Question 1

When a monopolist is able to sell its product at different prices,it is engaging in

Accepted Answer

A)   distribution pricing.
B)   quality-adjusted pricing.
C)   arbitrage.
D)   price discrimination.

Question 2

The socially efficient quantity is found where the demand curve intersects the marginal cost curve.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is NOT a difference between monopolies and perfectly competitive markets?

Accepted Answer

A)   Monopolies can earn profits in the long run while perfectly competitive firms break even.
B)   Monopolies charge a price higher than marginal cost while perfectly competitive firms charge a price equal to marginal cost.
C)   Monopolies choose to produce the quantity at which marginal revenue equals marginal cost while perfectly competitive firms do not.
D)   Monopolies face downward sloping demand curves while perfectly competitive firms face horizontal demand curves.

Question 4

Patent and copyright laws encourage

Accepted Answer

A)   creative activity.
B)   lower prices due to decreasing average total costs.
C)   competition among firms.
D)   All of the above are correct.

Question 5

One solution to the problems of marginal-cost pricing of a regulated natural monopolist is average cost pricing.In this model,the monopolist is allowed to price its production at average total cost.How does average-cost pricing differ from marginal-cost pricing? Does this solution maximize social well-being?

Accepted Answer

Under average-cost pricing,the monopolis...

Question 6

Table 15-1
A monopolist faces the following demand curve:
  Marginal cost is constant at $8 per unit.
-Refer to Scenario 15-1.How much profit will the museum earn if it charges all customers $12 for admission?

Accepted Answer

A)   $-800.
B)   $100.
C)   $800.
D)   $1200.

Question 7

Some prescription drugs sell for more in the United States than they do in other countries.Which of the following statements about this issue is most likely to be true?

Accepted Answer

A)   Drug companies are engaging in price discrimination,and this practice certainly reduces global social welfare.
B)   Global social welfare could be improved if the price in the United States were reduced to the price charged in other countries.
C)   Global social welfare could be improved if the price in the other countries were increased to the price charged in the United States.
D)   Drug companies are engaging in price discrimination,but this might improve global social welfare if it gives more people access to the drugs.

Question 8

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.

Question 9

Price discrimination is the business practice of

Accepted Answer

A)   bundling related products to increase total sales.
B)   selling the same good at different prices to different customers.
C)   pricing above marginal cost.
D)   hiring marketing experts to increase consumers' brand loyalty.

Question 10

Table 15-1
 
-Refer to Table 15-1.When 4 units of output are produced and sold,what is average revenue?

Accepted Answer

A)   $17
B)   $21
C)   $23
D)   $26

Question 11

Microsoft faces very little competition from other firms for its Windows software.Why isn't the price of the software $1,000 per copy?

Accepted Answer

A)   because the government would not allow such a high price
B)   because stockholders would not allow such a high price
C)   because the company would sell so few copies that they would earn higher profits by selling at a lower price
D)   All of the above are correct.

Question 12

Figure 15-3 
-Refer to Figure 15-3.The demand curve for a monopoly firm is depicted by curve

Accepted Answer

A)   A.
B)   B.
C)   C.
D)   D.

Question 13

Figure 15-2    
-Refer to Figure 15-2.Which panel could represent the demand curve facing a local cable television provider if that firm in a monopolist?

Accepted Answer

A)   Panel A
B)   Panel B
C)   Panel C
D)   Panel D

Question 14

The George Stigler quote,"...the degree of 'market failure' for the American economy is much smaller than the 'political failure' arising from the imperfections of economic policies ..." illustrates the advantage of which type of public policy toward monopolies?

Accepted Answer

A)   antitrust laws
B)   regulation
C)   public ownership
D)   "do nothing"

Question 15

The De Beers Diamond company advertises heavily to promote the sale of all diamonds,not just its own.This is evidence that it has a monopoly position to some degree.

Accepted Answer

A) True 
 B)False

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)   $41

Question 17

Which of the following is not correct?

Accepted Answer

A)   Antitrust laws may prevent mergers that would actually raise social welfare.
B)   Public ownership is the most common public policy toward monopolies in the United States.
C)   Regulation is a common strategy for a natural monopoly.
D)   Sometimes the best public policy toward a monopoly may be to do nothing.

Question 18

Splitting up a monopoly is often justified on the grounds that

Accepted Answer

A)   consumers prefer dealing with small firms.
B)   small firms have lower costs.
C)   competition is inherently efficient.
D)   small firms produce higher quality products.

Question 19

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.

Question 20

If a product can be produced by a natural monopoly,society will benefit in the form of lower prices if the monopolist is broken up into several smaller firms.

Accepted Answer

A) True 
 B)False

Exam 15: Monopoly

The De Beers Diamond company advertises heavily to promote the sale of all diamonds,not just its own.This is evidence that it has a monopoly position to some degree.

Correct Answer
verified

Monopolies are socially inefficient because the price they charge is

Correct Answer
verified

Table 15-1 -Refer to Table 15-1.When 4 units of output are produced and sold,what is average revenue?

Correct Answer
verified

Table 15-1 A monopolist faces the following demand curve: Marginal cost is constant at $8 per unit. -Refer to Scenario 15-1.How much profit will the museum earn if it charges all customers $12 for admission?

Correct Answer
verified

Which of the following is NOT a difference between monopolies and perfectly competitive markets?

Correct Answer
verified

The George Stigler quote,"...the degree of 'market failure' for the American economy is much smaller than the 'political failure' arising from the imperfections of economic policies ..." illustrates the advantage of which type of public policy toward monopolies?

Correct Answer
verified

Figure 15-2 -Refer to Figure 15-2.Which panel could represent the demand curve facing a local cable television provider if that firm in a monopolist?

Correct Answer
verified

Patent and copyright laws encourage

Correct Answer
verified

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
verified

Which of the following is not correct?

Correct Answer
verified

If a product can be produced by a natural monopoly,society will benefit in the form of lower prices if the monopolist is broken up into several smaller firms.

Correct Answer
verified

Some prescription drugs sell for more in the United States than they do in other countries.Which of the following statements about this issue is most likely to be true?

Correct Answer
verified

Microsoft faces very little competition from other firms for its Windows software.Why isn't the price of the software $1,000 per copy?

Correct Answer
verified

Splitting up a monopoly is often justified on the grounds that

Correct Answer
verified

When a monopolist is able to sell its product at different prices,it is engaging in

Correct Answer
verified

Figure 15-3 -Refer to Figure 15-3.The demand curve for a monopoly firm is depicted by curve

Correct Answer
verified

Price discrimination is the business practice of

Correct Answer
verified

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

Correct Answer
verified

The socially efficient quantity is found where the demand curve intersects the marginal cost curve.

Correct Answer
verified

Correct Answer
verified
Under average-cost pricing,the monopolis...
View Answer

Exam 15: Monopoly

The De Beers Diamond company advertises heavily to promote the sale of all diamonds,not just its own.This is evidence that it has a monopoly position to some degree.

Correct AnswerverifiedShow Answer

Monopolies are socially inefficient because the price they charge is

Correct AnswerverifiedShow Answer

Table 15-1 -Refer to Table 15-1.When 4 units of output are produced and sold,what is average revenue?

Correct AnswerverifiedShow Answer

Table 15-1 A monopolist faces the following demand curve: Marginal cost is constant at $8 per unit. -Refer to Scenario 15-1.How much profit will the museum earn if it charges all customers $12 for admission?

Correct AnswerverifiedShow Answer

Which of the following is NOT a difference between monopolies and perfectly competitive markets?

Correct AnswerverifiedShow Answer

The George Stigler quote,"...the degree of 'market failure' for the American economy is much smaller than the 'political failure' arising from the imperfections of economic policies ..." illustrates the advantage of which type of public policy toward monopolies?

Correct AnswerverifiedShow Answer

Figure 15-2 -Refer to Figure 15-2.Which panel could represent the demand curve facing a local cable television provider if that firm in a monopolist?

Correct AnswerverifiedShow Answer

Patent and copyright laws encourage

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?

Correct AnswerverifiedShow Answer

Which of the following is not correct?

Correct AnswerverifiedShow Answer

If a product can be produced by a natural monopoly,society will benefit in the form of lower prices if the monopolist is broken up into several smaller firms.

Correct AnswerverifiedShow Answer

Some prescription drugs sell for more in the United States than they do in other countries.Which of the following statements about this issue is most likely to be true?

Correct AnswerverifiedShow Answer

Microsoft faces very little competition from other firms for its Windows software.Why isn't the price of the software $1,000 per copy?

Correct AnswerverifiedShow Answer

Splitting up a monopoly is often justified on the grounds that

Correct AnswerverifiedShow Answer

When a monopolist is able to sell its product at different prices,it is engaging in

Correct AnswerverifiedShow Answer

Figure 15-3 -Refer to Figure 15-3.The demand curve for a monopoly firm is depicted by curve

Correct AnswerverifiedShow Answer

Price discrimination is the business practice of

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The socially efficient quantity is found where the demand curve intersects the marginal cost curve.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedUnder average-cost pricing,the monopolis...View AnswerShow Answer

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Under average-cost pricing,the monopolis...
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