Question 1

Which of the following is not correct?

Accepted Answer

A)  Antitrust laws may prevent mergers that would actually raise social welfare.
B)  Public ownership is the most common public policy toward monopolies in the United States.
C)  Regulation is a common strategy for a natural monopoly.
D)  Sometimes the best public policy toward a monopoly may be to do nothing.E) None of the above
F) A) and B)

Question 2

Figure 15-14 
-Refer to Figure 15-14. A benevolent social planner would have the monopoly operate at an output level

Accepted Answer

A)  less than Q0.
B)  greater than Q0.
C)  equal to Q0.
D)  equal to zero.E) None of the above
F) A) and B)

Question 3

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.E) A) and D)
F) B) and C)

Question 4

A monopolist will choose to increase output when

Accepted Answer

A)  market price increases.
B)  at all levels of output, marginal cost increases.
C)  at the present level of output, marginal revenue exceeds marginal cost.
D)  the demand curve shifts to the left.E) None of the above
F) A) and D)

Question 5

Figure 15-6 
-Refer to Figure 15-6. How much output will the monopolist produce?

Accepted Answer

A)  O
B)  T
C)  W
D)  ZE) B) and C)
F) None of the above

Question 6

For a long while, electricity producers were thought to be a classic example of a natural monopoly. People held this view because

Accepted Answer

A)  the average cost of producing units of electricity by one producer in a specific region was lower than if the same quantity were produced by two or more producers in the same region.
B)  the average cost of producing units of electricity by one producer in a specific region was higher than if the same quantity were produced by two or more produced in the same region.
C)  the marginal cost of producing units of electricity by one producer in a specific region was higher than if the same quantity were produced by two or more producers in the same region.
D)  electricity is a special non-excludable good that could never be sold in a competitive market.E) A) and B)
F) A) and C)

Question 7

For a monopolist, when the output effect is greater than the price effect, marginal revenue is

Accepted Answer

A)  positive.
B)  negative.
C)  zero.
D)  maximized.E) B) and D)
F) B) and C)

Question 8

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.E) None of the above
F) A) and B)

Question 9

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

Accepted Answer

A)  ABE
B)  BCFE
C)  EFG
D)  ACGE) A) and C)
F) All of the above

Question 10

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.E) C) and D)
F) B) and C)

Question 11

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)  $24E) C) and D)
F) A) and B)

Question 12

When a natural monopoly exists, it is

Accepted Answer

A)  always cost effective for government-owned firms to produce the product.
B)  never cost effective for one firm to produce the product.
C)  always cost effective for two or more private firms to produce the product.
D)  never cost effective for two or more private firms to produce the product.E) A) and B)
F) A) and C)

Question 13

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.E) All of the above
F) A) and C)

Question 14

Suppose a monopolist charges a price of $27 for its product and sells 10 units at that price. At 10 units of production the firm has average fixed cost equal to $10 and average variable cost equal to $12. How much total profit is the firm earning at this price?

Accepted Answer

A)  $5
B)  $25
C)  $50
D)  $140E) A) and D)
F) All of the above

Question 15

Scenario 15-9
Suppose executives at an art museum know that 100 adults are willing to pay $12 for admission to the museum on a weekday. Suppose the executives also know that 200 students are willing to pay $8 for admission on a weekday. The cost of operating the museum on a weekday is $2,000.
-Refer to Scenario 15-9. How much profit will the museum earn if it charges all customers $12 for admission?

Accepted Answer

A)  -$800
B)  $100
C)  $800
D)  $1,200E) A) and B)
F) A) and C)

Question 16

Authors are allowed to be monopolists in the sale of their books in order to

Accepted Answer

A)  promote a society in which people think for themselves and learn from whichever books they please.
B)  correct for the negative externalities that the Internet and television impose.
C)  satisfy literary advocacy groups that exercise their lobbying power.
D)  None of the above is correct.E) All of the above
F) A) and B)

Question 17

Figure 15-8 
-Refer to Figure 15-8. What is the monopoly price and quantity?

Accepted Answer

A)  price = A; quantity = X
B)  price = B; quantity = Y
C)  price = B; quantity = X
D)  price = C; quantity = XE) A) and B)
F) A) and C)

Question 18

When a monopolist chooses the output that maximizes profits, we know that MR = MC and also that P > MR. This is inefficient because

Accepted Answer

A)  ​the monopolist is not minimizing costs.
B)  ​the monopolist is the only producer in the market.
C)  ​the monopolist fails to make transactions where the marginal benefit is greater than the marginal cost.
D)  ​there are entry barriers.E) C) and D)
F) B) and C)

Question 19

Figure 15-2 
-Refer to Figure 15-2. If a regulator requires the firm to charge a marginal cost price, what quantity will the firm produce?

Accepted Answer

The answer of Figure 15-2 
-Refer to Figure 15-2. If...

Question 20

Table 15-8
The following table provides information on the price, quantity, and average total cost for a monopoly. 
-Refer to Table 15-8. At what price will the monopolist maximize his profit?

Accepted Answer

A)  $6
B)  $12
C)  $18
D)  $24E) A) and B)
F) A) and C)

Exam 15: Monopoly

For a long while, electricity producers were thought to be a classic example of a natural monopoly. People held this view because

Correct Answer
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Patents, copyrights, and trademarks

Correct Answer
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Which of the following is not correct?

Correct Answer
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For a monopolist, when the output effect is greater than the price effect, marginal revenue is

Correct Answer
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Figure 15-8 -Refer to Figure 15-8. What is the monopoly price and quantity?

Correct Answer
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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

Correct Answer
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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?

Correct Answer
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Table 15-8 The following table provides information on the price, quantity, and average total cost for a monopoly. -Refer to Table 15-8. At what price will the monopolist maximize his profit?

Correct Answer
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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?

Correct Answer
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When a monopolist chooses the output that maximizes profits, we know that MR = MC and also that P > MR. This is inefficient because

Correct Answer
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Figure 15-2 -Refer to Figure 15-2. If a regulator requires the firm to charge a marginal cost price, what quantity will the firm produce?

Correct Answer
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Figure 15-14 -Refer to Figure 15-14. A benevolent social planner would have the monopoly operate at an output level

Correct Answer
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Correct Answer
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Authors are allowed to be monopolists in the sale of their books in order to

Correct Answer
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Figure 15-17 -Refer to Figure 15-17. Which of the following areas represents the deadweight loss from this profit-maximizing monopolist?

Correct Answer
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Figure 15-6 -Refer to Figure 15-6. How much output will the monopolist produce?

Correct Answer
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The fundamental cause of monopoly is

Correct Answer
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A monopolist will choose to increase output when

Correct Answer
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When a natural monopoly exists, it is

Correct Answer
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Suppose a monopolist charges a price of $27 for its product and sells 10 units at that price. At 10 units of production the firm has average fixed cost equal to $10 and average variable cost equal to $12. How much total profit is the firm earning at this price?

Correct Answer
verified

Exam 15: Monopoly

For a long while, electricity producers were thought to be a classic example of a natural monopoly. People held this view because

Correct AnswerverifiedShow Answer

Patents, copyrights, and trademarks

Correct AnswerverifiedShow Answer

Which of the following is not correct?

Correct AnswerverifiedShow Answer

For a monopolist, when the output effect is greater than the price effect, marginal revenue is

Correct AnswerverifiedShow Answer

Figure 15-8 -Refer to Figure 15-8. What is the monopoly price and quantity?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

Table 15-8 The following table provides information on the price, quantity, and average total cost for a monopoly. -Refer to Table 15-8. At what price will the monopolist maximize his profit?

Correct AnswerverifiedShow Answer

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?

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When a monopolist chooses the output that maximizes profits, we know that MR = MC and also that P > MR. This is inefficient because

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Figure 15-2 -Refer to Figure 15-2. If a regulator requires the firm to charge a marginal cost price, what quantity will the firm produce?

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Figure 15-14 -Refer to Figure 15-14. A benevolent social planner would have the monopoly operate at an output level

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Authors are allowed to be monopolists in the sale of their books in order to

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

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Figure 15-6 -Refer to Figure 15-6. How much output will the monopolist produce?

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The fundamental cause of monopoly is

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A monopolist will choose to increase output when

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When a natural monopoly exists, it is

Correct AnswerverifiedShow Answer

Suppose a monopolist charges a price of $27 for its product and sells 10 units at that price. At 10 units of production the firm has average fixed cost equal to $10 and average variable cost equal to $12. How much total profit is the firm earning at this price?

Correct AnswerverifiedShow Answer

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