Question 1

Scenario 15-3
A monopoly firm maximizes its profit by producing Q = 500 units of output. At that level of output, its marginal revenue is $30, its average revenue is $60, and its average total cost is $34.
-Refer to Scenario 15-3. The firm's profit-maximizing price is

Accepted Answer

A)   $30.
B)   between $30 and $34.
C)   between $34 and $60.
D)   $60.E) None of the above
F) B) and D)

Question 2

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) All of the above
F) A) and B)

Question 3

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 the average revenue when 7 ties are sold?

Accepted Answer

A)   $90
B)   $100
C)   $110
D)   $130E) None of the above
F) B) and D)

Question 4

Because a monopolist is the sole producer in its market, it can necessarily alter the price of its good

Accepted Answer

A)   (ii)  only
B)   (iii)  only
C)   (i)  and (ii)  only
D)   (ii)  and (iii)  onlyE) A) and B)
F) None of the above

Question 5

Which of the following is not one of the ways that antitrust laws promote competition?

Accepted Answer

A)   Antitrust laws allow the government to prevent mergers.
B)   Antitrust laws allow the government to break up companies into smaller ones.
C)   Antitrust laws prevent companies from coordinating their activities in ways that make markets less competitive.
D)   Antitrust laws allow the government to shut down any firm the government believes has monopoly power.E) A) and C)
F) All of the above

Question 6

A firm that is a natural monopoly

Accepted Answer

A)   is not likely to be concerned about new entrants eroding its monopoly power.
B)   is taking advantage of economies of scale.
C)   would experience a higher average total cost if more firms entered the market.
D)   All of the above are correct.E) A) and C)
F) A) and B)

Question 7

Figure 15-6 
-Refer to Figure 15-6. What area measures the monopolist's profit?

Accepted Answer

A)   (K-
C)  *W
B)   (L-
A)  *T
C)   (K-
B)  *W
D)   0.5[(K-
C)  *(Z-T) ]E) A) and B)
F) A) and C)

Question 8

Which of the following statements is correct for both a monopolist and a perfectly competitive firm?

Accepted Answer

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

Question 9

A monopolist faces a

Accepted Answer

A)   horizontal demand curve.
B)   vertical demand curve.
C)   downward-sloping demand curve.
D)   U-shaped demand curve.E) B) and D)
F) B) and C)

Question 10

Scenario 15-10
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 15-10. Vincent is considering changing his pricing strategy. Which of the following options results in the highest profit per day?

Accepted Answer

A)   Charge a single price of $10 to all passengers.
B)   Charge a single price of $12 to all passengers.
C)   Charge a single price of $18 to all passengers.
D)   Continue charging each buyer his/her willingness to pay.E) B) and D)
F) A) and D)

Question 11

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

Question 12

Which of the following is not correct?

Accepted Answer

A)   The demand curve facing a competitive firm is perfectly elastic.
B)   The demand curve facing a monopolist is the market demand curve.
C)   A monopolist can charge any price and sell any quantity that it chooses.
D)   A monopolist can alter the market price by adjusting the quantity that it produces.E) A) and B)
F) A) and C)

Question 13

Antitrust laws may

Accepted Answer

A)   enhance the ability of firms to capture profits from a concentration of market power.
B)   enhance the ability of firms to reduce economic losses.
C)   restrict the ability of firms to operate at the socially efficient level of production.
D)   restrict the ability of firms to merge.E) A) and B)
F) B) and C)

Question 14

Comparing firms in perfectly competitive markets to monopoly firms, which produces more output?

Accepted Answer

perfectly ...

Question 15

Scenario 15-1
Consider a transportation corporation named Reading's that has just completed the development of a new light rail system in Minneapolis. Currently, there are plenty of seats on the train, and it is never crowded. Its capacity far exceeds the needs of the city. After just a few years of operation, the shareholders of Reading's experienced incredibly high rates of return on their investment due to the profitability of the corporation.
-Refer to Scenario 15-1. Which of the following statements is most likely to be true? currently has.

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 B)
F) A) and C)

Question 16

If a monopolist can sell 7 units when the price is $4 and 8 units when the price is $3, then the marginal revenue of selling the eighth unit is equal to

Accepted Answer

A)   $3.
B)   $4.
C)   $24.
D)   -$4.E) A) and D)
F) B) and D)

Question 17

When the government creates a monopoly, the social loss may include

Accepted Answer

A)   declining marginal costs.
B)   the cost of lawyers and lobbyists hired to convince lawmakers to continue the monopoly.
C)   excessive monopoly profits.
D)   diminishing marginal revenue.E) A) and B)
F) A) and C)

Question 18

For a profit-maximizing monopolist,

Accepted Answer

A) P > MR = MC. B) P = MR = MC. C) P > MR > MC. D) MR < MC < P.E) None of the above F) B) and C)

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

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) A) and B)
F) A) and C)

Exam 15: Monopoly

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

Correct Answer
verified

A firm that is a natural monopoly

Correct Answer
verified

Which of the following is not correct?

Correct Answer
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Antitrust laws may

Correct Answer
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Comparing firms in perfectly competitive markets to monopoly firms, which produces more output?

Correct Answer
verified
perfectly ...
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Figure 15-6 -Refer to Figure 15-6. What area measures the monopolist's profit?

Correct Answer
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For a monopolist, marginal revenue is

Correct Answer
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If a monopolist can sell 7 units when the price is $4 and 8 units when the price is $3, then the marginal revenue of selling the eighth unit is equal to

Correct Answer
verified

A reduction in a monopolist's fixed costs would

Correct Answer
verified

Correct Answer
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For a profit-maximizing monopolist,

Correct Answer
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Because a monopolist is the sole producer in its market, it can necessarily alter the price of its good

Correct Answer
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Scenario 15-3 A monopoly firm maximizes its profit by producing Q = 500 units of output. At that level of output, its marginal revenue is $30, its average revenue is $60, and its average total cost is $34. -Refer to Scenario 15-3. The firm's profit-maximizing price is

Correct Answer
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When the government creates a monopoly, the social loss may include

Correct Answer
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A monopolist faces a

Correct Answer
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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 the average revenue when 7 ties are sold?

Correct Answer
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Which of the following statements is correct for both a monopolist and a perfectly competitive firm?

Correct Answer
verified

Which of the following is not one of the ways that antitrust laws promote competition?

Correct Answer
verified

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

Correct Answer
verified

Exam 15: Monopoly

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

Correct AnswerverifiedShow Answer

A firm that is a natural monopoly

Correct AnswerverifiedShow Answer

Which of the following is not correct?

Correct AnswerverifiedShow Answer

Antitrust laws may

Correct AnswerverifiedShow Answer

Comparing firms in perfectly competitive markets to monopoly firms, which produces more output?

Correct Answerverifiedperfectly ...View AnswerShow Answer

Figure 15-6 -Refer to Figure 15-6. What area measures the monopolist's profit?

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For a monopolist, marginal revenue is

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If a monopolist can sell 7 units when the price is $4 and 8 units when the price is $3, then the marginal revenue of selling the eighth unit is equal to

Correct AnswerverifiedShow Answer

A reduction in a monopolist's fixed costs would

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

For a profit-maximizing monopolist,

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Because a monopolist is the sole producer in its market, it can necessarily alter the price of its good

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Scenario 15-3 A monopoly firm maximizes its profit by producing Q = 500 units of output. At that level of output, its marginal revenue is $30, its average revenue is $60, and its average total cost is $34. -Refer to Scenario 15-3. The firm's profit-maximizing price is

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When the government creates a monopoly, the social loss may include

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A monopolist faces a

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following statements is correct for both a monopolist and a perfectly competitive firm?

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Which of the following is not one of the ways that antitrust laws promote competition?

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

Correct AnswerverifiedShow Answer

Correct Answer
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perfectly ...
View Answer

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