Question 1

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

Question 2

Price discrimination requires the firm to

Accepted Answer

A)  separate customers according to their willingnesses to pay.
B)  differentiate between different units of its product.
C)  engage in arbitrage.
D)  use coupons.E) None of the above
F) All of the above

Question 3

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

Question 4

Scenario 15-1
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 15-1. Vincent uses a pricing practice called

Accepted Answer

price disc...

Question 5

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) A) and B)

Question 6

Which of the following is not an example of a barrier to entry?

Accepted Answer

A)  Mighty Mitch's Mining Company owns a unique plot of land in Tanzania, under which lies the only large deposit of Tanzanite in the world.
B)  A chemist receives a patent for a new skin cream.
C)  An entrepreneur opens a cupcake bakery.
D)  A taxi cab driver in New York City obtains a license to legally provide transportation in New York City.E) A) and B)
F) A) and C)

Question 7

Figure 15-3    
-Refer to Figure 15-3. Which of the following statements is correct?

Accepted Answer

A)  Panel B represents the typical demand curve for a perfectly competitive industry.
B)  Panel A represents the typical demand curve for a monopoly.
C)  Panel C represents the typical demand curve for a perfectly competitive firm.
D)  All of the above are correct.E) A) and B)
F) All of the above

Question 8

Figure 15-2 
-Refer to Figure 15-2. If the firm profit-maximizes, how much profit will it earn?

Accepted Answer

The answer of Figure 15-2 
-Refer to Figure 15-2. If...

Question 9

Table 15-5
A monopolist faces the following demand curve: 
-Refer to Table 15-5. 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) A) and B)
F) All of the above

Question 10

In order to sell more of its product, a monopolist must

Accepted Answer

A)  lobby the government for a subsidy.
B)  lower its price.
C)  advertise.
D)  enact barriers to entry in related markets.E) A) and D)
F) A) and B)

Question 11

The first major piece of antitrust legislation was the

Accepted Answer

A)  Clayton Act.
B)  Obama Care Act.
C)  Sherman Act.
D)  Clinton Act.E) A) and D)
F) None of the above

Question 12

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

Question 13

When a certain monopoly sets its price at $8 it sells 64 units. When the monopoly sets its price at $10 it sells 60 units. The marginal revenue for the firm over this range is

Accepted Answer

A)  $11.
B)  $22.
C)  $33.
D)  $44.E) B) and C)
F) A) and B)

Question 14

Patent and copyright laws

Accepted Answer

A)  encourage creative activity.
B)  promote competition among firms.
C)  discourage creative activity.
D)  Both a and b are correct.E) A) and B)
F) All of the above

Question 15

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

Accepted Answer

A)  $100
B)  $15
C)  $10
D)  $1E) A) and D)
F) All of the above

Question 16

Which of the following statements is not correct?

Accepted Answer

A)  Two examples of early antitrust laws are the Sherman and Clayton Antitrust Acts.
B)  Antitrust laws automatically prevent mergers between companies that produce similar products.
C)  Antitrust laws give the government power to increase competition.
D)  Antitrust laws can reduce social welfare if they prevent mergers that would lower costs through more efficient joint production.E) A) and D)
F) None of the above

Question 17

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 B)
F) A) and C)

Question 18

The social cost of a monopoly is equal to its

Accepted Answer

A)  economic profit.
B)  fixed cost.
C)  deadweight loss.
D)  variable cost.E) A) and C)
F) C) and D)

Question 19

For a monopolist, when does marginal revenue exceed average revenue?

Accepted Answer

A)  never
B)  when output is less than the profit-maximizing level of output
C)  when output is greater than the profit-maximizing level of output
D)  for all levels of output greater than zeroE) All of the above
F) A) and B)

Question 20

Comparing firms in perfectly competitive markets to monopoly firms, which results in a deadweight loss?

Accepted Answer

The answer of Comparing firms in perfectly competitive markets to...

Exam 15: Monopoly

Correct Answer
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Patent and copyright laws

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A fundamental source of monopoly market power arises from

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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 average revenue?

Correct Answer
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Price discrimination requires the firm to

Correct Answer
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For a monopolist, when does marginal revenue exceed average revenue?

Correct Answer
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In order to sell more of its product, a monopolist must

Correct Answer
verified

When a certain monopoly sets its price at $8 it sells 64 units. When the monopoly sets its price at $10 it sells 60 units. The marginal revenue for the firm over this range is

Correct Answer
verified

The first major piece of antitrust legislation was the

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

Correct Answer
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The social cost of a monopoly is equal to its

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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Figure 15-3 -Refer to Figure 15-3. Which of the following statements is correct?

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Which of the following is not an example of a barrier to entry?

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price disc...
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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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Comparing firms in perfectly competitive markets to monopoly firms, which results in a deadweight loss?

Correct Answer
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Table 15-5 A monopolist faces the following demand curve: -Refer to Table 15-5. The monopolist has total fixed costs of $60 and has a constant marginal cost of $15. What is the profit-maximizing level of production?

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Figure 15-2 -Refer to Figure 15-2. If the firm profit-maximizes, how much profit will it earn?

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Exam 15: Monopoly

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Patent and copyright laws

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A fundamental source of monopoly market power arises from

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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 average revenue?

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Price discrimination requires the firm to

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For a monopolist, when does marginal revenue exceed average revenue?

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In order to sell more of its product, a monopolist must

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When a certain monopoly sets its price at $8 it sells 64 units. When the monopoly sets its price at $10 it sells 60 units. The marginal revenue for the firm over this range is

Correct AnswerverifiedShow Answer

The first major piece of antitrust legislation was the

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

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The social cost of a monopoly is equal to its

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

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Figure 15-3 -Refer to Figure 15-3. Which of the following statements is correct?

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Which of the following is not an example of a barrier to entry?

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Correct Answerverifiedprice disc...View AnswerShow Answer

Which of the following statements is not correct?

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Which of the following statements is correct?

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Comparing firms in perfectly competitive markets to monopoly firms, which results in a deadweight loss?

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Table 15-5 A monopolist faces the following demand curve: -Refer to Table 15-5. The monopolist has total fixed costs of $60 and has a constant marginal cost of $15. What is the profit-maximizing level of production?

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Figure 15-2 -Refer to Figure 15-2. If the firm profit-maximizes, how much profit will it earn?

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price disc...
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