Question 1

Figure 15-17  
-Refer to Figure 15-17. Which of the following areas represents the consumer surplus from this profit-maximizing monopolist?

Accepted Answer

A)  ABE 
B)  BCFE 
C)  EFG 
D)  ACG 
A)  ABE 
B)  BCFE 
C)  EFG 
D)  ACG

Question 2

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

Accepted Answer

A)  Q = 30 and P = 30 
B)  Q = 30 and P = 60 
C)  Q = 45 and P = 45 
D)  Q = 60 and P = 30 
A)  Q = 30 and P = 30 
B)  Q = 30 and P = 60 
C)  Q = 45 and P = 45 
D)  Q = 60 and P = 30

Question 3

If the government deems a newly-invented drug to be truly original, the pharmaceutical company is given the exclusive right to manufacture and sell the drug for 50 years.

Accepted Answer

A) True 
 B)False

Question 4

Table 15-21
Tommy's Tie Company, a monopolist, has the following cost and revenue information. Assume that Tommy's is
able to engage in perfect price discrimination.  
-Refer to Table 15-21. If the monopolist can engage in perfect price discrimination, what is total profit at the profit-maximizing quantity?

Accepted Answer

A)  $325 
B)  $435 
C)  $565 
D)  $1000 
A)  $325 
B)  $435 
C)  $565 
D)  $1000

Question 5

The fundamental cause of monopoly is

Accepted Answer

A)  incompetent management in competitive firms. 
B)  the zero-profit feature of long-run equilibrium in competitive markets. 
C)  advertising. 
D)  barriers to entry. 
A)  incompetent management in competitive firms. 
B)  the zero-profit feature of long-run equilibrium in competitive markets. 
C)  advertising. 
D)  barriers to entry.

Question 6

The supply curve for the monopolist

Accepted Answer

A)  is horizontal. 
B)  is vertical. 
C)  is upward sloping. 
D)  does not exist. 
A)  is horizontal. 
B)  is vertical. 
C)  is upward sloping. 
D)  does not exist.

Question 7

In a natural monopoly,

Accepted Answer

A)  society would be better off if antitrust laws were used to create many different firms in the market. 
B)  the marginal cost curve is positively sloped. 
C)  if the government requires marginal cost pricing, it will likely have to subsidize the firm. 
D)  the marginal revenue curve is horizontal. 
A)  society would be better off if antitrust laws were used to create many different firms in the market. 
B)  the marginal cost curve is positively sloped. 
C)  if the government requires marginal cost pricing, it will likely have to subsidize the firm. 
D)  the marginal revenue curve is horizontal.

Question 8

Table 15-10
The monopolist faces the following demand curve:  
-Refer to Table 15-10. If the monopolist has total fixed costs of $40 and a constant marginal cost of $5, what is the profit-maximizing level of output?

Accepted Answer

A)  7 units 
B)  16 units 
C)  23 units 
D)  31 units 
A)  7 units 
B)  16 units 
C)  23 units 
D)  31 units

Question 9

Figure 15-4  
-Refer to Figure 15-4. Profit can always be increased by increasing the level of output by one unit if the monopolist is currently operating at

Accepted Answer

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

Question 10

Table 15-6
A monopolist faces the following demand curve:  
-Refer to Table 15-6. What is the marginal revenue from the sale of the 3rd unit?

Accepted Answer

A)  $3 
B)  -$3 
C)  $9 
D)  $24 
A)  $3 
B)  -$3 
C)  $9 
D)  $24

Question 11

Which of the following statements is correct?

Accepted Answer

A)  Public ownership is preferred to regulation in order to minimize the deadweight losses associated with natural monopolies. 
B)  Antitrust laws are always the best way to limit monopoly power. 
C)  It is possible that the best approach to monopolies is for the government to do nothing. 
D)  Marginal-cost pricing requires a natural monopoly to earn zero economic profits. 
A)  Public ownership is preferred to regulation in order to minimize the deadweight losses associated with natural monopolies. 
B)  Antitrust laws are always the best way to limit monopoly power. 
C)  It is possible that the best approach to monopolies is for the government to do nothing. 
D)  Marginal-cost pricing requires a natural monopoly to earn zero economic profits.

Question 12

Figure 15-24  
-Refer to Figure 15-24. Use the letters in the figure to identify the profit area if this firm were able to perfectly price discriminate.

Accepted Answer

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

Question 13

Price discrimination explains why Ivy League universities often base tuition costs on students'

Accepted Answer

A)  age. 
B)  financial resources. 
C)  high school GPA. 
D)  gender. 
A)  age. 
B)  financial resources. 
C)  high school GPA. 
D)  gender.

Question 14

Suppose a firm has a monopoly on the sale of widgets and faces a downward-sloping demand curve. When selling the 100th widget, the firm will always receive

Accepted Answer

A)  less marginal revenue on the 100th widget than it received on the 99th widget. 
B)  more average revenue on the 100th widget than it received on the 99th widget. 
C)  more total revenue on the 100 widgets than it received on the first 99 widgets. 
D)  a lower average cost per unit at 100 units of output than at 99 units of output. 
A)  less marginal revenue on the 100th widget than it received on the 99th widget. 
B)  more average revenue on the 100th widget than it received on the 99th widget. 
C)  more total revenue on the 100 widgets than it received on the first 99 widgets. 
D)  a lower average cost per unit at 100 units of output than at 99 units of output.

Question 15

The defining characteristic of a natural monopoly is

Accepted Answer

A)  constant marginal cost over the relevant range of output. 
B)  economies of scale over the relevant range of output. 
C)  constant returns to scale over the relevant range of output. 
D)  diseconomies of scale over the relevant range of output. 
A)  constant marginal cost over the relevant range of output. 
B)  economies of scale over the relevant range of output. 
C)  constant returns to scale over the relevant range of output. 
D)  diseconomies of scale over the relevant range of output.

Question 16

Figure 15-17  
-Refer to Figure 15-17. Which of the following areas represents the profit earned by this profit-maximizing monopolist?

Accepted Answer

A)  BCFE 
B)  ABE 
C)  EFG 
D)  CFIH 
A)  BCFE 
B)  ABE 
C)  EFG 
D)  CFIH

Question 17

The key issue in determining the efficiency of public versus private ownership of a monopoly is

Accepted Answer

A)  the tendency for efficient management of publicly owned enterprises. 
B)  the inability of private monopolies to get rid of managers that are doing a bad job. 
C)  the propensity of private monopolies to generate excessive profits. 
D)  how ownership of the firm affects the cost of production. 
A)  the tendency for efficient management of publicly owned enterprises. 
B)  the inability of private monopolies to get rid of managers that are doing a bad job. 
C)  the propensity of private monopolies to generate excessive profits. 
D)  how ownership of the firm affects the cost of production.

Question 18

When deciding what price to charge consumers, the monopolist may choose to charge them different prices based on the customers'

Accepted Answer

A)  geographical location. 
B)  age. 
C)  income. 
D)  All of the above are correct. 
A)  geographical location. 
B)  age. 
C)  income. 
D)  All of the above are correct.

Question 19

The output effect describes the situation when a monopolist sells more 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 20

The task of economic regulation is to

Accepted Answer

A)  protect monopoly profits. 
B)  approximate the results of the competitive market. 
C)  replace competition with government ownership. 
D)  increase competition within the market. 
A)  protect monopoly profits. 
B)  approximate the results of the competitive market. 
C)  replace competition with government ownership. 
D)  increase competition within the market.

Exam 15: Monopoly

Figure 15-17 -Refer to Figure 15-17. Which of the following areas represents the consumer surplus from this profit-maximizing monopolist?

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

If the government deems a newly-invented drug to be truly original, the pharmaceutical company is given the exclusive right to manufacture and sell the drug for 50 years.

The fundamental cause of monopoly is

The supply curve for the monopolist

In a natural monopoly,

Table 15-10 The monopolist faces the following demand curve: -Refer to Table 15-10. If the monopolist has total fixed costs of $40 and a constant marginal cost of $5, what is the profit-maximizing level of output?

Figure 15-4 -Refer to Figure 15-4. Profit can always be increased by increasing the level of output by one unit if the monopolist is currently operating at

Table 15-6 A monopolist faces the following demand curve: -Refer to Table 15-6. What is the marginal revenue from the sale of the 3rd unit?

Which of the following statements is correct?

Figure 15-24 -Refer to Figure 15-24. Use the letters in the figure to identify the profit area if this firm were able to perfectly price discriminate.

Price discrimination explains why Ivy League universities often base tuition costs on students'

Suppose a firm has a monopoly on the sale of widgets and faces a downward-sloping demand curve. When selling the 100th widget, the firm will always receive

The defining characteristic of a natural monopoly is

Figure 15-17 -Refer to Figure 15-17. Which of the following areas represents the profit earned by this profit-maximizing monopolist?

The key issue in determining the efficiency of public versus private ownership of a monopoly is

When deciding what price to charge consumers, the monopolist may choose to charge them different prices based on the customers'

The output effect describes the situation when a monopolist sells more output and, all else equal, total revenue

The task of economic regulation is to

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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