Question 1

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

Question 2

Table 15-1
 
-Refer to Table 15-1.What is the marginal revenue for the monopolist for the sixth unit sold?

Accepted Answer

A)   $3
B)   $5
C)   $11
D)   $17E) B) and C)
F) B) and D)

Question 3

The amount of power that a monopoly has depends on whether there are close substitutes for its product.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following can eliminate the inefficiency inherent in monopoly pricing?

Accepted Answer

A)   arbitrage
B)   cost-plus pricing
C)   price discrimination
D)   regulations that force monopolies to reduce their levels of outputE) A) and C)
F) A) and D)

Question 5

Figure 15-5
 
-Refer to Figure 15-5.How much output will the monopolist produce?

Accepted Answer

A)   O
B)   J
C)   K
D)   LE) A) and C)
F) A) and D)

Question 6

Scenario 15-5
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 15-5.How much additional profit can the airline earn by charging each customer their willingness to pay relative to charging a flat price of $300 per ticket?

Accepted Answer

A)   $10,000
B)   $15,000
C)   $30,000
D)   $45,000E) B) and C)
F) None of the above

Question 7

When a single firm can supply a product to an entire market at a lower cost than could two or more firms,the industry is called a

Accepted Answer

A)   resource industry.
B)   exclusive industry.
C)   government monopoly.
D)   natural monopoly.E) None of the above
F) A) and C)

Question 8

Many movie theaters allow discount tickets to be sold to senior citizens because

Accepted Answer

A)   senior-citizen laws mandate such discounts.
B)   goodwill efforts earn community respect and win loyal patrons.
C)   the theaters are profit maximizers.
D)   senior citizens lobby city councils for lower prices.E) A) and B)
F) B) and C)

Question 9

Which type of public policy toward monopolies is much more common in Europe than in the United States?

Accepted Answer

A)   antitrust laws
B)   regulation
C)   public ownership
D)   "do nothing"E) A) and B)
F) A) and C)

Question 10

A monopolist that can practice perfect price discrimination will not impose a deadweight loss on society.

Accepted Answer

A) True 
 B)False

Question 11

A natural monopoly arises when

Accepted Answer

A)   there are constant returns to scale over the relevant range of output.
B)   there are economies of scale over the relevant range of output.
C)   one firm owns a key natural resource.
D)   the government gives a single firm the exclusive right to produce a particular good or service.E) None of the above
F) All of the above

Question 12

Figure 15-13
 
-Refer to Figure 15-13.If the monopoly operates at an output level less than Q0,then an increase in output toward (but not exceeding) Q0 would

Accepted Answer

A)   raise the price and raise total surplus.
B)   lower the price and raise total surplus.
C)   raise the price and lower total surplus.
D)   lower the price and lower total surplus.E) A) and C)
F) C) and D)

Question 13

Marginal revenue can become negative for

Accepted Answer

A)   both competitive and monopoly firms.
B)   competitive firms but not for monopoly firms.
C)   monopoly firms but not for competitive firms.
D)   neither competitive nor monopoly firms.E) C) and D)
F) B) and D)

Question 14

The DeBeers company faces very little competition from other firms in the wholesale diamond market.Why isn't the price of the wholesale diamonds $10,000 per carat?

Accepted Answer

A)   because the government would not allow such a high price
B)   because stockholders would not allow such a high price
C)   because the company would sell so few copies that they would earn higher profits by selling at a lower price
D)   All of the above are correct.E) A) and B)
F) A) and C)

Question 15

In a natural monopoly,

Accepted Answer

A)   society would be better off if antitrust laws were used to create many different firms in the market.
B)   the marginal cost curve is positively sloped.
C)   if the government requires marginal cost pricing, it will likely have to subsidize the firm.
D)   the marginal revenue curve is horizontal.E) B) and C)
F) B) and D)

Question 16

For a monopoly,the level of output at which marginal revenue equals zero is also the level of output at which

Accepted Answer

A)   average revenue is zero.
B)   profit is maximized.
C)   total revenue is maximized.
D)   marginal cost is zero.E) A) and C)
F) C) and D)

Question 17

A fundamental source of monopoly market power arises from

Accepted Answer

A)   perfectly elastic demand.
B)   perfectly inelastic demand.
C)   barriers to entry.
D)   availability of "free" natural resources, such as water or air.E) None of the above
F) B) and C)

Question 18

Scenario 15-4
Suppose a monopolist has a demand curve that can be expressed as P=90-Q. The monopolist's marginal revenue curve can be expressed as MR=90-2Q. The monopolist has constant marginal costs and average total costs of $10.
-Refer to Scenario 15-4.The profit-maximizing monopolist will charge a price of

Accepted Answer

A)   $50.
B)   $40.
C)   $20.
D)   $10.E) A) and D)
F) A) and B)

Question 19

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 20

The proper level of government intervention is unclear when dealing with a monopoly.

Accepted Answer

A) True 
 B)False

Exam 15: Monopoly.

Figure 15-5 -Refer to Figure 15-5.How much output will the monopolist produce?

Correct Answer
verified

Table 15-1 -Refer to Table 15-1.What is the marginal revenue for the monopolist for the sixth unit sold?

Correct Answer
verified

Many movie theaters allow discount tickets to be sold to senior citizens because

Correct Answer
verified

Which type of public policy toward monopolies is much more common in Europe than in the United States?

Correct Answer
verified

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 Answer
verified

Correct Answer
verified

The DeBeers company faces very little competition from other firms in the wholesale diamond market.Why isn't the price of the wholesale diamonds $10,000 per carat?

Correct Answer
verified

Which of the following can eliminate the inefficiency inherent in monopoly pricing?

Correct Answer
verified

The proper level of government intervention is unclear when dealing with a monopoly.

Correct Answer
verified

A monopolist that can practice perfect price discrimination will not impose a deadweight loss on society.

Correct Answer
verified

Marginal revenue can become negative for

Correct Answer
verified

When a single firm can supply a product to an entire market at a lower cost than could two or more firms,the industry is called a

Correct Answer
verified

A firm that is a natural monopoly

Correct Answer
verified

The amount of power that a monopoly has depends on whether there are close substitutes for its product.

Correct Answer
verified

Correct Answer
verified

Figure 15-13 -Refer to Figure 15-13.If the monopoly operates at an output level less than Q0,then an increase in output toward (but not exceeding) Q0 would

Correct Answer
verified

A fundamental source of monopoly market power arises from

Correct Answer
verified

For a monopoly,the level of output at which marginal revenue equals zero is also the level of output at which

Correct Answer
verified

In a natural monopoly,

Correct Answer
verified

A natural monopoly arises when

Correct Answer
verified

Exam 15: Monopoly.

Figure 15-5 -Refer to Figure 15-5.How much output will the monopolist produce?

Correct AnswerverifiedShow Answer

Table 15-1 -Refer to Table 15-1.What is the marginal revenue for the monopolist for the sixth unit sold?

Correct AnswerverifiedShow Answer

Many movie theaters allow discount tickets to be sold to senior citizens because

Correct AnswerverifiedShow Answer

Which type of public policy toward monopolies is much more common in Europe than in the United States?

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

Correct AnswerverifiedShow Answer

The DeBeers company faces very little competition from other firms in the wholesale diamond market.Why isn't the price of the wholesale diamonds $10,000 per carat?

Correct AnswerverifiedShow Answer

Which of the following can eliminate the inefficiency inherent in monopoly pricing?

Correct AnswerverifiedShow Answer

The proper level of government intervention is unclear when dealing with a monopoly.

Correct AnswerverifiedShow Answer

A monopolist that can practice perfect price discrimination will not impose a deadweight loss on society.

Correct AnswerverifiedShow Answer

Marginal revenue can become negative for

Correct AnswerverifiedShow Answer

When a single firm can supply a product to an entire market at a lower cost than could two or more firms,the industry is called a

Correct AnswerverifiedShow Answer

A firm that is a natural monopoly

Correct AnswerverifiedShow Answer

The amount of power that a monopoly has depends on whether there are close substitutes for its product.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 15-13 -Refer to Figure 15-13.If the monopoly operates at an output level less than Q0,then an increase in output toward (but not exceeding) Q0 would

Correct AnswerverifiedShow Answer

A fundamental source of monopoly market power arises from

Correct AnswerverifiedShow Answer

For a monopoly,the level of output at which marginal revenue equals zero is also the level of output at which

Correct AnswerverifiedShow Answer

In a natural monopoly,

Correct AnswerverifiedShow Answer

A natural monopoly arises when

Correct AnswerverifiedShow Answer

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