Question 1

In a competitive market,a firm's supply curve dictates the amount it will supply.In a monopoly market the

Accepted Answer

A)   same is true.
B)   supply curve conceptually makes sense,but in practice is never used.
C)   supply curve will have limited predictive capacity.
D)   decision about how much to supply is impossible to separate from the demand curve it faces.E) B) and C)
F) B) and D)

Question 2

In theory,perfect price discrimination

Accepted Answer

A)   decreases the monopolist's profits.
B)   decreases consumer surplus.
C)   increases deadweight loss.
D)   reduces the number of consumers who purchase the monopoly's product.E) All of the above
F) None of the above

Question 3

Deadweight loss measures the loss in society's welfare that occurs because a monopolist can earn profits without the concern of new firms entering its industry.

Accepted Answer

A) True 
 B)False

Question 4

A monopolist's supply curve is vertical.

Accepted Answer

A) True 
 B)False

Question 5

A monopolist does not have a supply curve because the firm's decision about how much to supply is impossible to separate from the demand curve it faces.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following formulas would correctly calculate a monopolist's profit?

Accepted Answer

A)   profit = price - marginal cost
B)   profit = price - average total cost
C)   profit = (price - marginal cost) * quantity
D)   profit = (price - average total cost) * quantityE) A) and B)
F) None of the above

Question 7

Table 15-15
A monopolist faces the following demand curve:
 
-Refer to Table 15-15.The monopolist has total fixed costs of $40 and a constant marginal cost of $5.At the profit-maximizing level of output,the monopolist's profit is

Accepted Answer

A)   $88.
B)   $8.
C)   $6.
D)   We do not have enough information to determine profit.E) A) and B)
F) A) and C)

Question 8

A monopolist

Accepted Answer

A)   has a supply curve that is upward-sloping,just like a competitive firm.
B)   does not have a supply curve because the monopolist sets its price at the same time it chooses the quantity to supply.
C)   has a horizontal supply curve,just like a competitive firm.
D)   does not have a supply curve because marginal revenue exceeds the price it charges for its products.E) None of the above
F) C) and D)

Question 9

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) None of the above
F) All of the above

Question 10

Consumers' willingness to pay for a good minus the amount they actually pay for it equals

Accepted Answer

A)   consumer surplus.
B)   consumer benefit.
C)   price discriminant.
D)   deadweight loss.E) B) and D)
F) A) and D)

Question 11

Figure 15-1 
-Refer to Figure 15-1.If the firm profit-maximizes,what price will it charge?

Accepted Answer

The answer of Figure 15-1 
-Refer to Figure 15-1.If the...

Question 12

Suppose a firm has a monopoly on the sale of widgets and faces a downward-sloping demand curve.When selling the 100th widget,the firm will always receive

Accepted Answer

A)   less marginal revenue on the 100th widget than it received on the 99th widget.
B)   more average revenue on the 100th widget than it received on the 99th widget.
C)   more total revenue on the 100 widgets than it received on the first 99 widgets.
D)   a lower average cost per unit at 100 units output than at 99 units of output.E) A) and B)
F) None of the above

Question 13

Price discrimination adds to social welfare in the form of (i) 
Increased total surplus.
(ii) 
Reduced costs of production.
(iii) 
Increased consumer surplus.

Accepted Answer

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

Question 14

When a certain monopoly sets its price at $8 it sells 64 units.When the monopoly sets its price at $10 it sells 60 units.The marginal revenue for the firm over this range is

Accepted Answer

A)   $11.
B)   $22.
C)   $33.
D)   $44.E) All of the above
F) C) and D)

Question 15

Monopolies are inefficient because they (i) 
Eliminate barriers to entry.
(ii) 
Price their product at a level where marginal revenue exceeds marginal cost.
(iii) 
Restrict output below the socially efficient level of production.

Accepted Answer

A)   (i) and (ii) only
B)   (ii) and (iii) only
C)   (iii) only
D)   (i) , (ii) ,and (iii) E) B) and C)
F) None of the above

Question 16

Comparing firms in perfectly competitive markets to monopoly firms,which charges a price equal to marginal cost?

Accepted Answer

perfectly ...

Question 17

Table 15-11
The following table shows quantity,price,and marginal cost information for a monopoly:
 
-Refer to Table 15-11.What level of output should the firm produce to maximize its profit?

Accepted Answer

A)   2 units
B)   3 units
C)   4 units
D)   5 unitsE) A) and D)
F) A) and C)

Question 18

Table 15-10
The monopolist faces the following demand curve:
 
-Refer to Table 15-10.If the monopolist has total fixed costs of $40 and a constant marginal cost of $5,how much profit can the firm earn at the profit-maximizing level of output?

Accepted Answer

A)   $128
B)   $120
C)   $80
D)   $8E) All of the above
F) A) and D)

Question 19

Figure 15-1 
-Refer to Figure 15-1.If a regulator requires the firm to charge a marginal cost price,what is the amount of proft or loss earned by the firm?

Accepted Answer

The answer of Figure 15-1 
-Refer to Figure 15-1.If a...

Question 20

Figure 15-13 
-Refer to Figure 15-13.If the monopoly operates at an output level less than Q0,then an increase in output toward (but not exceeding) Q0 would

Accepted Answer

A)   raise the price and raise total surplus.
B)   lower the price and raise total surplus.
C)   raise the price and lower total surplus.
D)   lower the price and lower total surplus.E) A) and D)
F) A) and C)

Exam 15: Monopoly

A monopolist does not have a supply curve because the firm's decision about how much to supply is impossible to separate from the demand curve it faces.

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A monopolist

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Deadweight loss measures the loss in society's welfare that occurs because a monopolist can earn profits without the concern of new firms entering its industry.

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Consumers' willingness to pay for a good minus the amount they actually pay for it equals

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Which of the following formulas would correctly calculate a monopolist's profit?

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Figure 15-1 -Refer to Figure 15-1.If a regulator requires the firm to charge a marginal cost price,what is the amount of proft or loss earned by the firm?

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When a certain monopoly sets its price at $8 it sells 64 units.When the monopoly sets its price at $10 it sells 60 units.The marginal revenue for the firm over this range is

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A monopolist's supply curve is vertical.

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Figure 15-13 -Refer to Figure 15-13.If the monopoly operates at an output level less than Q0,then an increase in output toward (but not exceeding) Q0 would

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Monopolies are inefficient because they (i) Eliminate barriers to entry. (ii) Price their product at a level where marginal revenue exceeds marginal cost. (iii) Restrict output below the socially efficient level of production.

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Comparing firms in perfectly competitive markets to monopoly firms,which charges a price equal to marginal cost?

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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.

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In a competitive market,a firm's supply curve dictates the amount it will supply.In a monopoly market the

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Suppose a firm has a monopoly on the sale of widgets and faces a downward-sloping demand curve.When selling the 100th widget,the firm will always receive

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Table 15-10 The monopolist faces the following demand curve: -Refer to Table 15-10.If the monopolist has total fixed costs of $40 and a constant marginal cost of $5,how much profit can the firm earn at the profit-maximizing level of output?

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Table 15-15 A monopolist faces the following demand curve: -Refer to Table 15-15.The monopolist has total fixed costs of $40 and a constant marginal cost of $5.At the profit-maximizing level of output,the monopolist's profit is

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Price discrimination adds to social welfare in the form of (i) Increased total surplus. (ii) Reduced costs of production. (iii) Increased consumer surplus.

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Table 15-11 The following table shows quantity,price,and marginal cost information for a monopoly: -Refer to Table 15-11.What level of output should the firm produce to maximize its profit?

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In theory,perfect price discrimination

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Figure 15-1 -Refer to Figure 15-1.If the firm profit-maximizes,what price will it charge?

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perfectly ...
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Suppose a firm has a monopoly on the sale of widgets and faces a downward-sloping demand curve.When selling the 100^th widget,the firm will always receive

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