Question 1

A market force that can prevent firms from price discriminating is

Accepted Answer

A)   fluctuating resource prices.
B)   arbitrage.
C)   high fixed costs.
D)   marginal-cost pricing.

Question 2

Figure 15-23 
-Refer to Figure 15-23. If a regulator requires the firm to charge an average cost price, what price will the firm charge?

Accepted Answer

The answer of Figure 15-23 
-Refer to Figure 15-23. If...

Question 3

The monopolist's profit-maximizing quantity of output is determined by the intersection of which of the following two curves?

Accepted Answer

A)   marginal cost and demand
B)   marginal cost and marginal revenue
C)   average total cost and marginal revenue
D)   average variable cost and average revenue

Question 4

By offering lower prices to customers who buy a large quantity, a monopoly is price discriminating.

Accepted Answer

A) True 
 B)False

Question 5

Figure 15-23 
-Refer to Figure 15-23. If a regulator requires the firm to charge a marginal cost price, what quantity will the firm produce?

Accepted Answer

The answer of Figure 15-23 
-Refer to Figure 15-23. If...

Question 6

Figure 15-22 
-Refer to Figure 15-22. Which is more efficient, single price profit maximization or perfect price discrimination?

Accepted Answer

perfect pr...

Question 7

A patent gives a single person or firm the exclusive right to sell some good or service forever.

Accepted Answer

A) True 
 B)False

Question 8

The proper level of government intervention is unclear when dealing with a monopoly.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

Table 15-7
Sally owns the only shoe store in town. She has the following cost and revenue information. 
-Refer to Table 15-7. What is the total variable cost of production when Sally produces six pairs of shoes?

Accepted Answer

A)   $100
B)   $295
C)   $600
D)   $620

Question 11

During the life of a drug patent, the monopoly pharmaceutical firm maximizes profit by producing the quantity at which marginal revenue equals marginal cost.

Accepted Answer

A) True 
 B)False

Question 12

A monopolist

Accepted Answer

A)   has a supply curve that is upward-sloping, just like a competitive firm.
B)   does not have a supply curve because the monopolist sets its price at the same time it chooses the quantity to supply.
C)   has a horizontal supply curve, just like a competitive firm.
D)   does not have a supply curve because marginal revenue exceeds the price it charges for its products.

Question 13

A perfectly competitive market

Accepted Answer

A)   may not be in the best interests of society, whereas a monopoly market promotes general economic well-being
B)   promotes general economic well-being, whereas a monopoly market may not be in the best interests of society.
C)   and a monopoly market are equally likely to promote general economic well-being.
D)   is less likely to promote general economic well-being than a monopoly market.

Question 14

The price effect describes the situation when a monopolist lowers the price of output and, all else equal, total revenue

Accepted Answer

A)   increases.
B)   decreases.
C)   is unchanged.
D)   is maximized.

Question 15

Table 15-17
A monopolist faces the following demand curve: 
-Refer to Table 15-17. Which of the following statements best describes the relationship between the price and the marginal revenue associated with values in the table?

Accepted Answer

A)   The price and marginal revenue are the same.
B)   The price is greater than or equal to the marginal revenue.
C)   The price is less than or equal to the marginal revenue.
D)   The relationship cannot be determined from the information given.

Question 16

There has been much discussion of deregulating electricity and natural gas delivery companies in the United States. Discuss the likely effect of deregulation on prices in these two industries.

Accepted Answer

If deregulation leads to increased compe...

Question 17

Because natural monopolies have a declining average cost curve, regulating natural monopolies by setting price equal to marginal cost would

Accepted Answer

A)   cause the monopolist to operate at a loss.
B)   result in a less than optimal total surplus.
C)   maximize producer surplus.
D)   result in higher profits for the monopoly.

Question 18

When a monopolist increases the amount of output that it produces and sells, the price of its output

Accepted Answer

A)   stays the same.
B)   increases.
C)   decreases.
D)   may increase or decrease depending on the price elasticity of demand.

Question 19

The government may choose to do nothing to reduce monopoly inefficiency because the "fix" may be worse than the problem.

Accepted Answer

A) True 
 B)False

Question 20

If a monopolist sells 100 units at $8 per unit and realizes an average total cost of $6 per unit, what is the monopolist's profit?

Accepted Answer

A)   $200
B)   $400
C)   $600
D)   $800

Exam 15: Monopoly

Figure 15-23 -Refer to Figure 15-23. If a regulator requires the firm to charge an average cost price, what price will the firm charge?

Correct AnswerverifiedShow Answer

The government may choose to do nothing to reduce monopoly inefficiency because the "fix" may be worse than the problem.

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During the life of a drug patent, the monopoly pharmaceutical firm maximizes profit by producing the quantity at which marginal revenue equals marginal cost.

Correct AnswerverifiedShow Answer

A perfectly competitive market

Correct AnswerverifiedShow Answer

Figure 15-22 -Refer to Figure 15-22. Which is more efficient, single price profit maximization or perfect price discrimination?

Correct Answerverifiedperfect pr...View AnswerShow Answer

Because natural monopolies have a declining average cost curve, regulating natural monopolies by setting price equal to marginal cost would

Correct AnswerverifiedShow Answer

There has been much discussion of deregulating electricity and natural gas delivery companies in the United States. Discuss the likely effect of deregulation on prices in these two industries.

Correct AnswerverifiedIf deregulation leads to increased compe...View AnswerShow Answer

A market force that can prevent firms from price discriminating is

Correct AnswerverifiedShow Answer

Table 15-7 Sally owns the only shoe store in town. She has the following cost and revenue information. -Refer to Table 15-7. What is the total variable cost of production when Sally produces six pairs of shoes?

Correct AnswerverifiedShow Answer

A patent gives a single person or firm the exclusive right to sell some good or service forever.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Table 15-17 A monopolist faces the following demand curve: -Refer to Table 15-17. Which of the following statements best describes the relationship between the price and the marginal revenue associated with values in the table?

Correct AnswerverifiedShow Answer

By offering lower prices to customers who buy a large quantity, a monopoly is price discriminating.

Correct AnswerverifiedShow Answer

The monopolist's profit-maximizing quantity of output is determined by the intersection of which of the following two curves?

Correct AnswerverifiedShow Answer

The proper level of government intervention is unclear when dealing with a monopoly.

Correct AnswerverifiedShow Answer

When a monopolist increases the amount of output that it produces and sells, the price of its output

Correct AnswerverifiedShow Answer

A monopolist

Correct AnswerverifiedShow Answer

The price effect describes the situation when a monopolist lowers the price of output and, all else equal, total revenue

Correct AnswerverifiedShow Answer

If a monopolist sells 100 units at $8 per unit and realizes an average total cost of $6 per unit, what is the monopolist's profit?

Correct AnswerverifiedShow Answer

Figure 15-23 -Refer to Figure 15-23. If a regulator requires the firm to charge a marginal cost price, what quantity will the firm produce?

Correct AnswerverifiedShow Answer

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perfect pr...
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If deregulation leads to increased compe...
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