Question 1

If a monopolist is able to perfectly price discriminate,

Accepted Answer

A)  consumer surplus is always increased.
B)  total surplus is always decreased.
C)  consumer surplus and deadweight losses are transformed into monopoly profits.
D)  the price effect dominates the output effect on monopoly revenue.E) All of the above
F) C) and D)

Question 2

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 3

Figure 15-7
The figure below depicts the demand, marginal revenue, and marginal cost curves of a profit-maximizing monopolist.
 
-Refer to Figure 15-7.If there are no fixed costs of production,monopoly profit with perfect price discrimination equals

Accepted Answer

A)  $500.
B)  $1,000.
C)  $2,000.
D)  $4,000.E) B) and C)
F) None of the above

Question 4

Explain the benefits and costs of antitrust laws.

Accepted Answer

Benefits: Promote competition ...

Question 5

When a monopoly charges a higher price,fewer of its goods are sold.

Accepted Answer

A) True 
 B)False

Question 6

If a monopolist sells 100 units at $8 per unit and realizes an average total cost of $6 per unit,what is the monopolist's profit?

Accepted Answer

A)  $200
B)  $400
C)  $600
D)  $800E) A) and B)
F) A) and C)

Question 7

Figure 15-7
The figure below depicts the demand, marginal revenue, and marginal cost curves of a profit-maximizing monopolist.
 
-Refer to Figure 15-7.If the monopoly firm perfectly price discriminates,then consumer surplus amounts to

Accepted Answer

A)  $0.
B)  $250.
C)  $500.
D)  $1,000.E) B) and D)
F) None of the above

Question 8

A monopolist's profits with price discrimination will be

Accepted Answer

A)  lower than if the firm charged a single, profit-maximizing price
B)  the same as if the firm charged a single, profit-maximizing price.
C)  higher than if the firm charged just one price because the firm will capture more consumer surplus.
D)  higher than if the firm charged a single price because the costs of selling the good will be lower.E) None of the above
F) All of the above

Question 9

What happens to the price and quantity sold of a drug when its patent runs out? (i) 	The price will fall.
(ii) 	The quantity sold will fall.
(iii) 	The marginal cost of producing the drug will rise.

Accepted Answer

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

Question 10

For a long while,electricity producers were thought to be a classic example of a natural monopoly.People held this view because

Accepted Answer

A)  the average cost of producing units of electricity by one producer in a specific region was lower than if the same quantity were produced by two or more producers in the same region.
B)  the average cost of producing units of electricity by one producer in a specific region was higher than if the same quantity were produced by two or more produced in the same region.
C)  the marginal cost of producing units of electricity by one producer in a specific region was higher than if the same quantity were produced by two or more producers in the same region.
D)  electricity is a special non-excludable good that could never be sold in a competitive market.E) A) and D)
F) A) and C)

Question 11

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 12

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) All of the above
F) A) 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.Using your understanding of monopoly,discuss the context in which your electricity provider is a monopolist.Is this characterization universally applicable? Carefully explain your answer.

Accepted Answer

In this case,the firms are monopolists i...

Question 14

A monopolist faces the following demand curve: 
The monopolist has total fixed costs of $60 and has a constant marginal cost of $15.What is the profit-maximizing level of production?

Accepted Answer

A)  2 units
B)  3 units
C)  4 units
D)  5 unitsE) B) and C)
F) A) and C)

Question 15

Which of the following items is a primary source of barriers to entry?

Accepted Answer

A)  The costs of production make a single firm more efficient than a large number of firms.
B)  A single firm hires all the people who have the management skills that are important in the industry.
C)  Contracts among firms prohibit them from competing with one another in the production and sale of certain products.
D)  All of the above are correct.E) A) and C)
F) B) and C)

Question 16

Which of the following statements comparing monopoly with competition is correct?

Accepted Answer

A)  A monopolist produces a higher level of output and charges a lower price than a competitive firm would.
B)  With perfect price discrimination, the total surplus under monopoly can be the same as under competition.
C)  With or without price discrimination, the consumer surplus under monopoly is at least as large as it would be under competition.
D)  The deadweight loss associated with monopoly is caused by the positive economic profits of the monopolist; competitive firms do not earn a positive economic profit so there is no deadweight loss under competition.E) C) and D)
F) None of the above

Question 17

In many countries,the government chooses to "internalize" the monopoly by owning monopoly providers of goods and services.(In some cases these firms are "nationalized" and the government actually buys or confiscates firms that operate in monopoly markets).What would be the advantages and disadvantages of such an approach to ensuring the "best interest of society" is promoted in these markets? Carefully explain your answer.

Accepted Answer

As long as the government "owner" pursue...

Question 18

Suppose a monopolist chooses the price and production level which maximizes its profit.From that point,to increase society's economic welfare,output would need to be increased as long as

Accepted Answer

A)  average revenue exceeds marginal cost.
B)  average revenue exceeds average total cost.
C)  marginal revenue exceeds marginal cost.
D)  marginal revenue exceeds average total cost.E) C) and D)
F) All of the above

Question 19

Which of the following statements is correct?

Accepted Answer

A)  A competitive firm is a price maker and a monopoly is a price taker.
B)  A competitive firm is a price taker and a monopoly is a price maker.
C)  Both competitive firms and monopolies are price takers.
D)  Both competitive firms and monopolies are price makers.E) All of the above
F) A) and D)

Question 20

Competitive firms differ from monopolies in which of the following ways? (i) 	Competitive firms do not have to worry about the price effect lowering their total revenue.
(ii) 	Marginal revenue for a competitive firm equals price,while marginal revenue for a monopoly is less than the price it is able to charge.
(iii) 	Monopolies must lower their price in order to sell more of their product,while competitive firms do not.

Accepted Answer

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

Exam 15: Monopoly

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

Correct Answer
verified

Correct Answer
verified

When a monopoly charges a higher price,fewer of its goods are sold.

Correct Answer
verified

If a monopolist sells 100 units at $8 per unit and realizes an average total cost of $6 per unit,what is the monopolist's profit?

Correct Answer
verified

Which of the following items is a primary source of barriers to entry?

Correct Answer
verified

Explain the benefits and costs of antitrust laws.

Correct Answer
verified
Benefits: Promote competition ...
View Answer

A monopolist faces the following demand curve: The monopolist has total fixed costs of $60 and has a constant marginal cost of $15.What is the profit-maximizing level of production?

Correct Answer
verified

Figure 15-7 The figure below depicts the demand, marginal revenue, and marginal cost curves of a profit-maximizing monopolist. -Refer to Figure 15-7.If there are no fixed costs of production,monopoly profit with perfect price discrimination equals

Correct Answer
verified

A reduction in a monopolist's fixed costs would

Correct Answer
verified

Suppose a monopolist chooses the price and production level which maximizes its profit.From that point,to increase society's economic welfare,output would need to be increased as long as

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
verified

What happens to the price and quantity sold of a drug when its patent runs out? (i) The price will fall. (ii) The quantity sold will fall. (iii) The marginal cost of producing the drug will rise.

Correct Answer
verified

For a long while,electricity producers were thought to be a classic example of a natural monopoly.People held this view because

Correct Answer
verified

Correct Answer
verified
As long as the government "owner" pursue...
View Answer

If a monopolist is able to perfectly price discriminate,

Correct Answer
verified

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 Answer
verified

A monopolist's profits with price discrimination will be

Correct Answer
verified

Which of the following statements comparing monopoly with competition is correct?

Correct Answer
verified

Correct Answer
verified
In this case,the firms are monopolists i...
View Answer

Figure 15-7 The figure below depicts the demand, marginal revenue, and marginal cost curves of a profit-maximizing monopolist. -Refer to Figure 15-7.If the monopoly firm perfectly price discriminates,then consumer surplus amounts to

Correct Answer
verified

Exam 15: Monopoly

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When a monopoly charges a higher price,fewer of its goods are sold.

Correct AnswerverifiedShow Answer

If a monopolist sells 100 units at $8 per unit and realizes an average total cost of $6 per unit,what is the monopolist's profit?

Correct AnswerverifiedShow Answer

Which of the following items is a primary source of barriers to entry?

Correct AnswerverifiedShow Answer

Explain the benefits and costs of antitrust laws.

Correct AnswerverifiedBenefits: Promote competition ...View AnswerShow Answer

A monopolist faces the following demand curve: The monopolist has total fixed costs of $60 and has a constant marginal cost of $15.What is the profit-maximizing level of production?

Correct AnswerverifiedShow Answer

Figure 15-7 The figure below depicts the demand, marginal revenue, and marginal cost curves of a profit-maximizing monopolist. -Refer to Figure 15-7.If there are no fixed costs of production,monopoly profit with perfect price discrimination equals

Correct AnswerverifiedShow Answer

A reduction in a monopolist's fixed costs would

Correct AnswerverifiedShow Answer

Suppose a monopolist chooses the price and production level which maximizes its profit.From that point,to increase society's economic welfare,output would need to be increased as long as

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

What happens to the price and quantity sold of a drug when its patent runs out? (i) The price will fall. (ii) The quantity sold will fall. (iii) The marginal cost of producing the drug will rise.

Correct AnswerverifiedShow Answer

For a long while,electricity producers were thought to be a classic example of a natural monopoly.People held this view because

Correct AnswerverifiedShow Answer

Correct AnswerverifiedAs long as the government "owner" pursue...View AnswerShow Answer

If a monopolist is able to perfectly price discriminate,

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

A monopolist's profits with price discrimination will be

Correct AnswerverifiedShow Answer

Which of the following statements comparing monopoly with competition is correct?

Correct AnswerverifiedShow Answer

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

Figure 15-7 The figure below depicts the demand, marginal revenue, and marginal cost curves of a profit-maximizing monopolist. -Refer to Figure 15-7.If the monopoly firm perfectly price discriminates,then consumer surplus amounts to

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Benefits: Promote competition ...
View Answer

Correct Answer
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Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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As long as the government "owner" pursue...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
In this case,the firms are monopolists i...
View Answer

Correct Answer
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