Question 1

Why might economists prefer private ownership of monopolies over public ownership of monopolies?

Accepted Answer

The private monopolist is governed by th...

Question 2

For a monopoly firm,

Accepted Answer

A)   price always exceeds average revenue.
B)   price always exceeds marginal revenue.
C)   any price-quantity combination will maximize profits.
D)   All of the above are correct.E) A) and D)
F) B) and C)

Question 3

Due to the nature of the patent laws on pharmaceuticals, the market for such drugs

Accepted Answer

A)   always remains a competitive market.
B)   always remains a monopolistic market.
C)   switches from competitive to monopolistic once the firm's patent runs out.
D)   switches from monopolistic to competitive once the firm's patent runs out.E) A) and D)
F) A) and C)

Question 4

Table 15-9
Consider the following demand and cost information for a monopoly. 
-Refer to Table 15-9. What is the monopolist's average total cost of production at the profit­maximizing price?

Accepted Answer

A)   $12
B)   $14
C)   $16
D)   $17E) A) and B)
F) C) and D)

Question 5

Figure 15-3 
-Refer to Figure 15-3. Which of the following statements is correct?

Accepted Answer

A)   Panel C represents the typical demand curve for a perfectly competitive firm, and Panel B represents the typical demand curve for a monopoly.
B)   Panel B represents the typical demand curve for a perfectly competitive firm, and Panel A represents the typical demand curve for a monopoly.
C)   Panel A represents the typical demand curve for a perfectly competitive firm, and Panel C represents the typical demand curve for a monopoly.
D)   Panel C represents the typical demand curve for a perfectly competitive firm, and Panel D represents the typical demand curve for a monopoly.E) C) and D)
F) All of the above

Question 6

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 marginal revenue from selling the 8th pair of shoes?

Accepted Answer

A)   $10
B)   $20
C)   $40
D)   $90E) B) and C)
F) A) and B)

Question 7

In order to sell more of its product, a monopolist must

Accepted Answer

A)   lobby the government for a subsidy.
B)   lower its price.
C)   advertise.
D)   enact barriers to entry in related markets.E) None of the above
F) C) and D)

Question 8

Round-trip airline tickets are usually cheaper if you stay over a Saturday night before you fly back. What is the reason for this price discrepancy?

Accepted Answer

A)   Airlines are practicing imperfect price discrimination to raise their profits.
B)   Airlines charge a different rate based on the different nature of peoples' travel needs.
C)   Airlines are attempting to charge people based on their willingness to pay.
D)   All of the above are correct.E) A) and B)
F) A) and C)

Question 9

Scenario 15-8
Mega Media Cable TV is able to purchase an exclusive right to sell a premium sports channel in its market area. Let's assume that Mega Media pays $100,000 a year for the exclusive marketing rights to the sports channel. Since Mega Media has already installed cable to all of the homes in its market area, the marginal cost of delivering the sports channel to subscribers is zero. The manager of Mega Media needs to know what price to charge for the sports channel service to maximize her profit. Before setting price, she hires an economist to estimate demand for the sports channel. The economist discovers that there are two types of subscribers who value premium sporting channels. First are the 3,000 die-hard sports fans who will pay as much as $150 a year for the new channel. Second, the premium sports channel will appeal to 20,000 occasional sports viewers who will pay as much as $25 a year for a subscription to it.
-Refer to Scenario 15-8. How much profit will Mega Media Cable TV earn if it sets the price at $150?

Accepted Answer

A)   $350,000
B)   $450,000
C)   $475,000
D)   $575,000E) A) and D)
F) A) and C)

Question 10

Perfect price discrimination

Accepted Answer

A)   increases profits to the firm.
B)   increases total surplus.
C)   decreases consumer surplus.
D)   All of the above are correct.E) All of the above
F) C) and D)

Question 11

Table 15-3
Consider the following demand and cost information for a monopoly. 
-Refer to Table 15-3. The marginal revenue of the 2nd unit is

Accepted Answer

A)   $10.
B)   $15.
C)   $20.
D)   $25.E) None of the above
F) A) and C)

Question 12

Figure 15-19 
-Refer to Figure 15-19. If there are no fixed costs of production, monopoly profit with perfect price discrimination equals

Accepted Answer

A)   $1.
B)   $1,562.5.
C)   $3,125.
D)   $6,250.E) A) and D)
F) None of the above

Question 13

Figure 15-9 
-Refer to Figure 15-9. The monopolist's maximum profit

Accepted Answer

A)   is $1,600.
B)   is $2,000.
C)   is $2,500.
D)   cannot be determined from the diagram.E) B) and C)
F) All of the above

Question 14

Table 15-4
A monopolist faces the following demand curve: 
-Refer to Table 15-4. If the monopolist produces 5 units, what is its marginal revenue?

Accepted Answer

A)   $100
B)   $37.5
C)   $15
D)   $2.50E) A) and D)
F) None of the above

Question 15

Figure 15-21 
-Refer to Figure 15-21. Which of the following areas describes the profit of this natural monopolist under socially optimal pricing?

Accepted Answer

A)   ABCE
B)   0HIL
C)   0FGK
D)   None of the above is correct.E) A) and B)
F) All of the above

Question 16

Figure 15-25 
-Refer to Figure 15-25. If this firm profit maximizes, which letter represents the quantity it will produce?

Accepted Answer

The answer of Figure 15-25 
-Refer to Figure 15-25. If...

Question 17

A monopoly is an inefficient way to produce a product because

Accepted Answer

A)   it can earn both short-run and long-run profits.
B)   it faces a downward-sloping demand curve.
C)   the cost to the monopolist of producing one more unit exceeds the value of that unit to potential buyers.
D)   it produces a smaller level of output than would be produced in a competitive market.E) None of the above
F) A) and D)

Question 18

Microsoft's government­granted exclusive right to make and sell the Windows operating system is called a

Accepted Answer

The answer of Microsoft's government­granted exclusive right to make and...

Question 19

Figure 15-22 
-Refer to Figure 15-22. If the monopolist uses perfect price discrimination, what price will it charge?

Accepted Answer

The amount...

Question 20

Which of the following statements is not correct?

Accepted Answer

A)   The government may use antitrust laws to break up an existing company to improve competition.
B)   The government may break up a natural monopoly to lower the price charged to customers.
C)   Private ownership is typically preferred to public ownership.
D)   Sometimes the best strategy is for the government to do nothing about monopoly inefficiency because the "fix" may be worse than the problem.E) All of the above
F) B) and D)

Exam 15: Monopoly

For a monopoly firm,

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Which of the following statements is not correct?

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Figure 15-25 -Refer to Figure 15-25. If this firm profit maximizes, which letter represents the quantity it will produce?

Correct Answer
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Why might economists prefer private ownership of monopolies over public ownership of monopolies?

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The private monopolist is governed by th...
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Table 15-3 Consider the following demand and cost information for a monopoly. -Refer to Table 15-3. The marginal revenue of the 2nd unit is

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In order to sell more of its product, a monopolist must

Correct Answer
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Table 15-9 Consider the following demand and cost information for a monopoly. -Refer to Table 15-9. What is the monopolist's average total cost of production at the profitmaximizing price?

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 marginal revenue from selling the 8th pair of shoes?

Correct Answer
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Figure 15-22 -Refer to Figure 15-22. If the monopolist uses perfect price discrimination, what price will it charge?

Correct Answer
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The amount...
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Round-trip airline tickets are usually cheaper if you stay over a Saturday night before you fly back. What is the reason for this price discrepancy?

Correct Answer
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Table 15-4 A monopolist faces the following demand curve: -Refer to Table 15-4. If the monopolist produces 5 units, what is its marginal revenue?

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Figure 15-3 -Refer to Figure 15-3. Which of the following statements is correct?

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Figure 15-9 -Refer to Figure 15-9. The monopolist's maximum profit

Correct Answer
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Perfect price discrimination

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Figure 15-21 -Refer to Figure 15-21. Which of the following areas describes the profit of this natural monopolist under socially optimal pricing?

Correct Answer
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Due to the nature of the patent laws on pharmaceuticals, the market for such drugs

Correct Answer
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Figure 15-19 -Refer to Figure 15-19. If there are no fixed costs of production, monopoly profit with perfect price discrimination equals

Correct Answer
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Microsoft's governmentgranted exclusive right to make and sell the Windows operating system is called a

Correct Answer
verified

A monopoly is an inefficient way to produce a product because

Correct Answer
verified

Exam 15: Monopoly

For a monopoly firm,

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Which of the following statements is not correct?

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Figure 15-25 -Refer to Figure 15-25. If this firm profit maximizes, which letter represents the quantity it will produce?

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Why might economists prefer private ownership of monopolies over public ownership of monopolies?

Correct AnswerverifiedThe private monopolist is governed by th...View AnswerShow Answer

Table 15-3 Consider the following demand and cost information for a monopoly. -Refer to Table 15-3. The marginal revenue of the 2nd unit is

Correct AnswerverifiedShow Answer

In order to sell more of its product, a monopolist must

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Table 15-9 Consider the following demand and cost information for a monopoly. -Refer to Table 15-9. What is the monopolist's average total cost of production at the profit­maximizing price?

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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 marginal revenue from selling the 8th pair of shoes?

Correct AnswerverifiedShow Answer

Figure 15-22 -Refer to Figure 15-22. If the monopolist uses perfect price discrimination, what price will it charge?

Correct AnswerverifiedThe amount...View AnswerShow Answer

Round-trip airline tickets are usually cheaper if you stay over a Saturday night before you fly back. What is the reason for this price discrepancy?

Correct AnswerverifiedShow Answer

Table 15-4 A monopolist faces the following demand curve: -Refer to Table 15-4. If the monopolist produces 5 units, what is its marginal revenue?

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Figure 15-3 -Refer to Figure 15-3. Which of the following statements is correct?

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Figure 15-9 -Refer to Figure 15-9. The monopolist's maximum profit

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Perfect price discrimination

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Figure 15-21 -Refer to Figure 15-21. Which of the following areas describes the profit of this natural monopolist under socially optimal pricing?

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Due to the nature of the patent laws on pharmaceuticals, the market for such drugs

Correct AnswerverifiedShow Answer

Figure 15-19 -Refer to Figure 15-19. If there are no fixed costs of production, monopoly profit with perfect price discrimination equals

Correct AnswerverifiedShow Answer

Microsoft's government­granted exclusive right to make and sell the Windows operating system is called a

Correct AnswerverifiedShow Answer

A monopoly is an inefficient way to produce a product because

Correct AnswerverifiedShow Answer

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The private monopolist is governed by th...
View Answer

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Table 15-9 Consider the following demand and cost information for a monopoly. -Refer to Table 15-9. What is the monopolist's average total cost of production at the profitmaximizing price?

Correct Answer
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Correct Answer
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The amount...
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Microsoft's governmentgranted exclusive right to make and sell the Windows operating system is called a

Correct Answer
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Correct Answer
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