Question 1

A snack shop inside a hotel in a busy city has a monopoly on food sales if it is the only food vendor in the hotel that is open 24 hours a day.

Accepted Answer

A) True 
 B)False

Question 2

A monopolist currently sells 18 units of a good.If marginal revenue on the last unit sold is $117, then the price of the good must be less than $117.

Accepted Answer

A) True 
 B)False

Question 3

Figure 15-11
   
In 2011, Verizon was granted permission to enter the market for cable TV in Upstate New York, ending the virtual monopoly that Time Warner Cable had in most local communities in the region. Figure 15-11 shows the cable television market in Upstate New York.
-Refer to Figure 15-11.What is the size of the deadweight loss prior to Verizon entering the market and what happens to this deadweight loss after Verizon does enter the market?

Accepted Answer

A) The deadweight loss of area D is converted to consumer surplus. 
B) The deadweight loss of area C+D is converted to consumer surplus 
C) The deadweight loss of area D is converted to producer surplus. 
D) The total deadweight loss is the area D+F; D is converted to consumer surplus and F to producer surplus. 
A) The deadweight loss of area D is converted to consumer surplus. 
B) The deadweight loss of area C+D is converted to consumer surplus 
C) The deadweight loss of area D is converted to producer surplus. 
D) The total deadweight loss is the area D+F; D is converted to consumer surplus and F to producer surplus.

Question 4

A United States government patent lasts

Accepted Answer

A) forever. 
B) 50 years. 
C) 20 years. 
D) 7 years. 
A) forever. 
B) 50 years. 
C) 20 years. 
D) 7 years.

Question 5

Figure 15-2
   
Figure 15-2 above shows the demand and cost curves facing a monopolist.
-Refer to Figure 15-2.The firm's profit-maximizing price is

Accepted Answer

A) P₁. 
B) P₂. 
C) P₃. 
D) P₄. 
A) P₁. 
B) P₂. 
C) P₃. 
D) P₄.

Question 6

Table 15-1
   
A monopoly producer of foreign language translation software faces a demand and cost structure as given in Table 15-1.
-Refer to Table 15-1.What is the marginal revenue from the sale of the 12th unit?

Accepted Answer

A) $75 
B) $50 
C) $20 
D) -$5 
A) $75 
B) $50 
C) $20 
D) -$5

Question 7

Figure 15-17
   
Your college decides to offer a psychology course as a MOOC that can be taken by students anywhere in the world, whether they are actually enrolled in your college or not. The demand and cost situation for the MOOC is shown in the figure.
-Refer to Figure 15-17.You are a member of a student government and are asked to recommend a price for the course and you argue: "I think the college should charge a price so that it just breaks even on the course." What price should you recommend?

Accepted Answer

A) $0 
B) $40 
C) $88 
D) $150 
A) $0 
B) $40 
C) $88 
D) $150

Question 8

Figure 15-17
   
Your college decides to offer a psychology course as a MOOC that can be taken by students anywhere in the world, whether they are actually enrolled in your college or not. The demand and cost situation for the MOOC is shown in the figure.
-Refer to Figure 15-17.You are a member of a student government and are asked to recommend a price for the course and you argue: "I think the college should charge a price so that it just breaks even on the course." How much profit (or loss)will the college make on the course if it charges this price?

Accepted Answer

A) -$2,592,000 
B) -$1,080,000 
C) $0 
D) $450,000 
A) -$2,592,000 
B) -$1,080,000 
C) $0 
D) $450,000

Question 9

Relative to a perfectly competitive market, a monopoly results in

Accepted Answer

A) a gain in producer surplus equal to the gain in consumer surplus. 
B) a gain in producer surplus equal to the loss in consumer surplus. 
C) a gain in producer surplus less than the loss in consumer surplus. 
D) greater economic efficiency. 
A) a gain in producer surplus equal to the gain in consumer surplus. 
B) a gain in producer surplus equal to the loss in consumer surplus. 
C) a gain in producer surplus less than the loss in consumer surplus. 
D) greater economic efficiency.

Question 10

Which of following is the best example of a monopoly if we use a broader definition of monopoly?

Accepted Answer

A) Spuds McKenzie, a wealthy potato farmer in Idaho 
B) Cheap Gas, one of two gasoline stations in a large rural community 
C) Santos Tacos, the only taqueria in the small town of Santosville 
D) Zippie Rentals, a car rental service in Boston 
A) Spuds McKenzie, a wealthy potato farmer in Idaho 
B) Cheap Gas, one of two gasoline stations in a large rural community 
C) Santos Tacos, the only taqueria in the small town of Santosville 
D) Zippie Rentals, a car rental service in Boston

Question 11

Which of the following statements applies to a monopolist but not to a perfectly competitive firm at their profit-maximizing outputs?

Accepted Answer

A) Marginal revenue is less than price. 
B) Marginal revenue equals marginal cost. 
C) Price equals marginal cost. 
D) Average revenue equals average cost. 
A) Marginal revenue is less than price. 
B) Marginal revenue equals marginal cost. 
C) Price equals marginal cost. 
D) Average revenue equals average cost.

Question 12

The size of a deadweight loss in a market is reduced by

Accepted Answer

A) government legislating a ceiling price. 
B) government legislating a price floor. 
C) market price being close to marginal cost. 
D) creative destruction. 
A) government legislating a ceiling price. 
B) government legislating a price floor. 
C) market price being close to marginal cost. 
D) creative destruction.

Question 13

Which antitrust law prohibited firms from buying stock in competitors and from having directors serve on the boards of competing firms?

Accepted Answer

A) the Clayton Act 
B) the Securities and Exchange Act 
C) the Sherman Act 
D) the Robinson-Patman Act 
A) the Clayton Act 
B) the Securities and Exchange Act 
C) the Sherman Act 
D) the Robinson-Patman Act

Question 14

Figure 15-6
   
Figure 15-6 shows the cost and demand curves for a monopolist.
-Refer to Figure 15-6.The monopolist's total cost is

Accepted Answer

A) $1,116. 
B) $1,240. 
C) $1,660. 
D) $1,726.40. 
A) $1,116. 
B) $1,240. 
C) $1,660. 
D) $1,726.40.

Question 15

Few firms in the United States are monopolies because

Accepted Answer

A) few firms experience economies of scale. 
B) monopolies are technically illegal in the United States. 
C) when a firm earns profits, other firms will enter its market. 
D) most firms produce products for which there are no close substitutes. 
A) few firms experience economies of scale. 
B) monopolies are technically illegal in the United States. 
C) when a firm earns profits, other firms will enter its market. 
D) most firms produce products for which there are no close substitutes.

Question 16

If a monopolist's marginal revenue is $15 per unit and its marginal cost is $25, then to maximize profit the firm should decrease output.

Accepted Answer

A) True 
 B)False

Question 17

Many biologic drug manufacturers are pushing for patent protection to be extended to 12 years before generics are allowed to be introduced to the market.This reflects which of the following barriers to entry?

Accepted Answer

A) control of a key resource 
B) network externalities 
C) entry blocked by government action 
D) economies of scale creating a natural monopoly 
A) control of a key resource 
B) network externalities 
C) entry blocked by government action 
D) economies of scale creating a natural monopoly

Question 18

Because a monopoly's demand curve is the same as the market demand curve for its product,

Accepted Answer

A) the monopoly's marginal revenue equals its price. 
B) the monopoly is a price taker. 
C) the monopoly must lower its price to sell more of its product. 
D) the monopoly's average total cost always falls as it increases its output. 
A) the monopoly's marginal revenue equals its price. 
B) the monopoly is a price taker. 
C) the monopoly must lower its price to sell more of its product. 
D) the monopoly's average total cost always falls as it increases its output.

Question 19

For a natural monopoly to exist,

Accepted Answer

A) a firm must continually buy up its rivals. 
B) a firm's long-run average cost curve must exhibit diseconomies of scale beyond the economically efficient output level. 
C) a firm's long-run average cost curve must exhibit economies of scale throughout the relevant range of market demand. 
D) a firm must have a government-imposed barrier. 
A) a firm must continually buy up its rivals. 
B) a firm's long-run average cost curve must exhibit diseconomies of scale beyond the economically efficient output level. 
C) a firm's long-run average cost curve must exhibit economies of scale throughout the relevant range of market demand. 
D) a firm must have a government-imposed barrier.

Question 20

Figure 15-15
   
Figure 15-15 shows the cost and demand curves for the Erickson Power Company.
-Refer to Figure 15-15.The profit-maximizing price is

Accepted Answer

A) P₁. 
B) P₂. 
C) P₃. 
D) P₄. 
A) P₁. 
B) P₂. 
C) P₃. 
D) P₄.

A snack shop inside a hotel in a busy city has a monopoly on food sales if it is the only food vendor in the hotel that is open 24 hours a day.

A monopolist currently sells 18 units of a good.If marginal revenue on the last unit sold is $117, then the price of the good must be less than $117.

A United States government patent lasts

Figure 15-2 Figure 15-2 above shows the demand and cost curves facing a monopolist. -Refer to Figure 15-2.The firm's profit-maximizing price is

Table 15-1 A monopoly producer of foreign language translation software faces a demand and cost structure as given in Table 15-1. -Refer to Table 15-1.What is the marginal revenue from the sale of the 12th unit?

Relative to a perfectly competitive market, a monopoly results in

Which of following is the best example of a monopoly if we use a broader definition of monopoly?

Which of the following statements applies to a monopolist but not to a perfectly competitive firm at their profit-maximizing outputs?

The size of a deadweight loss in a market is reduced by

Which antitrust law prohibited firms from buying stock in competitors and from having directors serve on the boards of competing firms?

Figure 15-6 Figure 15-6 shows the cost and demand curves for a monopolist. -Refer to Figure 15-6.The monopolist's total cost is

Few firms in the United States are monopolies because

If a monopolist's marginal revenue is $15 per unit and its marginal cost is $25, then to maximize profit the firm should decrease output.

Many biologic drug manufacturers are pushing for patent protection to be extended to 12 years before generics are allowed to be introduced to the market.This reflects which of the following barriers to entry?

Because a monopoly's demand curve is the same as the market demand curve for its product,

For a natural monopoly to exist,

Figure 15-15 Figure 15-15 shows the cost and demand curves for the Erickson Power Company. -Refer to Figure 15-15.The profit-maximizing price is

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a

Oligopoly: Firms in Less Competitive Markets

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

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Exam 15: Monopoly and Antitrust Policy

A snack shop inside a hotel in a busy city has a monopoly on food sales if it is the only food vendor in the hotel that is open 24 hours a day.

A monopolist currently sells 18 units of a good.If marginal revenue on the last unit sold is $117, then the price of the good must be less than $117.

A United States government patent lasts

Figure 15-2 Figure 15-2 above shows the demand and cost curves facing a monopolist. -Refer to Figure 15-2.The firm's profit-maximizing price is

Table 15-1 A monopoly producer of foreign language translation software faces a demand and cost structure as given in Table 15-1. -Refer to Table 15-1.What is the marginal revenue from the sale of the 12th unit?

Relative to a perfectly competitive market, a monopoly results in

Which of following is the best example of a monopoly if we use a broader definition of monopoly?

Which of the following statements applies to a monopolist but not to a perfectly competitive firm at their profit-maximizing outputs?

The size of a deadweight loss in a market is reduced by

Which antitrust law prohibited firms from buying stock in competitors and from having directors serve on the boards of competing firms?

Figure 15-6 Figure 15-6 shows the cost and demand curves for a monopolist. -Refer to Figure 15-6.The monopolist's total cost is

Few firms in the United States are monopolies because

If a monopolist's marginal revenue is $15 per unit and its marginal cost is $25, then to maximize profit the firm should decrease output.

Many biologic drug manufacturers are pushing for patent protection to be extended to 12 years before generics are allowed to be introduced to the market.This reflects which of the following barriers to entry?

Because a monopoly's demand curve is the same as the market demand curve for its product,

For a natural monopoly to exist,

Figure 15-15 Figure 15-15 shows the cost and demand curves for the Erickson Power Company. -Refer to Figure 15-15.The profit-maximizing price is

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a

Oligopoly: Firms in Less Competitive Markets

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

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