Question 1

Suppose a profit-maximizing monopolist faces a constant marginal cost of $10,produces an output level of 100 units,and charges a price of $50.The socially efficient level of output is 200 units.Assume that the demand curve and marginal revenue curve are the typical downward-sloping straight lines.The monopoly deadweight loss equals $4,000.

Accepted Answer

A) True 
 B)False

Question 2

Scenario 14-3
A monopoly firm maximizes its profit by producing Q = 500 units of output.At that level of output,its marginal revenue is $30,its average revenue is $60,and its average total cost is $34.
-Refer to Scenario 14-3.The firm's profit-maximizing price is

Accepted Answer

A)   $30.
B)   between $30 and $34.
C)   between $34 and $60.
D)   $60.E) A) and B)
F) A) and D)

Question 3

Which of the following is not an example of price discrimination?

Accepted Answer

A)   A movie theater charges a lower price for a child's ticket than for an adult's ticket.
B)   A university rebates part of the cost of tuition in the form of financial aid for needy students.
C)   A local pizza chain offers a "buy three get one free" deal.
D)   An ice cream parlor charges a higher price for ice cream than for sherbet.E) B) and D)
F) B) and C)

Question 4

One solution to the problems of marginal-cost pricing of a regulated natural monopolist is average cost pricing.In this model,the monopolist is allowed to price its production at average total cost.How does average-cost pricing differ from marginal-cost pricing? Does this solution maximize social well-being?

Accepted Answer

Under average-cost pricing,the monopolis...

Question 5

Compared to the monopoly outcome with a single price,imperfect price discrimination (i) sometimes raises total surplus.
(ii) sometimes lowers total surplus.
(iii) always leads to a lower quantity of output.

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 B)
F) A) and C)

Question 6

A market force that can prevent firms from price discriminating is

Accepted Answer

A)   fluctuating resource prices.
B)   arbitrage.
C)   high fixed costs.
D)   marginal-cost pricing.E) All of the above
F) A) and B)

Question 7

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

Question 8

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

Accepted Answer

A)   less of a concern for a monopoly than competitive market.
B)   offset by the higher profits earned by a monopolist.
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) A) and D)
F) None of the above

Question 9

A reduction in a monopolist's fixed costs would

Accepted Answer

A)   decrease the profit-maximizing price and increase the profit-maximizing quantity produced.
B)   increase the profit-maximizing price and decrease the profit-maximizing quantity produced.
C)   not effect the profit-maximizing price or quantity.
D)   possibly increase,decrease or not effect profit-maximizing price and quantity,depending on the elasticity of demand.E) A) and B)
F) None of the above

Question 10

Authors are allowed to be monopolists in the sale of their books in order to

Accepted Answer

A)   encourage authors to write more and better books.
B)   correct for the negative externalities that the Internet and television impose.
C)   satisfy literary advocacy groups that exercise their lobbying power.
D)   promote a society in which people think for themselves and learn from whichever books they please.E) None of the above
F) B) and C)

Question 11

Table 14-17
 
-Refer to Table 14-17.If a monopolist faces a constant marginal cost of $2,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) B) and C)

Question 12

The government may choose to do nothing to reduce monopoly inefficiency because the "fix" may be worse than the problem.

Accepted Answer

A) True 
 B)False

Question 13

Figure 14-16 
-Refer to Figure 14-16.If the monopoly firm is not allowed to price discriminate,then the deadweight loss amounts to

Accepted Answer

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

Question 14

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) C) and D)
F) None of the above

Question 15

The reason to regulate utilities instead of using antitrust laws to promote competition is that a utility is usually a

Accepted Answer

A)   profit-maximizing monopoly.
B)   producer of externalities.
C)   revenue-maximizing monopoly.
D)   natural monopoly.E) B) and D)
F) A) and B)

Question 16

What do economists call the business practice of selling the same good at difference prices to different customers?

Accepted Answer

A)   price discrimination
B)   collusion
C)   compensating differential
D)   Both a and b are correctE) B) and D)
F) A) and B)

Question 17

Price discrimination is a rational strategy for a profit-maximizing monopolist when

Accepted Answer

A)   the monopolist finds itself able to produce only limited quantities of output.
B)   consumers are unable to be segmented into identifiable markets.
C)   the monopolist wishes to increase the deadweight loss that results from profit-maximizing behavior.
D)   there is no opportunity for arbitrage across market segments.E) None of the above
F) All of the above

Question 18

The supply curve for the monopolist

Accepted Answer

A)   is horizontal.
B)   is vertical.
C)   is upward sloping.
D)   does not exist.E) C) and D)
F) None of the above

Question 19

Natural monopolies differ from other forms of monopoly because they are

Accepted Answer

A)   not subject to barriers to entry.
B)   not regulated by government.
C)   unable to sustain long-run profits.
D)   are generally not worried about competition eroding their monopoly position in the market.E) All of the above
F) C) and D)

Question 20

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) A) and D)
F) B) and D)

Exam 14: Monopoly

Which of the following is not an example of price discrimination?

Correct Answer
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What do economists call the business practice of selling the same good at difference prices to different customers?

Correct Answer
verified

Figure 14-16 -Refer to Figure 14-16.If the monopoly firm is not allowed to price discriminate,then the deadweight loss amounts to

Correct Answer
verified

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

Correct Answer
verified

A market force that can prevent firms from price discriminating is

Correct Answer
verified

A reduction in a monopolist's fixed costs would

Correct Answer
verified

The government may choose to do nothing to reduce monopoly inefficiency because the "fix" may be worse than the problem.

Correct Answer
verified

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
verified

The reason to regulate utilities instead of using antitrust laws to promote competition is that a utility is usually a

Correct Answer
verified

Correct Answer
verified

Authors are allowed to be monopolists in the sale of their books in order to

Correct Answer
verified

Price discrimination is a rational strategy for a profit-maximizing monopolist when

Correct Answer
verified

Correct Answer
verified
Under average-cost pricing,the monopolis...
View Answer

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?

Correct Answer
verified

Table 14-17 -Refer to Table 14-17.If a monopolist faces a constant marginal cost of $2,how much output should the firm produce?

Correct Answer
verified

The supply curve for the monopolist

Correct Answer
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Natural monopolies differ from other forms of monopoly because they are

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

Correct Answer
verified

Scenario 14-3 A monopoly firm maximizes its profit by producing Q = 500 units of output.At that level of output,its marginal revenue is $30,its average revenue is $60,and its average total cost is $34. -Refer to Scenario 14-3.The firm's profit-maximizing price is

Correct Answer
verified

Compared to the monopoly outcome with a single price,imperfect price discrimination (i) sometimes raises total surplus. (ii) sometimes lowers total surplus. (iii) always leads to a lower quantity of output.

Correct Answer
verified

Exam 14: Monopoly

Which of the following is not an example of price discrimination?

Correct AnswerverifiedShow Answer

What do economists call the business practice of selling the same good at difference prices to different customers?

Correct AnswerverifiedShow Answer

Figure 14-16 -Refer to Figure 14-16.If the monopoly firm is not allowed to price discriminate,then the deadweight loss amounts to

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A market force that can prevent firms from price discriminating is

Correct AnswerverifiedShow Answer

A reduction in a monopolist's fixed costs would

Correct AnswerverifiedShow Answer

The government may choose to do nothing to reduce monopoly inefficiency because the "fix" may be worse than the problem.

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

The reason to regulate utilities instead of using antitrust laws to promote competition is that a utility is usually a

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Authors are allowed to be monopolists in the sale of their books in order to

Correct AnswerverifiedShow Answer

Price discrimination is a rational strategy for a profit-maximizing monopolist when

Correct AnswerverifiedShow Answer

Correct AnswerverifiedUnder average-cost pricing,the monopolis...View AnswerShow Answer

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?

Correct AnswerverifiedShow Answer

Table 14-17 -Refer to Table 14-17.If a monopolist faces a constant marginal cost of $2,how much output should the firm produce?

Correct AnswerverifiedShow Answer

The supply curve for the monopolist

Correct AnswerverifiedShow Answer

Natural monopolies differ from other forms of monopoly because they are

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Scenario 14-3 A monopoly firm maximizes its profit by producing Q = 500 units of output.At that level of output,its marginal revenue is $30,its average revenue is $60,and its average total cost is $34. -Refer to Scenario 14-3.The firm's profit-maximizing price is

Correct AnswerverifiedShow Answer

Compared to the monopoly outcome with a single price,imperfect price discrimination (i) sometimes raises total surplus. (ii) sometimes lowers total surplus. (iii) always leads to a lower quantity of output.

Correct AnswerverifiedShow Answer

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Under average-cost pricing,the monopolis...
View Answer

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