Question 1

Table 15-5
 
-Consider a profit-maximizing monopoly pricing under the following conditions.The profit-maximizing price charged for goods produced is $12.The intersection of the marginal revenue and marginal cost curves occurs where output is 10 units and marginal cost is $6.The socially efficient level of production is 12 units.The demand curve and marginal cost curves are linear.What is the deadweight loss?

Accepted Answer

A)   $4
B)   $6
C)   $12
D)   $16E) None of the above
F) A) and D)

Question 2

Suppose when a monopolist produces 50 units its average revenue is $8 per unit,its marginal revenue is $4 per unit,its marginal cost is $4 per unit,and its average total cost is $3 per unit.What can we conclude about this monopolist?

Accepted Answer

A)   The monopolist is currently maximizing profits,and its total profits are $200.
B)   The monopolist is currently maximizing profits,and its total profits are $250.
C)   The monopolist is not currently maximizing its profits;it should produce more units and charge a lower price to maximize profit.
D)   The monopolist is not currently maximizing its profits;it should produce fewer units and charger a higher price to maximize profit.E) B) and C)
F) B) and D)

Question 3

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) B) and D)
F) All of the above

Question 4

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

Question 5

In a competitive market,a firm's supply curve dictates the amount it will supply.In a monopoly market the

Accepted Answer

A)   same is true.
B)   supply curve conceptually makes sense,but in practice is never used.
C)   supply curve will have limited predictive capacity.
D)   decision about how much to supply is impossible to separate from the demand curve it faces.E) B) and C)
F) A) and D)

Question 6

Which of the following is an example of public ownership of a monopoly?

Accepted Answer

A)   DeBeers
B)   Microsoft
C)   U.S.Postal Service
D)   AT&TE) A) and B)
F) None of the above

Question 7

Table 15-3
George has the following demand curve for selling vegemite sandwiches.Assume that George has a marginal cost of $3 per unit.
 
-Refer to Table 15-3.What is George's profit-maximizing level of output?

Accepted Answer

A)   1
B)   2
C)   3
D)   4E) B) and C)
F) A) and D)

Question 8

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 9

A profit-maximizing monopolist will produce the level of output at which

Accepted Answer

A)   average revenue is equal to average total cost.
B)   average revenue is equal to marginal cost.
C)   marginal revenue is equal to marginal cost.
D)   total revenue is equal to opportunity cost.E) A) and D)
F) A) and C)

Question 10

Which of the following statements is not correct?

Accepted Answer

A)   Part of the deadweight loss associated with monopoly is measured by the monopolist's economic profit.
B)   Marginal cost is always less than average total cost in a natural monopoly.
C)   Discount coupons available free to the public are a type of price discrimination.
D)   Anti-trust laws make it harder for firms to create synergies.E) C) and D)
F) A) and C)

Question 11

Figure 15-11 
-Refer to Figure 15-11.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 D)
F) A) and D)

Question 12

Price discrimination

Accepted Answer

A)   is illegal in the United States and Europe.
B)   can occur in both perfectly competitive and monopoly markets.
C)   is illogical because it does not maximize profits.
D)   can maximize profits if the seller can prevent the resale of goods between customers.E) B) and C)
F) A) and D)

Question 13

A monopolist maximizes profits by

Accepted Answer

A)   producing an output level where marginal revenue equals marginal cost.
B)   charging a price that is greater than marginal revenue.
C)   earning a profit of (P - M
C)  x Q.
D)   Both a and b are correct.E) A) and B)
F) A) and C)

Question 14

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 15

Which of the following is an example of a barrier to entry?

Accepted Answer

A)   Matthew offers free samples of his latest flavored coffee drink to entice customers to buy a cup.
B)   Mark charges a lower price to students than to faculty for his tattoo services.
C)   Luke charges a higher hourly price to business students than to liberal arts students for his economics tutoring.
D)   John obtained a copyright for the song he wrote and recorded.E) A) and B)
F) A) and C)

Question 16

The socially efficient level of production occurs where the marginal cost curve intersects

Accepted Answer

A)   average variable cost.
B)   average total cost.
C)   demand.
D)   marginal revenue.E) A) and C)
F) B) and C)

Question 17

If a monopolist has zero marginal costs,it will produce

Accepted Answer

A)   the output at which total revenue is maximized.
B)   in the range in which marginal revenue is still increasing.
C)   at the point at which marginal revenue is at a maximum.
D)   in the range in which marginal revenue is negative.E) A) and B)
F) All of the above

Question 18

Additional firms often do not try to compete with a natural monopoly because

Accepted Answer

A)   they fear retaliation in the form of pricing wars from the natural monopolist.
B)   they are unsure of the size of the market in general.
C)   they know they cannot achieve the same low costs that the natural monopolist enjoys.
D)   the natural monopoly doesn't make a huge profit.E) A) and B)
F) All of the above

Question 19

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 20

One problem with regulating a monopolist on the basis of cost is that

Accepted Answer

A)   by focusing on costs,the regulators ignore profits.
B)   it does not provide an incentive for the monopolist to reduce its cost.
C)   a monopolist's costs,by definition,are higher than costs of perfectly competitive firms.
D)   a monopolist is still able to generate excessive economic profits.E) B) and C)
F) C) and D)

Exam 15: Monopoly

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

Correct Answer
verified

A monopolist maximizes profits by

Correct Answer
verified

One problem with regulating a monopolist on the basis of cost is that

Correct Answer
verified

Correct Answer
verified

Marginal revenue can become negative for

Correct Answer
verified

Which of the following is an example of a barrier to entry?

Correct Answer
verified

Price discrimination

Correct Answer
verified

Figure 15-11 -Refer to Figure 15-11.If there are no fixed costs of production,monopoly profit with perfect price discrimination equals

Correct Answer
verified

A profit-maximizing monopolist will produce the level of output at which

Correct Answer
verified

Suppose when a monopolist produces 50 units its average revenue is $8 per unit,its marginal revenue is $4 per unit,its marginal cost is $4 per unit,and its average total cost is $3 per unit.What can we conclude about this monopolist?

Correct Answer
verified

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

Correct Answer
verified

Table 15-3 George has the following demand curve for selling vegemite sandwiches.Assume that George has a marginal cost of $3 per unit. -Refer to Table 15-3.What is George's profit-maximizing level of output?

Correct Answer
verified

Additional firms often do not try to compete with a natural monopoly because

Correct Answer
verified

The socially efficient level of production occurs where the marginal cost curve intersects

Correct Answer
verified

Which of the following statements is not correct?

Correct Answer
verified

Antitrust laws have economic benefits that outweigh the costs if they

Correct Answer
verified

Which of the following is an example of public ownership of a monopoly?

Correct Answer
verified

If a monopolist has zero marginal costs,it will produce

Correct Answer
verified

In a competitive market,a firm's supply curve dictates the amount it will supply.In a monopoly market the

Correct Answer
verified

Exam 15: Monopoly

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

Correct AnswerverifiedShow Answer

A monopolist maximizes profits by

Correct AnswerverifiedShow Answer

One problem with regulating a monopolist on the basis of cost is that

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Marginal revenue can become negative for

Correct AnswerverifiedShow Answer

Which of the following is an example of a barrier to entry?

Correct AnswerverifiedShow Answer

Price discrimination

Correct AnswerverifiedShow Answer

Figure 15-11 -Refer to Figure 15-11.If there are no fixed costs of production,monopoly profit with perfect price discrimination equals

Correct AnswerverifiedShow Answer

A profit-maximizing monopolist will produce the level of output at which

Correct AnswerverifiedShow Answer

Suppose when a monopolist produces 50 units its average revenue is $8 per unit,its marginal revenue is $4 per unit,its marginal cost is $4 per unit,and its average total cost is $3 per unit.What can we conclude about this monopolist?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Table 15-3 George has the following demand curve for selling vegemite sandwiches.Assume that George has a marginal cost of $3 per unit. -Refer to Table 15-3.What is George's profit-maximizing level of output?

Correct AnswerverifiedShow Answer

Additional firms often do not try to compete with a natural monopoly because

Correct AnswerverifiedShow Answer

The socially efficient level of production occurs where the marginal cost curve intersects

Correct AnswerverifiedShow Answer

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

Antitrust laws have economic benefits that outweigh the costs if they

Correct AnswerverifiedShow Answer

Which of the following is an example of public ownership of a monopoly?

Correct AnswerverifiedShow Answer

If a monopolist has zero marginal costs,it will produce

Correct AnswerverifiedShow Answer

In a competitive market,a firm's supply curve dictates the amount it will supply.In a monopoly market the

Correct AnswerverifiedShow Answer

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