Question 1

Which of the following is not a reason for the existence of a monopoly?

Accepted Answer

A)  sole ownership of a key resource 
B)  patents 
C)  copyrights 
D)  diseconomies of scale 
A)  sole ownership of a key resource 
B)  patents 
C)  copyrights 
D)  diseconomies of scale

Question 2

Figure 15-3  
-Refer to Figure 15-3. Which of the following statements is correct?

Accepted Answer

A)  Panel B represents the typical demand curve for a perfectly competitive industry. 
B)  Panel A represents the typical demand curve for a monopoly. 
C)  Panel C represents the typical demand curve for a perfectly competitive firm. 
D)  All of the above are correct. 
A)  Panel B represents the typical demand curve for a perfectly competitive industry. 
B)  Panel A represents the typical demand curve for a monopoly. 
C)  Panel C represents the typical demand curve for a perfectly competitive firm. 
D)  All of the above are correct.

Question 3

Price discrimination

Accepted Answer

A)  forces monopolies to charge a lower price as a result of government regulation. 
B)  is an attempt by a monopoly to prevent some customers from purchasing its product by charging a high price. 
C)  is an attempt by a monopoly to increases its profit by selling the same good to different customers at different prices. 
D)  increases the consumer surplus associated with a monopolistic market. 
A)  forces monopolies to charge a lower price as a result of government regulation. 
B)  is an attempt by a monopoly to prevent some customers from purchasing its product by charging a high price. 
C)  is an attempt by a monopoly to increases its profit by selling the same good to different customers at different prices. 
D)  increases the consumer surplus associated with a monopolistic market.

Question 4

Assume that a monopolist decides to maximize revenue rather than profit. How does this operating objective change the size of the deadweight loss? If you are a "benevolent" manager of a monopoly firm and are interested in reducing the deadweight loss of monopoly, should you maximize profits or maximize revenue? Explain your answer.

Accepted Answer

A revenue maximizer operates where MR =

Question 5

Table 15-1  
-Refer to Table 15-1. If the monopolist sells 8 units of its product, how much total revenue will it receive from the sale?

Accepted Answer

A)  $14 
B)  $40 
C)  $112 
D)  $164 
A)  $14 
B)  $40 
C)  $112 
D)  $164

Question 6

Figure 15-18  
-Refer to Figure 15-18. If the monopoly firm is not allowed to price discriminate, then consumer surplus amounts to

Accepted Answer

A)  $1,000. 
B)  $2,000. 
C)  $3,000. 
D)  $4,000. 
A)  $1,000. 
B)  $2,000. 
C)  $3,000. 
D)  $4,000.

Question 7

Patent and copyright laws

Accepted Answer

A)  encourage creative activity. 
B)  promote competition among firms. 
C)  discourage creative activity. 
D)  Both a and b are correct. 
A)  encourage creative activity. 
B)  promote competition among firms. 
C)  discourage creative activity. 
D)  Both a and b are correct.

Question 8

When a firm has a natural monopoly, the firm's

Accepted Answer

A)  marginal cost always exceeds its average total cost. 
B)  total cost curve is horizontal. 
C)  average total cost curve is downward sloping. 
D)  marginal cost curve must lie above the firm's average total cost curve. 
A)  marginal cost always exceeds its average total cost. 
B)  total cost curve is horizontal. 
C)  average total cost curve is downward sloping. 
D)  marginal cost curve must lie above the firm's average total cost curve.

Question 9

Which of the following can defeat the profit-maximizing strategy of price discrimination?

Accepted Answer

A)  consumer surplus 
B)  deadweight loss 
C)  market power 
D)  arbitrage 
A)  consumer surplus 
B)  deadweight loss 
C)  market power 
D)  arbitrage

Question 10

Table 15-9
Consider the following demand and cost information for a monopoly.  
-Refer to Table 15-9. What price should the monopoly charge to maximize profit?

Accepted Answer

A)  $16 
B)  $20 
C)  $24 
D)  $28 
A)  $16 
B)  $20 
C)  $24 
D)  $28

Question 11

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

Accepted Answer

A)  can prevent children from buying the lower-priced tickets and selling them to adults. 
B)  has some degree of monopoly pricing power. 
C)  can easily distinguish between the two groups of customers. 
D)  All of the above are correct. 
A)  can prevent children from buying the lower-priced tickets and selling them to adults. 
B)  has some degree of monopoly pricing power. 
C)  can easily distinguish between the two groups of customers. 
D)  All of the above are correct.

Question 12

Exclusive ownership of a key resource

Accepted Answer

A)  is the most common cause of a monopoly. 
B)  is a potential but rare cause of a monopoly. 
C)  explains the monopoly ownership of the US Postal Service. 
D)  explains why a single firm distributes water to a community. 
A)  is the most common cause of a monopoly. 
B)  is a potential but rare cause of a monopoly. 
C)  explains the monopoly ownership of the US Postal Service. 
D)  explains why a single firm distributes water to a community.

Question 13

A monopoly's marginal cost will

Accepted Answer

A)  be less than its average fixed cost. 
B)  be less than the price per unit of its product. 
C)  exceed its marginal revenue. 
D)  equal its average total cost. 
A)  be less than its average fixed cost. 
B)  be less than the price per unit of its product. 
C)  exceed its marginal revenue. 
D)  equal its average total cost.

Question 14

Which of the following would be most likely to have monopoly power?

Accepted Answer

A)  an online bookstore 
B)  a municipal water company 
C)  a local restaurant 
D)  a grocery store 
A)  an online bookstore 
B)  a municipal water company 
C)  a local restaurant 
D)  a grocery store

Question 15

If the government regulates the price a natural monopolist can charge to be equal to the firm's average total cost, the firm has no incentive to reduce costs.

Accepted Answer

A) True 
 B)False

Question 16

Antitrust laws allow the government to

Accepted Answer

A)  prevent mergers. 
B)  break up companies. 
C)  promote competition. 
D)  All of the above are correct. 
A)  prevent mergers. 
B)  break up companies. 
C)  promote competition. 
D)  All of the above are correct.

Question 17

Figure 15-11  
-Refer to Figure 15-11. Which area represents the deadweight loss from monopoly?

Accepted Answer

A)  J 
B)  H 
C)  A+B+C+D+F+I+J+H 
D)  J+H 
A)  J 
B)  H 
C)  A+B+C+D+F+I+J+H 
D)  J+H

Question 18

Figure 15-24  
-Refer to Figure 15-24. Use the letters in the figure to identify the profit area for the single price monopolist.

Accepted Answer

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

Question 19

Patent and copyright laws are major sources of

Accepted Answer

A)  natural monopolies. 
B)  government-created monopolies. 
C)  resource monopolies. 
D)  antitrust regulation. 
A)  natural monopolies. 
B)  government-created monopolies. 
C)  resource monopolies. 
D)  antitrust regulation.

Question 20

Compared to the monopoly outcome with a single price, imperfect price discrimination

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)

Exam 15: Monopoly

Which of the following is not a reason for the existence of a monopoly?

Figure 15-3 -Refer to Figure 15-3. Which of the following statements is correct?

Price discrimination

Table 15-1 -Refer to Table 15-1. If the monopolist sells 8 units of its product, how much total revenue will it receive from the sale?

Figure 15-18 -Refer to Figure 15-18. If the monopoly firm is not allowed to price discriminate, then consumer surplus amounts to

Patent and copyright laws

When a firm has a natural monopoly, the firm's

Which of the following can defeat the profit-maximizing strategy of price discrimination?

Table 15-9 Consider the following demand and cost information for a monopoly. -Refer to Table 15-9. What price should the monopoly charge to maximize profit?

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

Exclusive ownership of a key resource

A monopoly's marginal cost will

Which of the following would be most likely to have monopoly power?

If the government regulates the price a natural monopolist can charge to be equal to the firm's average total cost, the firm has no incentive to reduce costs.

Antitrust laws allow the government to

Figure 15-11 -Refer to Figure 15-11. Which area represents the deadweight loss from monopoly?

Figure 15-24 -Refer to Figure 15-24. Use the letters in the figure to identify the profit area for the single price monopolist.

Patent and copyright laws are major sources of

Compared to the monopoly outcome with a single price, imperfect price discrimination

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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