Question 1

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) A) and B)
F) A) and C)

Question 2

Which type of public policy toward monopolies is much more common in Europe than in the United States?

Accepted Answer

A)   antitrust laws
B)   regulation
C)   public ownership
D)   "do nothing"E) None of the above
F) A) and D)

Question 3

During the life of a drug patent,the monopoly pharmaceutical firm maximizes profit by producing the quantity at which marginal revenue equals marginal cost.

Accepted Answer

A) True 
 B)False

Question 4

A monopoly firm can sell 150 units of output for $10 per unit.Alternatively,it can sell 151 units of output for $9.95 per unit.The marginal revenue of the 151st unit of output is

Accepted Answer

A)   $-2.45.
B)   $-0.05.
C)   $2.45.
D)   $9.95.E) A) and C)
F) A) and B)

Question 5

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)   $90E) C) and D)
F) A) and C)

Question 6

Name brand drugs are able to continue capitalizing on their market power even after generic drugs enter the market because (i) 
Almost all people fear the generic drug companies are devoting too few resources to research and development.
(ii) 
Some people fear that generic drugs are inferior.
(iii) 
Some people are loyal to the name brand.

Accepted Answer

A)   (i) and (ii) only
B)   (ii) and (iii) only
C)   (i) and (iii) only
D)   (i) , (ii) ,and (iii) E) B) and D)
F) C) and D)

Question 7

A monopolist's profit is equal to (Price - Marginal Cost)* Quantity.

Accepted Answer

A) True 
 B)False

Question 8

What is the shape of the monopolist's marginal revenue curve?

Accepted Answer

A)   a downward-sloping line that is identical to the demand curve
B)   a downward-sloping line that lies below the demand curve
C)   a horizontal line that is identical to the demand curve
D)   a horizontal line that lies below the demand curveE) All of the above
F) C) and D)

Question 9

One example of price discrimination occurs in the publishing industry when a publisher initially releases an expensive hardcover edition of a popular novel and later releases a cheaper paperback edition.Use this example to demonstrate the benefits and potential pitfalls of a price discrimination pricing strategy.

Accepted Answer

The answer should address the three basi...

Question 10

One problem with regulating a monopolist on the basis of cost is that

Accepted Answer

A)   by focusing on costs,the regulators ignore profits.
B)   it does not provide an incentive for the monopolist to reduce its cost.
C)   a monopolist's costs,by definition,are higher than costs of perfectly competitive firms.
D)   a monopolist is still able to generate excessive economic profits.E) B) and D)
F) B) and C)

Question 11

Suppose a monopolist chooses the price and production level that maximizes its profit.From that point,to increase society's economic welfare,output would need to be increased as long as

Accepted Answer

A)   average revenue exceeds marginal cost.
B)   average revenue exceeds average total cost.
C)   marginal revenue exceeds marginal cost.
D)   marginal revenue exceeds average total cost.E) C) and D)
F) A) and B)

Question 12

The deadweight loss for a monopolist equals one-half of its profits for any given level of output.

Accepted Answer

A) True 
 B)False

Question 13

A government-created monopoly arises when

Accepted Answer

A)   government spending in a certain industry gives rise to monopoly power.
B)   the government exercises its market control by encouraging competition among sellers.
C)   the government gives a firm the exclusive right to sell some good or service.
D)   Both a and c are correct.E) All of the above
F) A) and D)

Question 14

In a monopoly market,the socially efficient quantity of output is typically higher than the profit-maximizing quantity of output for the monopolist.

Accepted Answer

A) True 
 B)False

Question 15

Figure 15-15 
-Refer to Figure 15-15.If the monopoly firm is not allowed to price discriminate,then consumer surplus amounts to

Accepted Answer

A)   $0.
B)   $500.
C)   $1,000.
D)   $2,000.E) None of the above
F) A) and B)

Question 16

The legislation passed by Congress in 1914 to strengthen the government's powers and authorize private lawsuits was the

Accepted Answer

A)   Morgan Act.
B)   Sherman Act.
C)   Clayton Act.
D)   14th Amendment.E) None of the above
F) B) and D)

Question 17

Perfect price discrimination

Accepted Answer

A)   eliminates deadweight loss.
B)   reduces profits to the monopolist.
C)   decreases the total quantity sold by the monopolist.
D)   requires arbitrage in order for the monopolist to maximize profits.E) C) and D)
F) B) and D)

Question 18

Figure 15-7 
-Refer to Figure 15-7.What area represents the total surplus lost due to monopoly pricing?

Accepted Answer

A)   the rectangle (F-
D)  xA
B)   the triangle 1/2[(F-
D)  x(B-
A)  ]
C)   the triangle 1/2[(F-G) x(B-
A)  ]
D)   the rectangle (F-
D)  xA plus the triangle 1/2[(F-
D)  x(B-
A)  ]E) None of the above
F) A) and B)

Question 19

Reduced competition through merging of companies will raise social welfare

Accepted Answer

A)   if the social cost from the synergies exceeds the benefit of increased market power.
B)   if the benefit from the synergies exceeds the social cost of increased market power.
C)   always.
D)   never.E) A) and D)
F) All of the above

Question 20

Table 15-1
 
-Refer to Table 15-1.If the monopolist sells 8 units of its product,how much total revenue will it receive from the sale?

Accepted Answer

A)   $14
B)   $40
C)   $112
D)   $164E) A) and B)
F) A) and C)

Exam 15: Monopoly

Perfect price discrimination

Correct Answer
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Figure 15-7 -Refer to Figure 15-7.What area represents the total surplus lost due to monopoly pricing?

Correct Answer
verified

A monopoly firm can sell 150 units of output for $10 per unit.Alternatively,it can sell 151 units of output for $9.95 per unit.The marginal revenue of the 151^st unit of output is

Correct Answer
verified

During the life of a drug patent,the monopoly pharmaceutical firm maximizes profit by producing the quantity at which marginal revenue equals marginal cost.

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

The legislation passed by Congress in 1914 to strengthen the government's powers and authorize private lawsuits was the

Correct Answer
verified

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?

Correct Answer
verified

What is the shape of the monopolist's marginal revenue curve?

Correct Answer
verified

Correct Answer
verified
The answer should address the three basi...
View Answer

Figure 15-15 -Refer to Figure 15-15.If the monopoly firm is not allowed to price discriminate,then consumer surplus amounts to

Correct Answer
verified

Table 15-1 -Refer to Table 15-1.If the monopolist sells 8 units of its product,how much total revenue will it receive from the sale?

Correct Answer
verified

Which type of public policy toward monopolies is much more common in Europe than in the United States?

Correct Answer
verified

One problem with regulating a monopolist on the basis of cost is that

Correct Answer
verified

Reduced competition through merging of companies will raise social welfare

Correct Answer
verified

Suppose a monopolist chooses the price and production level that maximizes its profit.From that point,to increase society's economic welfare,output would need to be increased as long as

Correct Answer
verified

The deadweight loss for a monopolist equals one-half of its profits for any given level of output.

Correct Answer
verified

A government-created monopoly arises when

Correct Answer
verified

A monopolist's profit is equal to (Price - Marginal Cost)* Quantity.

Correct Answer
verified

In a monopoly market,the socially efficient quantity of output is typically higher than the profit-maximizing quantity of output for the monopolist.

Correct Answer
verified

Exam 15: Monopoly

Perfect price discrimination

Correct AnswerverifiedShow Answer

Figure 15-7 -Refer to Figure 15-7.What area represents the total surplus lost due to monopoly pricing?

Correct AnswerverifiedShow Answer

A monopoly firm can sell 150 units of output for $10 per unit.Alternatively,it can sell 151 units of output for $9.95 per unit.The marginal revenue of the 151st unit of output is

Correct AnswerverifiedShow Answer

During the life of a drug patent,the monopoly pharmaceutical firm maximizes profit by producing the quantity at which marginal revenue equals marginal cost.

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

The legislation passed by Congress in 1914 to strengthen the government's powers and authorize private lawsuits was the

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

What is the shape of the monopolist's marginal revenue curve?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe answer should address the three basi...View AnswerShow Answer

Figure 15-15 -Refer to Figure 15-15.If the monopoly firm is not allowed to price discriminate,then consumer surplus amounts to

Correct AnswerverifiedShow Answer

Table 15-1 -Refer to Table 15-1.If the monopolist sells 8 units of its product,how much total revenue will it receive from the sale?

Correct AnswerverifiedShow Answer

Which type of public policy toward monopolies is much more common in Europe than in the United States?

Correct AnswerverifiedShow Answer

One problem with regulating a monopolist on the basis of cost is that

Correct AnswerverifiedShow Answer

Reduced competition through merging of companies will raise social welfare

Correct AnswerverifiedShow Answer

Suppose a monopolist chooses the price and production level that maximizes its profit.From that point,to increase society's economic welfare,output would need to be increased as long as

Correct AnswerverifiedShow Answer

The deadweight loss for a monopolist equals one-half of its profits for any given level of output.

Correct AnswerverifiedShow Answer

A government-created monopoly arises when

Correct AnswerverifiedShow Answer

A monopolist's profit is equal to (Price - Marginal Cost)* Quantity.

Correct AnswerverifiedShow Answer

In a monopoly market,the socially efficient quantity of output is typically higher than the profit-maximizing quantity of output for the monopolist.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
verified

A monopoly firm can sell 150 units of output for $10 per unit.Alternatively,it can sell 151 units of output for $9.95 per unit.The marginal revenue of the 151^st unit of output is

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
The answer should address the three basi...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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