Question 1

Antitrust laws may

Accepted Answer

A)   enhance the ability of firms to capture profits from a concentration of market power.
B)   enhance the ability of firms to reduce economic losses.
C)   restrict the ability of firms to operate at the socially efficient level of production.
D)   restrict the ability of firms to merge.E) B) and C)
F) A) and C)

Question 2

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) All of the above
F) C) and D)

Question 3

A monopolist earns higher profits by charging one price than by practicing price discrimination.

Accepted Answer

A) True 
 B)False

Question 4

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 5

Monopolies use their market power to

Accepted Answer

A)   charge prices that equal minimum average total cost.
B)   increase the quantity sold as they increase price.
C)   charge a price that is higher than marginal cost.
D)   dump excess supplies of their product on the market.E) B) and C)
F) None of the above

Question 6

Most markets are not monopolies in the real world because

Accepted Answer

A)   firms usually face downward-sloping demand curves.
B)   supply curves slope upward.
C)   price is usually set equal to marginal cost by firms.
D)   there are reasonable substitutes for most goods.E) B) and D)
F) A) and B)

Question 7

Figure 15-12 
-Refer to Figure 15-12.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) All of the above
F) B) and D)

Question 8

Which of the following is not an example of price discrimination by a firm?

Accepted Answer

A)   children's meals at a restaurant
B)   a natural gas company charging customers a higher rate in the winter than in the summer
C)   a senior citizens' discount
D)   coupons in the Sunday newspaperE) None of the above
F) C) and D)

Question 9

For a monopolist,when the output effect is greater than the price effect,marginal revenue is

Accepted Answer

A)   positive.
B)   negative.
C)   zero.
D)   maximized.E) B) and D)
F) B) and C)

Question 10

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

Question 11

Table 15-4
Consider the following demand and cost information for a monopoly.
 
-Refer to Table 15-4.The maximum profit this monopolist can earn is

Accepted Answer

A)   $5.
B)   $15.
C)   $16.
D)   $28.E) A) and C)
F) B) and D)

Question 12

In reality,perfect price discrimination is

Accepted Answer

A)   used by about 75 percent of all monopolies.
B)   used by about 50 percent of all monopolies.
C)   seldom used by monopolies because it leads to lower profits.
D)   rarely possible.E) C) and D)
F) A) and D)

Question 13

A benefit of a monopoly is

Accepted Answer

A)   lower prices.
B)   a wide variety of similar products.
C)   decreasing long-run average total costs.
D)   greater creativity by authors who can copyright their novels.E) A) and B)
F) All of the above

Question 14

Patent and copyright laws encourage

Accepted Answer

A)   creative activity.
B)   lower prices due to decreasing average total costs.
C)   competition among firms.
D)   Both a and b are correct.E) A) and D)
F) A) and C)

Question 15

Angelo is a wholesale meatball distributor.He sells his meatballs to all the finest Italian restaurants in town.Nobody can make meatballs like Angelo.As a result,his is the only business in town that sells meatballs to restaurants.Assuming that Angelo is maximizing his profit,which of the following statements is true?

Accepted Answer

A)   Meatball prices will be less than marginal cost.
B)   Meatball prices will equal marginal cost.
C)   Meatball prices will exceed marginal cost.
D)   Costs are irrelevant to Angelo because he is a monopolist.E) None of the above
F) A) and B)

Question 16

Suppose when a monopolist produces 75 units its average revenue is $10 per unit,its marginal revenue is $5 per unit,its marginal cost is $6 per unit,and its average total cost is $5 per unit.What can we conclude about this monopolist?

Accepted Answer

A)   The monopolist is currently maximizing profits,and its total profits are $375.
B)   The monopolist is currently maximizing profits,and its total profits are $300.
C)   The monopolist is not currently maximizing profits;it should produce more units and charge a lower price to maximize profits.
D)   The monopolist is not currently maximizing profits;it should produce fewer units and charge a higher price to maximize profits.E) None of the above
F) A) and C)

Question 17

Which of the following statements is not correct?

Accepted Answer

A)   The government may use antitrust laws to break up an existing company to improve competition.
B)   The government may break up a natural monopoly to lower the price charged to customers.
C)   Private ownership is typically preferred to public ownership.
D)   Sometimes the best strategy is for the government to do nothing about monopoly inefficiency because the "fix" may be worse than the problem.E) None of the above
F) A) and B)

Question 18

For a monopoly market,total surplus can be defined as the value of the good to

Accepted Answer

A)   producers minus the cost incurred by consumers.
B)   producers plus the cost incurred by consumers.
C)   consumers minus the costs of producing the good.
D)   consumers plus the cost of producing the good.E) All of the above
F) A) and D)

Question 19

A monopolist faces the following demand curve:

The monopolist has total fixed costs of $40 and a constant marginal cost of $5.What is the profit-maximizing level of output?

Accepted Answer

A)   7 units
B)   16 units
C)   23 units
D)   31 unitsE) All of the above
F) A) and D)

Question 20

A firm that is a natural monopoly

Accepted Answer

A)   is not likely to be concerned about new entrants eroding its monopoly power.
B)   is taking advantage of economies of scale.
C)   would experience a higher average total cost if more firms entered the market.
D)   All of the above are correct.E) B) and C)
F) None of the above

Exam 15: Monopoly

For a monopolist,when the output effect is greater than the price effect,marginal revenue is

Correct Answer
verified

A government-created monopoly arises when

Correct Answer
verified

Correct Answer
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Which of the following statements is not correct?

Correct Answer
verified

A firm that is a natural monopoly

Correct Answer
verified

A benefit of a monopoly is

Correct Answer
verified

Which of the following is not an example of price discrimination by a firm?

Correct Answer
verified

Patent and copyright laws encourage

Correct Answer
verified

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.

Correct Answer
verified

Monopolies use their market power to

Correct Answer
verified

In reality,perfect price discrimination is

Correct Answer
verified

A monopolist earns higher profits by charging one price than by practicing price discrimination.

Correct Answer
verified

Figure 15-12 -Refer to Figure 15-12.If the monopoly firm perfectly price discriminates,then consumer surplus amounts to

Correct Answer
verified

Antitrust laws may

Correct Answer
verified

A monopolist faces the following demand curve: The monopolist has total fixed costs of $40 and a constant marginal cost of $5.What is the profit-maximizing level of output?

Correct Answer
verified

For a monopoly market,total surplus can be defined as the value of the good to

Correct Answer
verified

Table 15-4 Consider the following demand and cost information for a monopoly. -Refer to Table 15-4.The maximum profit this monopolist can earn is

Correct Answer
verified

Most markets are not monopolies in the real world because

Correct Answer
verified

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

Correct Answer
verified

Suppose when a monopolist produces 75 units its average revenue is $10 per unit,its marginal revenue is $5 per unit,its marginal cost is $6 per unit,and its average total cost is $5 per unit.What can we conclude about this monopolist?

Correct Answer
verified

Exam 15: Monopoly

For a monopolist,when the output effect is greater than the price effect,marginal revenue is

Correct AnswerverifiedShow Answer

A government-created monopoly arises when

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

A firm that is a natural monopoly

Correct AnswerverifiedShow Answer

A benefit of a monopoly is

Correct AnswerverifiedShow Answer

Which of the following is not an example of price discrimination by a firm?

Correct AnswerverifiedShow Answer

Patent and copyright laws encourage

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

Monopolies use their market power to

Correct AnswerverifiedShow Answer

In reality,perfect price discrimination is

Correct AnswerverifiedShow Answer

A monopolist earns higher profits by charging one price than by practicing price discrimination.

Correct AnswerverifiedShow Answer

Figure 15-12 -Refer to Figure 15-12.If the monopoly firm perfectly price discriminates,then consumer surplus amounts to

Correct AnswerverifiedShow Answer

Antitrust laws may

Correct AnswerverifiedShow Answer

A monopolist faces the following demand curve: The monopolist has total fixed costs of $40 and a constant marginal cost of $5.What is the profit-maximizing level of output?

Correct AnswerverifiedShow Answer

For a monopoly market,total surplus can be defined as the value of the good to

Correct AnswerverifiedShow Answer

Table 15-4 Consider the following demand and cost information for a monopoly. -Refer to Table 15-4.The maximum profit this monopolist can earn is

Correct AnswerverifiedShow Answer

Most markets are not monopolies in the real world because

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Suppose when a monopolist produces 75 units its average revenue is $10 per unit,its marginal revenue is $5 per unit,its marginal cost is $6 per unit,and its average total cost is $5 per unit.What can we conclude about this monopolist?

Correct AnswerverifiedShow Answer

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