Question 1

For a long while,electricity producers were thought to be a classic example of a natural monopoly.People held this view because

Accepted Answer

A)   the average cost of producing units of electricity by one producer in a specific region was lower than if the same quantity were produced by two or more producers in the same region.
B)   the average cost of producing units of electricity by one producer in a specific region was higher than if the same quantity were produced by two or more produced in the same region.
C)   the marginal cost of producing units of electricity by one producer in a specific region was higher than if the same quantity were produced by two or more producers in the same region.
D)   electricity is a special non-excludable good that could never be sold in a competitive market.E) A) and B)
F) B) and C)

Question 2

Figure 14-16 
-Refer to Figure 14-16.If there are no fixed costs of production,monopoly profit without price discrimination equals

Accepted Answer

A)   $0.
B)   $1,562.50.
C)   $3,125.
D)   $6,250.E) A) and D)
F) B) and C)

Question 3

For a monopolist,

Accepted Answer

A)   average revenue is always greater than the price of the good.
B)   marginal revenue is always less than the price of the good.
C)   marginal cost is always greater than average total cost.
D)   marginal revenue equals marginal cost at the point where total revenue is maximized.E) All of the above
F) A) and B)

Question 4

When a monopolist increases the amount of output that it produces and sells,average revenue

Accepted Answer

A)   increases,and marginal revenue increases.
B)   increases,and marginal revenue decreases.
C)   decreases,and marginal revenue increases.
D)   decreases,and marginal revenue decreases.E) C) and D)
F) A) and D)

Question 5

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

Question 6

If a profit-maximizing monopolist faces a downward-sloping market demand curve,its

Accepted Answer

A)   average revenue is less than the price of the product.
B)   average revenue is less than marginal revenue.
C)   marginal revenue is less than the price of the product.
D)   marginal revenue is greater than the price of the product.E) A) and B)
F) A) and C)

Question 7

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

Accepted Answer

A)   Fixed costs are typically a small portion of total costs.
B)   Average total cost declines over large regions of output.
C)   The product sold is a natural resource such as diamonds or water.
D)   All of the above are correct.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 level of output should the firm produce to maximize its profit?

Accepted Answer

A)   2 units
B)   3 units
C)   4 units
D)   5 unitsE) A) and B)
F) B) and D)

Question 9

When a monopolist increases the quantity that it sells,price decreases,which,all else equal,decreases total revenue; this is called the price effect.

Accepted Answer

A) True 
 B)False

Question 10

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.

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) All of the above

Question 11

For a monopolist,when the output effect is greater than the price effect,marginal revenue is

Accepted Answer

A)   positive.
B)   negative.
C)   zero.
D)   maximized.E) C) and D)
F) B) and C)

Question 12

Table 14-17
 
-Refer to Table 14-17.If a monopolist faces a constant marginal cost of $3,how much output should the firm produce in order to equate marginal revenue with marginal cost?

Accepted Answer

A)   3 units
B)   4 units
C)   5 units
D)   6 unitsE) A) and B)
F) A) and C)

Question 13

When deciding what price to charge consumers,the monopolist may choose to charge them different prices based on the customers'

Accepted Answer

A)   geographical location.
B)   age.
C)   income.
D)   All of the above are correct.E) A) and B)
F) A) and D)

Question 14

One characteristic of a monopoly market is that the product is virtually identical to products produced by competing firms.

Accepted Answer

A) True 
 B)False

Question 15

The monopolist's profit-maximizing quantity of output is determined by the intersection of which of the following two curves?

Accepted Answer

A)   marginal cost and demand
B)   marginal cost and marginal revenue
C)   average total cost and marginal revenue
D)   average variable cost and average revenueE) A) and B)
F) A) and C)

Question 16

Scenario 14-5
An airline knows that there are two types of travelers: business travelers and vacationers.For a particular flight,there are 100 business travelers who will pay $600 for a ticket while there are 50 vacationers who will pay $300 for a ticket.There are 150 seats available on the plane.Suppose the cost to the airline of providing the flight is $20,000,which includes the cost of the pilots,flight attendants,fuel,etc.
-Refer to Scenario 14-5.How much profit will the airline earn if it sets the price of each ticket at $300?

Accepted Answer

A)   -$15,000
B)   -$5,000
C)   $25,000
D)   $45,000E) A) and B)
F) A) and C)

Question 17

Figure 14-14 
-Refer to Figure 14-14.To maximize total surplus,a benevolent social planner would choose which of the following outcomes?

Accepted Answer

A)   Q = 30 and P = 30
B)   Q = 30 and P = 60
C)   Q = 45 and P = 45
D)   Q = 60 and P = 30E) A) and C)
F) A) and D)

Question 18

With no price discrimination,the monopolist sells every unit at the same price.Therefore

Accepted Answer

A)   marginal revenue is equal to price.
B)   marginal revenue is equal to average revenue.
C)   price is greater than marginal revenue.
D)   Both a and b are correct.E) B) and D)
F) B) and C)

Question 19

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 20

When a firm's average total cost curve continually declines,the firm is a

Accepted Answer

A)   government-created monopoly.
B)   natural monopoly.
C)   revenue monopoly.
D)   All of the above are correct.E) A) and B)
F) A) and C)

Exam 14: Monopoly

When deciding what price to charge consumers,the monopolist may choose to charge them different prices based on the customers'

Correct Answer
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Table 14-17 -Refer to Table 14-17.If a monopolist faces a constant marginal cost of $3,how much output should the firm produce in order to equate marginal revenue with marginal cost?

Correct Answer
verified

Figure 14-16 -Refer to Figure 14-16.If there are no fixed costs of production,monopoly profit without price discrimination equals

Correct Answer
verified

For a long while,electricity producers were thought to be a classic example of a natural monopoly.People held this view because

Correct Answer
verified

Figure 14-14 -Refer to Figure 14-14.To maximize total surplus,a benevolent social planner would choose which of the following outcomes?

Correct Answer
verified

When a monopolist increases the amount of output that it produces and sells,average revenue

Correct Answer
verified

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

Correct Answer
verified

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.

Correct Answer
verified

With no price discrimination,the monopolist sells every unit at the same price.Therefore

Correct Answer
verified

If a profit-maximizing monopolist faces a downward-sloping market demand curve,its

Correct Answer
verified

Table 14-11 The following table shows quantity,price,and marginal cost information for a monopoly: -Refer to Table 14-11.What level of output should the firm produce to maximize its profit?

Correct Answer
verified

When a monopolist increases the quantity that it sells,price decreases,which,all else equal,decreases total revenue; this is called the price effect.

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

One characteristic of a monopoly market is that the product is virtually identical to products produced by competing firms.

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

Correct Answer
verified

For a monopolist,when the output effect is greater than the price effect,marginal revenue is

Correct Answer
verified

When a firm's average total cost curve continually declines,the firm is a

Correct Answer
verified

The monopolist's profit-maximizing quantity of output is determined by the intersection of which of the following two curves?

Correct Answer
verified

For a monopolist,

Correct Answer
verified

Exam 14: Monopoly

When deciding what price to charge consumers,the monopolist may choose to charge them different prices based on the customers'

Correct AnswerverifiedShow Answer

Table 14-17 -Refer to Table 14-17.If a monopolist faces a constant marginal cost of $3,how much output should the firm produce in order to equate marginal revenue with marginal cost?

Correct AnswerverifiedShow Answer

Figure 14-16 -Refer to Figure 14-16.If there are no fixed costs of production,monopoly profit without price discrimination equals

Correct AnswerverifiedShow Answer

For a long while,electricity producers were thought to be a classic example of a natural monopoly.People held this view because

Correct AnswerverifiedShow Answer

Figure 14-14 -Refer to Figure 14-14.To maximize total surplus,a benevolent social planner would choose which of the following outcomes?

Correct AnswerverifiedShow Answer

When a monopolist increases the amount of output that it produces and sells,average revenue

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

With no price discrimination,the monopolist sells every unit at the same price.Therefore

Correct AnswerverifiedShow Answer

If a profit-maximizing monopolist faces a downward-sloping market demand curve,its

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 level of output should the firm produce to maximize its profit?

Correct AnswerverifiedShow Answer

When a monopolist increases the quantity that it sells,price decreases,which,all else equal,decreases total revenue; this is called the price effect.

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

One characteristic of a monopoly market is that the product is virtually identical to products produced by competing firms.

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 AnswerverifiedShow Answer

For a monopolist,when the output effect is greater than the price effect,marginal revenue is

Correct AnswerverifiedShow Answer

When a firm's average total cost curve continually declines,the firm is a

Correct AnswerverifiedShow Answer

The monopolist's profit-maximizing quantity of output is determined by the intersection of which of the following two curves?

Correct AnswerverifiedShow Answer

For a monopolist,

Correct AnswerverifiedShow Answer

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