Question 1

When a monopoly increases its output and sales,

Accepted Answer

A)  both the output effect and the price effect work to increase total revenue.
B)  the output effect works to increase total revenue and the price effect works to decrease total revenue.
C)  the output effect works to decrease total revenue and the price effect works to increase total revenue.
D)  both the output effect and the price effect work to decrease total revenue.E) A) and B)
F) A) and C)

Question 2

Price discrimination explains why Ivy League universities often set rules that determine prices of admission based on students'

Accepted Answer

A)  age.
B)  financial resources.
C)  high school GPA.
D)  gender.E) B) and C)
F) All of the above

Question 3

A firm that is the sole seller of a product without close substitutes is

Accepted Answer

A)  perfectly competitive.
B)  monopolistically competitive.
C)  an oligopolist
D)  a monopolistE) A) and B)
F) A) and C)

Question 4

A monopolist faces the following demand curve: 
The monopolist has total fixed costs of $40 and a constant marginal cost of $5.At the profit-maximizing level of output,the monopolist's average total cost is

Accepted Answer

A)  $9.00
B)  $7.50
C)  $6.74
D)  $5.82E) A) and B)
F) B) and C)

Question 5

Table 15-2
Dreher's Designer Shirt Company, a monopolist, has the following cost and revenue information.
 
-Refer to Table 15-2.What is the total revenue from selling 8 shirts?

Accepted Answer

A)  $90
B)  $695
C)  $720
D)  $800E) A) and D)
F) None of the above

Question 6

With perfect price discrimination

Accepted Answer

A)  the monopoly eliminates all price discrimination by charging each customer the same price.
B)  the monopoly charges each customer an amount equal to the monopolist's marginal cost of production.
C)  the deadweight loss from monopoly is eliminated.
D)  consumer surplus is gained as monopoly profits are eliminated.E) C) and D)
F) All of the above

Question 7

A perfectly price-discriminating monopolist is able to

Accepted Answer

A)  maximize profit and produce a socially-optimal level of output.
B)  maximize profit, but not produce a socially-optimal level of output.
C)  produce a socially-optimal level of output, but not maximize profit.
D)  exercise illegal preferences regarding the race and/or gender of its employees.E) A) and B)
F) A) and C)

Question 8

Figure 15-3
The figure below illustrates the cost and revenue structure for a monopoly firm.
 
-Refer to Figure 15-3.A profit-maximizing monopoly's profit is equal to

Accepted Answer

A)  P₃ × Q₂.
B)  P₂ × Q₄.
C)  (P₃ - P₀)  × Q₂.
D)  (P₃ - P₀)  × Q₄.E) B) and D)
F) A) and C)

Question 9

Figure 15-7
The figure below depicts the demand, marginal revenue, and marginal cost curves of a profit-maximizing monopolist.
 
-Refer to Figure 15-7.If the monopoly firm perfectly price discriminates,then the deadweight loss amounts to

Accepted Answer

A)  $0.
B)  $100.
C)  $200.
D)  $500.E) A) and B)
F) A) and C)

Question 10

Figure 15-4
The figure below depicts the demand and marginal cost curves of a profit-maximizing monopolist.
 
-Refer to Figure 15-4.If the monopoly operates at an output level below Q₀,then an increase in output toward Q₀ (but not so large an increase as to exceed Q₀) would

Accepted Answer

A)  raise the price and raise total surplus.
B)  lower the price and raise total surplus.
C)  raise the price and lower total surplus.
D)  lower the price and lower total surplus.E) B) and C)
F) A) and B)

Question 11

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.E) C) and D)
F) None of the above

Question 12

Figure 15-2
The figure below illustrates the cost and revenue structure for a monopoly firm.
 
-Refer to Figure 15-2.Profit will be maximized by charging a price equal to

Accepted Answer

A)  P₀.
B)  P₁.
C)  P₂.
D)  P₃.E) B) and C)
F) None of the above

Question 13

A monopolist produces

Accepted Answer

A)  more than the socially efficient quantity of output, but at a higher price than in a competitive market.
B)  less than the socially efficient quantity of output, but at a higher price than in a competitive market.
C)  the socially efficient quantity of output, but at a higher price than in a competitive market.
D)  possibly more or possibly less than the socially efficient quantity of output, but definitely at a higher price than in a competitive market.E) None of the above
F) B) and C)

Question 14

Marginal revenue can become negative for

Accepted Answer

A)  both competitive and monopoly firms.
B)  competitive firms, but not for monopoly firms.
C)  monopoly firms, but not for competitive firms.
D)  neither competitive nor monopoly firms.E) B) and D)
F) A) and C)

Question 15

Figure 15-6
 
-Refer to Figure 15-6.To maximize total surplus,a benevolent social planner would choose which of the following outcomes?

Accepted Answer

A)  100 units of output and a price of $10 per unit
B)  150 units of output and a price of $10 per unit
C)  150 units of output and a price of $15 per unit
D)  200 units of output and a price of $10 per unitE) A) and C)
F) C) and D)

Question 16

Table 15-2
Dreher's Designer Shirt Company, a monopolist, has the following cost and revenue information.
 
-Refer to Table 15-2.What is the total revenue from selling 6 shirts?

Accepted Answer

A)  $100
B)  $600
C)  $625
D)  $660E) A) and C)
F) A) and B)

Question 17

For a monopolist,

Accepted Answer

A)  average revenue is always greater than the price of the good.
B)  marginal revenue is always less than the price of the good.
C)  marginal cost is always greater than average total cost.
D)  marginal revenue equals marginal cost at the point where total revenue is maximized.E) B) and C)
F) A) and C)

Question 18

Figure 15-2
The figure below illustrates the cost and revenue structure for a monopoly firm.
 
-Refer to Figure 15-2.The marginal cost curve for a monopoly firm is depicted by curve

Accepted Answer

A)  a.
B)  B.
C)  C.
D)  D.E) None of the above
F) A) and D)

Question 19

If a monopolist can sell 7 units when the price is $4 and 8 units when the price is $3,then marginal revenue of selling the eighth unit is equal to

Accepted Answer

A)  $3.
B)  $4.
C)  $24.
D)  -$4.E) B) and D)
F) C) and D)

Question 20

The simplest way for a monopoly to arise is for a single firm to

Accepted Answer

A)  decrease its price below its competitors' prices.
B)  decrease production to increase demand for its product.
C)  make pricing decisions jointly with other firms.
D)  own a key resource.E) C) and D)
F) A) and B)

Exam 15: Monopoly

Figure 15-7 The figure below depicts the demand, marginal revenue, and marginal cost curves of a profit-maximizing monopolist. -Refer to Figure 15-7.If the monopoly firm perfectly price discriminates,then the deadweight loss amounts to

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If a monopolist can sell 7 units when the price is $4 and 8 units when the price is $3,then marginal revenue of selling the eighth unit is equal to

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When a monopoly increases its output and sales,

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A firm that is the sole seller of a product without close substitutes is

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A monopolist produces

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Figure 15-2 The figure below illustrates the cost and revenue structure for a monopoly firm. -Refer to Figure 15-2.The marginal cost curve for a monopoly firm is depicted by curve

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Figure 15-6 -Refer to Figure 15-6.To maximize total surplus,a benevolent social planner would choose which of the following outcomes?

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Figure 15-3 The figure below illustrates the cost and revenue structure for a monopoly firm. -Refer to Figure 15-3.A profit-maximizing monopoly's profit is equal to

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

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For a monopolist,

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Price discrimination explains why Ivy League universities often set rules that determine prices of admission based on students'

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Figure 15-4 The figure below depicts the demand and marginal cost curves of a profit-maximizing monopolist. -Refer to Figure 15-4.If the monopoly operates at an output level below Q₀,then an increase in output toward Q₀ (but not so large an increase as to exceed Q₀) would

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Table 15-2 Dreher's Designer Shirt Company, a monopolist, has the following cost and revenue information. -Refer to Table 15-2.What is the total revenue from selling 6 shirts?

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Figure 15-2 The figure below illustrates the cost and revenue structure for a monopoly firm. -Refer to Figure 15-2.Profit will be maximized by charging a price equal to

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The simplest way for a monopoly to arise is for a single firm to

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A monopolist faces the following demand curve: The monopolist has total fixed costs of $40 and a constant marginal cost of $5.At the profit-maximizing level of output,the monopolist's average total cost is

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Table 15-2 Dreher's Designer Shirt Company, a monopolist, has the following cost and revenue information. -Refer to Table 15-2.What is the total revenue from selling 8 shirts?

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Marginal revenue can become negative for

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A perfectly price-discriminating monopolist is able to

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With perfect price discrimination

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