Question 1

Suppose a profit-maximizing monopolist faces a constant marginal cost of $20, produces an output level of 100 units, and charges a price of $50. The socially efficient level of output is 200 units. Assume that the demand curve and marginal revenue curve are the typical downward-sloping straight lines. The monopoly deadweight loss equals $1,500.

Accepted Answer

A) True 
 B)False

Question 2

Figure 15-5 
-Refer to Figure 15-5. Profit on a typical unit sold for a profit-maximizing monopoly would equal

Accepted Answer

A)  P1-P6.
B)  P2-P4.
C)  P2-P5.
D)  P2-P3.E) A) and D)
F) C) and D)

Question 3

Which of the following is a characteristic of a natural monopoly?

Accepted Answer

A)  Average cost exceeds marginal cost over large regions of output.
B)  Increasing the number of firms increases each firm's average total cost.
C)  One firm can supply output at a lower cost than two firms.
D)  All of the above are correct.E) C) and D)
F) A) and C)

Question 4

Table 15-18
A monopolist faces the following demand curve:  Suppose marginal cost is constant at $8 per unit.
-Refer to Table 15-18. When the price effect on revenue is greater than the output effect, marginal revenue is

Accepted Answer

A)  positive. This occurs with the 3rd unit of output.
B)  positive. This occurs with the 4th unit of output.
C)  negative. This occurs with the 5th unit of output.
D)  negative. This occurs with the 6th unit of output.E) B) and C)
F) A) and D)

Question 5

For a typical natural monopoly, average total cost is

Accepted Answer

A)  rising, often because marginal costs are very large.
B)  rising, often because fixed costs are very large.
C)  declining, often because marginal costs are very large.
D)  declining, often because fixed costs are very large.E) A) and B)
F) All of the above

Question 6

Which of the following statements is (are)  true of a monopoly? (i) 
A monopoly has the ability to set the price of its product at whatever level it desires.
(ii) 
A monopoly's total revenue will always increase when it increases the price of its product.
(iii) 
The more a monopoly increases output, the higher the profits.

Accepted Answer

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

Question 7

Because a monopolist must lower its price in order to sell another unit of output,

Accepted Answer

A)  marginal revenue is less than price.
B)  long-term economic profits will be zero.
C)  total revenue increases as price increases.
D)  average revenue is less than price.E) A) and B)
F) A) and C)

Question 8

Which of the following is an example of price discrimination?

Accepted Answer

A)  Nabisco provides cents-off coupons for its products.
B)  Amtrak offers a lower price for weekend travel compared to weekday rates on the same routes.
C)  Hotel rates for AAA members are lower than for nonmembers.
D)  All of the above are correct.E) A) and C)
F) B) and C)

Question 9

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 would the total profit be if she charged $6 per unit for her product?

Accepted Answer

A)  $1
B)  $3
C)  $8
D)  $15E) A) and B)
F) B) and C)

Question 10

The legislation passed by Congress in 1914 to strengthen the government's powers and authorize private lawsuits was the

Accepted Answer

A)  Morgan Act.
B)  Sherman Act.
C)  Clayton Act.
D)  14th Amendment.E) C) and D)
F) B) and C)

Question 11

A natural monopoly has economies of scale for most if not all of its range of output.

Accepted Answer

A) True 
 B)False

Question 12

A perfectly competitive firm produces where

Accepted Answer

A)  marginal cost equals price, while a monopolist produces where price exceeds marginal cost.
B)  marginal cost equals price, while a monopolist produces where marginal cost exceeds price.
C)  price exceeds marginal cost, while a monopolist produces where marginal cost equals price.
D)  marginal cost exceeds price, while a monopolist produces where marginal cost equals price.E) All of the above
F) C) and D)

Question 13

For a monopolist, marginal revenue is

Accepted Answer

A)  positive when the demand effect is greater than the supply effect.
B)  positive when the monopoly effect is greater than the competitive effect.
C)  negative when the price effect is greater than the output effect.
D)  negative when the output effect is greater than the price effect.E) A) and D)
F) A) and C)

Question 14

What is the shape of the monopolist's marginal revenue curve?

Accepted Answer

A)  a downward-sloping line that is identical to the demand curve
B)  a downward-sloping line that lies below the demand curve
C)  a horizontal line that is identical to the demand curve
D)  a horizontal line that lies below the demand curveE) None of the above
F) B) and D)

Question 15

Private ownership of a monopoly may benefit society because the monopoly will have an incentive to

Accepted Answer

A)  charge a price that is consistent with that of a benevolent social planner.
B)  charge a price that prevents some people from buying.
C)  price its good according to the intersection of marginal cost and average revenue.
D)  lower its costs to earn a higher profit.E) A) and B)
F) A) and C)

Question 16

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

Accepted Answer

A)  sell to the government.
B)  sell in international markets.
C)  lower its price.
D)  use its market power to force up the price of complementary products.E) A) and D)
F) A) and C)

Question 17

Goods that do not have close substitutes have downward-sloping demand curves.

Accepted Answer

A) True 
 B)False

Question 18

Figure 15-18 
-Refer to Figure 15-18. If the monopoly firm is not allowed to price discriminate, then the deadweight loss amounts to

Accepted Answer

A)  $0.
B)  $1,000.
C)  $2,000.
D)  $4,000.E) B) and C)
F) A) and B)

Question 19

Table 15-2
Tanya has the following demand curve for selling taffy. Assume that Tanya has a marginal cost of $3 per unit. 
-Refer to Table 15-2. What is Tanya's profit-maximizing level of output?

Accepted Answer

A)  1
B)  2
C)  3
D)  4E) C) and D)
F) A) and B)

Question 20

Marginal revenue for a monopolist is computed as

Accepted Answer

A)  average revenue divided by quantity sold.
B)  average revenue times quantity divided by price.
C)  total revenue divided by quantity sold.
D)  change in total revenue per one unit increase in quantity sold.E) A) and C)
F) A) and D)

Exam 15: Monopoly

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

Correct Answer
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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 would the total profit be if she charged $6 per unit for her product?

Correct Answer
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Table 15-2 Tanya has the following demand curve for selling taffy. Assume that Tanya has a marginal cost of $3 per unit. -Refer to Table 15-2. What is Tanya's profit-maximizing level of output?

Correct Answer
verified

For a monopolist, marginal revenue is

Correct Answer
verified

Because a monopolist must lower its price in order to sell another unit of output,

Correct Answer
verified

Marginal revenue for a monopolist is computed as

Correct Answer
verified

The legislation passed by Congress in 1914 to strengthen the government's powers and authorize private lawsuits was the

Correct Answer
verified

A natural monopoly has economies of scale for most if not all of its range of output.

Correct Answer
verified

A perfectly competitive firm produces where

Correct Answer
verified

Figure 15-5 -Refer to Figure 15-5. Profit on a typical unit sold for a profit-maximizing monopoly would equal

Correct Answer
verified

Correct Answer
verified

Private ownership of a monopoly may benefit society because the monopoly will have an incentive to

Correct Answer
verified

Which of the following is an example of price discrimination?

Correct Answer
verified

What is the shape of the monopolist's marginal revenue curve?

Correct Answer
verified

Which of the following is a characteristic of a natural monopoly?

Correct Answer
verified

Figure 15-18 -Refer to Figure 15-18. If the monopoly firm is not allowed to price discriminate, then the deadweight loss amounts to

Correct Answer
verified

Goods that do not have close substitutes have downward-sloping demand curves.

Correct Answer
verified

For a typical natural monopoly, average total cost is

Correct Answer
verified

Table 15-18 A monopolist faces the following demand curve: Suppose marginal cost is constant at $8 per unit. -Refer to Table 15-18. When the price effect on revenue is greater than the output effect, marginal revenue is

Correct Answer
verified

Exam 15: Monopoly

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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 would the total profit be if she charged $6 per unit for her product?

Correct AnswerverifiedShow Answer

Table 15-2 Tanya has the following demand curve for selling taffy. Assume that Tanya has a marginal cost of $3 per unit. -Refer to Table 15-2. What is Tanya's profit-maximizing level of output?

Correct AnswerverifiedShow Answer

For a monopolist, marginal revenue is

Correct AnswerverifiedShow Answer

Because a monopolist must lower its price in order to sell another unit of output,

Correct AnswerverifiedShow Answer

Marginal revenue for a monopolist is computed as

Correct AnswerverifiedShow Answer

The legislation passed by Congress in 1914 to strengthen the government's powers and authorize private lawsuits was the

Correct AnswerverifiedShow Answer

A natural monopoly has economies of scale for most if not all of its range of output.

Correct AnswerverifiedShow Answer

A perfectly competitive firm produces where

Correct AnswerverifiedShow Answer

Figure 15-5 -Refer to Figure 15-5. Profit on a typical unit sold for a profit-maximizing monopoly would equal

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Private ownership of a monopoly may benefit society because the monopoly will have an incentive to

Correct AnswerverifiedShow Answer

Which of the following is an example of price discrimination?

Correct AnswerverifiedShow Answer

What is the shape of the monopolist's marginal revenue curve?

Correct AnswerverifiedShow Answer

Which of the following is a characteristic of a natural monopoly?

Correct AnswerverifiedShow Answer

Figure 15-18 -Refer to Figure 15-18. If the monopoly firm is not allowed to price discriminate, then the deadweight loss amounts to

Correct AnswerverifiedShow Answer

Goods that do not have close substitutes have downward-sloping demand curves.

Correct AnswerverifiedShow Answer

For a typical natural monopoly, average total cost is

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. When the price effect on revenue is greater than the output effect, marginal revenue is

Correct AnswerverifiedShow Answer

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