Question 1

Because a monopolist is the sole producer in its market,it can necessarily alter the price of its good (i) without affecting the quantity sold.
(ii) without affecting its average total cost.
(iii) by adjusting the quantity it supplies to the market.

Accepted Answer

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

Question 2

A natural monopoly arises when

Accepted Answer

A)   there are constant returns to scale over the relevant range of output.
B)   there are economies of scale over the relevant range of output.
C)   one firm owns a key natural resource.
D)   the government gives a single firm the exclusive right to produce a particular good or service.E) B) and D)
F) B) and C)

Question 3

Figure 14-3 
-Refer to Figure 14-3.The average total cost curve for a monopoly firm is depicted by curve

Accepted Answer

A)   A.
B)   B.
C)   C.
D)   D.E) A) and D)
F) A) and C)

Question 4

Scenario 14-8
Mega Media Cable TV is able to purchase an exclusive right to sell a premium sports channel in its market area.Let's assume that Mega Media pays $100,000 a year for the exclusive marketing rights to the sports channel.Since Mega Media has already installed cable to all of the homes in its market area,the marginal cost of delivering the sports channel to subscribers is zero.The manager of Mega Media needs to know what price to charge for the sports channel service to maximize her profit.Before setting price,she hires an economist to estimate demand for the sports channel.The economist discovers that there are two types of subscribers who value premium sporting channels.First are the 3,000 die-hard sports fans who will pay as much as $150 a year for the new channel.Second,the premium sports channel will appeal to 20,000 occasional sports viewers who will pay as much as $25 a year for a subscription to it.
-Refer to Scenario 14-8.If Mega Media Cable TV is able to price discriminate,what would be the maximum amount of profit it could generate?

Accepted Answer

A)   $950,000
B)   $850,000
C)   $400,000
D)   $350,000E) None of the above
F) A) and D)

Question 5

Which of the following is an example of price discrimination?

Accepted Answer

A)   Nabisco provides cents-off coupons for its products.
B)   Amtrak offers a lower price for weekend travel compared to weekday rates on the same routes.
C)   Hotel rates for AAA members are lower than for nonmembers.
D)   All of the above are correct.E) B) and D)
F) None of the above

Question 6

Which of the following are necessary characteristics of a monopoly? (i) The firm is the sole seller of its product.
(ii) The firm's product does not have close substitutes.
(iii) The firm generates a large economic profit.
(iv) 
The firm is located in a small geographic market.

Accepted Answer

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

Question 7

Which of the following is an example of a barrier to entry?

Accepted Answer

A)   Matthew offers free samples of his latest flavored coffee drink to entice customers to buy a cup.
B)   Mark charges a lower price to students than to faculty for his tattoo services.
C)   Luke charges a higher hourly price to business students than to liberal arts students for his economics tutoring.
D)   John obtained a copyright for the song he wrote and recorded.E) None of the above
F) A) and B)

Question 8

Generic drugs enter the pharmaceutical drug market once

Accepted Answer

A)   the ingredients to the name brand drug have been discovered.
B)   10 years have passed.
C)   they are patented.
D)   the patent on the name brand drug expires.E) A) and C)
F) A) and B)

Question 9

Table 14-4
A monopolist faces the following demand curve:
 
-Refer to Table 14-4.In order to maximize profits,the monopolist should produce

Accepted Answer

A)   7.5 units.
B)   10 units.
C)   where marginal revenue equals marginal cost.
D)   Both a) and c) are correct.E) B) and C)
F) A) and B)

Question 10

Figure 14-8 
-Refer to Figure 14-8.The deadweight loss caused by a profit-maximizing monopoly amounts to

Accepted Answer

A)   $150.
B)   $200.
C)   $250.
D)   $500.E) None of the above
F) A) and B)

Question 11

Since 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.E) B) and D)
F) B) and C)

Question 12

Price discrimination requires the firm to

Accepted Answer

A)   separate customers according to their willingnesses to pay.
B)   differentiate between different units of its product.
C)   engage in arbitrage.
D)   use coupons.E) A) and B)
F) B) and D)

Question 13

If a monopolist can sell 7 units when the price is $4 and 8 units when the price is $3,then marginal revenue of selling the eighth unit is equal to

Accepted Answer

A)   $3.
B)   $4.
C)   $24.
D)   -$4.E) B) and D)
F) C) and D)

Question 14

Like competitive firms,monopolies choose to produce a quantity in which marginal revenue equals marginal cost.

Accepted Answer

A) True 
 B)False

Question 15

Figure 14-3  x Q2. D)  (P4-P3) x Q2." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 14-3.A profit-maximizing monopoly's total revenue is equal to

Accepted Answer

A)   P4 x Q2.
B)   P3 x Q4.
C)   (P4-P2)  x Q2.
D)   (P4-P3) x Q2.E) C) and D)
F) A) and B)

Question 16

Scenario 14-6
The concert promoters of a heavy-metal band,WeR2Loud,know that there are two types of concert-goers: die-hard fans and casual fans.For a particular WeR2Loud concert,there are 1,000 die-hard fans who will pay $150 for a ticket and 500 casual fans who will pay $50 for a ticket.There are 1,500 seats available at the concert venue.Suppose the cost of putting on the concert is $50,000,which includes the cost of the band,lighting,security,etc.
-Refer to Scenario 14-6.How much additional profit can the concert promoters earn by charging each customer their willingness to pay relative to charging a flat price of $50 per ticket?

Accepted Answer

A)   $25,000
B)   $50,000
C)   $75,000
D)   $100,000E) A) and B)
F) None of the above

Question 17

Which of the following statements is correct?

Accepted Answer

A)   The benefits that accrue to a monopoly's owners are equal to the costs that are incurred by consumers of that firm's product.
B)   The deadweight loss that arises in monopoly stems from the fact that the profit-maximizing monopoly firm produces a quantity of output that exceeds the socially-efficient quantity.
C)   The deadweight loss caused by monopoly is similar to the deadweight loss caused by a tax on a product.
D)   The primary social problem caused by monopoly is monopoly profit.E) A) and D)
F) A) and C)

Question 18

Figure 14-16 
-Refer to Figure 14-16.If the monopoly firm perfectly price discriminates,then consumer surplus amounts to

Accepted Answer

A)   $0.
B)   $1,562.50.
C)   $3,125.
D)   $6,250.E) B) and C)
F) B) and D)

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

Table 14-17
 
-Refer to Table 14-17.If a monopolist faces a constant marginal cost of $5,how much output should the firm produce?

Accepted Answer

A)   3 units
B)   4 units
C)   5 units
D)   6 unitsE) All of the above
F) None of the above

Exam 14: Monopoly

If a monopolist can sell 7 units when the price is $4 and 8 units when the price is $3,then marginal revenue of selling the eighth unit is equal to

Correct Answer
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Which of the following is an example of a barrier to entry?

Correct Answer
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Figure 14-8 -Refer to Figure 14-8.The deadweight loss caused by a profit-maximizing monopoly amounts to

Correct Answer
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Figure 14-16 -Refer to Figure 14-16.If the monopoly firm perfectly price discriminates,then consumer surplus amounts to

Correct Answer
verified

Like competitive firms,monopolies choose to produce a quantity in which marginal revenue equals marginal cost.

Correct Answer
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Generic drugs enter the pharmaceutical drug market once

Correct Answer
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Correct Answer
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Which of the following are necessary characteristics of a monopoly? (i) The firm is the sole seller of its product. (ii) The firm's product does not have close substitutes. (iii) The firm generates a large economic profit. (iv) The firm is located in a small geographic market.

Correct Answer
verified

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

Correct Answer
verified

Because a monopolist is the sole producer in its market,it can necessarily alter the price of its good (i) without affecting the quantity sold. (ii) without affecting its average total cost. (iii) by adjusting the quantity it supplies to the market.

Correct Answer
verified

Which of the following is an example of price discrimination?

Correct Answer
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A natural monopoly arises when

Correct Answer
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Figure 14-3 -Refer to Figure 14-3.The average total cost curve for a monopoly firm is depicted by curve

Correct Answer
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Table 14-17 -Refer to Table 14-17.If a monopolist faces a constant marginal cost of $5,how much output should the firm produce?

Correct Answer
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Price discrimination requires the firm to

Correct Answer
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Table 14-4 A monopolist faces the following demand curve: -Refer to Table 14-4.In order to maximize profits,the monopolist should produce

Correct Answer
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Which of the following statements is correct?

Correct Answer
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Figure 14-3 -Refer to Figure 14-3.A profit-maximizing monopoly's total revenue is equal to

Correct Answer
verified

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

Correct Answer
verified

Exam 14: Monopoly

If a monopolist can sell 7 units when the price is $4 and 8 units when the price is $3,then marginal revenue of selling the eighth unit is equal to

Correct AnswerverifiedShow Answer

Which of the following is an example of a barrier to entry?

Correct AnswerverifiedShow Answer

Figure 14-8 -Refer to Figure 14-8.The deadweight loss caused by a profit-maximizing monopoly amounts to

Correct AnswerverifiedShow Answer

Figure 14-16 -Refer to Figure 14-16.If the monopoly firm perfectly price discriminates,then consumer surplus amounts to

Correct AnswerverifiedShow Answer

Like competitive firms,monopolies choose to produce a quantity in which marginal revenue equals marginal cost.

Correct AnswerverifiedShow Answer

Generic drugs enter the pharmaceutical drug market once

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following are necessary characteristics of a monopoly? (i) The firm is the sole seller of its product. (ii) The firm's product does not have close substitutes. (iii) The firm generates a large economic profit. (iv) The firm is located in a small geographic market.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Because a monopolist is the sole producer in its market,it can necessarily alter the price of its good (i) without affecting the quantity sold. (ii) without affecting its average total cost. (iii) by adjusting the quantity it supplies to the market.

Correct AnswerverifiedShow Answer

Which of the following is an example of price discrimination?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A natural monopoly arises when

Correct AnswerverifiedShow Answer

Figure 14-3 -Refer to Figure 14-3.The average total cost curve for a monopoly firm is depicted by curve

Correct AnswerverifiedShow Answer

Table 14-17 -Refer to Table 14-17.If a monopolist faces a constant marginal cost of $5,how much output should the firm produce?

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Price discrimination requires the firm to

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Table 14-4 A monopolist faces the following demand curve: -Refer to Table 14-4.In order to maximize profits,the monopolist should produce

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Which of the following statements is correct?

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Figure 14-3 -Refer to Figure 14-3.A profit-maximizing monopoly's total revenue is equal to

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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