Question 1

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. At Q = 500, the firm's profit is

Accepted Answer

A)  $13,000.
B)  $15,000.
C)  $17,000.
D)  $30,000.E) A) and B)
F) C) and D)

Question 2

Figure 15-1 
-Refer to Figure 15-1. How much deadweight loss results if this single-price monopolist profit-maximizes?

Accepted Answer

The answer of Figure 15-1 
-Refer to Figure 15-1. How...

Question 3

A profit-maximizing monopolist will produce the level of output at which

Accepted Answer

A)  average revenue is equal to average total cost.
B)  average revenue is equal to marginal cost.
C)  marginal revenue is equal to marginal cost.
D)  total revenue is equal to opportunity cost.E) A) and C)
F) None of the above

Question 4

Figure 15-1 
-Refer to Figure 15-1. Which is more efficient, single price profit maximization or perfect price discrimination?

Accepted Answer

perfect pr...

Question 5

For a monopoly, the level of output at which marginal revenue equals zero is also the level of output at which

Accepted Answer

A)  average revenue is zero.
B)  profit is maximized.
C)  total revenue is maximized.
D)  marginal cost is zero.E) A) and B)
F) A) and C)

Question 6

A monopoly

Accepted Answer

A)  can set the price it charges for its output and earn unlimited profits.
B)  takes the market price as given and earns small but positive profits.
C)  can set the price it charges for its output but faces a downward-sloping demand curve so it cannot earn unlimited profits.
D)  can set the price it charges for its output but faces a horizontal demand curve so it can earn unlimited profits.E) A) and B)
F) A) and C)

Question 7

Suppose a monopolist chooses the price and production level that maximizes its profit. From that point, to increase society's economic welfare, output would need to be increased as long as

Accepted Answer

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

Question 8

When a monopoly increases its output and sales,

Accepted Answer

A)  both the output effect and the price effect work to increase total revenue.
B)  the output effect works to increase total revenue, and the price effect works to decrease total revenue.
C)  the output effect works to decrease total revenue, and the price effect works to increase total revenue.
D)  both the output effect and the price effect work to decrease total revenue.E) B) and C)
F) A) and B)

Question 9

One method used to control the ability of firms to capture monopoly profit in the United States is through

Accepted Answer

A)  government purchase of products produced by monopolists.
B)  government distribution of a monopolist's excess production.
C)  enforcement of antitrust laws.
D)  regulation of firms in highly competitive markets.E) None of the above
F) All of the above

Question 10

A firm that is the sole seller of a product without close substitutes is

Accepted Answer

A)  perfectly competitive.
B)  monopolistically competitive.
C)  an oligopolist.
D)  a monopolist.E) None of the above
F) A) and C)

Question 11

Which of the following is an example of a barrier to entry?

Accepted Answer

A)  Crystal charges a higher price than her competitors for her hair-styling services.
B)  Dan charges a lower price than his competitors for his dry-walling services.
C)  Jackie offers free samples of her loose-meat sandwiches to attract new customers.
D)  Roseanne obtains a copyright for a short story that she wrote and published.E) B) and C)
F) None of the above

Question 12

Table 15-4
A monopolist faces the following demand curve: 
-Refer to Table 15-4. The monopolist will not produce

Accepted Answer

A)  5 units or fewer under any circumstances.
B)  7.5 units or fewer under any circumstances.
C)  7.5 units or more under any circumstances.
D)  10 units or more under any circumstances.E) B) and C)
F) None of the above

Question 13

Declining average total cost with increased production is one of the defining characteristics of a natural monopoly.

Accepted Answer

A) True 
 B)False

Question 14

Figure 15-1 
-Refer to Figure 15-1. If the monopolist uses perfect price discrimination, what price will it charge?

Accepted Answer

The amount...

Question 15

A monopolist's average revenue is always

Accepted Answer

A)  equal to marginal revenue.
B)  greater than the price of its product.
C)  equal to the price of its product.
D)  less than the price of its product.E) A) and C)
F) A) and B)

Question 16

Table 15-8
The following table provides information on the price, quantity, and average total cost for a monopoly. 
-Refer to Table 15-8. How much extra revenue does the monopolist earn when he lowers the price from $18 to $12?

Accepted Answer

A)  $10
B)  $12
C)  $30
D)  $41E) B) and D)
F) A) and B)

Question 17

Allowing an inventor to have the exclusive rights to market her new invention will lead to (i) 
A product that is priced higher than it would be without the exclusive rights.
(ii) 
Desirable behavior in the sense that inventors are encouraged to invent.
(iii) 
Higher profits for the inventor.

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 D)
F) A) and C)

Question 18

Figure 15-3 
-Refer to Figure 15-3. Use the letters in the figure to identify the profit area if this firm were able to perfectly price discriminate.

Accepted Answer

The answer of Figure 15-3 
-Refer to Figure 15-3. Use...

Question 19

Which of the following is not an example of a barrier to entry?

Accepted Answer

A)  John owns the only parcel of lakeside property with a beach that is safe for swimming. He charges admission to neighbors who want to use the beach.
B)  Jackie owns the copyright to a popular song. She receives royalties every time a radio station plays her song.
C)  John Jr. owns the best seafood restaurant in a popular resort area. He charges high prices because the quality of the food is so good.
D)  Caroline owns the patent for a new running shoe. She receives payments from the company who manufactures the shoes.E) B) and C)
F) A) and C)

Question 20

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. If Mega Media Cable TV is able to price discriminate, what would be the maximum amount of profit it could generate?

Accepted Answer

A)  $950,000
B)  $850,000
C)  $400,000
D)  $350,000E) None of the above
F) A) and D)

Exam 15: Monopoly

Allowing an inventor to have the exclusive rights to market her new invention will lead to (i) A product that is priced higher than it would be without the exclusive rights. (ii) Desirable behavior in the sense that inventors are encouraged to invent. (iii) Higher profits for the inventor.

Correct Answer
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When a monopoly increases its output and sales,

Correct Answer
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A monopolist's average revenue is always

Correct Answer
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Which of the following is an example of a barrier to entry?

Correct Answer
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Suppose a monopolist chooses the price and production level that maximizes its profit. From that point, to increase society's economic welfare, output would need to be increased as long as

Correct Answer
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A firm that is the sole seller of a product without close substitutes is

Correct Answer
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Which of the following is not an example of a barrier to entry?

Correct Answer
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Declining average total cost with increased production is one of the defining characteristics of a natural monopoly.

Correct Answer
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Figure 15-3 -Refer to Figure 15-3. Use the letters in the figure to identify the profit area if this firm were able to perfectly price discriminate.

Correct Answer
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A profit-maximizing monopolist will produce the level of output at which

Correct Answer
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Table 15-8 The following table provides information on the price, quantity, and average total cost for a monopoly. -Refer to Table 15-8. How much extra revenue does the monopolist earn when he lowers the price from $18 to $12?

Correct Answer
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A monopoly

Correct Answer
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For a monopoly, the level of output at which marginal revenue equals zero is also the level of output at which

Correct Answer
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Figure 15-1 -Refer to Figure 15-1. If the monopolist uses perfect price discrimination, what price will it charge?

Correct Answer
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The amount...
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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. At Q = 500, the firm's profit is

Correct Answer
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Figure 15-1 -Refer to Figure 15-1. How much deadweight loss results if this single-price monopolist profit-maximizes?

Correct Answer
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One method used to control the ability of firms to capture monopoly profit in the United States is through

Correct Answer
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Table 15-4 A monopolist faces the following demand curve: -Refer to Table 15-4. The monopolist will not produce

Correct Answer
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Figure 15-1 -Refer to Figure 15-1. Which is more efficient, single price profit maximization or perfect price discrimination?

Correct Answer
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perfect pr...
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Exam 15: Monopoly

Allowing an inventor to have the exclusive rights to market her new invention will lead to (i) A product that is priced higher than it would be without the exclusive rights. (ii) Desirable behavior in the sense that inventors are encouraged to invent. (iii) Higher profits for the inventor.

Correct AnswerverifiedShow Answer

When a monopoly increases its output and sales,

Correct AnswerverifiedShow Answer

A monopolist's average revenue is always

Correct AnswerverifiedShow Answer

Which of the following is an example of a barrier to entry?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose a monopolist chooses the price and production level that maximizes its profit. From that point, to increase society's economic welfare, output would need to be increased as long as

Correct AnswerverifiedShow Answer

A firm that is the sole seller of a product without close substitutes is

Correct AnswerverifiedShow Answer

Which of the following is not an example of a barrier to entry?

Correct AnswerverifiedShow Answer

Declining average total cost with increased production is one of the defining characteristics of a natural monopoly.

Correct AnswerverifiedShow Answer

Figure 15-3 -Refer to Figure 15-3. Use the letters in the figure to identify the profit area if this firm were able to perfectly price discriminate.

Correct AnswerverifiedShow Answer

A profit-maximizing monopolist will produce the level of output at which

Correct AnswerverifiedShow Answer

Table 15-8 The following table provides information on the price, quantity, and average total cost for a monopoly. -Refer to Table 15-8. How much extra revenue does the monopolist earn when he lowers the price from $18 to $12?

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A monopoly

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For a monopoly, the level of output at which marginal revenue equals zero is also the level of output at which

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Figure 15-1 -Refer to Figure 15-1. If the monopolist uses perfect price discrimination, what price will it charge?

Correct AnswerverifiedThe amount...View AnswerShow 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. At Q = 500, the firm's profit is

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Figure 15-1 -Refer to Figure 15-1. How much deadweight loss results if this single-price monopolist profit-maximizes?

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One method used to control the ability of firms to capture monopoly profit in the United States is through

Correct AnswerverifiedShow Answer

Table 15-4 A monopolist faces the following demand curve: -Refer to Table 15-4. The monopolist will not produce

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Figure 15-1 -Refer to Figure 15-1. Which is more efficient, single price profit maximization or perfect price discrimination?

Correct Answerverifiedperfect pr...View AnswerShow Answer

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The amount...
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perfect pr...
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