Question 1

Why might economists prefer private ownership of monopolies over public ownership of monopolies?

Accepted Answer

The private monopolist is governed by th...

Question 2

Monopolists can achieve any level of profit they desire because they have unlimited market power.

Accepted Answer

A) True 
 B)False

Question 3

The three main sources of barriers to entry are monopoly resources, government regulation, and the firm's production process.

Accepted Answer

A) True 
 B)False

Question 4

A fundamental source of monopoly market power arises from

Accepted Answer

A)   perfectly elastic demand.
B)   perfectly inelastic demand.
C)   barriers to entry.
D)   availability of "free" natural resources, such as water or air.E) A) and B)
F) A) and C)

Question 5

Scenario 15-11
Vincent operates a scenic tour business in Boston. He has one bus which can fit 50 people per tour and each tour lasts 2 hours. His total cost of operating one tour is fixed at $450. Vincent's cost is not reduced if he runs a tour with a partially full bus. While his cost is the same for all tours, Vincent charges each passenger his/her willingness to pay: adults $18 per trip, children $10 per trip, and senior citizens $12 per trip. At those rates, on a typical day Vincent's demand is:
  Assume that Vincent's customers are always available for the tour; therefore, he can fill his bus for each tour as long as there is sufficient total demand for the day.
-Refer to Scenario 15-11. What is Vincent's profit on a typical day?

Accepted Answer

The answer of Scenario 15-11
Vincent operates a scenic tour business...

Question 6

When a firm experiences continually declining average total costs, the firm is a

Accepted Answer

A)   government-created monopoly.
B)   price taker.
C)   natural monopoly.
D)   revenue maximizer.E) C) and D)
F) A) and B)

Question 7

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) C) and D)

Question 8

Figure 15-18 
-Refer to Figure 15-18. If the monopoly firm perfectly price discriminates, then the deadweight loss amounts to

Accepted Answer

A)   $0.
B)   $1,000.
C)   $2,000.
D)   $4,000.E) All of the above
F) A) and B)

Question 9

Competitive firms differ from monopolies in which of the following ways? (i)  Competitive firms do not have to worry about the price effect lowering their total revenue.
(ii)  Marginal revenue for a competitive firm equals price, while marginal revenue for a monopoly is less than the price it is able to charge.
(iii)  Monopolies must lower their price in order to sell more of their product, while competitive firms do not.

Accepted Answer

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

Question 10

For a monopolist, when does marginal revenue exceed average revenue?

Accepted Answer

A)   never
B)   when output is less than the profit-maximizing level of output
C)   when output is greater than the profit-maximizing level of output
D)   for all levels of output greater than zeroE) B) and D)
F) A) and B)

Question 11

Table 15-14
The following table gives information on the price, quantity, and total cost of production for a monopolist.
 
-Refer to Table 15-14. At what price does marginal revenue equal marginal cost?

Accepted Answer

A)   $5
B)   $4
C)   $3
D)   $2E) A) and C)
F) B) and C)

Question 12

Which of the following statements comparing monopoly with competition is correct?

Accepted Answer

A)   A monopolist produces a higher level of output and charges a lower price than a competitive firm would.
B)   With perfect price discrimination, the total surplus under monopoly can be the same as under competition.
C)   With or without price discrimination, the consumer surplus under monopoly is at least as large as it would be under competition.
D)   The deadweight loss associated with monopoly is caused by the positive economic profits of the monopolist; competitive firms do not earn a positive economic profit so there is no deadweight loss under competition.E) A) and C)
F) A) and D)

Question 13

Which of the following would be most likely to have monopoly power?

Accepted Answer

A)   a long-distance telephone service provider
B)   a local cable TV provider
C)   a large department store
D)   a gas stationE) A) and D)
F) B) and D)

Question 14

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) B) and D)

Question 15

Give some examples of the benefits and costs of antitrust laws.

Accepted Answer

Benefits include promoting com...

Question 16

Suppose most people regard emeralds, rubies, and sapphires as close substitutes for diamonds. Then DeBeers, a large diamond company, has

Accepted Answer

A)   less incentive to advertise than it would otherwise have.
B)   less market power than it would otherwise have.
C)   more control over the price of diamonds than it would otherwise have.
D)   higher profits than it would otherwise have.E) C) and D)
F) A) and B)

Question 17

Suppose when a monopolist produces 75 units its average revenue is $10 per unit, its marginal revenue is $5 per unit, its marginal cost is $6 per unit, and its average total cost is $5 per unit. What can we conclude about this monopolist?

Accepted Answer

A)   The monopolist is currently maximizing profits, and its total profits are $375.
B)   The monopolist is currently maximizing profits, and its total profits are $300.
C)   The monopolist is not currently maximizing profits; it should produce more units and charge a lower price to maximize profits.
D)   The monopolist is not currently maximizing profits; it should produce fewer units and charge a higher price to maximize profits.E) A) and D)
F) A) and C)

Question 18

The profit-maximization problem for a monopolist differs from that of a competitive firm in which of the following ways?

Accepted Answer

A)   A competitive firm maximizes profit at the point where marginal revenue equals marginal cost; a monopolist maximizes profit at the point where marginal revenue exceeds marginal cost.
B)   A competitive firm maximizes profit at the point where average revenue equals marginal cost; a monopolist maximizes profit at the point where average revenue exceeds marginal cost.
C)   For a competitive firm, marginal revenue at the profit-maximizing level of output is equal to marginal revenue at all other levels of output; for a monopolist, marginal revenue at the profit-maximizing level of output is smaller than it is for larger levels of output.
D)   For a profit-maximizing competitive firm, thinking at the margin is much more important than it is for a profit- maximizing monopolist.E) A) and B)
F) A) and C)

Question 19

The George Stigler quote, "...the degree of 'market failure' for the American economy is much smaller than the 'political failure' arising from the imperfections of economic policies ..." illustrates the advantage of which type of public policy toward monopolies?

Accepted Answer

A)   antitrust laws
B)   regulation
C)   public ownership
D)   "do nothing"E) B) and D)
F) A) and C)

Question 20

Table 15-12
The following table provides information on the price, quantity, and average total cost for a monopoly.
 
-Refer to Table 15-12. In order to maximize profits, the firm should produce

Accepted Answer

A)   4 units of output.
B)   8 units of output.
C)   12 units of output.
D)   16 units of output.E) B) and D)
F) C) and D)

Exam 15: Monopoly

Table 15-14 The following table gives information on the price, quantity, and total cost of production for a monopolist. -Refer to Table 15-14. At what price does marginal revenue equal marginal cost?

Correct Answer
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The George Stigler quote, "...the degree of 'market failure' for the American economy is much smaller than the 'political failure' arising from the imperfections of economic policies ..." illustrates the advantage of which type of public policy toward monopolies?

Correct Answer
verified

Patents, copyrights, and trademarks

Correct Answer
verified

Suppose when a monopolist produces 75 units its average revenue is $10 per unit, its marginal revenue is $5 per unit, its marginal cost is $6 per unit, and its average total cost is $5 per unit. What can we conclude about this monopolist?

Correct Answer
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Correct Answer
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Suppose most people regard emeralds, rubies, and sapphires as close substitutes for diamonds. Then DeBeers, a large diamond company, has

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

Table 15-12 The following table provides information on the price, quantity, and average total cost for a monopoly. -Refer to Table 15-12. In order to maximize profits, the firm should produce

Correct Answer
verified

Figure 15-18 -Refer to Figure 15-18. If the monopoly firm perfectly price discriminates, then the deadweight loss amounts to

Correct Answer
verified

When a firm experiences continually declining average total costs, the firm is a

Correct Answer
verified

Which of the following would be most likely to have monopoly power?

Correct Answer
verified

A fundamental source of monopoly market power arises from

Correct Answer
verified

Why might economists prefer private ownership of monopolies over public ownership of monopolies?

Correct Answer
verified
The private monopolist is governed by th...
View Answer

Correct Answer
verified

Monopolists can achieve any level of profit they desire because they have unlimited market power.

Correct Answer
verified

Give some examples of the benefits and costs of antitrust laws.

Correct Answer
verified
Benefits include promoting com...
View Answer

The three main sources of barriers to entry are monopoly resources, government regulation, and the firm's production process.

Correct Answer
verified

For a monopolist, when does marginal revenue exceed average revenue?

Correct Answer
verified

The profit-maximization problem for a monopolist differs from that of a competitive firm in which of the following ways?

Correct Answer
verified

Which of the following statements comparing monopoly with competition is correct?

Correct Answer
verified

Exam 15: Monopoly

Table 15-14 The following table gives information on the price, quantity, and total cost of production for a monopolist. -Refer to Table 15-14. At what price does marginal revenue equal marginal cost?

Correct AnswerverifiedShow Answer

The George Stigler quote, "...the degree of 'market failure' for the American economy is much smaller than the 'political failure' arising from the imperfections of economic policies ..." illustrates the advantage of which type of public policy toward monopolies?

Correct AnswerverifiedShow Answer

Patents, copyrights, and trademarks

Correct AnswerverifiedShow Answer

Suppose when a monopolist produces 75 units its average revenue is $10 per unit, its marginal revenue is $5 per unit, its marginal cost is $6 per unit, and its average total cost is $5 per unit. What can we conclude about this monopolist?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose most people regard emeralds, rubies, and sapphires as close substitutes for diamonds. Then DeBeers, a large diamond company, has

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

Table 15-12 The following table provides information on the price, quantity, and average total cost for a monopoly. -Refer to Table 15-12. In order to maximize profits, the firm should produce

Correct AnswerverifiedShow Answer

Figure 15-18 -Refer to Figure 15-18. If the monopoly firm perfectly price discriminates, then the deadweight loss amounts to

Correct AnswerverifiedShow Answer

When a firm experiences continually declining average total costs, the firm is a

Correct AnswerverifiedShow Answer

Which of the following would be most likely to have monopoly power?

Correct AnswerverifiedShow Answer

A fundamental source of monopoly market power arises from

Correct AnswerverifiedShow Answer

Why might economists prefer private ownership of monopolies over public ownership of monopolies?

Correct AnswerverifiedThe private monopolist is governed by th...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Monopolists can achieve any level of profit they desire because they have unlimited market power.

Correct AnswerverifiedShow Answer

Give some examples of the benefits and costs of antitrust laws.

Correct AnswerverifiedBenefits include promoting com...View AnswerShow Answer

The three main sources of barriers to entry are monopoly resources, government regulation, and the firm's production process.

Correct AnswerverifiedShow Answer

For a monopolist, when does marginal revenue exceed average revenue?

Correct AnswerverifiedShow Answer

The profit-maximization problem for a monopolist differs from that of a competitive firm in which of the following ways?

Correct AnswerverifiedShow Answer

Which of the following statements comparing monopoly with competition is correct?

Correct AnswerverifiedShow Answer

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The private monopolist is governed by th...
View Answer

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Benefits include promoting com...
View Answer

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