Question 1

Figure 15-5 
-Refer to Figure 15-5. Profit on a typical unit sold for a profit-maximizing monopoly would equal

Accepted Answer

A)   P1-P6.
B)   P2-P4.
C)   P2-P5.
D)   P2-P3.E) None of the above
F) All of the above

Question 2

Table 15-21
Tommy's Tie Company, a monopolist, has the following cost and revenue information. Assume that Tommy's is
able to engage in perfect price discrimination. 
-Refer to Table 15-21. If the monopolist can engage in perfect price discrimination, what is the total revenue when 3 ties are sold?

Accepted Answer

A)   $140
B)   $420
C)   $450
D)   $620E) A) and D)
F) A) and C)

Question 3

Table 15-12
The following table provides information on the price, quantity, and average total cost for a monopoly. 
-Refer to Table 15-12. In order to maximize profits, the firm should produce

Accepted Answer

A)   4 units of output.
B)   8 units of output.
C)   12 units of output.
D)   16 units of output.E) None of the above
F) A) and B)

Question 4

Figure 15-18 
-Refer to Figure 15-18. If the monopoly firm is not allowed to price discriminate, then the deadweight loss amounts to

Accepted Answer

A)   $0.
B)   $1,000.
C)   $2,000.
D)   $4,000.E) B) and D)
F) B) and C)

Question 5

Monopoly pricing prevents some mutually beneficial trades from taking place. These unrealized, mutually beneficial trades are

Accepted Answer

A)   of little concern to society.
B)   a deadweight loss to society.
C)   a sunk cost to society.
D)   also observed in competitive markets.E) A) and D)
F) A) and C)

Question 6

Table 15-18
A monopolist faces the following demand curve:  Suppose marginal cost is constant at $8 per unit.
-Refer to Table 15-18. The monopolist's marginal revenue is

Accepted Answer

A)   always more than the price of its good.
B)   always equal to the price of its good.
C)   always less than the price of its good.
D)   sometimes more and sometimes less than the price of its good.E) None of the above
F) All of the above

Question 7

Table 15-11
The following table shows quantity, price, and marginal cost information for a monopoly: 
-Refer to Table 15-11. What price should the firm charge to maximize its profit?

Accepted Answer

A)   $4
B)   $5
C)   $6
D)   $7E) B) and C)
F) None of the above

Question 8

To maximize total surplus with a monopoly firm, a benevolent social planner would choose the level of output where

Accepted Answer

A)   MR = MC.
B)   MR intersects the demand curve.
C)   MC intersects the demand curve.
D)   MR exceeds MC by the greatest amount.E) A) and B)
F) All of the above

Question 9

Policymakers are discussing various proposals regarding how to deal with natural monopolies. Senator Huff wants to regulate natural monopolies by equating price with average total cost. Huff contends that such a policy will ensure that monopolies make every effort to reduce costs. Senator Puff wants the government to own natural monopolies. Puff argues that government-owned monopolies usually do a better job of holding down costs than privately owned monopolies. Which senator's argument is correct?

Accepted Answer

A)   Senator Huff
B)   Senator Puff
C)   both senators
D)   neither senatorE) All of the above
F) None of the above

Question 10

The socially efficient quantity is found where the demand curve intersects the marginal cost curve.

Accepted Answer

A) True 
 B)False

Question 11

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 price?

Accepted Answer

A)   $4
B)   $39
C)   $36
D)   $42E) A) and B)
F) All of the above

Question 12

Antitrust laws

Accepted Answer

A)   prevent firms from maximizing profits.
B)   allow the government to prevent mergers, even ones that would benefit consumers.
C)   require the government to measure both the benefits and costs of a potential merger.
D)   All of the above are correct.E) A) and D)
F) A) and B)

Question 13

Figure 15-8 
-Refer to Figure 15-8. What is the monopoly price and quantity?

Accepted Answer

A)   price = A; quantity = X
B)   price = B; quantity = Y
C)   price = B; quantity = X
D)   price = C; quantity = XE) None of the above
F) B) and C)

Question 14

Suppose when a monopolist produces 75 units its average revenue is $10 per unit, its marginal revenue is $5 per unit, its marginal cost is $6 per unit, and its average total cost is $5 per unit. What can we conclude about this monopolist?

Accepted Answer

A)   The monopolist is currently maximizing profits, and its total profits are $375.
B)   The monopolist is currently maximizing profits, and its total profits are $300.
C)   The monopolist is not currently maximizing profits; it should produce more units and charge a lower price to maximize profits.
D)   The monopolist is not currently maximizing profits; it should produce fewer units and charge a higher price to maximize profits.E) A) and D)
F) C) and D)

Question 15

The deadweight loss that arises from a monopoly is a consequence of the fact that the monopoly

Accepted Answer

A)   quantity is lower than the socially-optimal quantity.
B)   price equals marginal revenue.
C)   price is the same as average revenue.
D)   earns positive profits.E) A) and C)
F) B) and D)

Question 16

Which of the following is a characteristic of a natural monopoly?

Accepted Answer

A)   Average cost exceeds marginal cost over large regions of output.
B)   Increasing the number of firms increases each firm's average total cost.
C)   One firm can supply output at a lower cost than two firms.
D)   All of the above are correct.E) A) and C)
F) A) and B)

Question 17

One example of price discrimination occurs in the publishing industry when a publisher initially releases an expensive hardcover edition of a popular novel and later releases a cheaper paperback edition. Use this example to demonstrate the benefits and potential pitfalls of a price discrimination pricing strategy.

Accepted Answer

The answer should address the three basi...

Question 18

When an industry is a natural monopoly,

Accepted Answer

A)   it is characterized by constant returns to scale.
B)   it is characterized by diseconomies of scale.
C)   a larger number of firms may lead to a lower average cost.
D)   a larger number of firms will lead to a higher average cost.E) None of the above
F) B) and D)

Question 19

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. Vincent uses a pricing practice called

Accepted Answer

price disc...

Question 20

Antitrust laws have economic benefits that outweigh the costs if they

Accepted Answer

A)   prevent mergers that would decrease competition and lower the costs of production.
B)   prevent mergers that would decrease competition and raise the costs of production.
C)   allow mergers that would decrease competition and raise the costs of production.
D)   None of the above is correct because antitrust laws never have economic benefits that outweigh the costs.E) A) and C)
F) A) and D)

Exam 15: Monopoly

To maximize total surplus with a monopoly firm, a benevolent social planner would choose the level of output where

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 price?

Correct Answer
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Table 15-18 A monopolist faces the following demand curve: Suppose marginal cost is constant at $8 per unit. -Refer to Table 15-18. The monopolist's marginal revenue is

Correct Answer
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Correct Answer
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price disc...
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Table 15-21 Tommy's Tie Company, a monopolist, has the following cost and revenue information. Assume that Tommy's is able to engage in perfect price discrimination. -Refer to Table 15-21. If the monopolist can engage in perfect price discrimination, what is the total revenue when 3 ties are sold?

Correct Answer
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Figure 15-18 -Refer to Figure 15-18. If the monopoly firm is not allowed to price discriminate, then the deadweight loss amounts to

Correct Answer
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When an industry is a natural monopoly,

Correct Answer
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The deadweight loss that arises from a monopoly is a consequence of the fact that the monopoly

Correct Answer
verified

Figure 15-5 -Refer to Figure 15-5. Profit on a typical unit sold for a profit-maximizing monopoly would equal

Correct Answer
verified

Antitrust laws have economic benefits that outweigh the costs if they

Correct Answer
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Antitrust laws

Correct Answer
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Which of the following is a characteristic of a natural monopoly?

Correct Answer
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Correct Answer
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The answer should address the three basi...
View Answer

Table 15-12 The following table provides information on the price, quantity, and average total cost for a monopoly. -Refer to Table 15-12. In order to maximize profits, the firm should produce

Correct Answer
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Monopoly pricing prevents some mutually beneficial trades from taking place. These unrealized, mutually beneficial trades are

Correct Answer
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Figure 15-8 -Refer to Figure 15-8. What is the monopoly price and quantity?

Correct Answer
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Table 15-11 The following table shows quantity, price, and marginal cost information for a monopoly: -Refer to Table 15-11. What price should the firm charge to maximize its profit?

Correct Answer
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The socially efficient quantity is found where the demand curve intersects the marginal cost curve.

Correct Answer
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Suppose when a monopolist produces 75 units its average revenue is $10 per unit, its marginal revenue is $5 per unit, its marginal cost is $6 per unit, and its average total cost is $5 per unit. What can we conclude about this monopolist?

Correct Answer
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Exam 15: Monopoly

To maximize total surplus with a monopoly firm, a benevolent social planner would choose the level of output where

Correct AnswerverifiedShow Answer

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 price?

Correct AnswerverifiedShow Answer

Table 15-18 A monopolist faces the following demand curve: Suppose marginal cost is constant at $8 per unit. -Refer to Table 15-18. The monopolist's marginal revenue is

Correct AnswerverifiedShow Answer

Correct Answerverifiedprice disc...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Table 15-21 Tommy's Tie Company, a monopolist, has the following cost and revenue information. Assume that Tommy's is able to engage in perfect price discrimination. -Refer to Table 15-21. If the monopolist can engage in perfect price discrimination, what is the total revenue when 3 ties are sold?

Correct AnswerverifiedShow Answer

Figure 15-18 -Refer to Figure 15-18. If the monopoly firm is not allowed to price discriminate, then the deadweight loss amounts to

Correct AnswerverifiedShow Answer

When an industry is a natural monopoly,

Correct AnswerverifiedShow Answer

The deadweight loss that arises from a monopoly is a consequence of the fact that the monopoly

Correct AnswerverifiedShow Answer

Figure 15-5 -Refer to Figure 15-5. Profit on a typical unit sold for a profit-maximizing monopoly would equal

Correct AnswerverifiedShow Answer

Antitrust laws have economic benefits that outweigh the costs if they

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Antitrust laws

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Which of the following is a characteristic of a natural monopoly?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe answer should address the three basi...View AnswerShow Answer

Table 15-12 The following table provides information on the price, quantity, and average total cost for a monopoly. -Refer to Table 15-12. In order to maximize profits, the firm should produce

Correct AnswerverifiedShow Answer

Monopoly pricing prevents some mutually beneficial trades from taking place. These unrealized, mutually beneficial trades are

Correct AnswerverifiedShow Answer

Figure 15-8 -Refer to Figure 15-8. What is the monopoly price and quantity?

Correct AnswerverifiedShow Answer

Table 15-11 The following table shows quantity, price, and marginal cost information for a monopoly: -Refer to Table 15-11. What price should the firm charge to maximize its profit?

Correct AnswerverifiedShow Answer

The socially efficient quantity is found where the demand curve intersects the marginal cost curve.

Correct AnswerverifiedShow Answer

Suppose when a monopolist produces 75 units its average revenue is $10 per unit, its marginal revenue is $5 per unit, its marginal cost is $6 per unit, and its average total cost is $5 per unit. What can we conclude about this monopolist?

Correct AnswerverifiedShow Answer

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price disc...
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The answer should address the three basi...
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