: Monopoly

If a social planner were running a monopoly, that planner could achieve an efficient outcome by charging the price that is determined by the

The assessment by George Stigler concerning the tradeoffs between "market failure" and "political failure" in the American economy provides support for which of the following solutions to the problems of monopolies?

The socially efficient level of production occurs where the marginal cost curve intersects

The best solution to the problem of welfare loss from monopoly is public ownership.

Antitrust laws give the Justice Department the authority to challenge potential mergers between companies in an effort to safeguard society from monopoly power.

The process of buying a good in one market at a low price and selling the good in another market for a higher price in order to profit from the price difference is known as

Patents, copyrights, and trademarks

Figure 15-1 -Refer to Figure 15-1. Considering the relationship between average total cost and marginal cost, the marginal cost curve for this firm must

A government-created monopoly arises when

The difference in total surplus between the socially efficient level of production and the monopolist's level of production is

Figure 15-9 -Refer to Figure 15-9. To maximize its profit, a monopolist would choose which of the following outcomes?

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 8 pairs of shoes?

Which of the following is not an example of a barrier to entry?

Figure 15-24 -Refer to Figure 15-24. Which letter represents the profit-maximizing quantity chosen by the single price monopolist?

A monopolist produces

Price discrimination is the business practice of

Table 15-18 A monopolist faces the following demand curve: Suppose marginal cost is constant at $8 per unit. -Refer to Table 15-18. The monopolist's marginal revenue from selling the second unit of output 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

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