Question 1

Encouraging firms to invest in research and development and individuals to engage in creative endeavors such as writing novels is one justification for

Accepted Answer

A)   resource monopolies.
B)   natural monopolies.
C)   government-created monopolies.
D)   breaking up monopolies into smaller firms.E) B) and D)
F) B) and C)

Question 2

Which of the following would be most likely to have monopoly power?

Accepted Answer

A)   a long-distance telephone service provider
B)   a local cable TV provider
C)   a large department store
D)   a gas stationE) C) and D)
F) B) and C)

Question 3

When regulators use a marginal-cost pricing strategy to regulate a natural monopoly,the regulated monopoly

Accepted Answer

A)   will experience a loss.
B)   will experience a price below average total cost.
C)   may rely on a government subsidy to remain in business.
D)   All of the above are correct.E) None of the above
F) A) and D)

Question 4

Round-trip airline tickets are usually cheaper if you stay over a Saturday night before you fly back.What is the reason for this price discrepancy?

Accepted Answer

A)   Airlines are practicing imperfect price discrimination to raise their profits.
B)   Airlines charge a different rate based on the different nature of peoples' travel needs.
C)   Airlines are attempting to charge people based on their willingness to pay.
D)   All of the above are correct.E) C) and D)
F) None of the above

Question 5

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 quantity that maximizes economic profit?

Accepted Answer

A)   5 ties
B)   6 ties
C)   7 ties
D)   8 tiesE) A) and B)
F) A) and D)

Question 6

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 7

Figure 15-1 
-Refer to Figure 15-1.The shape of the average total cost curve reveals information about the nature of the barrier to entry that might exist in a monopoly market.Which of the following monopoly types best coincides with the figure?

Accepted Answer

A)   ownership of a key resource by a single firm
B)   natural monopoly
C)   government-created monopoly
D)   a patent or copyright monopolyE) A) and C)
F) None of the above

Question 8

Because monopoly firms do not have to compete with other firms,the outcome in a market with a monopoly is often

Accepted Answer

A)   not in the best interest of society.
B)   one that fails to maximize total economic well-being.
C)   inefficient.
D)   All of the above are correct.E) C) and D)
F) A) and B)

Question 9

The economic inefficiency of a monopolist can be measured by the

Accepted Answer

A)   number of consumers who are unable to purchase the product because of its high price.
B)   excess profit generated by monopoly firms.
C)   poor quality of service offered by monopoly firms.
D)   deadweight loss.E) B) and C)
F) A) and B)

Question 10

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) C) and D)
F) A) and D)

Question 11

Movie theatres charge different prices to different groups of people based on the differing marginal costs that exist from group to group.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A)   Al owns the only parcel of lakeside property with a beach that is safe for swimming.He charges admission to neighbors who want to use the beach.
B)   Meredith owns the copyright to a popular song.She receives royalties every time a radio station plays her song.
C)   Matt sells computers to his state government for use in their legislative sessions.He has sold computers for ten years.
D)   Anne owns the patent for a new running shoe.She receives payments from the company who manufactures the shoes.E) A) and B)
F) B) and D)

Question 13

Patent and copyright laws are major sources of

Accepted Answer

A)   natural monopolies.
B)   government-created monopolies.
C)   resource monopolies.
D)   antitrust regulation.E) None of the above
F) A) and B)

Question 14

If a monopolist sells 100 units at $8 per unit and realizes an average total cost of $6 per unit,what is the monopolist's profit?

Accepted Answer

A)   $200
B)   $400
C)   $600
D)   $800E) A) and D)
F) A) and C)

Question 15

Figure 15-3  x Q2. D)  (P4-P3) x Q2." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 15-3.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) B) and C)
F) None of the above

Question 16

Financial aid to college students,quantity discounts,and senior citizen discounts are all examples of

Accepted Answer

A)   consumer surplus.
B)   deadweight loss.
C)   price discrimination.
D)   nonprofit pricing strategies.E) A) and C)
F) None of the above

Question 17

By offering lower prices to customers who buy a large quantity,a monopoly is price discriminating.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following would be most likely to have monopoly power?

Accepted Answer

A)   a national florist
B)   an online bookstore
C)   a local restaurant
D)   a local electrical cooperativeE) All of the above
F) A) and B)

Question 19

Figure 15-6 
-Refer to Figure 15-6.In order to maximize profits,the monopolist should charge a price of

Accepted Answer

A)   $9.
B)   $12.
C)   $20.
D)   $23.E) B) and C)
F) A) and B)

Question 20

If a monopolist can practice perfect price discrimination,the monopolist will

Accepted Answer

A)   eliminate consumer surplus.
B)   eliminate deadweight loss.
C)   maximize profits.
D)   All of the above are correct.E) A) and B)
F) B) and C)

Exam 15: Monopoly

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

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Financial aid to college students,quantity discounts,and senior citizen discounts are all examples of

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Encouraging firms to invest in research and development and individuals to engage in creative endeavors such as writing novels is one justification for

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By offering lower prices to customers who buy a large quantity,a monopoly is price discriminating.

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Because monopoly firms do not have to compete with other firms,the outcome in a market with a monopoly is often

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Movie theatres charge different prices to different groups of people based on the differing marginal costs that exist from group to group.

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Patent and copyright laws are major sources of

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Round-trip airline tickets are usually cheaper if you stay over a Saturday night before you fly back.What is the reason for this price discrepancy?

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When regulators use a marginal-cost pricing strategy to regulate a natural monopoly,the regulated monopoly

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Figure 15-6 -Refer to Figure 15-6.In order to maximize profits,the monopolist should charge a price of

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If a monopolist can practice perfect price discrimination,the monopolist will

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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

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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 quantity that maximizes economic profit?

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Which of the following would be most likely to have monopoly power?

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If a monopolist sells 100 units at $8 per unit and realizes an average total cost of $6 per unit,what is the monopolist's profit?

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Figure 15-3 -Refer to Figure 15-3.A profit-maximizing monopoly's total revenue is equal to

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

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Figure 15-1 -Refer to Figure 15-1.The shape of the average total cost curve reveals information about the nature of the barrier to entry that might exist in a monopoly market.Which of the following monopoly types best coincides with the figure?

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The economic inefficiency of a monopolist can be measured by the

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Which of the following would be most likely to have monopoly power?

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