Question 1

Figure 15-19  
-Refer to Figure 15-19. If there are no fixed costs of production, monopoly profit with perfect price discrimination equals

Accepted Answer

A)  $1. 
B)  $1,562.5. 
C)  $3,125. 
D)  $6,250. 
A)  $1. 
B)  $1,562.5. 
C)  $3,125. 
D)  $6,250.

Question 2

Figure 15-22  
-Refer to Figure 15-22. If the monopolist uses perfect price discrimination, what price will it charge?

Accepted Answer

The amount

Question 3

Figure 15-25  
-Refer to Figure 15-25. If this firm profit maximizes, which letter represents the quantity it will produce?

Accepted Answer

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

Question 4

Perfect price discrimination

Accepted Answer

A)  increases profits to the firm. 
B)  increases total surplus. 
C)  decreases consumer surplus. 
D)  All of the above are correct. 
A)  increases profits to the firm. 
B)  increases total surplus. 
C)  decreases consumer surplus. 
D)  All of the above are correct.

Question 5

Microsoft's government­granted exclusive right to make and sell the Windows operating system is called a

Accepted Answer

The answer of Microsoft's government­granted exclusive right to make and...

Question 6

Scenario 15-8
Mega Media Cable TV is able to purchase an exclusive right to sell a premium sports channel in its market area. Let's assume that Mega Media pays $100,000 a year for the exclusive marketing rights to the sports channel. Since Mega Media has already installed cable to all of the homes in its market area, the marginal cost of delivering the sports channel to subscribers is zero. The manager of Mega Media needs to know what price to charge for the sports channel service to maximize her profit. Before setting price, she hires an economist to estimate demand for the sports channel. The economist discovers that there are two types of subscribers who value premium sporting channels. First are the 3,000 die-hard sports fans who will pay as much as $150 a year for the new channel. Second, the premium sports channel will appeal to 20,000 occasional sports viewers who will pay as much as $25 a year for a subscription to it.
-Refer to Scenario 15-8. How much profit will Mega Media Cable TV earn if it sets the price at $150?

Accepted Answer

A)  $350,000 
B)  $450,000 
C)  $475,000 
D)  $575,000 
A)  $350,000 
B)  $450,000 
C)  $475,000 
D)  $575,000

Question 7

Which of the following statements is not correct?

Accepted Answer

A)  The government may use antitrust laws to break up an existing company to improve competition. 
B)  The government may break up a natural monopoly to lower the price charged to customers. 
C)  Private ownership is typically preferred to public ownership. 
D)  Sometimes the best strategy is for the government to do nothing about monopoly inefficiency because the "fix" may be worse than the problem. 
A)  The government may use antitrust laws to break up an existing company to improve competition. 
B)  The government may break up a natural monopoly to lower the price charged to customers. 
C)  Private ownership is typically preferred to public ownership. 
D)  Sometimes the best strategy is for the government to do nothing about monopoly inefficiency because the "fix" may be worse than the problem.

Question 8

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

Accepted Answer

A)  Panel C represents the typical demand curve for a perfectly competitive firm, and Panel B represents the typical demand curve for a monopoly. 
B)  Panel B represents the typical demand curve for a perfectly competitive firm, and Panel A represents the typical demand curve for a monopoly. 
C)  Panel A represents the typical demand curve for a perfectly competitive firm, and Panel C represents the typical demand curve for a monopoly. 
D)  Panel C represents the typical demand curve for a perfectly competitive firm, and Panel D represents the typical demand curve for a monopoly. 
A)  Panel C represents the typical demand curve for a perfectly competitive firm, and Panel B represents the typical demand curve for a monopoly. 
B)  Panel B represents the typical demand curve for a perfectly competitive firm, and Panel A represents the typical demand curve for a monopoly. 
C)  Panel A represents the typical demand curve for a perfectly competitive firm, and Panel C represents the typical demand curve for a monopoly. 
D)  Panel C represents the typical demand curve for a perfectly competitive firm, and Panel D represents the typical demand curve for a monopoly.

Question 9

Table 15-3
Consider the following demand and cost information for a monopoly.  
-Refer to Table 15-3. The marginal revenue of the 2nd unit is

Accepted Answer

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

Question 10

Table 15-4
A monopolist faces the following demand curve:  
-Refer to Table 15-4. If the monopolist produces 5 units, what is its marginal revenue?

Accepted Answer

A)  $100 
B)  $37.5 
C)  $15 
D)  $2.50 
A)  $100 
B)  $37.5 
C)  $15 
D)  $2.50

Question 11

Figure 15-9  
-Refer to Figure 15-9. The monopolist's maximum profit

Accepted Answer

A)  is $1,600. 
B)  is $2,000. 
C)  is $2,500. 
D)  cannot be determined from the diagram. 
A)  is $1,600. 
B)  is $2,000. 
C)  is $2,500. 
D)  cannot be determined from the diagram.

Question 12

A monopoly is an inefficient way to produce a product because

Accepted Answer

A)  it can earn both short-run and long-run profits. 
B)  it faces a downward-sloping demand curve. 
C)  the cost to the monopolist of producing one more unit exceeds the value of that unit to potential buyers. 
D)  it produces a smaller level of output than would be produced in a competitive market. 
A)  it can earn both short-run and long-run profits. 
B)  it faces a downward-sloping demand curve. 
C)  the cost to the monopolist of producing one more unit exceeds the value of that unit to potential buyers. 
D)  it produces a smaller level of output than would be produced in a competitive market.

Question 13

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 marginal revenue from selling the 8th pair of shoes?

Accepted Answer

A)  $10 
B)  $20 
C)  $40 
D)  $90 
A)  $10 
B)  $20 
C)  $40 
D)  $90

Question 14

Why might economists prefer private ownership of monopolies over public ownership of monopolies?

Accepted Answer

The private monopolist is governed by th

Question 15

Table 15-9
Consider the following demand and cost information for a monopoly.  
-Refer to Table 15-9. What is the monopolist's average total cost of production at the profit­maximizing price?

Accepted Answer

A)  $12 
B)  $14 
C)  $16 
D)  $17 
A)  $12 
B)  $14 
C)  $16 
D)  $17

Question 16

Due to the nature of the patent laws on pharmaceuticals, the market for such drugs

Accepted Answer

A)  always remains a competitive market. 
B)  always remains a monopolistic market. 
C)  switches from competitive to monopolistic once the firm's patent runs out. 
D)  switches from monopolistic to competitive once the firm's patent runs out. 
A)  always remains a competitive market. 
B)  always remains a monopolistic market. 
C)  switches from competitive to monopolistic once the firm's patent runs out. 
D)  switches from monopolistic to competitive once the firm's patent runs out.

Question 17

For a monopoly firm,

Accepted Answer

A)  price always exceeds average revenue. 
B)  price always exceeds marginal revenue. 
C)  any price-quantity combination will maximize profits. 
D)  All of the above are correct. 
A)  price always exceeds average revenue. 
B)  price always exceeds marginal revenue. 
C)  any price-quantity combination will maximize profits. 
D)  All of the above are correct.

Question 18

Round-trip airline tickets are usually cheaper if you stay over a Saturday night before you fly back. What is the reason for this price discrepancy?

Accepted Answer

A)  Airlines are practicing imperfect price discrimination to raise their profits. 
B)  Airlines charge a different rate based on the different nature of peoples' travel needs. 
C)  Airlines are attempting to charge people based on their willingness to pay. 
D)  All of the above are correct. 
A)  Airlines are practicing imperfect price discrimination to raise their profits. 
B)  Airlines charge a different rate based on the different nature of peoples' travel needs. 
C)  Airlines are attempting to charge people based on their willingness to pay. 
D)  All of the above are correct.

Question 19

Figure 15-21  
-Refer to Figure 15-21. Which of the following areas describes the profit of this natural monopolist under socially optimal pricing?

Accepted Answer

A)  ABCE 
B)  0HIL 
C)  0FGK 
D)  None of the above is correct. 
A)  ABCE 
B)  0HIL 
C)  0FGK 
D)  None of the above is correct.

Question 20

In order to sell more of its product, a monopolist must

Accepted Answer

A)  lobby the government for a subsidy. 
B)  lower its price. 
C)  advertise. 
D)  enact barriers to entry in related markets. 
A)  lobby the government for a subsidy. 
B)  lower its price. 
C)  advertise. 
D)  enact barriers to entry in related markets.

Exam 15: Monopoly

Figure 15-19 -Refer to Figure 15-19. If there are no fixed costs of production, monopoly profit with perfect price discrimination equals

Figure 15-22 -Refer to Figure 15-22. If the monopolist uses perfect price discrimination, what price will it charge?

Figure 15-25 -Refer to Figure 15-25. If this firm profit maximizes, which letter represents the quantity it will produce?

Perfect price discrimination

Microsoft's government­granted exclusive right to make and sell the Windows operating system is called a

Which of the following statements is not correct?

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

Table 15-3 Consider the following demand and cost information for a monopoly. -Refer to Table 15-3. The marginal revenue of the 2nd unit is

Table 15-4 A monopolist faces the following demand curve: -Refer to Table 15-4. If the monopolist produces 5 units, what is its marginal revenue?

Figure 15-9 -Refer to Figure 15-9. The monopolist's maximum profit

A monopoly is an inefficient way to produce a product because

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 marginal revenue from selling the 8th pair of shoes?

Why might economists prefer private ownership of monopolies over public ownership of monopolies?

Table 15-9 Consider the following demand and cost information for a monopoly. -Refer to Table 15-9. What is the monopolist's average total cost of production at the profit­maximizing price?

Due to the nature of the patent laws on pharmaceuticals, the market for such drugs

For a monopoly firm,

Round-trip airline tickets are usually cheaper if you stay over a Saturday night before you fly back. What is the reason for this price discrepancy?

Figure 15-21 -Refer to Figure 15-21. Which of the following areas describes the profit of this natural monopolist under socially optimal pricing?

In order to sell more of its product, a monopolist must

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

Filters

Microsoft's governmentgranted exclusive right to make and sell the Windows operating system is called a

Table 15-9 Consider the following demand and cost information for a monopoly. -Refer to Table 15-9. What is the monopolist's average total cost of production at the profitmaximizing price?