Question 1

A natural monopoly has economies of scale for most if not all of its range of output.

Accepted Answer

A) True 
 B)False

Question 2

Accepted Answer

Figure 15-24 -Refer to Figure 15-24. Which letter represents the profit-maximizing price chosen by the single price monopolist? ) undefined
 ) undefined

Question 3

The De Beers Diamond company is not worried about differentiating its product from all other gemstones.

Accepted Answer

A) True 
 B)False

Question 4

A reduction in a monopolist's fixed costs would

Accepted Answer

A)   decrease the profit-maximizing price and increase the profit-maximizing quantity produced.
B)   increase the profit-maximizing price and decrease the profit-maximizing quantity produced.
C)   not effect the profit-maximizing price or quantity.
D)   possibly increase, decrease or not effect profit-maximizing price and quantity, depending on the elasticity of demand.E) B) and C)
F) None of the above

Question 5

Which of the following statements is correct? Monopolies are socially inefficient because they (i)  charge a price above marginal cost.
(ii)  produce too little output.
(iii)  earn profits at the expense of consumers.
(iv)  maximize the market's total surplus.

Accepted Answer

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

Question 6

When a monopolist increases the amount of output that it produces and sells, the price of its output

Accepted Answer

A)   stays the same.
B)   increases.
C)   decreases.
D)   may increase or decrease depending on the price elasticity of demand.E) B) and C)
F) B) and D)

Question 7

Which of the following formulas would correctly calculate a monopolist's profit?

Accepted Answer

A)   profit = price - marginal cost
B)   profit = price - average total cost
C)   profit = (price - marginal cost)  × quantity
D)   profit = (price - average total cost)  × quantityE) All of the above
F) None of the above

Question 8

Figure 15-22 
-Refer to Figure 15-22. How much profit will this monopolist earn if it charges each consumer the same price?

Accepted Answer

The answer of Figure 15-22 
-Refer to Figure 15-22. How...

Question 9

A benefit to society of the patent and copyright laws is that those laws

Accepted Answer

A)   help to keep prices down.
B)   help to prevent a single firm from acquiring ownership of a key resource.
C)   encourage creative activity.
D)   discourage the production of inefficient products.E) C) and D)
F) B) and D)

Question 10

A patent gives a single person or firm the exclusive right to sell some good or service for a specific period of time.

Accepted Answer

A) True 
 B)False

Question 11

A monopolist earns higher profits by charging one price than by practicing price discrimination.

Accepted Answer

A) True 
 B)False

Question 12

Figure 15-9 
-Refer to Figure 15-9. 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 $20 per unit
B)   150 units of output and a price of $20 per unit
C)   150 units of output and a price of $30 per unit
D)   200 units of output and a price of $20 per unitE) B) and D)
F) B) and C)

Question 13

Table 15-8
The following table provides information on the price, quantity, and average total cost for a monopoly.
 
-Refer to Table 15-8. At what price will the monopolist maximize his profit?

Accepted Answer

A)   $6
B)   $12
C)   $18
D)   $24E) B) and C)
F) None of the above

Question 14

A monopolist's average revenue is always

Accepted Answer

A)   equal to marginal revenue.
B)   greater than the price of its product.
C)   equal to the price of its product.
D)   less than the price of its product.E) B) and C)
F) A) and D)

Question 15

The reason to regulate utilities instead of using antitrust laws to promote competition is that a utility is usually a

Accepted Answer

A)   profit-maximizing monopoly.
B)   producer of externalities.
C)   revenue-maximizing monopoly.
D)   natural monopoly.E) All of the above
F) C) and D)

Question 16

The government may choose to do nothing to reduce monopoly inefficiency because the "fix" may be worse than the problem.

Accepted Answer

A) True 
 B)False

Question 17

Table 15-18
A monopolist faces the following demand curve:
  Suppose marginal cost is constant at $8 per unit.
-Refer to Table 15-18. Suppose the firm depicted in the table is selling a prescription drug for which it had a patent, but the patent has expired. As new firms enter the market and sell the generic version of this drug competitively, what quantity will be sold?

Accepted Answer

A)   3 units
B)   4 units
C)   5 units
D)   6 unitsE) None of the above
F) A) and D)

Question 18

Price discrimination requires the firm to

Accepted Answer

A)   separate customers according to their willingnesses to pay.
B)   differentiate between different units of its product.
C)   engage in arbitrage.
D)   use coupons.E) A) and B)
F) A) and C)

Question 19

Which of the following is an example of price discrimination?

Accepted Answer

A)   An online bookstore charges more for overnight shipping than standard shipping when customers buy books from it.
B)   Airline tickets are more expensive for first-class seats than for coach.
C)   Hotel rates for AAA members are lower than for nonmembers.
D)   All of the above are correct.E) All of the above
F) B) and C)

Question 20

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

Exam 15: Monopoly

Figure 15-22 -Refer to Figure 15-22. How much profit will this monopolist earn if it charges each consumer the same price?

Correct Answer
verified

The De Beers Diamond company is not worried about differentiating its product from all other gemstones.

Correct Answer
verified

When a monopolist increases the amount of output that it produces and sells, the price of its output

Correct Answer
verified

Price discrimination requires the firm to

Correct Answer
verified

A reduction in a monopolist's fixed costs would

Correct Answer
verified

Which of the following is an example of price discrimination?

Correct Answer
verified

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

Correct Answer
verified

The government may choose to do nothing to reduce monopoly inefficiency because the "fix" may be worse than the problem.

Correct Answer
verified

Figure 15-9 -Refer to Figure 15-9. To maximize total surplus, a benevolent social planner would choose which of the following outcomes?

Correct Answer
verified

A patent gives a single person or firm the exclusive right to sell some good or service for a specific period of time.

Correct Answer
verified

A monopolist earns higher profits by charging one price than by practicing price discrimination.

Correct Answer
verified

The reason to regulate utilities instead of using antitrust laws to promote competition is that a utility is usually a

Correct Answer
verified

Which of the following formulas would correctly calculate a monopolist's profit?

Correct Answer
verified

Correct Answer
verified

A natural monopoly has economies of scale for most if not all of its range of output.

Correct Answer
verified

Correct Answer
verified

A monopolist's average revenue is always

Correct Answer
verified

A benefit to society of the patent and copyright laws is that those laws

Correct Answer
verified

Table 15-8 The following table provides information on the price, quantity, and average total cost for a monopoly. -Refer to Table 15-8. At what price will the monopolist maximize his profit?

Correct Answer
verified

Which of the following statements is correct? Monopolies are socially inefficient because they (i) charge a price above marginal cost. (ii) produce too little output. (iii) earn profits at the expense of consumers. (iv) maximize the market's total surplus.

Correct Answer
verified

Exam 15: Monopoly

Figure 15-22 -Refer to Figure 15-22. How much profit will this monopolist earn if it charges each consumer the same price?

Correct AnswerverifiedShow Answer

The De Beers Diamond company is not worried about differentiating its product from all other gemstones.

Correct AnswerverifiedShow Answer

When a monopolist increases the amount of output that it produces and sells, the price of its output

Correct AnswerverifiedShow Answer

Price discrimination requires the firm to

Correct AnswerverifiedShow Answer

A reduction in a monopolist's fixed costs would

Correct AnswerverifiedShow Answer

Which of the following is an example of price discrimination?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The government may choose to do nothing to reduce monopoly inefficiency because the "fix" may be worse than the problem.

Correct AnswerverifiedShow Answer

Figure 15-9 -Refer to Figure 15-9. To maximize total surplus, a benevolent social planner would choose which of the following outcomes?

Correct AnswerverifiedShow Answer

A patent gives a single person or firm the exclusive right to sell some good or service for a specific period of time.

Correct AnswerverifiedShow Answer

A monopolist earns higher profits by charging one price than by practicing price discrimination.

Correct AnswerverifiedShow Answer

The reason to regulate utilities instead of using antitrust laws to promote competition is that a utility is usually a

Correct AnswerverifiedShow Answer

Which of the following formulas would correctly calculate a monopolist's profit?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A natural monopoly has economies of scale for most if not all of its range of output.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A monopolist's average revenue is always

Correct AnswerverifiedShow Answer

A benefit to society of the patent and copyright laws is that those laws

Correct AnswerverifiedShow Answer

Table 15-8 The following table provides information on the price, quantity, and average total cost for a monopoly. -Refer to Table 15-8. At what price will the monopolist maximize his profit?

Correct AnswerverifiedShow Answer

Which of the following statements is correct? Monopolies are socially inefficient because they (i) charge a price above marginal cost. (ii) produce too little output. (iii) earn profits at the expense of consumers. (iv) maximize the market's total surplus.

Correct AnswerverifiedShow Answer

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