Question 1

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) C) and D)
F) B) and D)

Question 2

Figure 15-3 
-Refer to Figure 15-3. Which letter represents the profit-maximizing price chosen by the single price monopolist?

Accepted Answer

The answer of Figure 15-3 
-Refer to Figure 15-3. Which...

Question 3

Which of the following statements is not correct?

Accepted Answer

A)  The government may use antitrust laws to prevent a merger if the government believes the merger will reduce competition and increase prices.
B)  By regulating a natural monopoly where price equals average total cost, the monopoly earns zero profits.
C)  An advantage of private ownership over public ownership is that private business owners tend to fire inefficient managers.
D)  The government should always intervene to improve monopoly inefficiency.E) B) and C)
F) All of the above

Question 4

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 5

For a typical natural monopoly, average total cost is

Accepted Answer

A)  falling, and marginal cost is above average total cost.
B)  falling, and marginal cost is below average total cost.
C)  rising, and marginal cost is below average total cost.
D)  rising, and marginal cost is above average total cost.E) All of the above
F) None of the above

Question 6

The fundamental source of monopoly power is

Accepted Answer

A)  barriers to entry.
B)  profit.
C)  decreasing average total cost.
D)  a product without close substitutes.E) C) and D)
F) B) and C)

Question 7

When a monopoly increases its output and sales,

Accepted Answer

A)  both the output effect and the price effect work to increase total revenue.
B)  the output effect works to increase total revenue, and the price effect works to decrease total revenue.
C)  the output effect works to decrease total revenue, and the price effect works to increase total revenue.
D)  both the output effect and the price effect work to decrease total revenue.E) A) and D)
F) All of the above

Question 8

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

Question 9

Table 15-6
A monopolist faces the following demand curve: 
-Refer to Table 15-6. Suppose the monopolist has total fixed costs equal to $5 and a variable cost equal to $4 per unit for all units produced. What is the total profit if she operates at her profit-maximizing price?

Accepted Answer

A)  $1
B)  $7
C)  $9
D)  $11E) None of the above
F) All of the above

Question 10

When regulators use a marginal-cost pricing strategy to regulate a natural monopoly, the regulated monopoly

Accepted Answer

A)  will experience a loss.
B)  will experience a price below average total cost.
C)  may rely on a government subsidy to remain in business.
D)  All of the above are correct.E) A) and D)
F) B) and C)

Question 11

Which of the following can defeat the profit-maximizing strategy of price discrimination?

Accepted Answer

A)  consumer surplus
B)  deadweight loss
C)  market power
D)  arbitrageE) A) and D)
F) A) and C)

Question 12

A monopoly creates a deadweight loss to society because it earns both short-run and long-run positive economic profits.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following statements is correct?

Accepted Answer

A)  The benefits that accrue to a monopoly's owners are equal to the costs that are incurred by consumers of that firm's product.
B)  The deadweight loss that arises in monopoly stems from the fact that the profit-maximizing monopoly firm produces a quantity of output that exceeds the socially-efficient quantity.
C)  The deadweight loss caused by monopoly is similar to the deadweight loss caused by a tax on a product.
D)  The primary social problem caused by monopoly is monopoly profit.E) All of the above
F) B) and C)

Question 14

Figure 15-20 
-Refer to Figure 15-20. The consumer surplus at the monopolist's profit-maximizing price is

Accepted Answer

A)  $450.
B)  $900.
C)  $1,350.
D)  $2,025.E) A) and B)
F) A) and C)

Question 15

For a monopoly firm,

Accepted Answer

A)  price always exceeds average revenue.
B)  price always exceeds marginal revenue.
C)  any price-quantity combination will maximize profits.
D)  All of the above are correct.E) A) and B)
F) A) and D)

Question 16

Which of the following statements is true about patents and copyrights?
(i) They have benefits and costs.
(ii) They lead to higher prices.
(iii) They enhance the ability of monopolists to earn above-average profits.

Accepted Answer

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

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

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. At Q = 500, the firm's marginal cost is

Accepted Answer

A)  less than $30.
B)  $30.
C)  $34.
D)  greater than $34.E) B) and C)
F) None of the above

Question 19

Antitrust laws allow the government to

Accepted Answer

A)  prevent mergers.
B)  break up companies.
C)  promote competition.
D)  All of the above are correct.E) C) and D)
F) A) and B)

Question 20

The key issue in determining the efficiency of public versus private ownership of a monopoly is

Accepted Answer

A)  the tendency for efficient management of publicly owned enterprises.
B)  the inability of private monopolies to get rid of managers that are doing a bad job.
C)  the propensity of private monopolies to generate excessive profits.
D)  how ownership of the firm affects the cost of production.E) A) and C)
F) C) and D)

Exam 15: Monopoly

Antitrust laws allow the government to

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A monopoly creates a deadweight loss to society because it earns both short-run and long-run positive economic profits.

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Which of the following is not correct?

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When a monopoly increases its output and sales,

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When regulators use a marginal-cost pricing strategy to regulate a natural monopoly, the regulated monopoly

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Table 15-6 A monopolist faces the following demand curve: -Refer to Table 15-6. Suppose the monopolist has total fixed costs equal to $5 and a variable cost equal to $4 per unit for all units produced. What is the total profit if she operates at her profit-maximizing price?

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Which of the following can defeat the profit-maximizing strategy of price discrimination?

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Figure 15-20 -Refer to Figure 15-20. The consumer surplus at the monopolist's profit-maximizing price is

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The key issue in determining the efficiency of public versus private ownership of a monopoly is

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Which of the following statements is correct?

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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

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Figure 15-3 -Refer to Figure 15-3. Which letter represents the profit-maximizing price chosen by the single price monopolist?

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Which of the following statements is not correct?

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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. At Q = 500, the firm's marginal cost is

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

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Which of the following statements is true about patents and copyrights? (i) They have benefits and costs. (ii) They lead to higher prices. (iii) They enhance the ability of monopolists to earn above-average profits.

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The fundamental source of monopoly power is

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For a typical natural monopoly, average total cost is

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For a monopoly firm,

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

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