Question 1

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

Question 2

Which of the following statements is not correct?

Accepted Answer

A)  Consumers will likely benefit in the form of lower prices from buying a product made by a natural monopoly than if the market were served by several firms.
B)  Monopolists typically charge higher prices than competitive firms.
C)  Monopolists typically produce larger quantities of output than competitive firms.
D)  Consumers may benefit from monopolies if the firms invest their higher profits into something that benefits society such as medical research.E) A) and B)
F) A) and D) C

Question 3

When a single firm can supply a product to an entire market at a lower cost than could two or more firms, the industry is called a

Accepted Answer

A)  resource industry.
B)  exclusive industry.
C)  government monopoly.
D)  natural monopoly.E) None of the above
F) A) and B)

Question 4

For a monopoly, the socially efficient level of output occurs where

Accepted Answer

A)  marginal revenue equals marginal cost.
B)  average revenue equals marginal cost.
C)  marginal revenue equals average total cost.
D)  average revenue equals average total cost.E) A) and B)
F) None of the above

Question 5

Monopolies are socially inefficient because the price they charge is

Accepted Answer

A)  equal to marginal revenue.
B)  above marginal cost.
C)  equal to demand.
D)  above demand.E) A) and B)
F) A) and C)

Question 6

Figure 15-8 
-Refer to Figure 15-8. What area represents the total surplus lost due to monopoly pricing?

Accepted Answer

A)  the rectangle (A-
C)  *X
B)  the triangle 1/2[(A-
C)  *(Y-X) ]
C)  the triangle 1/2[(A-
B)  *(Y-X) ]
D)  the rectangle (A-
C)  *X plus the triangle 1/2[(A-
C)  *(Y-X) ]E) None of the above
F) B) and D)

Question 7

Figure 15-1 
-Refer to Figure 15-1. How much profit will this monopolist earn if it charges each consumer the same price?

Accepted Answer

$612.50

Question 8

When a certain monopoly sets its price at $8 it sells 64 units. When the monopoly sets its price at $9 it sells 62 units. The marginal revenue for the firm over this range is

Accepted Answer

A)  $18.
B)  $23.
C)  $46.
D)  $92.E) A) and B)
F) All of the above

Question 9

An industry is a natural monopoly when (i) 
The government assists the firm in maintaining the monopoly.
(ii) 
A single firm owns a key resource.(iii) 
A single firm can supply a good or service to an entire market at a smaller cost than could two or more firms.

Accepted Answer

A)  (ii)  only
B)  (iii)  only
C)  (i)  and (ii)  only
D)  (ii)  and (iii)  onlyE) C) and D)
F) A) and B)

Question 10

A movie theater can increase its profits through price discrimination by charging a higher price to adults and a lower price to children if it

Accepted Answer

A)  can prevent children from buying the lower-priced tickets and selling them to adults.
B)  has some degree of monopoly pricing power.
C)  can easily distinguish between the two groups of customers.
D)  All of the above are correct.E) All of the above
F) C) and D)

Question 11

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 total profit at the profit-maximizing quantity?

Accepted Answer

A)  $100
B)  $245
C)  $265
D)  $395E) B) and C)
F) None of the above

Question 12

Scenario 15-3
A monopoly firm maximizes its profit by producing Q = 500 units of output. At that level of output, its marginal revenue is $30, its average revenue is $60, and its average total cost is $34.
-Refer to Scenario 15-3. The firm's profit-maximizing price is

Accepted Answer

A)  $30.
B)  between $30 and $34.
C)  between $34 and $60.
D)  $60.E) B) and C)
F) A) and D)

Question 13

A monopoly firm is a price

Accepted Answer

A)  taker and has no supply curve.
B)  maker and has no supply curve
C)  taker and has an upward-sloping supply curve.
D)  maker and has an upward-sloping supply curve.E) A) and D)
F) A) and C)

Question 14

Scenario 15-2
Consider a local, privately-owned electrical cooperative named Poweshiek Power Company (PPCo) . PPCo has just completed a clean-coal-burning electrical power plant in Iowa. Currently, PPCo 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 PPCo experienced incredibly high 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 PPCo currently has.
(ii) 
PPCo is a natural monopoly.
(iii) 
PPCo would experience higher profits if it were government-run.

Accepted Answer

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

Question 15

Table 15-18
A monopolist faces the following demand curve:  Suppose marginal cost is constant at $8 per unit.
-Refer to Table 15-18 The monopolist's profit-maximizing level of output is

Accepted Answer

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

Question 16

University financial aid can be viewed as a type of price discrimination.

Accepted Answer

A) True 
 B)False  True

Question 17

Table 15-20
A monopolist faces the following demand curve: 
-Refer to Table 15-20. If a monopolist faces a constant marginal cost of $10, how much output should the firm produce in order to maximize profit?

Accepted Answer

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

Question 18

Figure 15-5 
-Refer to Figure 15-5. A profit-maximizing monopoly's profit is equal to

Accepted Answer

A)  P2 x Q3.
B)  (P2-P4)  x Q3.
C)  (P2-P5)  x Q3.
D)  (P1-P6)  x Q1.E) B) and C)
F) A) and D)

Question 19

A monopolist's profit is equal to (Price - Marginal Cost) × Quantity.

Accepted Answer

A) True 
 B)False

Question 20

Table 15-1 
-Refer to Table 15-1. What is the marginal revenue for the monopolist for the sixth unit sold?

Accepted Answer

A)  $3
B)  $5
C)  $11
D)  $17E) B) and D)
F) C) and D)

Exam 15: Monopoly

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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Which of the following statements is not correct?

Correct Answer
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C

When a single firm can supply a product to an entire market at a lower cost than could two or more firms, the industry is called a

Correct Answer
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For a monopoly, the socially efficient level of output occurs where

Correct Answer
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Monopolies are socially inefficient because the price they charge is

Correct Answer
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Figure 15-8 -Refer to Figure 15-8. What area represents the total surplus lost due to monopoly pricing?

Correct Answer
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Figure 15-1 -Refer to Figure 15-1. How much profit will this monopolist earn if it charges each consumer the same price?

Correct Answer
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$612.50

When a certain monopoly sets its price at $8 it sells 64 units. When the monopoly sets its price at $9 it sells 62 units. The marginal revenue for the firm over this range is

Correct Answer
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An industry is a natural monopoly when (i) The government assists the firm in maintaining the monopoly. (ii) A single firm owns a key resource.(iii) A single firm can supply a good or service to an entire market at a smaller cost than could two or more firms.

Correct Answer
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A movie theater can increase its profits through price discrimination by charging a higher price to adults and a lower price to children if it

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 total profit at the profit-maximizing quantity?

Correct Answer
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Scenario 15-3 A monopoly firm maximizes its profit by producing Q = 500 units of output. At that level of output, its marginal revenue is $30, its average revenue is $60, and its average total cost is $34. -Refer to Scenario 15-3. The firm's profit-maximizing price is

Correct Answer
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A monopoly firm is a price

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Table 15-18 A monopolist faces the following demand curve: Suppose marginal cost is constant at $8 per unit. -Refer to Table 15-18 The monopolist's profit-maximizing level of output is

Correct Answer
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University financial aid can be viewed as a type of price discrimination.

Correct Answer
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True

Table 15-20 A monopolist faces the following demand curve: -Refer to Table 15-20. If a monopolist faces a constant marginal cost of $10, how much output should the firm produce in order to maximize profit?

Correct Answer
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Figure 15-5 -Refer to Figure 15-5. A profit-maximizing monopoly's profit is equal to

Correct Answer
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A monopolist's profit is equal to (Price - Marginal Cost) × Quantity.

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Table 15-1 -Refer to Table 15-1. What is the marginal revenue for the monopolist for the sixth unit sold?

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Exam 15: Monopoly

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

Which of the following statements is not correct?

Correct AnswerverifiedC

When a single firm can supply a product to an entire market at a lower cost than could two or more firms, the industry is called a

Correct AnswerverifiedShow Answer

For a monopoly, the socially efficient level of output occurs where

Correct AnswerverifiedShow Answer

Monopolies are socially inefficient because the price they charge is

Correct AnswerverifiedShow Answer

Figure 15-8 -Refer to Figure 15-8. What area represents the total surplus lost due to monopoly pricing?

Correct AnswerverifiedShow Answer

Figure 15-1 -Refer to Figure 15-1. How much profit will this monopolist earn if it charges each consumer the same price?

Correct Answerverified$612.50

When a certain monopoly sets its price at $8 it sells 64 units. When the monopoly sets its price at $9 it sells 62 units. The marginal revenue for the firm over this range is

Correct AnswerverifiedShow Answer

An industry is a natural monopoly when (i) The government assists the firm in maintaining the monopoly. (ii) A single firm owns a key resource.(iii) A single firm can supply a good or service to an entire market at a smaller cost than could two or more firms.

Correct AnswerverifiedShow Answer

A movie theater can increase its profits through price discrimination by charging a higher price to adults and a lower price to children if it

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 total profit at the profit-maximizing quantity?

Correct AnswerverifiedShow Answer

Scenario 15-3 A monopoly firm maximizes its profit by producing Q = 500 units of output. At that level of output, its marginal revenue is $30, its average revenue is $60, and its average total cost is $34. -Refer to Scenario 15-3. The firm's profit-maximizing price is

Correct AnswerverifiedShow Answer

A monopoly firm is a price

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Table 15-18 A monopolist faces the following demand curve: Suppose marginal cost is constant at $8 per unit. -Refer to Table 15-18 The monopolist's profit-maximizing level of output is

Correct AnswerverifiedShow Answer

University financial aid can be viewed as a type of price discrimination.

Correct AnswerverifiedTrue

Table 15-20 A monopolist faces the following demand curve: -Refer to Table 15-20. If a monopolist faces a constant marginal cost of $10, how much output should the firm produce in order to maximize profit?

Correct AnswerverifiedShow Answer

Figure 15-5 -Refer to Figure 15-5. A profit-maximizing monopoly's profit is equal to

Correct AnswerverifiedShow Answer

A monopolist's profit is equal to (Price - Marginal Cost) × Quantity.

Correct AnswerverifiedShow Answer

Table 15-1 -Refer to Table 15-1. What is the marginal revenue for the monopolist for the sixth unit sold?

Correct AnswerverifiedShow Answer

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C

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$612.50

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True

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