Question 1

Which of the following can defeat the profit-maximizing strategy of price discrimination?

Accepted Answer

A)   consumer surplus
B)   deadweight loss
C)   market power
D)   arbitrageE) C) and D)
F) A) and B)

Question 2

Figure 14-9 
-Refer to Figure 14-9.What area measures the deadweight loss?

Accepted Answer

A)   (B-F) *K
B)   0.5[(P-O) *(L-O) ]
C)   0.5[(A-H) *(L-J) ]
D)   0.5[(B-F) *(L-K) ]E) B) and C)
F) None of the above

Question 3

Which of the following is not a characteristic of a monopoly?

Accepted Answer

A)   barriers to entry
B)   one seller
C)   one buyer
D)   a product without close substitutesE) C) and D)
F) A) and C)

Question 4

Table 14-10
The monopolist faces the following demand curve:
 
-Refer to Table 14-10.If the monopolist has total fixed costs of $40 and a constant marginal cost of $5,how much profit can the firm earn at the profit-maximizing level of output?

Accepted Answer

A)   $128
B)   $120
C)   $80
D)   $8E) A) and C)
F) C) and D)

Question 5

Which of the following statements is true? (i) When a competitive firm sells an additional unit of output,its revenue increases by an amount less than the price.
(ii) When a monopoly firm sells an additional unit of output,its revenue increases by an amount less than the price.
(iii) Average revenue is the same as price for both competitive and monopoly firms.

Accepted Answer

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

Question 6

Table 14-18
Tommy's Tie Company,a monopolist,has the following cost and revenue information.Assume that Tommy's is able to engage in perfect price discrimination.
 
-Refer to Table 14-18.If the monopolist can engage in perfect price discrimination,what is the total revenue when 7 ties are sold?

Accepted Answer

A)   $650
B)   $700
C)   $910
D)   $1080E) A) and B)
F) A) and C)

Question 7

Antitrust laws allow the government to

Accepted Answer

A)   prevent mergers.
B)   break up companies.
C)   promote competition.
D)   All of the above are correct.E) All of the above
F) C) 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) None of the above

Question 9

Scenario 14-2
Consider a local,privately-owned electrical cooperative named Minny County Megawatts (MCM,LLC) .MCM has just completed a natural-gas-burning electrical power plant in the Midwest.Currently,MCM can meet the electricity needs of all residents in the county.In fact,its capacity far exceeds the needs of the county.After just a few years of operation,the shareholders of MCM experienced incredible rates of return on their investment due to the profitability of the corporation.
-Refer to Scenario 14-2.Which of the following statements is most likely to be true? (i) New entrants to the market know they will have a smaller market share than MCM currently has.
(ii) MCM would experience higher profits if it were government-run.
(iii) MCM is a natural 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) B) and D)

Question 10

The social cost of a monopoly is equal to its

Accepted Answer

A)   economic profit.
B)   fixed cost.
C)   dead weight loss.
D)   variable cost.E) A) and C)
F) A) and D)

Question 11

If the government deems a newly-invented drug to be truly original,the pharmaceutical company is given the exclusive right to manufacture and sell the drug for 50 years.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A)   lobby the government for a subsidy.
B)   lower its price.
C)   advertise.
D)   enact barriers to entry in related markets.E) None of the above
F) A) and C)

Question 13

When a firm experiences continually declining average total costs,the firm is a

Accepted Answer

A)   natural monopoly.
B)   price taker.
C)   government-created monopoly.
D)   All of the above are correct.E) C) and D)
F) A) and B)

Question 14

Which of the following can eliminate the inefficiency inherent in monopoly pricing?

Accepted Answer

A)   arbitrage
B)   cost-plus pricing
C)   price discrimination
D)   regulations that force monopolies to reduce their levels of outputE) A) and B)
F) A) and D)

Question 15

If the government regulates the price a natural monopolist can charge to be equal to the firm's average total cost,the firm has no incentive to reduce costs.

Accepted Answer

A) True 
 B)False

Question 16

Scenario 14-3
A monopoly firm maximizes its profit by producing Q = 500 units of output.At that level of output,its marginal revenue is $30,its average revenue is $60,and its average total cost is $34.
-Refer to Scenario 14-3.At Q = 500,the firm's total revenue is

Accepted Answer

A)   $13,000.
B)   $15,000.
C)   $17,000.
D)   $30,000.E) A) and B)
F) A) and C)

Question 17

A monopolist maximizes profits by

Accepted Answer

A)   producing an output level where marginal revenue equals marginal cost.
B)   charging a price equal to marginal revenue and marginal cost.
C)   charging a price where marginal cost equals average total cost.
D)   Both a and b are correct.E) B) and C)
F) B) and D)

Question 18

Table 14-18
Tommy's Tie Company,a monopolist,has the following cost and revenue information.Assume that Tommy's is able to engage in perfect price discrimination.
 
-Refer to Table 14-18.If the monopolist can engage in perfect price discrimination,what is the quantity that maximizes economic profit?

Accepted Answer

A)   5 ties
B)   6 ties
C)   7 ties
D)   8 tiesE) B) and C)
F) None of the above

Question 19

Figure 14-15 
-Refer to Figure 14-15.If the monopoly firm is not allowed to price discriminate,then the deadweight loss amounts to

Accepted Answer

A)   $50.
B)   $100.
C)   $500.
D)   $1,000.E) B) and C)
F) A) and D)

Question 20

If the government regulates the price a natural monopolist can charge to be equal to the firm's marginal cost,the government will likely need to subsidize the firm.

Accepted Answer

A) True 
 B)False

Exam 14: Monopoly

Antitrust laws allow the government to

Correct Answer
verified

If the government regulates the price a natural monopolist can charge to be equal to the firm's marginal cost,the government will likely need to subsidize the firm.

Correct Answer
verified

When a firm experiences continually declining average total costs,the firm is a

Correct Answer
verified

If the government regulates the price a natural monopolist can charge to be equal to the firm's average total cost,the firm has no incentive to reduce costs.

Correct Answer
verified

Figure 14-15 -Refer to Figure 14-15.If the monopoly firm is not allowed to price discriminate,then the deadweight loss amounts to

Correct Answer
verified

A monopolist maximizes profits by

Correct Answer
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Which of the following can eliminate the inefficiency inherent in monopoly pricing?

Correct Answer
verified

The social cost of a monopoly is equal to its

Correct Answer
verified

Correct Answer
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Scenario 14-3 A monopoly firm maximizes its profit by producing Q = 500 units of output.At that level of output,its marginal revenue is $30,its average revenue is $60,and its average total cost is $34. -Refer to Scenario 14-3.At Q = 500,the firm's total revenue is

Correct Answer
verified

Which of the following is not a characteristic of a monopoly?

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

If the government deems a newly-invented drug to be truly original,the pharmaceutical company is given the exclusive right to manufacture and sell the drug for 50 years.

Correct Answer
verified

Figure 14-9 -Refer to Figure 14-9.What area measures the deadweight loss?

Correct Answer
verified

Table 14-18 Tommy's Tie Company,a monopolist,has the following cost and revenue information.Assume that Tommy's is able to engage in perfect price discrimination. -Refer to Table 14-18.If the monopolist can engage in perfect price discrimination,what is the total revenue when 7 ties are sold?

Correct Answer
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Table 14-10 The monopolist faces the following demand curve: -Refer to Table 14-10.If the monopolist has total fixed costs of $40 and a constant marginal cost of $5,how much profit can the firm earn at the profit-maximizing level of output?

Correct Answer
verified

Table 14-18 Tommy's Tie Company,a monopolist,has the following cost and revenue information.Assume that Tommy's is able to engage in perfect price discrimination. -Refer to Table 14-18.If the monopolist can engage in perfect price discrimination,what is the quantity that maximizes economic profit?

Correct Answer
verified

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

Correct Answer
verified

Which of the following can defeat the profit-maximizing strategy of price discrimination?

Correct Answer
verified

Exam 14: Monopoly

Antitrust laws allow the government to

Correct AnswerverifiedShow Answer

If the government regulates the price a natural monopolist can charge to be equal to the firm's marginal cost,the government will likely need to subsidize the firm.

Correct AnswerverifiedShow Answer

When a firm experiences continually declining average total costs,the firm is a

Correct AnswerverifiedShow Answer

If the government regulates the price a natural monopolist can charge to be equal to the firm's average total cost,the firm has no incentive to reduce costs.

Correct AnswerverifiedShow Answer

Figure 14-15 -Refer to Figure 14-15.If the monopoly firm is not allowed to price discriminate,then the deadweight loss amounts to

Correct AnswerverifiedShow Answer

A monopolist maximizes profits by

Correct AnswerverifiedShow Answer

Which of the following can eliminate the inefficiency inherent in monopoly pricing?

Correct AnswerverifiedShow Answer

The social cost of a monopoly is equal to its

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Scenario 14-3 A monopoly firm maximizes its profit by producing Q = 500 units of output.At that level of output,its marginal revenue is $30,its average revenue is $60,and its average total cost is $34. -Refer to Scenario 14-3.At Q = 500,the firm's total revenue is

Correct AnswerverifiedShow Answer

Which of the following is not a characteristic of a monopoly?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If the government deems a newly-invented drug to be truly original,the pharmaceutical company is given the exclusive right to manufacture and sell the drug for 50 years.

Correct AnswerverifiedShow Answer

Figure 14-9 -Refer to Figure 14-9.What area measures the deadweight loss?

Correct AnswerverifiedShow Answer

Table 14-18 Tommy's Tie Company,a monopolist,has the following cost and revenue information.Assume that Tommy's is able to engage in perfect price discrimination. -Refer to Table 14-18.If the monopolist can engage in perfect price discrimination,what is the total revenue when 7 ties are sold?

Correct AnswerverifiedShow Answer

Table 14-10 The monopolist faces the following demand curve: -Refer to Table 14-10.If the monopolist has total fixed costs of $40 and a constant marginal cost of $5,how much profit can the firm earn at the profit-maximizing level of output?

Correct AnswerverifiedShow Answer

Table 14-18 Tommy's Tie Company,a monopolist,has the following cost and revenue information.Assume that Tommy's is able to engage in perfect price discrimination. -Refer to Table 14-18.If the monopolist can engage in perfect price discrimination,what is the quantity that maximizes economic profit?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following can defeat the profit-maximizing strategy of price discrimination?

Correct AnswerverifiedShow Answer

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