Question 1

A monopolist's profit is equal to (Price - Marginal Cost) × Quantity.

Accepted Answer

A) True 
 B)False

Question 2

What happens to the price and quantity sold of a drug when its patent runs out?
(i) The price will fall.
(ii) The quantity sold will fall.
(iii) The marginal cost of producing the drug will rise.

Accepted Answer

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

Question 3

Figure 15-4 
-Refer to Figure 15-4. Profit will be maximized by charging a price equal to

Accepted Answer

A)  P5.
B)  P4.
C)  P3.
D)  P1.E) All of the above
F) A) and C)

Question 4

Which of the following statements is not correct?

Accepted Answer

A)  Part of the deadweight loss associated with monopoly is measured by the monopolist's economic profit.
B)  Marginal cost is always less than average total cost in a natural monopoly.
C)  Discount coupons available free to the public are a type of price discrimination.
D)  Anti-trust laws make it harder for firms to create synergies.E) B) and C)
F) All of the above

Question 5

Figure 15-19 
-Refer to Figure 15-19. If there are no fixed costs of production, monopoly profit without price discrimination equals

Accepted Answer

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

Question 6

Figure 15-4 
-Refer to Figure 15-4. If a regulator requires this firm to charge a socially optimal price, how much deadweight loss results?

Accepted Answer

The answer of Figure 15-4 
-Refer to Figure 15-4. If...

Question 7

Figure 15-7 
-Refer to Figure 15-7. In order to maximize profits, the monopolist should charge a price of

Accepted Answer

A)  $9.
B)  $12.
C)  $20.
D)  $23.E) None of the above
F) A) and B)

Question 8

Scenario 15-5
An airline knows that there are two types of travelers: business travelers and vacationers. For a particular flight, there are 100 business travelers who will pay $600 for a ticket while there are 50 vacationers who will pay $300 for a ticket. There are 150 seats available on the plane. Suppose the cost to the airline of providing the flight is $20,000, which includes the cost of the pilots, flight attendants, fuel, etc.
-Refer to Scenario 15-5. How much profit will the airline earn if it sets the price of each ticket at $300?

Accepted Answer

A)  -$15,000
B)  -$5,000
C)  $25,000
D)  $45,000E) C) and D)
F) None of the above

Question 9

If the government regulates the price that a natural monopolist can charge to be equal to the firm's average total cost, the firm will

Accepted Answer

A)  earn zero profits.
B)  earn positive profits, causing other firms to enter the industry.
C)  earn negative profits, causing the firm to exit the industry.
D)  minimize costs in order to lower the price that it charges.E) A) and B)
F) A) and C)

Question 10

Patent and copyright laws encourage

Accepted Answer

A)  creative activity.
B)  research and development.
C)  competition among firms.
D)  Both a and b are correct.E) A) and B)
F) All of the above

Question 11

Average revenue for a monopoly is the total revenue divided by the quantity produced.

Accepted Answer

A) True 
 B)False

Question 12

Scenario 15-4
Suppose a monopolist has a demand curve that can be expressed as P=90-Q. The monopolist's marginal revenue curve can be expressed as MR=90-2Q. The monopolist has constant marginal costs and average total costs of $10.
-Refer to Scenario 15-4. The profit-maximizing monopolist will earn profits of

Accepted Answer

A)  $6,400.
B)  $3,200.
C)  $1,600.
D)  $800.E) C) and D)
F) A) and B)

Question 13

Consider a profit-maximizing monopoly pricing under the following conditions. The profit-maximizing quantity is 40 units, the profit-maximizing price is $160, and the marginal cost of the 40th unit is $120. If the good were produced in a perfectly competitive market, the equilibrium quantity would be 50, and the equilibrium price would be $150. The demand curve and marginal cost curves are linear. What is the value of the deadweight loss created by the monopolist?

Accepted Answer

A)  $40
B)  $100
C)  $200
D)  $400E) A) and C)
F) A) and D)

Question 14

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

Question 15

A government-created monopoly arises when

Accepted Answer

A)  government spending in a certain industry gives rise to monopoly power.
B)  the government exercises its market control by encouraging competition among sellers.
C)  the government gives a firm the exclusive right to sell some good or service.
D)  Both a and c are correct.E) B) and C)
F) B) and D)

Question 16

A monopoly creates a deadweight loss to society because it produces less output than the socially efficient level.

Accepted Answer

A) True 
 B)False

Question 17

Figure 15-2 
-Refer to Figure 15-2. What type of monopoly is shown in the figure?

Accepted Answer

The answer of Figure 15-2 
-Refer to Figure 15-2. What...

Question 18

A profit-maximizing monopolist charges a price of $14. The intersection of the marginal revenue curve and the marginal cost curve occurs where output is 15 units and marginal cost is $7. What is the monopolist's profit?

Accepted Answer

A)  $90
B)  $105
C)  $180
D)  Not enough information is given to determine the answer.E) A) and B)
F) B) and C)

Question 19

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) A) and B)
F) All of the above

Question 20

A firm cannot price discriminate if

Accepted Answer

A)  it has declining marginal revenue.
B)  it operates in a competitive market.
C)  buyers only reveal the price they are willing to pay for the product.
D)  it has a constant marginal cost.E) All of the above
F) None of the above

Exam 15: Monopoly

Figure 15-19 -Refer to Figure 15-19. If there are no fixed costs of production, monopoly profit without price discrimination equals

Correct Answer
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Figure 15-2 -Refer to Figure 15-2. What type of monopoly is shown in the figure?

Correct Answer
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Correct Answer
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A monopolist's profit is equal to (Price - Marginal Cost) × Quantity.

Correct Answer
verified

If the government regulates the price that a natural monopolist can charge to be equal to the firm's average total cost, the firm will

Correct Answer
verified

Figure 15-4 -Refer to Figure 15-4. Profit will be maximized by charging a price equal to

Correct Answer
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Patent and copyright laws encourage

Correct Answer
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Average revenue for a monopoly is the total revenue divided by the quantity produced.

Correct Answer
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Which of the following statements is not correct?

Correct Answer
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A profit-maximizing monopolist charges a price of $14. The intersection of the marginal revenue curve and the marginal cost curve occurs where output is 15 units and marginal cost is $7. What is the monopolist's profit?

Correct Answer
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A firm cannot price discriminate if

Correct Answer
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Correct Answer
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A monopoly creates a deadweight loss to society because it produces less output than the socially efficient level.

Correct Answer
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What happens to the price and quantity sold of a drug when its patent runs out? (i) The price will fall. (ii) The quantity sold will fall. (iii) The marginal cost of producing the drug will rise.

Correct Answer
verified

Figure 15-7 -Refer to Figure 15-7. In order to maximize profits, the monopolist should charge a price of

Correct Answer
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Figure 15-4 -Refer to Figure 15-4. If a regulator requires this firm to charge a socially optimal price, how much deadweight loss results?

Correct Answer
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A perfectly competitive market

Correct Answer
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A monopolist's average revenue is always

Correct Answer
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A government-created monopoly arises when

Correct Answer
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Exam 15: Monopoly

Figure 15-19 -Refer to Figure 15-19. If there are no fixed costs of production, monopoly profit without price discrimination equals

Correct AnswerverifiedShow Answer

Figure 15-2 -Refer to Figure 15-2. What type of monopoly is shown in the figure?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A monopolist's profit is equal to (Price - Marginal Cost) × Quantity.

Correct AnswerverifiedShow Answer

If the government regulates the price that a natural monopolist can charge to be equal to the firm's average total cost, the firm will

Correct AnswerverifiedShow Answer

Figure 15-4 -Refer to Figure 15-4. Profit will be maximized by charging a price equal to

Correct AnswerverifiedShow Answer

Patent and copyright laws encourage

Correct AnswerverifiedShow Answer

Average revenue for a monopoly is the total revenue divided by the quantity produced.

Correct AnswerverifiedShow Answer

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

A profit-maximizing monopolist charges a price of $14. The intersection of the marginal revenue curve and the marginal cost curve occurs where output is 15 units and marginal cost is $7. What is the monopolist's profit?

Correct AnswerverifiedShow Answer

A firm cannot price discriminate if

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A monopoly creates a deadweight loss to society because it produces less output than the socially efficient level.

Correct AnswerverifiedShow Answer

What happens to the price and quantity sold of a drug when its patent runs out? (i) The price will fall. (ii) The quantity sold will fall. (iii) The marginal cost of producing the drug will rise.

Correct AnswerverifiedShow Answer

Figure 15-7 -Refer to Figure 15-7. In order to maximize profits, the monopolist should charge a price of

Correct AnswerverifiedShow Answer

Figure 15-4 -Refer to Figure 15-4. If a regulator requires this firm to charge a socially optimal price, how much deadweight loss results?

Correct AnswerverifiedShow Answer

A perfectly competitive market

Correct AnswerverifiedShow Answer

A monopolist's average revenue is always

Correct AnswerverifiedShow Answer

A government-created monopoly arises when

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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