Question 1

Table 15-9
Consider the following demand and cost information for a monopoly.
 
-Refer to Table 15-9.What is the marginal cost of the 4th unit?

Accepted Answer

A)   $4
B)   $14
C)   $31
D)   $62E) None of the above
F) All of the above

Question 2

Which of the following statements is correct?

Accepted Answer

A)   If the monopolist's marginal revenue is greater than its marginal cost,the monopolist can increase profit by selling more units at a lower price per unit.
B)   If the monopolist's marginal revenue is greater than its marginal cost,the monopolist can increase profit by selling fewer units at a higher price per unit.
C)   When a monopolist produces where price equals the minimum of average total cost,it earns a positive economic profit.
D)   If the monopolist is earning a positive economic profit,it must be producing where MR = MC.E) B) and C)
F) All of the above

Question 3

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) B) and D)
F) B) and C)

Question 4

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) 
A monopoly can earn unlimited profits.

Accepted Answer

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

Question 5

Selling a good at a price determined by the intersection of the demand curve and the marginal cost curve is consistent with the (i) 
Socially-optimal level of output.
(ii) 
Market solution for profit-maximizing competitive firms.
(iii) 
Market solution for a profit-maximizing monopoly.

Accepted Answer

A)   (i) and (ii) only
B)   (ii) and (iii) only
C)   (i) and (iii) only
D)   (i) , (ii) ,and (iii) E) B) and C)
F) All of the above

Question 6

Table 15-13
The following table gives information on the price,quantity,and total cost of production for a monopolist.
 
-Refer to Table 15-13.How much profit will the firm earn at the profit-maximizing price?

Accepted Answer

A)   $9
B)   $12
C)   $15
D)   $18E) All of the above
F) None of the above

Question 7

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 engages in price discrimination?

Accepted Answer

A)   $800.
B)   $1200.
C)   $1600.
D)   $2800.E) None of the above
F) B) and D)

Question 8

For a monopolist,when does marginal revenue exceed average revenue?

Accepted Answer

A)   never
B)   when output is less than the profit-maximizing level of output
C)   when output is greater than the profit-maximizing level of output
D)   for all levels of output greater than zeroE) B) and C)
F) All of the above

Question 9

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.E) C) and D)
F) All of the above

Question 10

A monopolist's average revenue is always

Accepted Answer

A)   equal to marginal revenue.
B)   greater than the price of its product.
C)   equal to the price of its product.
D)   less than the price of its product.E) B) and C)
F) None of the above

Question 11

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.E) All of the above
F) A) and C)

Question 12

Suppose a monopolist charges a price of $27 for its product and sells 10 units at that price.At 10 units of production the firm has average fixed cost equal to $10 and average variable cost equal to $12.How much total profit is the firm earning at this price?

Accepted Answer

A)   $5
B)   $25
C)   $50
D)   $140E) B) and D)
F) B) and C)

Question 13

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 additional profit will the museum earn if it engages in price discrimination compared to charging each customer $8 for admission?

Accepted Answer

A)   $0.
B)   $200.
C)   $400.
D)   $800.E) None of the above
F) A) and B)

Question 14

Which of the following statements is not correct?

Accepted Answer

A)   Two examples of early antitrust laws are the Sherman and Clayton Antitrust Acts.
B)   Antitrust laws automatically prevent mergers between companies that produce similar products.
C)   Antitrust laws give the government power to increase competition.
D)   Antitrust laws can reduce social welfare if they prevent mergers that would lower costs through more efficient joint production.E) None of the above
F) All of the above

Question 15

A monopoly's marginal cost will

Accepted Answer

A)   be less than its average fixed cost.
B)   be less than the price per unit of its product.
C)   exceed its marginal revenue.
D)   equal its average total cost.E) None of the above
F) C) and D)

Question 16

When a monopolist decreases the price of its good,consumers

Accepted Answer

A)   continue to buy the same amount.
B)   buy more.
C)   buy less.
D)   may buy more or less,depending on the price elasticity of demand.E) A) and D)
F) None of the above

Question 17

Figure 15-15 
-Refer to Figure 15-15.If there are no fixed costs of production,monopoly profit with perfect price discrimination equals

Accepted Answer

A)   $500.
B)   $1,000.
C)   $2,000.
D)   $4,000.E) A) and C)
F) All of the above

Question 18

Copyrights and patents are examples of barriers to entry that give firms monopoly pricing powers.

Accepted Answer

A) True 
 B)False

Question 19

Figure 15-15 
-Refer to Figure 15-15.If there are no fixed costs of production,monopoly profit without price discrimination equals

Accepted Answer

A)   $500.
B)   $1,000.
C)   $2,000.
D)   $4,000.E) B) and C)
F) A) and B)

Question 20

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

Accepted Answer

A)   A.
B)   B.
C)   C.
D)   D.E) All of the above
F) C) and D)

Exam 15: Monopoly

Copyrights and patents are examples of barriers to entry that give firms monopoly pricing powers.

Correct AnswerverifiedShow Answer

Suppose a monopolist charges a price of $27 for its product and sells 10 units at that price.At 10 units of production the firm has average fixed cost equal to $10 and average variable cost equal to $12.How much total profit is the firm earning at this price?

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 engages in price discrimination?

Correct AnswerverifiedShow Answer

A monopoly's marginal cost will

Correct AnswerverifiedShow Answer

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) A monopoly can earn unlimited profits.

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 additional profit will the museum earn if it engages in price discrimination compared to charging each customer $8 for admission?

Correct AnswerverifiedShow Answer

When a monopolist decreases the price of its good,consumers

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Table 15-13 The following table gives information on the price,quantity,and total cost of production for a monopolist. -Refer to Table 15-13.How much profit will the firm earn at the profit-maximizing price?

Correct AnswerverifiedShow Answer

Figure 15-15 -Refer to Figure 15-15.If there are no fixed costs of production,monopoly profit without price discrimination equals

Correct AnswerverifiedShow Answer

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 15-15 -Refer to Figure 15-15.If there are no fixed costs of production,monopoly profit with perfect price discrimination equals

Correct AnswerverifiedShow Answer

A monopolist's average revenue is always

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Table 15-9 Consider the following demand and cost information for a monopoly. -Refer to Table 15-9.What is the marginal cost of the 4th unit?

Correct AnswerverifiedShow Answer

Selling a good at a price determined by the intersection of the demand curve and the marginal cost curve is consistent with the (i) Socially-optimal level of output. (ii) Market solution for profit-maximizing competitive firms. (iii) Market solution for a profit-maximizing monopoly.

Correct AnswerverifiedShow Answer

Antitrust laws

Correct AnswerverifiedShow Answer

For a monopolist,when does marginal revenue exceed average revenue?

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

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