Question 1

When a monopolist decreases the price of its good, consumers

Accepted Answer

A)   continue to buy the same amount.
B)   buy more.
C)   buy less.
D)   may buy more or less, depending on the price elasticity of demand.E) A) and D)
F) B) and D)

Question 2

Which of the following statements is not correct?

Accepted Answer

A)   The government may use antitrust laws to prevent a merger if the government believes the merger will reduce competition and increase prices.
B)   By regulating a natural monopoly where price equals average total cost, the monopoly earns zero profits.
C)   An advantage of private ownership over public ownership is that private business owners tend to fire inefficient managers.
D)   The government should always intervene to improve monopoly inefficiency.E) A) and C)
F) None of the above

Question 3

If the government deems a newly-invented drug to be truly original, the pharmaceutical company is given the exclusive right to manufacture and sell the drug for 50 years.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A)   John owns the only parcel of lakeside property with a beach that is safe for swimming. He charges admission to neighbors who want to use the beach.
B)   Jackie owns the copyright to a popular song. She receives royalties every time a radio station plays her song.
C)   John Jr. owns the best seafood restaurant in a popular resort area. He charges high prices because the quality of the food is so good.
D)   Caroline owns the patent for a new running shoe. She receives payments from the company who manufactures the shoes.E) B) and D)
F) C) and D)

Question 5

When a firm experiences continually declining average total costs, the firm is a

Accepted Answer

A)   government-created monopoly.
B)   price taker.
C)   natural monopoly.
D)   revenue maximizer.E) None of the above
F) All of the above

Question 6

Scenario 15-1
Consider a transportation corporation named Reading's that has just completed the development of a new light rail system in Minneapolis. Currently, there are plenty of seats on the train, and it is never crowded. Its capacity far exceeds the needs of the city. After just a few years of operation, the shareholders of Reading's experienced incredibly high rates of return on their investment due to the profitability of the corporation.
-Refer to Scenario 15-1. Which of the following statements is most likely to be true? i)  New entrants to the market know they will have a smaller market share than Reading's
Currently has.
Ii)  Reading's is most likely experiencing decreasing average total cost.
Iii)  Reading's is a natural monopoly.

Accepted Answer

A)   i)  and ii)  only
B)   ii)  and iii)  only
C)   i)  and iii)  only
D)   i) , ii) , and iii) E) A) and C)
F) None of the above

Question 7

Table 15-13
The following table gives information on the price, quantity, and total cost of production for a monopolist.
 
-Refer to Table 15-13. If the monopolist maximizes profits, he will charge a price of

Accepted Answer

A)   $4.
B)   $3.
C)   $2.
D)   $1.E) All of the above
F) A) and D)

Question 8

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

Question 9

Table 15-6
A monopolist faces the following demand curve:
 
-Refer to Table 15-6. Suppose the monopolist has total fixed costs equal to $5 and a variable cost equal to $4 per unit for all units produced. What is the total profit if she operates at her profit-maximizing price?

Accepted Answer

A)   $1
B)   $7
C)   $9
D)   $11E) B) and C)
F) A) and D)

Question 10

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) A) and D)
F) A) and B)

Question 11

Which of the following is not a characteristic of a monopoly?

Accepted Answer

A)   barriers to entry
B)   one seller
C)   one buyer
D)   a product without close substitutesE) C) and D)
F) A) and D)

Question 12

Table 15-4
A monopolist faces the following demand curve:
 
-Refer to Table 15-4. If the monopolist produces 5 units, what is its marginal revenue?

Accepted Answer

A)   $100
B)   $37.5
C)   $15
D)   $2.50E) All of the above
F) A) and C)

Question 13

Table 15-19
A monopolist faces the following demand curve:
 
-Refer to Table 15-19. If a monopolist faces a constant marginal cost of $9, how much output should the firm produce?

Accepted Answer

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

Question 14

Figure 15-5 
-Refer to Figure 15-5. A profit-maximizing monopoly will charge a price of

Accepted Answer

A)   P1.
B)   P2.
C)   P3.
D)   P4.E) B) and D)
F) A) and D)

Question 15

Which of the following statements is correct?

Accepted Answer

A)   If the monopolist's marginal revenue is greater than its marginal cost, the monopolist can increase profit by selling more units at a lower price per unit.
B)   If the monopolist's marginal revenue is greater than its marginal cost, the monopolist can increase profit by selling fewer units at a higher price per unit.
C)   When a monopolist produces where price equals the minimum of average total cost, it earns a positive economic profit.
D)   If the monopolist is earning a positive economic profit, it must be producing where MR = MC.E) A) and B)
F) None of the above

Question 16

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 does not make a large profit.E) C) and D)
F) A) and B)

Question 17

Figure 15-6 
-Refer to Figure 15-6. What area measures the monopolist's profit?

Accepted Answer

A)   K-
C)  *W
B)   L-
A)  *T
C)   K-
B)  *W
D)   0.5[K-
C)  *Z-T) ]E) A) and D)
F) A) and C)

Question 18

Describe how government is involved in creating a monopoly. Why might the government create one? Give an example.

Accepted Answer

The government can create a monopoly by ...

Question 19

Figure 15-17 
-Refer to Figure 15-17. Which of the following statements best describes the changes that would occur if this firm were to switch from operating as a single price profit-maximizing monopolist to perfect price discrimination?

Accepted Answer

A)   The quantity would increase from I to J, the profit would increase from BCFE to ACG, and the deadweight loss would decrease from EFG to zero.
B)   The quantity would remain constant, the profit would increase from BCFE to ABCFE and the deadweight loss would decrease from EFG to zero.
C)   The quantity would decrease from J to I, the profit would decrease from ACG to BCFE, and the deadweight loss would increase from EFG to ACG.
D)   The quantity would increase from I to J, the profit would decrease from BCFE to EFG, and the deadweight loss remain constant.E) A) and D)
F) B) and C)

Question 20

Figure 15-18 
-Refer to Figure 15-18. If there are no fixed costs of production, monopoly profit without price discrimination equals

Accepted Answer

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

Exam 14: Monopoly

Which of the following is not a characteristic of a monopoly?

Correct Answer
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Which of the following statements is not correct?

Correct Answer
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Table 15-4 A monopolist faces the following demand curve: -Refer to Table 15-4. If the monopolist produces 5 units, what is its marginal revenue?

Correct Answer
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Figure 15-6 -Refer to Figure 15-6. What area measures the monopolist's profit?

Correct Answer
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Table 15-13 The following table gives information on the price, quantity, and total cost of production for a monopolist. -Refer to Table 15-13. If the monopolist maximizes profits, he will charge a price of

Correct Answer
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Figure 15-17 -Refer to Figure 15-17. Which of the following statements best describes the changes that would occur if this firm were to switch from operating as a single price profit-maximizing monopolist to perfect price discrimination?

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

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

Correct Answer
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Table 15-6 A monopolist faces the following demand curve: -Refer to Table 15-6. Suppose the monopolist has total fixed costs equal to $5 and a variable cost equal to $4 per unit for all units produced. What is the total profit if she operates at her profit-maximizing price?

Correct Answer
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When a monopolist decreases the price of its good, consumers

Correct Answer
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Figure 15-18 -Refer to Figure 15-18. If there are no fixed costs of production, monopoly profit without price discrimination equals

Correct Answer
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If the government deems a newly-invented drug to be truly original, the pharmaceutical company is given the exclusive right to manufacture and sell the drug for 50 years.

Correct Answer
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Figure 15-5 -Refer to Figure 15-5. A profit-maximizing monopoly will charge a price of

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

Correct Answer
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Which of the following statements is correct?

Correct Answer
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When a firm experiences continually declining average total costs, the firm is a

Correct Answer
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Describe how government is involved in creating a monopoly. Why might the government create one? Give an example.

Correct Answer
verified
The government can create a monopoly by ...
View Answer

Table 15-19 A monopolist faces the following demand curve: -Refer to Table 15-19. If a monopolist faces a constant marginal cost of $9, how much output should the firm produce?

Correct Answer
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Exam 14: Monopoly

Which of the following is not a characteristic of a monopoly?

Correct AnswerverifiedShow Answer

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

Table 15-4 A monopolist faces the following demand curve: -Refer to Table 15-4. If the monopolist produces 5 units, what is its marginal revenue?

Correct AnswerverifiedShow Answer

Figure 15-6 -Refer to Figure 15-6. What area measures the monopolist's profit?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Table 15-13 The following table gives information on the price, quantity, and total cost of production for a monopolist. -Refer to Table 15-13. If the monopolist maximizes profits, he will charge a price of

Correct AnswerverifiedShow Answer

Figure 15-17 -Refer to Figure 15-17. Which of the following statements best describes the changes that would occur if this firm were to switch from operating as a single price profit-maximizing monopolist to perfect price discrimination?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Table 15-6 A monopolist faces the following demand curve: -Refer to Table 15-6. Suppose the monopolist has total fixed costs equal to $5 and a variable cost equal to $4 per unit for all units produced. What is the total profit if she operates at her profit-maximizing price?

Correct AnswerverifiedShow Answer

When a monopolist decreases the price of its good, consumers

Correct AnswerverifiedShow Answer

Figure 15-18 -Refer to Figure 15-18. If there are no fixed costs of production, monopoly profit without price discrimination equals

Correct AnswerverifiedShow Answer

If the government deems a newly-invented drug to be truly original, the pharmaceutical company is given the exclusive right to manufacture and sell the drug for 50 years.

Correct AnswerverifiedShow Answer

Figure 15-5 -Refer to Figure 15-5. A profit-maximizing monopoly will charge a price of

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

When a firm experiences continually declining average total costs, the firm is a

Correct AnswerverifiedShow Answer

Describe how government is involved in creating a monopoly. Why might the government create one? Give an example.

Correct AnswerverifiedThe government can create a monopoly by ...View AnswerShow Answer

Table 15-19 A monopolist faces the following demand curve: -Refer to Table 15-19. If a monopolist faces a constant marginal cost of $9, how much output should the firm produce?

Correct AnswerverifiedShow Answer

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The government can create a monopoly by ...
View Answer

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