Question 1

In a monopoly market, the socially efficient quantity of output is typically higher than the profit-maximizing quantity of output for the monopolist.

Accepted Answer

A) True 
 B)False

Question 2

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 total profit at the profit-maximizing quantity?

Accepted Answer

A)  $100 
B)  $245 
C)  $265 
D)  $395 
A)  $100 
B)  $245 
C)  $265 
D)  $395

Question 3

Comparing firms in perfectly competitive markets to monopoly firms, which results in a deadweight loss?

Accepted Answer

The answer of Comparing firms in perfectly competitive markets to...

Question 4

Figure 15-23  
-Refer to Figure 15-23. If a regulator requires the firm to charge a marginal cost price, what is the amount of profit or loss earned by the firm?

Accepted Answer

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

Question 5

Which of the following is a characteristic of a monopoly?

Accepted Answer

A)  rising average total costs 
B)  one buyer 
C)  rising fixed costs 
D)  a product without close substitutes 
A)  rising average total costs 
B)  one buyer 
C)  rising fixed costs 
D)  a product without close substitutes

Question 6

A firm cannot price discriminate if

Accepted Answer

A)  its has declining marginal revenue. 
B)  it operates in a competitive market. 
C)  buyers only reveal the price they are willing to pay for the product. 
D)  it has a constant marginal cost. 
A)  its has declining marginal revenue. 
B)  it operates in a competitive market. 
C)  buyers only reveal the price they are willing to pay for the product. 
D)  it has a constant marginal cost.

Question 7

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

Accepted Answer

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

Question 8

As a monopolist increases the quantity of output it sells, the price consumers are willing to pay for the good

Accepted Answer

A)  is unaffected. 
B)  decreases. 
C)  increases. 
D)  There is not enough information given in answer the question. 
A)  is unaffected. 
B)  decreases. 
C)  increases. 
D)  There is not enough information given in answer the question.

Question 9

Which of the following statements is correct?

Accepted Answer

A)  If the monopolist's marginal revenue is greater than its marginal cost, the monopolist can increase profit by selling more units at a lower price per unit. 
B)  If the monopolist's marginal revenue is greater than its marginal cost, the monopolist can increase profit by selling fewer units at a higher price per unit. 
C)  When a monopolist produces where price equals the minimum of average total cost, it earns a positive economic profit. 
D)  If the monopolist is earning a positive economic profit, it must be producing where MR = MC. 
A)  If the monopolist's marginal revenue is greater than its marginal cost, the monopolist can increase profit by selling more units at a lower price per unit. 
B)  If the monopolist's marginal revenue is greater than its marginal cost, the monopolist can increase profit by selling fewer units at a higher price per unit. 
C)  When a monopolist produces where price equals the minimum of average total cost, it earns a positive economic profit. 
D)  If the monopolist is earning a positive economic profit, it must be producing where MR = MC.

Question 10

The DeBeers Company faces very little competition from other firms in the wholesale diamond market. Why isn't the price of the wholesale diamonds $10,000 per carat?

Accepted Answer

A)  because the government would not allow such a high price 
B)  because stockholders would not allow such a high price 
C)  because the company would sell so few copies that they would earn higher profits by selling at a lower price 
D)  All of the above are correct. 
A)  because the government would not allow such a high price 
B)  because stockholders would not allow such a high price 
C)  because the company would sell so few copies that they would earn higher profits by selling at a lower price 
D)  All of the above are correct.

Question 11

For a monopoly,

Accepted Answer

A)  average revenue exceeds marginal revenue. 
B)  average revenue equals marginal revenue. 
C)  average revenue is less than marginal revenue. 
D)  price equals marginal revenue. 
A)  average revenue exceeds marginal revenue. 
B)  average revenue equals marginal revenue. 
C)  average revenue is less than marginal revenue. 
D)  price equals marginal revenue.

Question 12

Table 15-18
A monopolist faces the following demand curve:   Suppose marginal cost is constant at $8 per unit.
-Refer to Table 15-18. When the price effect on revenue is greater than the output effect, marginal revenue is

Accepted Answer

A)  positive. This occurs with the 3rd unit of output. 
B)  positive. This occurs with the 4th unit of output. 
C)  negative. This occurs with the 5th unit of output. 
D)  negative. This occurs with the 6th unit of output. 
A)  positive. This occurs with the 3rd unit of output. 
B)  positive. This occurs with the 4th unit of output. 
C)  negative. This occurs with the 5th unit of output. 
D)  negative. This occurs with the 6th unit of output.

Question 13

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

Accepted Answer

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

Question 14

Table 15-12
The following table provides information on the price, quantity, and average total cost for a monopoly.  
-Refer to Table 15-12. If the firm produces the profit-maximizing level of output, it will earn profits of

Accepted Answer

A)  $24. 
B)  $18. 
C)  $15. 
D)  $12. 
A)  $24. 
B)  $18. 
C)  $15. 
D)  $12.

Question 15

Figure 15-17  
-Refer to Figure 15-17. Which of the following statements best describes the changes that would occur if this firm were to switch from operating as a single price profit-maximizing monopolist to perfect price discrimination?

Accepted Answer

A)  The quantity would increase from I to J, the profit would increase from BCFE to ACG, and the deadweight loss would decrease from EFG to zero. 
B)  The quantity would remain constant, the profit would increase from BCFE to ABCFE and the deadweight loss would decrease from EFG to zero. 
C)  The quantity would decrease from J to I, the profit would decrease from ACG to BCFE, and the deadweight loss would increase from EFG to ACG. 
D)  The quantity would increase from I to J, the profit would decrease from BCFE to EFG, and the deadweight loss remain constant. 
A)  The quantity would increase from I to J, the profit would increase from BCFE to ACG, and the deadweight loss would decrease from EFG to zero. 
B)  The quantity would remain constant, the profit would increase from BCFE to ABCFE and the deadweight loss would decrease from EFG to zero. 
C)  The quantity would decrease from J to I, the profit would decrease from ACG to BCFE, and the deadweight loss would increase from EFG to ACG. 
D)  The quantity would increase from I to J, the profit would decrease from BCFE to EFG, and the deadweight loss remain constant.

Question 16

Consumers' willingness to pay for a good minus the amount they actually pay for it equals

Accepted Answer

A)  consumer surplus. 
B)  consumer benefit. 
C)  price discriminant. 
D)  deadweight loss. 
A)  consumer surplus. 
B)  consumer benefit. 
C)  price discriminant. 
D)  deadweight loss.

Question 17

When a certain monopoly sets its price at $8 it sells 64 units. When the monopoly sets its price at $9 it sells 62 units. The marginal revenue for the firm over this range is

Accepted Answer

A)  $18. 
B)  $23. 
C)  $46. 
D)  $92. 
A)  $18. 
B)  $23. 
C)  $46. 
D)  $92.

Question 18

For a monopolist, marginal revenue is

Accepted Answer

A)  equal to price, as it is for a perfectly competitive firm. 
B)  less than price, as it is for a perfectly competitive firm. 
C)  equal to price, whereas marginal revenue is less than price for a perfectly competitive firm. 
D)  less than price, whereas marginal revenue is equal to price for a perfectly competitive firm. 
A)  equal to price, as it is for a perfectly competitive firm. 
B)  less than price, as it is for a perfectly competitive firm. 
C)  equal to price, whereas marginal revenue is less than price for a perfectly competitive firm. 
D)  less than price, whereas marginal revenue is equal to price for a perfectly competitive firm.

Question 19

The legislation passed by Congress in 1914 to strengthen the government's powers and authorize private lawsuits was the

Accepted Answer

A)  Morgan Act. 
B)  Sherman Act. 
C)  Clayton Act. 
D)  14th Amendment. 
A)  Morgan Act. 
B)  Sherman Act. 
C)  Clayton Act. 
D)  14th Amendment.

Question 20

A monopolist earns higher profits by charging one price than by practicing price discrimination.

Accepted Answer

A) True 
 B)False

Exam 15: Monopoly

In a monopoly market, the socially efficient quantity of output is typically higher than the profit-maximizing quantity of output for the monopolist.

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 total profit at the profit-maximizing quantity?

Comparing firms in perfectly competitive markets to monopoly firms, which results in a deadweight loss?

Figure 15-23 -Refer to Figure 15-23. If a regulator requires the firm to charge a marginal cost price, what is the amount of profit or loss earned by the firm?

Which of the following is a characteristic of a monopoly?

A firm cannot price discriminate if

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

As a monopolist increases the quantity of output it sells, the price consumers are willing to pay for the good

Which of the following statements is correct?

The DeBeers Company faces very little competition from other firms in the wholesale diamond market. Why isn't the price of the wholesale diamonds $10,000 per carat?

For a monopoly,

Table 15-18 A monopolist faces the following demand curve: Suppose marginal cost is constant at $8 per unit. -Refer to Table 15-18. When the price effect on revenue is greater than the output effect, marginal revenue is

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

Table 15-12 The following table provides information on the price, quantity, and average total cost for a monopoly. -Refer to Table 15-12. If the firm produces the profit-maximizing level of output, it will earn profits of

Figure 15-17 -Refer to Figure 15-17. Which of the following statements best describes the changes that would occur if this firm were to switch from operating as a single price profit-maximizing monopolist to perfect price discrimination?

Consumers' willingness to pay for a good minus the amount they actually pay for it equals

When a certain monopoly sets its price at $8 it sells 64 units. When the monopoly sets its price at $9 it sells 62 units. The marginal revenue for the firm over this range is

For a monopolist, marginal revenue is

The legislation passed by Congress in 1914 to strengthen the government's powers and authorize private lawsuits was the

A monopolist earns higher profits by charging one price than by practicing 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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