Question 1

The deadweight loss associated with a monopoly occurs because the monopolist

Accepted Answer

A)   maximizes profits.
B)   produces an output level less than the socially optimal level.
C)   produces an output level greater than the socially optimal level.
D)   equates marginal revenue with marginal cost.E) A) and B)
F) A) and C)

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

Table 15-4
A monopolist faces the following demand curve:
 
-Refer to Table 15-4.If the monopolist produces 10 units,what is its marginal revenue?

Accepted Answer

A)   $12.50
B)   $5
C)   -$5
D)   -$12.50E) A) and B)
F) A) and C)

Question 4

Table 15-18
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 15-18.If the monopolist can engage in perfect price discrimination,what is the total revenue when 3 ties are sold?

Accepted Answer

A)   $140
B)   $420
C)   $450
D)   $620E) A) and D)
F) C) and D)

Question 5

If the ABC company owns the exclusive rights to mine land in Afghanistan for Lapis Lazuli,a rare stone used in jewelry which is found only in Afghanistan,the company benefits from a barrier to entry.

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

Table 15-18
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 15-18.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 8

Figure 15-8 
-Refer to Figure 15-8.To maximize its profit,a monopolist would choose which of the following outcomes?

Accepted Answer

A)   100 units of output and a price of $10 per unit
B)   100 units of output and a price of $20 per unit
C)   150 units of output and a price of $15 per unit
D)   200 units of output and a price of $20 per unitE) B) and C)
F) A) and B)

Question 9

Which of the following may eliminate some or all of the inefficiency that results from monopoly pricing?

Accepted Answer

A)   The government can regulate the monopoly.
B)   The monopoly can be prohibited from price discriminating.
C)   The monopoly can be forced to operate at a point where its marginal revenue is equal to its marginal cost.
D)   None of the above would eliminate any inefficiency associated with a monopoly.E) B) and D)
F) A) and D)

Question 10

Which of the following is not an example of a barrier to entry?

Accepted Answer

A)   A soybean farmer is the first in her county to use a new brand of fertilizer.
B)   Microsoft obtains a copyright for its Windows operating system.
C)   A pharmaceutical company obtains a patent for a new medication to treat migraine headaches.
D)   A taxi cab driver in New York City obtains a license to legally provide transportation in New York City.E) B) and C)
F) B) and D)

Question 11

Table 15-18
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 15-18.What are Tommy's Ties Company's fixed costs?

Accepted Answer

A)   $100
B)   $150
C)   $354
D)   $654E) A) and C)
F) A) and B)

Question 12

When a firm's average total cost curve continually declines,the firm is a

Accepted Answer

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

Question 13

Figure 15-2 
-Refer to Figure 15-2.How much consumer surplus results if this single-price monopolist profit-maximizes?

Accepted Answer

The answer of Figure 15-2 
-Refer to Figure 15-2.How much...

Question 14

Monopoly pricing prevents some mutually beneficial trades from taking place.These unrealized,mutually beneficial trades are

Accepted Answer

A)   not a concern if a market is perfectly competitive.
B)   a deadweight loss to society.
C)   a function of the reduction in the quantity produced by a monopolist in comparison to a competitive market.
D)   All of the above are correct.E) C) and D)
F) B) and D)

Question 15

Antitrust laws have economic benefits that outweigh the costs if they

Accepted Answer

A)   prevent mergers that would decrease competition and lower the costs of production.
B)   prevent mergers that would decrease competition and raise the costs of production.
C)   allow mergers that would decrease competition and raise the costs of production.
D)   None of the above is correct because antitrust laws never have economic benefits that outweigh the costs.E) None of the above
F) All of the above

Question 16

For a monopoly firm,the shape and position of the demand curve play a role in determining the (i) 
Profit-maximizing price.
(ii) 
Shape and position of the marginal-cost curve.
(iii) 
Shape and position of the marginal-revenue curve.

Accepted Answer

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

Question 17

Figure 15-1 
-Refer to Figure 15-1.If the firm profit-maximizes,how much profit will it earn?

Accepted Answer

The answer of Figure 15-1 
-Refer to Figure 15-1.If the...

Question 18

A natural monopolist's ability to price its product is

Accepted Answer

A)   constrained by the market demand curve.
B)   constrained by market supply.
C)   not affected by market demand.
D)   enhanced by regulatory control of the government.E) A) and B)
F) None of the above

Question 19

To maximize total surplus with a monopoly firm,a benevolent social planner would choose the level of output where

Accepted Answer

A)   MR = MC.
B)   MR intersects the demand curve.
C)   MC intersects the demand curve.
D)   MR exceeds MC by the greatest amount.E) B) and C)
F) All of the above

Question 20

Patents,copyrights,and trademarks

Accepted Answer

A)   are examples of government-created monopolies.
B)   are examples of barriers to entry.
C)   allow their owners to charge higher prices.
D)   All of the above are correct.E) None of the above
F) B) and D)

Exam 15: Monopoly

The deadweight loss associated with a monopoly occurs because the monopolist

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Figure 15-1 -Refer to Figure 15-1.If the firm profit-maximizes,how much profit will it earn?

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Table 15-18 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 15-18.What are Tommy's Ties Company's fixed costs?

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Table 15-18 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 15-18.If the monopolist can engage in perfect price discrimination,what is the total revenue when 7 ties are sold?

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

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Figure 15-2 -Refer to Figure 15-2.How much consumer surplus results if this single-price monopolist profit-maximizes?

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When a firm's average total cost curve continually declines,the firm is a

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If the ABC company owns the exclusive rights to mine land in Afghanistan for Lapis Lazuli,a rare stone used in jewelry which is found only in Afghanistan,the company benefits from a barrier to entry.

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To maximize total surplus with a monopoly firm,a benevolent social planner would choose the level of output where

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Antitrust laws have economic benefits that outweigh the costs if they

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Table 15-18 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 15-18.If the monopolist can engage in perfect price discrimination,what is the total revenue when 3 ties are sold?

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Monopoly pricing prevents some mutually beneficial trades from taking place.These unrealized,mutually beneficial trades are

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Patents,copyrights,and trademarks

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A natural monopolist's ability to price its product is

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Which of the following is not an example of a barrier to entry?

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For a monopoly firm,the shape and position of the demand curve play a role in determining the (i) Profit-maximizing price. (ii) Shape and position of the marginal-cost curve. (iii) Shape and position of the marginal-revenue curve.

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Figure 15-8 -Refer to Figure 15-8.To maximize its profit,a monopolist would choose which of the following outcomes?

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

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Which of the following may eliminate some or all of the inefficiency that results from monopoly pricing?

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Table 15-4 A monopolist faces the following demand curve: -Refer to Table 15-4.If the monopolist produces 10 units,what is its marginal revenue?

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