Question 1

Refer to the graph shown. If the monopoly firm maximizes profit, there will be a welfare loss equal to:

Accepted Answer

A)  $2.50.
B)  $5.00.
C)  $7.50.
D)  $10.00.E) None of the above
F) B) and C)

Question 2

A perfectly price-discriminating monopolist:

Accepted Answer

A)  creates more consumer surplus for the consumer.
B)  increases both consumer surplus and producer surplus.
C)  reduces or eliminates the welfare loss from monopoly.
D)  increases the welfare loss from monopoly.E) A) and B)
F) B) and C)

Question 3

Refer to the graph shown. If the government's goal is to eliminate the welfare costs of monopoly, it will: 3. B) establish a price ceiling at P2. C) establish a price floor at P1. D) not attempt to control price." class="answers-bank-image d-inline" rel="preload" >

Accepted Answer

A)  establish a price ceiling at P3.
B)  establish a price ceiling at P2.
C)  establish a price floor at P1.
D)  not attempt to control price.E) None of the above
F) A) and C)

Question 4

iTunes charges British customers 20 percent more than customers in France and Germany. Apple defended the price difference, saying that the "underlying economic model in each country has an impact on how we price our track downloads." An economist would say that Apple is engaged in:

Accepted Answer

A)  collusion.
B)  monopolistic competition.
C)  price discrimination.
D)  reverse engineering.E) A) and D)
F) All of the above

Question 5

Refer to the graph shown. The short-run equilibrium price for the monopolistically competitive firm represented is:

Accepted Answer

A)  $0.60.
B)  $0.85.
C)  $0.95.
D)  $1.00.E) A) and B)
F) A) and C)

Question 6

Refer to the graph shown. If this monopolist were allowed to choose the profit-maximizing level of output, it would charge a price of:

Accepted Answer

A)  $2.
B)  $3.
C)  $8.
D)  $12.E) None of the above
F) B) and D)

Question 7

A monopolistically competitive firm faces a downward-sloping demand curve.

Accepted Answer

A) True 
 B)False

Question 8

The price at which a monopolistic competitor sells its product in both the long run and the short run is equal to:

Accepted Answer

A)  marginal revenue.
B)  average revenue.
C)  average total cost.
D)  marginal cost.E) A) and B)
F) B) and D)

Question 9

If a monopolist increases sales from 10 to 11 by lowering its price from $40 to $38, its marginal revenue is:

Accepted Answer

A)  $2.
B)  $18.
C)  $400.
D)  $418.E) A) and B)
F) A) and C)

Question 10

In long-run equilibrium in both perfect competition and monopolistic competition there is zero economic profit and yet the two cases are not identical.What is the key difference between them?

Accepted Answer

The key difference is where the firm is ...

Question 11

eBay.com dominates the online auction business because sellers want to go where the buyers are and buyers want to go where the sellers are. Bigger is thus better. Hence, eBay.com illustrates the concept of:

Accepted Answer

A)  public goods.
B)  nonrival goods.
C)  economies of scope.
D)  a network externality.E) A) and B)
F) A) and C)

Question 12

Define monopoly.What is the primary reason for the existence of a monopoly? Describe three types of barriers to entry.

Accepted Answer

Monopoly is a market structure in which ...

Question 13

Demonstrate graphically and explain verbally an example of a monopolist earning a positive economic profit.

Accepted Answer

The monopolist produces the output level...

Question 14

Refer to the graph shown. The loss of surplus to consumers resulting from monopoly is:

Accepted Answer

A)  11.25.
B)  20.
C)  31.25
D)  42.5.E) None of the above
F) B) and D)

Question 15

What aspect of a platform business tends to make it a monopoly?

Accepted Answer

Platform businesses generally exhibit ne...

Question 16

At one time,the FCC auctioned off the rights to use public airwaves for wireless communications devices,receiving $23 billion dollars in bids for 4,249 licenses.More than $10 billion was turned over to the U.S.Treasury.These auctions may be thought of as a government sale of a monopoly since one company's use of a particular frequency prevents another from using it.Who gains and who loses when the government sells a monopoly,compared to the case where monopolies don't require licenses to operate? Explain.

Accepted Answer

The most obvious beneficiary is the gove...

Question 17

Consider the following diagram:  Demonstrate graphically and explain verbally why moving away from producing output level Q0 will result in a decrease in profit for this monopolist.

Accepted Answer

Output level Q₀ is the firm's profit-maxi...

Question 18

Why do some stores offer senior citizens discounts on Tuesdays?

Accepted Answer

A)  Most stores are perfect competitors in their geographic region.
B)  Senior citizens have perfectly inelastic demand curves, whereas other shoppers do not.
C)  Senior citizens have more elastic demand schedules than do other shoppers.
D)  Senior citizens have less elastic demand schedules than do other shoppers.E) A) and C)
F) A) and D)

Question 19

The DeBeers Company is a profit-maximizing monopolist that exercises monopoly power in the distribution of diamonds. If the company earns positive economic profits this year, the price of diamonds will:

Accepted Answer

A)  be equal to the marginal cost of diamonds.
B)  be equal to the average total cost of diamonds.
C)  exceed the marginal cost of diamonds but be equal to the average total cost of diamonds.
D)  exceed both the marginal cost and the average total cost of diamonds.E) All of the above
F) B) and C)

Question 20

Refer to the graph shown. If the monopoly firm maximizes profit, it will produce:

Accepted Answer

A)  15 units of output and producer surplus will be $28.125.
B)  15 units of output and producer surplus will be $16.875.
C)  25 units of output and producer surplus will be $15.625.
D)  30 units of output and producer surplus will be $60.E) B) and C)
F) A) and B)

Exam 14: Monopoly and Monopolistic Competition

Refer to the graph shown. The short-run equilibrium price for the monopolistically competitive firm represented is:

Correct Answer
verified

Correct Answer
verified
The most obvious beneficiary is the gove...
View Answer

The DeBeers Company is a profit-maximizing monopolist that exercises monopoly power in the distribution of diamonds. If the company earns positive economic profits this year, the price of diamonds will:

Correct Answer
verified

Why do some stores offer senior citizens discounts on Tuesdays?

Correct Answer
verified

Refer to the graph shown. If the monopoly firm maximizes profit, there will be a welfare loss equal to:

Correct Answer
verified

Refer to the graph shown. The loss of surplus to consumers resulting from monopoly is:

Correct Answer
verified

Demonstrate graphically and explain verbally an example of a monopolist earning a positive economic profit.

Correct Answer
verified
The monopolist produces the output level...
View Answer

Consider the following diagram: Demonstrate graphically and explain verbally why moving away from producing output level Q₀ will result in a decrease in profit for this monopolist.

Correct Answer
verified
Output level Q₀ is the firm's profit-maxi...
View Answer

What aspect of a platform business tends to make it a monopoly?

Correct Answer
verified
Platform businesses generally exhibit ne...
View Answer

eBay.com dominates the online auction business because sellers want to go where the buyers are and buyers want to go where the sellers are. Bigger is thus better. Hence, eBay.com illustrates the concept of:

Correct Answer
verified

In long-run equilibrium in both perfect competition and monopolistic competition there is zero economic profit and yet the two cases are not identical.What is the key difference between them?

Correct Answer
verified
The key difference is where the firm is ...
View Answer

Refer to the graph shown. If this monopolist were allowed to choose the profit-maximizing level of output, it would charge a price of:

Correct Answer
verified

Define monopoly.What is the primary reason for the existence of a monopoly? Describe three types of barriers to entry.

Correct Answer
verified
Monopoly is a market structure in which ...
View Answer

Refer to the graph shown. If the monopoly firm maximizes profit, it will produce:

Correct Answer
verified

The price at which a monopolistic competitor sells its product in both the long run and the short run is equal to:

Correct Answer
verified

If a monopolist increases sales from 10 to 11 by lowering its price from $40 to $38, its marginal revenue is:

Correct Answer
verified

iTunes charges British customers 20 percent more than customers in France and Germany. Apple defended the price difference, saying that the "underlying economic model in each country has an impact on how we price our track downloads." An economist would say that Apple is engaged in:

Correct Answer
verified

A perfectly price-discriminating monopolist:

Correct Answer
verified

A monopolistically competitive firm faces a downward-sloping demand curve.

Correct Answer
verified

Refer to the graph shown. If the government's goal is to eliminate the welfare costs of monopoly, it will:

Correct Answer
verified

Exam 14: Monopoly and Monopolistic Competition

Refer to the graph shown. The short-run equilibrium price for the monopolistically competitive firm represented is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe most obvious beneficiary is the gove...View AnswerShow Answer

The DeBeers Company is a profit-maximizing monopolist that exercises monopoly power in the distribution of diamonds. If the company earns positive economic profits this year, the price of diamonds will:

Correct AnswerverifiedShow Answer

Why do some stores offer senior citizens discounts on Tuesdays?

Correct AnswerverifiedShow Answer

Refer to the graph shown. If the monopoly firm maximizes profit, there will be a welfare loss equal to:

Correct AnswerverifiedShow Answer

Refer to the graph shown. The loss of surplus to consumers resulting from monopoly is:

Correct AnswerverifiedShow Answer

Demonstrate graphically and explain verbally an example of a monopolist earning a positive economic profit.

Correct AnswerverifiedThe monopolist produces the output level...View AnswerShow Answer

Consider the following diagram: Demonstrate graphically and explain verbally why moving away from producing output level Q0 will result in a decrease in profit for this monopolist.

Correct AnswerverifiedOutput level Q0 is the firm's profit-maxi...View AnswerShow Answer

What aspect of a platform business tends to make it a monopoly?

Correct AnswerverifiedPlatform businesses generally exhibit ne...View AnswerShow Answer

eBay.com dominates the online auction business because sellers want to go where the buyers are and buyers want to go where the sellers are. Bigger is thus better. Hence, eBay.com illustrates the concept of:

Correct AnswerverifiedShow Answer

In long-run equilibrium in both perfect competition and monopolistic competition there is zero economic profit and yet the two cases are not identical.What is the key difference between them?

Correct AnswerverifiedThe key difference is where the firm is ...View AnswerShow Answer

Refer to the graph shown. If this monopolist were allowed to choose the profit-maximizing level of output, it would charge a price of:

Correct AnswerverifiedShow Answer

Define monopoly.What is the primary reason for the existence of a monopoly? Describe three types of barriers to entry.

Correct AnswerverifiedMonopoly is a market structure in which ...View AnswerShow Answer

Refer to the graph shown. If the monopoly firm maximizes profit, it will produce:

Correct AnswerverifiedShow Answer

The price at which a monopolistic competitor sells its product in both the long run and the short run is equal to:

Correct AnswerverifiedShow Answer

If a monopolist increases sales from 10 to 11 by lowering its price from $40 to $38, its marginal revenue is:

Correct AnswerverifiedShow Answer

iTunes charges British customers 20 percent more than customers in France and Germany. Apple defended the price difference, saying that the "underlying economic model in each country has an impact on how we price our track downloads." An economist would say that Apple is engaged in:

Correct AnswerverifiedShow Answer

A perfectly price-discriminating monopolist:

Correct AnswerverifiedShow Answer

A monopolistically competitive firm faces a downward-sloping demand curve.

Correct AnswerverifiedShow Answer

Refer to the graph shown. If the government's goal is to eliminate the welfare costs of monopoly, it will:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
The most obvious beneficiary is the gove...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The monopolist produces the output level...
View Answer

Consider the following diagram: Demonstrate graphically and explain verbally why moving away from producing output level Q₀ will result in a decrease in profit for this monopolist.

Correct Answer
verified
Output level Q₀ is the firm's profit-maxi...
View Answer

Correct Answer
verified
Platform businesses generally exhibit ne...
View Answer

Correct Answer
verified

Correct Answer
verified
The key difference is where the firm is ...
View Answer

Correct Answer
verified

Correct Answer
verified
Monopoly is a market structure in which ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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