Question 1

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) None of the above
F) All of the above

Question 2

Figure 15-2 
-Refer to Figure 15-2. If a regulator requires the firm to charge a marginal cost price, what price will the firm charge?

Accepted Answer

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

Question 3

Table 15-6
A monopolist faces the following demand curve: 
-Refer to Table 15-6. If the monopolist has a constant marginal cost for her product equal to $7, what is her profit-maximizing price?

Accepted Answer

A)  $6
B)  $9
C)  $12
D)  $15E) B) and C)
F) B) and D)

Question 4

Suppose a firm has a monopoly on the sale of widgets and faces a downward-sloping demand curve. When selling the 100th widget, the firm will always receive

Accepted Answer

A)  less marginal revenue on the 100th widget than it received on the 99th widget.
B)  more average revenue on the 100th widget than it received on the 99th widget.
C)  more total revenue on the 100 widgets than it received on the first 99 widgets.
D)  a lower average cost per unit at 100 units of output than at 99 units of output.E) None of the above
F) A) and B)

Question 5

Scenario 15-3
A monopoly firm maximizes its profit by producing Q = 500 units of output. At that level of output, its marginal revenue is $30, its average revenue is $60, and its average total cost is $34.
-Refer to Scenario 15-3. At Q = 500, the firm's marginal cost is

Accepted Answer

A)  less than $30.
B)  $30.
C)  $34.
D)  greater than $34.E) A) and C)
F) A) and B)

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 from selling the second unit of output is

Accepted Answer

A)  $8.
B)  $14.
C)  $16.
D)  $24.E) B) and D)
F) A) and B)

Question 7

Table 15-7
Sally owns the only shoe store in town. She has the following cost and revenue information. 
-Refer to Table 15-7. What is the marginal revenue from selling the 2nd pair of shoes?

Accepted Answer

A)  $140
B)  $150
C)  $160
D)  $170E) All of the above
F) B) and C)

Question 8

Figure 15-5 
-Refer to Figure 15-5. A profit-maximizing monopoly will produce an output level of

Accepted Answer

A)  Q1.
B)  Q2.
C)  Q3.
D)  Q4.E) A) and B)
F) None of the above

Question 9

The De Beers Diamond company advertises heavily to promote the sale of all diamonds, not just its own. This is evidence that it has a monopoly position to some degree.

Accepted Answer

A) True 
 B)False

Question 10

If a monopolist can sell 7 units when the price is $4 and 8 units when the price is $3, then the marginal revenue of selling the eighth unit is equal to

Accepted Answer

A)  $3.
B)  $4.
C)  $24.
D)  -$4.E) None of the above
F) A) and B)

Question 11

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

Question 12

When regulators use a marginal-cost pricing strategy to regulate a natural monopoly, the regulated monopoly

Accepted Answer

A)  will experience a loss.
B)  will experience a price below average total cost.
C)  may rely on a government subsidy to remain in business.
D)  All of the above are correct.E) C) and D)
F) All of the above

Question 13

Which of the following is an example of price discrimination?

Accepted Answer

A)  An online bookstore charges more for overnight shipping than standard shipping when customers buy books from it.
B)  Airline tickets are more expensive for first-class seats than for coach.
C)  Hotel rates for AAA members are lower than for nonmembers.
D)  All of the above are correct.E) A) and B)
F) C) and D)

Question 14

The output effect describes the situation when a monopolist sells more output and, all else equal, total revenue

Accepted Answer

A)  increases.
B)  decreases.
C)  is unchanged.
D)  is maximized.E) A) and B)
F) None of the above

Question 15

Patent and copyright laws are major sources of

Accepted Answer

A)  natural monopolies.
B)  government-created monopolies.
C)  resource monopolies.
D)  antitrust regulation.E) C) and D)
F) A) and B)

Question 16

When a certain monopoly sets its price at $8 it sells 64 units. When the monopoly sets its price at $10 it sells 62 units. The marginal revenue for the firm over this range is

Accepted Answer

A)  $22.
B)  $27.
C)  $54.
D)  $108.E) B) and C)
F) A) and D)

Question 17

A common solution to monopoly in European countries is public ownership.

Accepted Answer

A) True 
 B)False

Question 18

​When the market for a good is a natural monopoly, this results in

Accepted Answer

A)  ​improved product choice for consumers.
B)  ​many producers charging low prices for the good.
C)  ​dominance by a single producer of the good.
D)  ​increased entry by new producers of the good.E) All of the above
F) C) and D)

Question 19

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 20

For a monopolist,

Accepted Answer

A)  average revenue is always greater than the price of the good.
B)  marginal revenue is always less than the price of the good.
C)  marginal cost is always greater than average total cost.
D)  marginal revenue equals marginal cost at the point where total revenue is maximized.E) A) and B)
F) A) and C)

Exam 15: Monopoly

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 from selling the second unit of output is

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Scenario 15-3 A monopoly firm maximizes its profit by producing Q = 500 units of output. At that level of output, its marginal revenue is $30, its average revenue is $60, and its average total cost is $34. -Refer to Scenario 15-3. At Q = 500, the firm's marginal cost is

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A common solution to monopoly in European countries is public ownership.

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Price discrimination

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​When the market for a good is a natural monopoly, this results in

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Which of the following is an example of price discrimination?

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For a monopolist,

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The De Beers Diamond company advertises heavily to promote the sale of all diamonds, not just its own. This is evidence that it has a monopoly position to some degree.

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

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Table 15-7 Sally owns the only shoe store in town. She has the following cost and revenue information. -Refer to Table 15-7. What is the marginal revenue from selling the 2nd pair of shoes?

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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 62 units. The marginal revenue for the firm over this range is

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Figure 15-5 -Refer to Figure 15-5. A profit-maximizing monopoly will produce an output level of

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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?

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When regulators use a marginal-cost pricing strategy to regulate a natural monopoly, the regulated monopoly

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If a monopolist can sell 7 units when the price is $4 and 8 units when the price is $3, then the marginal revenue of selling the eighth unit is equal to

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Patent and copyright laws are major sources of

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Table 15-6 A monopolist faces the following demand curve: -Refer to Table 15-6. If the monopolist has a constant marginal cost for her product equal to $7, what is her profit-maximizing price?

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The output effect describes the situation when a monopolist sells more output and, all else equal, total revenue

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Suppose a firm has a monopoly on the sale of widgets and faces a downward-sloping demand curve. When selling the 100th widget, the firm will always receive

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Figure 15-2 -Refer to Figure 15-2. If a regulator requires the firm to charge a marginal cost price, what price will the firm charge?

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When the market for a good is a natural monopoly, this results in

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Suppose a firm has a monopoly on the sale of widgets and faces a downward-sloping demand curve. When selling the 100^th widget, the firm will always receive

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