Question 1

Figure 14-2    
-Refer to Figure 14-2.Which panel could represent the demand curve facing a local cable television provider if that firm in a monopolist?

Accepted Answer

A)   Panel A
B)   Panel B
C)   Panel C
D)   Panel DE) A) and C)
F) A) and B)

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

Suppose a monopolist is able to charge each customer a price equal to that customer's willingness-to-pay for the product.Then the monopolist is engaging in

Accepted Answer

A)   marginal cost pricing.
B)   arbitrage pricing.
C)   voodoo economics.
D)   perfect price discrimination.E) B) and D)
F) C) and D)

Question 4

Which of the following is an example of public ownership of a monopoly?

Accepted Answer

A)   DeBeers
B)   Microsoft
C)   U.S.Postal Service
D)   AT&TE) A) and B)
F) A) and C)

Question 5

The best solution to the problem of welfare loss from monopoly is public ownership.

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

A)   not a concern if a market is perfectly competitive.
B)   a deadweight loss to society.
C)   a function of the reduction in the quantity produced by a monopolist in comparison to a competitive market.
D)   All of the above are correct.E) A) and D)
F) B) and C)

Question 7

Even with market power,monopolists cannot achieve any level of profit they desire because they will sell lower quantities at higher prices.

Accepted Answer

A) True 
 B)False

Question 8

For a monopolist,marginal revenue is

Accepted Answer

A)   positive when the demand effect is greater than the supply effect.
B)   positive when the monopoly effect is greater than the competitive effect.
C)   negative when the price effect is greater than the output effect.
D)   negative when the output effect is greater than the price effect.E) B) and D)
F) C) and D)

Question 9

One difference between a perfectly competitive firm and a monopoly is that a perfectly competitive firm produces where

Accepted Answer

A)   marginal cost equals price,while a monopolist produces where price exceeds marginal cost.
B)   marginal cost equals price,while a monopolist produces where marginal cost exceeds price.
C)   price exceeds marginal cost,while a monopolist produces where marginal cost equals price.
D)   marginal cost exceeds price,while a monopolist produces where marginal cost equals price.E) A) and B)
F) A) and C)

Question 10

Which of the following statements is not correct?

Accepted Answer

A)   The competitive firm produces where P = MC.
B)   The monopolist produces where P = MC.
C)   The competitive firm produces where MR = MC.
D)   The monopolist produces where MR = MC.E) A) and B)
F) C) and D)

Question 11

Which of the following is an example of a barrier to entry?

Accepted Answer

A)   Dawn charges a higher price than her competitors for her landscape-architecture services.
B)   Rhianna obtains a copyright for a short story that she wrote and published.
C)   Debbie offers free samples of her chocolate chip cookies to attract new customers.
D)   Bev charges a lower price than her competitors for her desktop-publishing services.E) A) and D)
F) All of the above

Question 12

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) C) and D)
F) None of the above

Question 13

Figure 14-7 
-Refer to Figure 14-7.What is the socially efficient price and quantity?

Accepted Answer

A)   price = F; quantity = A
B)   price = G; quantity = B
C)   price = G; quantity = A
D)   price = D; quantity = AE) None of the above
F) All of the above

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

Table 14-18
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 14-18.If the monopolist can engage in perfect price discrimination,what is the total revenue when 3 ties are sold?

Accepted Answer

A)   $140
B)   $420
C)   $450
D)   $620E) A) and B)
F) A) and C)

Question 16

A monopolist maximizes profit by producing an output level where marginal cost equals price.

Accepted Answer

A) True 
 B)False

Question 17

Airlines often separate their customers into business travelers and personal travelers by giving a discount to those travelers who stay over a Saturday night.

Accepted Answer

A) True 
 B)False

Question 18

The marginal revenue curve for a monopoly firm starts at the same point on the vertical axis as the (i) average revenue curve.
(ii) marginal cost curve.
(iii) demand curve.

Accepted Answer

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

Question 19

The difference in total surplus between the socially efficient level of production and the monopolist's level of production is

Accepted Answer

A)   offset by regulatory revenues.
B)   called a deadweight loss.
C)   equal to the monopolist's profit.
D)   Both b and c are correct.E) None of the above
F) All of the above

Question 20

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) B) and D)
F) A) and B)

Exam 14: Monopoly

Which of the following is an example of a barrier to entry?

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A monopolist maximizes profit by producing an output level where marginal cost equals price.

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Figure 14-2 -Refer to Figure 14-2.Which panel could represent the demand curve facing a local cable television provider if that firm in a monopolist?

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For a monopolist,marginal revenue is

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One difference between a perfectly competitive firm and a monopoly is that a perfectly competitive firm produces where

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Which of the following statements is not correct?

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Figure 14-7 -Refer to Figure 14-7.What is the socially efficient price and quantity?

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

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The marginal revenue curve for a monopoly firm starts at the same point on the vertical axis as the (i) average revenue curve. (ii) marginal cost curve. (iii) demand curve.

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

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The best solution to the problem of welfare loss from monopoly is public ownership.

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The difference in total surplus between the socially efficient level of production and the monopolist's level of production is

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Table 14-18 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 14-18.If the monopolist can engage in perfect price discrimination,what is the total revenue when 3 ties are sold?

Correct AnswerverifiedShow Answer

Airlines often separate their customers into business travelers and personal travelers by giving a discount to those travelers who stay over a Saturday night.

Correct AnswerverifiedShow Answer

Suppose a monopolist is able to charge each customer a price equal to that customer's willingness-to-pay for the product.Then the monopolist is engaging in

Correct AnswerverifiedShow Answer

Even with market power,monopolists cannot achieve any level of profit they desire because they will sell lower quantities at higher prices.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is an example of public ownership of a monopoly?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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