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Exam 15: Monopoly

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Question 311

Multiple Choice

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Additional firms often do not try to compete with a natural monopoly because

A) they fear retaliation in the form of pricing wars from the natural monopolist.
B) they are unsure of the size of the market in general.
C) they know they cannot achieve the same low costs that the natural monopolist enjoys.
D) the natural monopoly does not make a large profit.

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

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Question 312

Multiple Choice

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Figure 15-3 -Refer to Figure 15-3. Which panel could represent the demand curve facing the soybean industry?

A) Panel A
B) Panel B
C) Panel C
D) Panel D

E) A) and D)
F) A) and C)

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Question 313

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A monopoly creates a deadweight loss to society because it earns both short-run and long-run positive economic profits.

Figure 15-2 -Refer to Figure 15-2. If a regulator requires the firm to charge an average cost price, what is the amount of profit or loss earned by the firm?

Patent and copyright laws encourage

Which of the following is not a characteristic of a 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.

A natural monopoly will always operate in the region of the long run average total cost curve where the cost per unit is constant. ​ ​

If government officials break up a natural monopoly into four smaller firms, then

A monopolist's supply curve is vertical.

Monopoly pricing prevents some mutually beneficial trades from taking place. These unrealized, mutually beneficial trades are

Figure 15-19 -Refer to Figure 15-19. If there are no fixed costs of production, monopoly profit with perfect price discrimination equals

Microsoft's government-granted exclusive right to make and sell the Windows operating system is called a

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

Figure 15-19 -Refer to Figure 15-19. If the monopoly firm is not allowed to price discriminate, then consumer surplus amounts to

In order for a firm to maximize profits through price discrimination, the firm must have some market power and be able to prevent arbitrage.

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?

If the government regulates the price that a natural monopolist can charge to be equal to the firm's average total cost, the firm will

A movie theater can increase its profits through price discrimination by charging a higher price to adults and a lower price to children if

Granting a pharmaceutical company a patent for a new medicine will lead to (i) A product that is priced higher than it would be without the exclusive rights. (ii) Incentives for pharmaceutical companies to invest in research and development. (iii) Higher quantities of output than without the patent.