Question 1

Which of the following statements is correct?

Accepted Answer

A)   The demand curve facing a competitive firm is horizontal, as is the demand curve facing a monopolist.
B)   The demand curve facing a competitive firm is downward sloping, whereas the demand curve facing a monopolist is horizontal.
C)   The demand curve facing a competitive firm is horizontal, whereas the demand curve facing a monopolist is downward sloping.
D)   The demand curve facing a competitive firm is downward sloping, as is the demand curve facing a monopolist.E) A) and C)
F) A) and B)

Question 2

Which of the following is a characteristic of a monopoly?

Accepted Answer

A)   low fixed costs as a portion of total costs
B)   free entry and exit
C)   barriers to entry
D)   declining marginal costE) None of the above
F) A) and B)

Question 3

A rational pricing strategy for a profit-maximizing monopolist is

Accepted Answer

A)   price discrimination.
B)   price segregation.
C)   synergy pricing.
D)   average cost pricing.E) A) and B)
F) A) and D)

Question 4

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

Question 5

For a monopoly market, total surplus can be defined as the value of the good to

Accepted Answer

A)   producers minus the cost incurred by consumers.
B)   producers plus the cost incurred by consumers.
C)   consumers minus the costs of producing the good.
D)   consumers plus the cost of producing the good.E) All of the above
F) None of the above

Question 6

A monopolist produces where P = MC = MR.

Accepted Answer

A) True 
 B)False

Question 7

Private ownership of a monopoly may benefit society because the monopoly will have an incentive to

Accepted Answer

A)   charge a price that is consistent with that of a benevolent social planner.
B)   charge a price that prevents some people from buying.
C)   price its good according to the intersection of marginal cost and average revenue.
D)   lower its costs to earn a higher profit.E) None of the above
F) B) and C)

Question 8

Which of the following governmental actions would eliminate some or all of the inefficiency that results from monopoly pricing? The government could

Accepted Answer

A)   regulate the monopoly.
B)   prohibited the monopoly from price discriminating.
C)   force the monopoly to operate at a point where its marginal revenue is equal to its marginal cost.
D)   None of the above would eliminate any inefficiency associated with a monopoly.E) A) and D)
F) A) and C)

Question 9

A monopolist's profits with price discrimination will be

Accepted Answer

A)   lower than if the firm charged a single, profit-maximizing price
B)   the same as if the firm charged a single, profit-maximizing price.
C)   higher than if the firm charged just one price because the firm will capture more consumer surplus.
D)   higher than if the firm charged a single price because the costs of selling the good will be lower.E) A) and B)
F) None of the above

Question 10

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. One of Vincent's friends tells him he would be more profitable if he charged a single price of $12. Assuming no changes in consumer demand, what would Vincent's profit be if he charged every customer $12?

Accepted Answer

The answer of Scenario 15-11
Vincent operates a scenic tour business...

Question 11

What is the defining characteristic of a natural monopoly? Give an example of a natural monopoly.

Accepted Answer

The defining characteristic of...

Question 12

Table 15-6
A monopolist faces the following demand curve: 
-Refer to Table 15-6. What is the marginal revenue from the sale of the 4th unit?

Accepted Answer

A)   $3
B)   -$3
C)   $9
D)   $24E) All of the above
F) A) and D)

Question 13

Microsoft faces very little competition from other firms for its Windows software. Why isn't the price of the software $1,000 per copy?

Accepted Answer

A)   because the government would not allow such a high price
B)   because stockholders would not allow such a high price
C)   because the company would sell so few copies that they would earn higher profits by selling at a lower price
D)   All of the above are correct.E) All of the above
F) A) and B)

Question 14

If the ABC company owns the exclusive rights to mine land in Afghanistan for Lapis Lazuli, a rare stone used in jewelry which is found only in Afghanistan, the company benefits from a barrier to entry.

Accepted Answer

A) True 
 B)False

Question 15

Figure 15-5 
-Refer to Figure 15-5. At the profit-maximizing level of output,

Accepted Answer

A)   marginal revenue is equal to P3.
B)   marginal cost is equal to P3.
C)   average revenue is equal to P2.
D)   average total cost is equal to P6.E) B) and C)
F) A) and C)

Question 16

Figure 15-23 
-Refer to Figure 15-23. If the firm profit-maximizes, what amount of output will it produce?

Accepted Answer

The answer of Figure 15-23 
-Refer to Figure 15-23. If...

Question 17

Table 15-8
The following table provides information on the price, quantity, and average total cost for a monopoly. 
-Refer to Table 15-8. What is the additional cost to the firm when the monopolist lowers the price from $18 to $12?

Accepted Answer

A)   The firm saves $15.
B)   $15
C)   $30
D)   $40E) A) and D)
F) A) and C)

Question 18

Table 15-19
A monopolist faces the following demand curve: 
-Refer to Table 15-19. If a monopolist faces a constant marginal cost of $7, how much output should the firm produce?

Accepted Answer

A)   3 units
B)   4 units
C)   5 units
D)   6 unitsE) A) and B)
F) None of the above

Question 19

Allowing an inventor to have the exclusive rights to market her new invention will lead to

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 D)
F) A) and C)

Question 20

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 average revenue when Sally sells 7 pairs of shoes?

Accepted Answer

A)   $40
B)   $90
C)   $100
D)   $700E) C) and D)
F) B) and C)

Exam 15: Monopoly

Which of the following governmental actions would eliminate some or all of the inefficiency that results from monopoly pricing? The government could

Correct Answer
verified

A rational pricing strategy for a profit-maximizing monopolist is

Correct Answer
verified

Table 15-6 A monopolist faces the following demand curve: -Refer to Table 15-6. What is the marginal revenue from the sale of the 4th unit?

Correct Answer
verified

Allowing an inventor to have the exclusive rights to market her new invention will lead to

Correct Answer
verified

A monopolist's profits with price discrimination will be

Correct Answer
verified

Table 15-8 The following table provides information on the price, quantity, and average total cost for a monopoly. -Refer to Table 15-8. What is the additional cost to the firm when the monopolist lowers the price from $18 to $12?

Correct Answer
verified

If the ABC company owns the exclusive rights to mine land in Afghanistan for Lapis Lazuli, a rare stone used in jewelry which is found only in Afghanistan, the company benefits from a barrier to entry.

Correct Answer
verified

Private ownership of a monopoly may benefit society because the monopoly will have an incentive to

Correct Answer
verified

Which of the following is a characteristic of a monopoly?

Correct Answer
verified

Table 15-19 A monopolist faces the following demand curve: -Refer to Table 15-19. If a monopolist faces a constant marginal cost of $7, how much output should the firm produce?

Correct Answer
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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 average revenue when Sally sells 7 pairs of shoes?

Correct Answer
verified

Microsoft faces very little competition from other firms for its Windows software. Why isn't the price of the software $1,000 per copy?

Correct Answer
verified

Correct Answer
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Figure 15-23 -Refer to Figure 15-23. If the firm profit-maximizes, what amount of output will it produce?

Correct Answer
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For a monopoly market, total surplus can be defined as the value of the good to

Correct Answer
verified

What is the defining characteristic of a natural monopoly? Give an example of a natural monopoly.

Correct Answer
verified
The defining characteristic of...
View Answer

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

Correct Answer
verified

A monopolist produces where P = MC = MR.

Correct Answer
verified

Figure 15-5 -Refer to Figure 15-5. At the profit-maximizing level of output,

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
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Exam 15: Monopoly

Which of the following governmental actions would eliminate some or all of the inefficiency that results from monopoly pricing? The government could

Correct AnswerverifiedShow Answer

A rational pricing strategy for a profit-maximizing monopolist is

Correct AnswerverifiedShow Answer

Table 15-6 A monopolist faces the following demand curve: -Refer to Table 15-6. What is the marginal revenue from the sale of the 4th unit?

Correct AnswerverifiedShow Answer

Allowing an inventor to have the exclusive rights to market her new invention will lead to

Correct AnswerverifiedShow Answer

A monopolist's profits with price discrimination will be

Correct AnswerverifiedShow Answer

Table 15-8 The following table provides information on the price, quantity, and average total cost for a monopoly. -Refer to Table 15-8. What is the additional cost to the firm when the monopolist lowers the price from $18 to $12?

Correct AnswerverifiedShow Answer

If the ABC company owns the exclusive rights to mine land in Afghanistan for Lapis Lazuli, a rare stone used in jewelry which is found only in Afghanistan, the company benefits from a barrier to entry.

Correct AnswerverifiedShow Answer

Private ownership of a monopoly may benefit society because the monopoly will have an incentive to

Correct AnswerverifiedShow Answer

Which of the following is a characteristic of a monopoly?

Correct AnswerverifiedShow 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 $7, how much output should the firm produce?

Correct AnswerverifiedShow Answer

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 average revenue when Sally sells 7 pairs of shoes?

Correct AnswerverifiedShow Answer

Microsoft faces very little competition from other firms for its Windows software. Why isn't the price of the software $1,000 per copy?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 15-23 -Refer to Figure 15-23. If the firm profit-maximizes, what amount of output will it produce?

Correct AnswerverifiedShow Answer

For a monopoly market, total surplus can be defined as the value of the good to

Correct AnswerverifiedShow Answer

What is the defining characteristic of a natural monopoly? Give an example of a natural monopoly.

Correct AnswerverifiedThe defining characteristic of...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

A monopolist produces where P = MC = MR.

Correct AnswerverifiedShow Answer

Figure 15-5 -Refer to Figure 15-5. At the profit-maximizing level of output,

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

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The defining characteristic of...
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