Question 1

A rational pricing strategy for a profit-maximizing monopolist is

Accepted Answer

A)   price discrimination.
B)   price segregation.
C)   synergy pricing.
D)   average cost pricing.E) A) and B)
F) None of the above

Question 2

After the patent runs out on a brand name drug,generic drugs enter the market.What happens next in the market?

Accepted Answer

A)   Price increases,and total surplus decreases.
B)   Price decreases,and total surplus decreases.
C)   Price decreases,and total surplus increases.
D)   Price increases,and total surplus increases.E) A) and B)
F) A) and C)

Question 3

A monopolist produces an output level where marginal revenue equals marginal cost and charges a price where marginal cost equals average total cost.

Accepted Answer

A) True 
 B)False

Question 4

If a monopolist has zero marginal costs,it will produce

Accepted Answer

A)   the output at which total revenue is maximized.
B)   in the range in which marginal revenue is still increasing.
C)   at the point at which marginal revenue is at a maximum.
D)   in the range in which marginal revenue is negative.E) None of the above
F) A) and B)

Question 5

Suppose that a professional photographer takes a prize-winning digital photo.She can sell a 5"x7" color print of the photo for $10.She can also sell the digital file for $20.There are 500 people willing to buy the color print and 2,000 people willing to buy the digital file.Assume the costs to the photographer are zero and that the people who purchase the digital file cannot resell the file itself or any prints made from it.What should she do in order to maximize her profits?

Accepted Answer

A)   earn $5,000 by selling only the color prints
B)   earn $40,000 by selling only the digital files
C)   earn $45,000 by selling both the color prints and the digital files at their respective prices
D)   We do not have enough information with which to answer this question.E) None of the above
F) B) and D)

Question 6

Scenario 14-6
The concert promoters of a heavy-metal band,WeR2Loud,know that there are two types of concert-goers: die-hard fans and casual fans.For a particular WeR2Loud concert,there are 1,000 die-hard fans who will pay $150 for a ticket and 500 casual fans who will pay $50 for a ticket.There are 1,500 seats available at the concert venue.Suppose the cost of putting on the concert is $50,000,which includes the cost of the band,lighting,security,etc.
-Refer to Scenario 14-6.How much profit will the concert promoters earn if they set the price of each ticket at $150?

Accepted Answer

A)   $75,000
B)   $100,000
C)   $150,000
D)   $175,000E) A) and B)
F) A) and D)

Question 7

A benefit of a monopoly is

Accepted Answer

A)   lower prices.
B)   a wide variety of similar products.
C)   decreasing long-run average total costs.
D)   greater creativity by authors who can copyright their novels.E) C) and D)
F) A) and B)

Question 8

Table 14-11
The following table shows quantity,price,and marginal cost information for a monopoly:
 
-Refer to Table 14-11.What would be the firm's marginal revenue at the profit-maximizing level of output?

Accepted Answer

A)   $7
B)   $6
C)   $5
D)   $1E) None of the above
F) C) and D)

Question 9

If the ABC company owns the exclusive rights to mine land in Afghanistan for Lapis Lazuli,a rare stone used in jewelry which is found only in Afghanistan,the company benefits from a barrier to entry.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is not an example of a barrier to entry?

Accepted Answer

A)   Mighty Mitch's Mining Company owns a unique plot of land in Tanzania,under which lies the only large deposit of Tanzanite in the world.
B)   A pharmaceutical company obtains a patent for a specific high blood pressure medication.
C)   A musician obtains a copyright for her original song.
D)   An entrepreneur opens a popular new restaurant.E) A) and C)
F) C) and D)

Question 11

Figure 14-6 
-Refer to Figure 14-6.A profit-maximizing monopolist would earn total revenues of

Accepted Answer

A)   $81.
B)   $144.
C)   $225.
D)   $240.E) All of the above
F) None of the above

Question 12

Because a monopolist must lower its price in order to sell another unit of output,

Accepted Answer

A)   marginal revenue is less than price.
B)   long-term economic profits will be zero.
C)   total revenue increases as price increases.
D)   average revenue is less than price.E) A) and C)
F) A) and B)

Question 13

Which of the following is a characteristic of a natural monopoly?

Accepted Answer

A)   Average cost exceeds marginal cost over large regions of output.
B)   Increasing the number of firms increases each firm's average total cost.
C)   One firm can supply output at a lower cost than two firms.
D)   All of the above are correct.E) A) and B)
F) A) and C)

Question 14

Figure 14-3 
-Refer to Figure 14-3.Profit will be maximized by charging a price equal to

Accepted Answer

A)   P1.
B)   P2.
C)   P3.
D)   P4.E) All of the above
F) C) and D)

Question 15

Scenario 14-2
Consider a local,privately-owned electrical cooperative named Minny County Megawatts (MCM,LLC) .MCM has just completed a natural-gas-burning electrical power plant in the Midwest.Currently,MCM can meet the electricity needs of all residents in the county.In fact,its capacity far exceeds the needs of the county.After just a few years of operation,the shareholders of MCM experienced incredible rates of return on their investment due to the profitability of the corporation.
-Refer to Scenario 14-2.MCM will continue to be a monopolist in the electricity industry only if

Accepted Answer

A)   population growth leads to an increased demand for electricity.
B)   there are no new entrants to the market.
C)   the price of natural gas decreases.
D)   All of the above are correct.E) B) and C)
F) A) and B)

Question 16

Table 14-13
The following table gives information on the price,quantity,and total cost of production for a monopolist.
 
-Refer to Table 14-13.How much profit will the firm earn at the profit-maximizing price?

Accepted Answer

A)   $9
B)   $12
C)   $15
D)   $18E) A) and D)
F) A) and C)

Question 17

Figure 14-2    
-Refer to Figure 14-2.Which panel could represent the demand curve facing a soybean farmer?

Accepted Answer

A)   Panel A
B)   Panel B
C)   Panel C
D)   Panel DE) A) and B)
F) B) and D)

Question 18

If government regulation sets the maximum price for a natural monopoly equal to its marginal cost,then the natural monopolist will

Accepted Answer

A)   earn economic losses.
B)   earn economic profits.
C)   earn zero economic profits.
D)   produce a lower quantity of output than is socially optimal.E) B) and D)
F) C) and D)

Question 19

Many movie theaters allow discount tickets to be sold to senior citizens because

Accepted Answer

A)   senior-citizen laws mandate such discounts.
B)   goodwill efforts earn community respect and win loyal patrons.
C)   the theaters are profit maximizers.
D)   senior citizens lobby city councils for lower prices.E) B) and D)
F) B) and C)

Question 20

A patent gives a single person or firm the exclusive right to sell some good or service forever.

Accepted Answer

A) True 
 B)False

Exam 14: Monopoly

If the ABC company owns the exclusive rights to mine land in Afghanistan for Lapis Lazuli,a rare stone used in jewelry which is found only in Afghanistan,the company benefits from a barrier to entry.

Correct Answer
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Figure 14-6 -Refer to Figure 14-6.A profit-maximizing monopolist would earn total revenues of

Correct Answer
verified

Correct Answer
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After the patent runs out on a brand name drug,generic drugs enter the market.What happens next in the market?

Correct Answer
verified

If government regulation sets the maximum price for a natural monopoly equal to its marginal cost,then the natural monopolist will

Correct Answer
verified

Correct Answer
verified

Because a monopolist must lower its price in order to sell another unit of output,

Correct Answer
verified

A patent gives a single person or firm the exclusive right to sell some good or service forever.

Correct Answer
verified

Figure 14-3 -Refer to Figure 14-3.Profit will be maximized by charging a price equal to

Correct Answer
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Correct Answer
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If a monopolist has zero marginal costs,it will produce

Correct Answer
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Many movie theaters allow discount tickets to be sold to senior citizens because

Correct Answer
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Table 14-13 The following table gives information on the price,quantity,and total cost of production for a monopolist. -Refer to Table 14-13.How much profit will the firm earn at the profit-maximizing price?

Correct Answer
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Figure 14-2 -Refer to Figure 14-2.Which panel could represent the demand curve facing a soybean farmer?

Correct Answer
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A monopolist produces an output level where marginal revenue equals marginal cost and charges a price where marginal cost equals average total cost.

Correct Answer
verified

Which of the following is a characteristic of a natural monopoly?

Correct Answer
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A benefit of a monopoly is

Correct Answer
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Which of the following is not an example of a barrier to entry?

Correct Answer
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Table 14-11 The following table shows quantity,price,and marginal cost information for a monopoly: -Refer to Table 14-11.What would be the firm's marginal revenue at the profit-maximizing level of output?

Correct Answer
verified

A rational pricing strategy for a profit-maximizing monopolist is

Correct Answer
verified

Exam 14: Monopoly

If the ABC company owns the exclusive rights to mine land in Afghanistan for Lapis Lazuli,a rare stone used in jewelry which is found only in Afghanistan,the company benefits from a barrier to entry.

Correct AnswerverifiedShow Answer

Figure 14-6 -Refer to Figure 14-6.A profit-maximizing monopolist would earn total revenues of

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

After the patent runs out on a brand name drug,generic drugs enter the market.What happens next in the market?

Correct AnswerverifiedShow Answer

If government regulation sets the maximum price for a natural monopoly equal to its marginal cost,then the natural monopolist will

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Because a monopolist must lower its price in order to sell another unit of output,

Correct AnswerverifiedShow Answer

A patent gives a single person or firm the exclusive right to sell some good or service forever.

Correct AnswerverifiedShow Answer

Figure 14-3 -Refer to Figure 14-3.Profit will be maximized by charging a price equal to

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If a monopolist has zero marginal costs,it will produce

Correct AnswerverifiedShow Answer

Many movie theaters allow discount tickets to be sold to senior citizens because

Correct AnswerverifiedShow Answer

Table 14-13 The following table gives information on the price,quantity,and total cost of production for a monopolist. -Refer to Table 14-13.How much profit will the firm earn at the profit-maximizing price?

Correct AnswerverifiedShow Answer

Figure 14-2 -Refer to Figure 14-2.Which panel could represent the demand curve facing a soybean farmer?

Correct AnswerverifiedShow Answer

A monopolist produces an output level where marginal revenue equals marginal cost and charges a price where marginal cost equals average total cost.

Correct AnswerverifiedShow Answer

Which of the following is a characteristic of a natural monopoly?

Correct AnswerverifiedShow Answer

A benefit of a monopoly is

Correct AnswerverifiedShow Answer

Which of the following is not an example of a barrier to entry?

Correct AnswerverifiedShow Answer

Table 14-11 The following table shows quantity,price,and marginal cost information for a monopoly: -Refer to Table 14-11.What would be the firm's marginal revenue at the profit-maximizing level of output?

Correct AnswerverifiedShow Answer

A rational pricing strategy for a profit-maximizing monopolist is

Correct AnswerverifiedShow Answer

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