Question 1

Suppose most people regard emeralds, rubies, and sapphires as close substitutes for diamonds. Then DeBeers, a large diamond company, has

Accepted Answer

A)   less incentive to advertise than it would otherwise have.
B)   less market power than it would otherwise have.
C)   more control over the price of diamonds than it would otherwise have.
D)   higher profits than it would otherwise have.

Question 2

Which of the following formulas would correctly calculate a monopolist's profit?

Accepted Answer

A)   profit = price - marginal cost
B)   profit = price - average total cost
C)   profit = (price - marginal cost)  × quantity
D)   profit = (price - average total cost)  × quantity

Question 3

A benefit to society of the patent and copyright laws is that those laws

Accepted Answer

A)   help to keep prices down.
B)   help to prevent a single firm from acquiring ownership of a key resource.
C)   encourage creative activity.
D)   discourage the production of inefficient products.

Question 4

The fundamental cause of monopoly is

Accepted Answer

The answer of The fundamental cause of monopoly is...

Question 5

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

Accepted Answer

A)   Fixed costs are typically a small portion of total costs.
B)   Average total cost declines over large regions of output.
C)   The product sold is a natural resource such as diamonds or water.
D)   All of the above are correct.

Question 6

A natural monopoly occurs when

Accepted Answer

A)   the product is sold in its natural state, such as water or diamonds.
B)   there are economies of scale over the relevant range of output.
C)   the firm is characterized by a rising marginal cost curve.
D)   production requires the use of free natural resources, such as water or air.

Question 7

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)   $15

Question 8

Suppose ABC Aluminum Inc. owns 80% of the world's bauxite, a mineral used in the production of aluminum. Which of the following reasons describes the fundamental barrier to entry for the aluminum industry?

Accepted Answer

A)   monopoly resources
B)   government regulation
C)   the production process
D)   Both a and b are correct.

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 is the profit-maximizing price?

Accepted Answer

A)   $6
B)   $9
C)   $12
D)   $15

Question 10

A monopolist produces where P > MC = MR.

Accepted Answer

A) True 
 B)False

Question 11

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 12

Figure 15-8 
-Refer to Figure 15-8. What is the socially efficient price and quantity?

Accepted Answer

A)   price = A; quantity = X
B)   price = B; quantity = Y
C)   price = B; quantity = X
D)   price = C; quantity = X

Question 13

The laws governing patents and copyrights

Accepted Answer

A)   eliminate the need for firms to engage in research and development.
B)   are intended to serve private interests, not the public's interest.
C)   reduce fixed costs for firms that obtain them.
D)   None of the above is correct.

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

A movie theater can increase its profits through price discrimination by charging a higher price to adults and a lower price to children if

Accepted Answer

A)   adults buy more popcorn than children.
B)   the cost of showing a movie to children is less than the cost of showing a movie to adults.
C)   it has some degree of monopoly-pricing power.
D)   All of the above are correct.

Question 16

Price discrimination is a rational strategy for a profit-maximizing monopolist when

Accepted Answer

A)   the monopolist finds itself able to produce only limited quantities of output.
B)   consumers are unable to be segmented into identifiable markets.
C)   the monopolist wishes to increase the deadweight loss that results from profit-maximizing behavior.
D)   there is no opportunity for arbitrage across market segments.

Question 17

Table 15-8
The following table provides information on the price, quantity, and average total cost for a monopoly. 
-Refer to Table 15-8. At what price will the monopolist maximize his profit?

Accepted Answer

A)   $6
B)   $12
C)   $18
D)   $24

Question 18

When a monopolist reduces the quantity of output it produces and sells, the

Accepted Answer

A)   price of its output increases.
B)   price of its output remains constant.
C)   price of its output decreases.
D)   profits for the firm always decrease.

Question 19

Name brand drugs are able to continue capitalizing on their market power even after generic drugs enter the market because

Accepted Answer

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

Question 20

The reason to regulate utilities instead of using antitrust laws to promote competition is that a utility is usually a

Accepted Answer

A)   profit-maximizing monopoly.
B)   producer of externalities.
C)   revenue-maximizing monopoly.
D)   natural monopoly.

Exam 15: Monopoly

A benefit to society of the patent and copyright laws is that those laws

Correct AnswerverifiedShow Answer

Which of the following formulas would correctly calculate a monopolist's profit?

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. At what price will the monopolist maximize his profit?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The fundamental cause of monopoly is

Correct AnswerverifiedShow Answer

Suppose ABC Aluminum Inc. owns 80% of the world's bauxite, a mineral used in the production of aluminum. Which of the following reasons describes the fundamental barrier to entry for the aluminum industry?

Correct AnswerverifiedShow Answer

A natural monopoly occurs when

Correct AnswerverifiedShow Answer

Suppose most people regard emeralds, rubies, and sapphires as close substitutes for diamonds. Then DeBeers, a large diamond company, has

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When a monopolist reduces the quantity of output it produces and sells, the

Correct AnswerverifiedShow Answer

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

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

Figure 15-8 -Refer to Figure 15-8. What is the socially efficient price and quantity?

Correct AnswerverifiedShow Answer

The reason to regulate utilities instead of using antitrust laws to promote competition is that a utility is usually a

Correct AnswerverifiedShow Answer

A movie theater can increase its profits through price discrimination by charging a higher price to adults and a lower price to children if

Correct AnswerverifiedShow Answer

Name brand drugs are able to continue capitalizing on their market power even after generic drugs enter the market because

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 is the profit-maximizing price?

Correct AnswerverifiedShow Answer

The laws governing patents and copyrights

Correct AnswerverifiedShow Answer

A monopolist produces where P > MC = MR.

Correct AnswerverifiedShow Answer

Price discrimination is a rational strategy for a profit-maximizing monopolist when

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified