Question 1

Which of the following statements comparing monopoly with competition is correct?

Accepted Answer

A)   A monopolist produces a higher level of output and charges a lower price than a competitive firm would.
B)   With perfect price discrimination, the total surplus under monopoly can be the same as under competition.
C)   With or without price discrimination, the consumer surplus under monopoly is at least as large as it would be under competition.
D)   The deadweight loss associated with monopoly is caused by the positive economic profits of the monopolist; competitive firms do not earn a positive economic profit so there is no deadweight loss under competition.

Question 2

Table 15-5
A monopolist faces the following demand curve:
 
-Refer to Table 15-5.The monopolist has total fixed costs of $60 and has a constant marginal cost of $15.What is the profit-maximizing price?

Accepted Answer

A)   $4
B)   $39
C)   $36
D)   $42

Question 3

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)   4

Question 4

A monopolist can sell 200 units of output for $36 per unit.Alternatively,it can sell 201 units of output for $35.80 per unit.The marginal revenue of the 201ˢᵗ unit of output is

Accepted Answer

A)   $-4.20.
B)   $-0.20.
C)   $4.20.
D)   $35.80.

Question 5

Figure 15-4
 
-Refer to Figure 15-4.Profit on a typical unit sold for a profit-maximizing monopoly would equal

Accepted Answer

A)   P5-P0.
B)   P4-P2.
C)   P4-P1.
D)   P4-P3.

Question 6

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.

Question 7

Figure 15-6
 
-Refer to Figure 15-6.In order to maximize profits,the monopolist should produce

Accepted Answer

A)   9 units.
B)   12 units.
C)   15 units.
D)   more than 15 units.

Question 8

Table 15-1
 
-Refer to Table 15-1.If the monopolist sells 8 units of its product,how much total revenue will it receive from the sale?

Accepted Answer

A)   $14
B)   $40
C)   $112
D)   $164

Question 9

Reduced competition through merging of companies will raise social welfare

Accepted Answer

A)   if the social cost from the synergies exceeds the benefit of increased market power.
B)   if the benefit from the synergies exceeds the social cost of increased market power.
C)   always.
D)   never.

Question 10

Granting a pharmaceutical company a patent for a new medicine will lead to
(i) a product that is priced higher than it would be without the exclusive rights.
(ii) incentives for pharmaceutical companies to invest in research and development.
(iii) higher quantities of output than without the patent.

Accepted Answer

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

Question 11

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.

Question 12

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 13

A monopolist does not have a supply curve because the firm's decision about how much to supply is impossible to separate from the demand curve it faces.

Accepted Answer

A) True 
 B)False

Question 14

Figure 15-1
 
-Refer to Figure 15-1.The shape of the average total cost curve reveals information about the nature of the barrier to entry that might exist in a monopoly market.Which of the following monopoly types best coincides with the figure?

Accepted Answer

A)   ownership of a key resource by a single firm
B)   natural monopoly
C)   government-created monopoly
D)   a patent or copyright monopoly

Question 15

Figure 15-7
 
-Refer to Figure 15-7.What is the monopoly price and quantity?

Accepted Answer

A)   price = F; quantity = A
B)   price = G; quantity = B
C)   price = G; quantity = A
D)   price = D; quantity = A

Question 16

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 17

Antitrust laws

Accepted Answer

A)   prevent firms from maximizing profits.
B)   allow the government to prevent mergers, even ones that would benefit consumers.
C)   require the government to measure both the benefits and costs of a potential merger.
D)   All of the above are correct.

Question 18

Price discrimination can increase both the monopolist's profits and society's welfare.

Accepted Answer

A) True 
 B)False

Question 19

A monopolist will choose to increase output when

Accepted Answer

A)   market price increases.
B)   at all levels of output, marginal cost increases.
C)   at the present level of output, marginal revenue exceeds marginal cost.
D)   the demand curve shifts to the left.

Question 20

Which of the following statements is correct?

Accepted Answer

A)   Public ownership is preferred to regulation in order to minimize the deadweight losses associated with natural monopolies.
B)   Antitrust laws are always the best way to limit monopoly power.
C)   It is possible that the best approach to monopolies is for the government to do nothing.
D)   Marginal-cost pricing requires a natural monopoly to earn zero economic profits.

Exam 15: Monopoly.

Table 15-1 -Refer to Table 15-1.If the monopolist sells 8 units of its product,how much total revenue will it receive from the sale?

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A monopolist can sell 200 units of output for $36 per unit.Alternatively,it can sell 201 units of output for $35.80 per unit.The marginal revenue of the 201ˢᵗ unit of output is

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Figure 15-4 -Refer to Figure 15-4.Profit on a typical unit sold for a profit-maximizing monopoly would equal

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Price discrimination is the business practice of

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Figure 15-1 -Refer to Figure 15-1.The shape of the average total cost curve reveals information about the nature of the barrier to entry that might exist in a monopoly market.Which of the following monopoly types best coincides with the figure?

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Table 15-5 A monopolist faces the following demand curve: -Refer to Table 15-5.The monopolist has total fixed costs of $60 and has a constant marginal cost of $15.What is the profit-maximizing price?

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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?

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A monopolist does not have a supply curve because the firm's decision about how much to supply is impossible to separate from the demand curve it faces.

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Price discrimination can increase both the monopolist's profits and society's welfare.

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

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Reduced competition through merging of companies will raise social welfare

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Figure 15-6 -Refer to Figure 15-6.In order to maximize profits,the monopolist should produce

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Splitting up a monopoly is often justified on the grounds that

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Which of the following statements is correct?

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A monopolist will choose to increase output when

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

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Which of the following statements comparing monopoly with competition is correct?

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Figure 15-7 -Refer to Figure 15-7.What is the monopoly price and quantity?

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Antitrust laws

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