Question 1

Goods that do not have close substitutes have downward-sloping demand curves.

Accepted Answer

A) True 
 B)False

Question 2

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 cost of serving all passengers demanding a tour on a typical day?

Accepted Answer

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

Question 3

Monopoly firms have

Accepted Answer

A)   downward-sloping demand curves, so they can sell as much output as they desire at the market price.
B)   downward-sloping demand curves, so they can sell only the specific price-quantity combinations that lie on the demand curve.
C)   horizontal demand curves, so they can sell as much output as they desire at the market price.
D)   horizontal demand curves, so they can sell only a limited quantity of output at each price.E) A) and D)
F) A) and B)

Question 4

Because monopoly firms do not have to compete with other firms, the outcome in a market with a monopoly is often

Accepted Answer

A)   not in the best interest of society.
B)   one that fails to maximize total economic well-being.
C)   inefficient.
D)   All of the above are correct.E) A) and D)
F) A) and C)

Question 5

Table 15-19
A monopolist faces the following demand curve: 
-Refer to Table 15-19. If a monopolist faces a constant marginal cost of $3, how much output should the firm produce?

Accepted Answer

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

Question 6

Which of the following statements is correct?

Accepted Answer

A)   Firms with some degree of monopoly power are common, but firms with substantial monopoly power are rare.
B)   Firms with some degree of monopoly power are rare, as are firms with substantial monopoly power.
C)   Firms with some degree of monopoly power are common, as are firms with substantial monopoly power.
D)   Firms with some degree of monopoly power are rare, but firms with substantial monopoly power are common.E) A) and B)
F) All of the above

Question 7

Table 15-4
A monopolist faces the following demand curve: 
-Refer to Table 15-4. If the monopolist produces 10 units, what is its marginal revenue?

Accepted Answer

A)   $5
B)   -$5
C)   $12.50
D)   -$12.50E) A) and B)
F) A) and C)

Question 8

Which of the following statements is not correct?

Accepted Answer

A)   Consumers will likely benefit in the form of lower prices from buying a product made by a natural monopoly than if the market were served by several firms.
B)   Monopolists typically charge higher prices than competitive firms.
C)   Monopolists typically produce larger quantities of output than competitive firms.
D)   Consumers may benefit from monopolies if the firms invest their higher profits into something that benefits society such as medical research.E) A) and D)
F) A) and C)

Question 9

When there are economies of scale over the relevant range of output for a monopoly, the monopoly

Accepted Answer

A)   is a natural monopoly.
B)   is a government-granted monopoly.
C)   has monopoly power due to the ownership of a patent or copyright.
D)   has monopoly power due to the ownership of a key production resource.E) None of the above
F) A) and B)

Question 10

A monopoly creates a deadweight loss to society because it produces less output than the socially efficient level.

Accepted Answer

A) True 
 B)False

Question 11

Scenario 15-9
Suppose executives at an art museum know that 100 adults are willing to pay $12 for admission to the museum on a weekday. Suppose the executives also know that 200 students are willing to pay $8 for admission on a weekday. The cost of operating the museum on a weekday is $2,000.
-Refer to Scenario 15-9. How much additional profit will the museum earn if it engages in price discrimination compared to charging each customer $8 for admission?

Accepted Answer

A)   $0
B)   $200
C)   $400
D)   $800E) A) and D)
F) B) and C)

Question 12

"Monopolists do not worry about efficient production and minimizing costs since they can just pass along any increase in costs to their consumers." This statement is

Accepted Answer

A)   false; price increases will mean fewer sales, which may lower profits.
B)   true; this is the primary reason why economists believe that monopolies result in economic inefficiency.
C)   false; the monopolist is a price taker.
D)   true; consumers in a monopoly market have no substitutes to turn to when the monopolist raises prices.E) C) and D)
F) B) and D)

Question 13

In the market for "home heating" consumers typically have several options (e.g., electricity, heating fuel, natural gas, propane, etc.), yet we often think of firms in this industry as behaving like monopolists. Discuss the context in which your electricity provider is a monopolist. Is this characterization universally applicable? Explain your answer.

Accepted Answer

In this case, the firms are monopolists ...

Question 14

A profit-maximizing monopolist charges a price of $14. The intersection of the marginal revenue curve and the marginal cost curve occurs where output is 15 units and marginal cost is $7. What is the monopolist's profit?

Accepted Answer

A)   $90
B)   $105
C)   $180
D)   Not enough information is given to determine the answer.E) All of the above
F) A) and C)

Question 15

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

Question 16

Which of the following is not a difference between monopolies and perfectly competitive markets?

Accepted Answer

A)   Monopolies can earn profits in the long run while perfectly competitive firms break even.
B)   Monopolies charge a price higher than marginal cost while perfectly competitive firms charge a price equal to marginal cost.
C)   Monopolies choose to produce the quantity at which marginal revenue equals marginal cost while perfectly competitive firms do not.
D)   Monopolies face downward sloping demand curves while perfectly competitive firms face horizontal demand curves.E) A) and C)
F) B) and C)

Question 17

Figure 15-7 
-Refer to Figure 15-7. A profit-maximizing monopolist would earn total revenues of

Accepted Answer

A)   $81.
B)   $144.
C)   $225.
D)   $240.E) A) and B)
F) A) and C)

Exam 15: Monopoly

Goods that do not have close substitutes have downward-sloping demand curves.

Correct Answer
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Correct Answer
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Table 15-4 A monopolist faces the following demand curve: -Refer to Table 15-4. If the monopolist produces 10 units, what is its marginal revenue?

Correct Answer
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A profit-maximizing monopolist charges a price of $14. The intersection of the marginal revenue curve and the marginal cost curve occurs where output is 15 units and marginal cost is $7. What is the monopolist's profit?

Correct Answer
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When there are economies of scale over the relevant range of output for a monopoly, the monopoly

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
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Figure 15-7 -Refer to Figure 15-7. A profit-maximizing monopolist would earn total revenues of

Correct Answer
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"Monopolists do not worry about efficient production and minimizing costs since they can just pass along any increase in costs to their consumers." This statement is

Correct Answer
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Which of the following is not a difference between monopolies and perfectly competitive markets?

Correct Answer
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Because monopoly firms do not have to compete with other firms, the outcome in a market with a monopoly is often

Correct Answer
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Table 15-19 A monopolist faces the following demand curve: -Refer to Table 15-19. If a monopolist faces a constant marginal cost of $3, how much output should the firm produce?

Correct Answer
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A monopoly creates a deadweight loss to society because it produces less output than the socially efficient level.

Correct Answer
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In this case, the firms are monopolists ...
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Monopoly firms have

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Which of the following statements is not correct?

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Which of the following statements is correct?

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Exam 15: Monopoly

Goods that do not have close substitutes have downward-sloping demand curves.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Table 15-4 A monopolist faces the following demand curve: -Refer to Table 15-4. If the monopolist produces 10 units, what is its marginal revenue?

Correct AnswerverifiedShow Answer

A profit-maximizing monopolist charges a price of $14. The intersection of the marginal revenue curve and the marginal cost curve occurs where output is 15 units and marginal cost is $7. What is the monopolist's profit?

Correct AnswerverifiedShow Answer

When there are economies of scale over the relevant range of output for a monopoly, the monopoly

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

Figure 15-7 -Refer to Figure 15-7. A profit-maximizing monopolist would earn total revenues of

Correct AnswerverifiedShow Answer

"Monopolists do not worry about efficient production and minimizing costs since they can just pass along any increase in costs to their consumers." This statement is

Correct AnswerverifiedShow Answer

Which of the following is not a difference between monopolies and perfectly competitive markets?

Correct AnswerverifiedShow Answer

Because monopoly firms do not have to compete with other firms, the outcome in a market with a monopoly is often

Correct AnswerverifiedShow Answer

Table 15-19 A monopolist faces the following demand curve: -Refer to Table 15-19. If a monopolist faces a constant marginal cost of $3, how much output should the firm produce?

Correct AnswerverifiedShow Answer

A monopoly creates a deadweight loss to society because it produces less output than the socially efficient level.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedIn this case, the firms are monopolists ...View AnswerShow Answer

Monopoly firms have

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Which of the following statements is not correct?

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Which of the following statements is correct?

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In this case, the firms are monopolists ...
View Answer

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