Question 1

A firm that is a natural monopoly

Accepted Answer

A)  is not likely to be concerned about new entrants eroding its monopoly power. 
B)  is taking advantage of diseconomies of scale. 
C)  would experience a lower average total cost if more firms entered the market. 
D)  All of the above are correct. 
A)  is not likely to be concerned about new entrants eroding its monopoly power. 
B)  is taking advantage of diseconomies of scale. 
C)  would experience a lower average total cost if more firms entered the market. 
D)  All of the above are correct. A

Question 2

Figure 15-6
  
-Refer to Figure 15-6.A profit-maximizing monopolist would incur total costs of

Accepted Answer

A)  $81. 
B)  $120. 
C)  $144. 
D)  $240. 
A)  $81. 
B)  $120. 
C)  $144. 
D)  $240. B

Question 3

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. 
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. D

Question 4

Scenario 15-6
The concert promoters of a heavy-metal band, WeR2Loud, know that there are two types of concert-goers: die-hard fans and casual fans. For a particular WeR2Loud concert, there are 1,000 die-hard fans who will pay $150 for a ticket and 500 casual fans who will pay $50 for a ticket. There are 1,500 seats available at the concert venue. Suppose the cost of putting on the concert is $50,000, which includes the cost of the band, lighting, security, etc.
-Refer to Scenario 15-6.How much profit will the concert promoters earn if they engage in price discrimination?

Accepted Answer

A)  $100,000 
B)  $125,000 
C)  $150,000 
D)  $175,000 
A)  $100,000 
B)  $125,000 
C)  $150,000 
D)  $175,000

Question 5

Most firms have

Accepted Answer

A)  no monopoly pricing power. 
B)  some monopoly pricing power. 
C)  absolute monopoly pricing power. 
D)  the ability to earn monopoly profits. 
A)  no monopoly pricing power. 
B)  some monopoly pricing power. 
C)  absolute monopoly pricing power. 
D)  the ability to earn monopoly profits.

Question 6

Figure 15-6
  
-Refer to Figure 15-6.In order to maximize profits,the monopolist should charge a price of

Accepted Answer

A)  $9. 
B)  $12. 
C)  $20. 
D)  $23. 
A)  $9. 
B)  $12. 
C)  $20. 
D)  $23.

Question 7

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 8

Figure 15-7
  
-Refer to Figure 15-7.What is the socially efficient price and quantity?

Accepted Answer

A)  price = F; quantity = A 
B)  price = G; quantity = B 
C)  price = G; quantity = A 
D)  price = D; quantity = A 
A)  price = F; quantity = A 
B)  price = G; quantity = B 
C)  price = G; quantity = A 
D)  price = D; quantity = A

Question 9

A reduction in a monopolist's fixed costs would

Accepted Answer

A)  decrease the profit-maximizing price and increase the profit-maximizing quantity produced. 
B)  increase the profit-maximizing price and decrease the profit-maximizing quantity produced. 
C)  not effect the profit-maximizing price or quantity. 
D)  possibly increase, decrease or not effect profit-maximizing price and quantity, depending on the elasticity of demand. 
A)  decrease the profit-maximizing price and increase the profit-maximizing quantity produced. 
B)  increase the profit-maximizing price and decrease the profit-maximizing quantity produced. 
C)  not effect the profit-maximizing price or quantity. 
D)  possibly increase, decrease or not effect profit-maximizing price and quantity, depending on the elasticity of demand.

Question 10

Table 15-16
A monopolist faces the following demand curve:
  
-Refer to Table 15-16.The monopolist has total fixed costs of $40 and a constant marginal cost of $5.At the profit-maximizing level of output,the monopolist's average total cost is

Accepted Answer

A)  $9.00. 
B)  $7.50. 
C)  $6.74. 
D)  $5.82. 
A)  $9.00. 
B)  $7.50. 
C)  $6.74. 
D)  $5.82.

Question 11

In many countries,the government chooses to "internalize" the monopoly by owning monopoly providers of goods and services.(In some cases these firms are "nationalized," and the government actually buys or confiscates firms that operate in monopoly markets).What would be the advantages and disadvantages of such an approach to ensure that the "best interest of society" is promoted in these markets? Explain your answer.

Accepted Answer

As long as the government "owner" pursue

Question 12

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. 
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.

Question 13

Scenario 15-2
Consider a local, privately-owned electrical cooperative named Minny County Megawatts (MCM, LLC). MCM has just completed a natural-gas-burning electrical power plant in the Midwest. Currently, MCM can meet the electricity needs of all residents in the county. In fact, its capacity far exceeds the needs of the county. After just a few years of operation, the shareholders of MCM experienced incredible rates of return on their investment due to the profitability of the corporation.
-Refer to Scenario 15-2.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 MCM currently has.
(ii)MCM would experience higher profits if it were government-run.
(iii)MCM 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) 
A)  (i) and (ii) only 
B)  (ii) and (iii) only 
C)  (i) and (iii) only 
D)  (i), (ii), and (iii)

Question 14

Competitive firms have

Accepted Answer

A)  downward-sloping demand curves, and they can sell as much output as they desire at the market price. 
B)  downward-sloping demand curves, and they can sell only a limited quantity of output at each price. 
C)  horizontal demand curves, and they can sell as much output as they desire at the market price. 
D)  horizontal demand curves, and they can sell only a limited quantity of output at each price. 
A)  downward-sloping demand curves, and they can sell as much output as they desire at the market price. 
B)  downward-sloping demand curves, and they can sell only a limited quantity of output at each price. 
C)  horizontal demand curves, and they can sell as much output as they desire at the market price. 
D)  horizontal demand curves, and they can sell only a limited quantity of output at each price.

Question 15

Which of the following is not correct?

Accepted Answer

A)  The demand curve facing a competitive firm is perfectly elastic. 
B)  The demand curve facing a monopolist is the market demand curve. 
C)  A monopolist can charge any price and sell any quantity that it chooses. 
D)  A monopolist can alter the market price by adjusting the quantity that it produces. 
A)  The demand curve facing a competitive firm is perfectly elastic. 
B)  The demand curve facing a monopolist is the market demand curve. 
C)  A monopolist can charge any price and sell any quantity that it chooses. 
D)  A monopolist can alter the market price by adjusting the quantity that it produces.

Question 16

Competitive firms differ from monopolies in which of the following ways?
(i)Competitive firms do not have to worry about the price effect lowering their total revenue.
(ii)Marginal revenue for a competitive firm equals price,while marginal revenue for a monopoly is less than the price it is able to charge.
(iii)Monopolies must lower their price in order to sell more of their product,while competitive firms do not.

Accepted Answer

A)  (i) and (ii) only 
B)  (ii) and (iii) only 
C)  (i) and (iii) only 
D)  (i), (ii), and (iii) 
A)  (i) and (ii) only 
B)  (ii) and (iii) only 
C)  (i) and (iii) only 
D)  (i), (ii), and (iii)

Question 17

When a monopolist increases the amount of output that it produces and sells,the price of its output

Accepted Answer

A)  stays the same. 
B)  increases. 
C)  decreases. 
D)  may increase or decrease depending on the price elasticity of demand. 
A)  stays the same. 
B)  increases. 
C)  decreases. 
D)  may increase or decrease depending on the price elasticity of demand.

Question 18

Table 15-9
Consider the following demand and cost information for a monopoly.
  
-Refer to Table 15-9.At the profit-maximizing price,how much profit will the monopoly earn?

Accepted Answer

A)  $8 
B)  $10 
C)  $12 
D)  $14 
A)  $8 
B)  $10 
C)  $12 
D)  $14

Question 19

Patent and copyright laws encourage

Accepted Answer

A)  creative activity. 
B)  lower prices due to decreasing average total costs. 
C)  competition among firms. 
D)  All of the above are correct. 
A)  creative activity. 
B)  lower prices due to decreasing average total costs. 
C)  competition among firms. 
D)  All of the above are correct.

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 total revenue from selling 6 pairs of shoes?

Accepted Answer

A)  $100 
B)  $600 
C)  $625 
D)  $660 
A)  $100 
B)  $600 
C)  $625 
D)  $660

A firm that is a natural monopoly

Figure 15-6 -Refer to Figure 15-6.A profit-maximizing monopolist would incur total costs of

When an industry is a natural monopoly,

Most firms have

Figure 15-6 -Refer to Figure 15-6.In order to maximize profits,the monopolist should charge a price of

Airlines often separate their customers into business travelers and personal travelers by giving a discount to those travelers who stay over a Saturday night.

Figure 15-7 -Refer to Figure 15-7.What is the socially efficient price and quantity?

A reduction in a monopolist's fixed costs would

Table 15-16 A monopolist faces the following demand curve: -Refer to Table 15-16.The monopolist has total fixed costs of $40 and a constant marginal cost of $5.At the profit-maximizing level of output,the monopolist's average total cost is

If a monopolist has zero marginal costs,it will produce

Competitive firms have

Which of the following is not correct?

When a monopolist increases the amount of output that it produces and sells,the price of its output

Table 15-9 Consider the following demand and cost information for a monopoly. -Refer to Table 15-9.At the profit-maximizing price,how much profit will the monopoly earn?

Patent and copyright laws encourage

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 total revenue from selling 6 pairs of shoes?

Ten Principles of Economics.

Thinking Like an Economist.

Interdependence and the Gains from Trade.

The Market Forces of Supply and Demand.

Elasticity and Its Application

Supply, Demand, And Government Policies.

Consumers, Producers, and the Efficiency of Markets.

Application: The Costs of Taxation.

Application: International Trade.

Externalities.

Public Goods and Common Resources.

The Design of the Tax System.

The Costs of Production.

Firms in Competitive Markets.

Monopolistic Competition.

Oligopoly.

The Market For the Factors of Production.

Earnings and Discrimination.

Income Inequality and Poverty.

The Theory of Consumer Choice.

Frontiers in Microeconomics.

Filters

Exam 15: Monopoly.

A firm that is a natural monopoly

Figure 15-6 -Refer to Figure 15-6.A profit-maximizing monopolist would incur total costs of

When an industry is a natural monopoly,

Most firms have

Figure 15-6 -Refer to Figure 15-6.In order to maximize profits,the monopolist should charge a price of

Airlines often separate their customers into business travelers and personal travelers by giving a discount to those travelers who stay over a Saturday night.

Figure 15-7 -Refer to Figure 15-7.What is the socially efficient price and quantity?

A reduction in a monopolist's fixed costs would

Table 15-16 A monopolist faces the following demand curve: -Refer to Table 15-16.The monopolist has total fixed costs of $40 and a constant marginal cost of $5.At the profit-maximizing level of output,the monopolist's average total cost is

If a monopolist has zero marginal costs,it will produce

Competitive firms have

Which of the following is not correct?

When a monopolist increases the amount of output that it produces and sells,the price of its output

Table 15-9 Consider the following demand and cost information for a monopoly. -Refer to Table 15-9.At the profit-maximizing price,how much profit will the monopoly earn?

Patent and copyright laws encourage

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 total revenue from selling 6 pairs of shoes?

Ten Principles of Economics.

Thinking Like an Economist.

Interdependence and the Gains from Trade.

The Market Forces of Supply and Demand.

Elasticity and Its Application

Supply, Demand, And Government Policies.

Consumers, Producers, and the Efficiency of Markets.

Application: The Costs of Taxation.

Application: International Trade.

Externalities.

Public Goods and Common Resources.

The Design of the Tax System.

The Costs of Production.

Firms in Competitive Markets.

Monopolistic Competition.

Oligopoly.

The Market For the Factors of Production.

Earnings and Discrimination.

Income Inequality and Poverty.

The Theory of Consumer Choice.

Frontiers in Microeconomics.

Filters