Question 1

When we compare economic welfare in a monopoly market to a competitive market, the profits earned by the monopolist represent

Accepted Answer

A)  a loss in total welfare.
B)  a transfer of benefits from the buyer to the seller.
C)  the higher marginal costs incurred by the monopolists in comparison to competitive firms.
D)  All of the above are correct.E) B) and D)
F) None of the above

Question 2

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 of output than at 99 units of output.E) C) and D)
F) B) and D)

Question 3

Policymakers are discussing various proposals regarding how to deal with natural monopolies. Senator Huff wants to regulate natural monopolies by equating price with average total cost. Huff contends that such a policy will ensure that monopolies make every effort to reduce costs. Senator Puff wants the government to own natural monopolies. Puff argues that government-owned monopolies usually do a better job of holding down costs than privately owned monopolies. Which senator's argument is correct?

Accepted Answer

A)  Senator Huff
B)  Senator Puff
C)  both senators
D)  neither senatorE) A) and C)
F) A) and B)

Question 4

Like competitive firms, monopolies charge a price equal to marginal cost.

Accepted Answer

A) True 
 B)False

Question 5

The best solution to the problem of welfare loss from monopoly is public ownership.

Accepted Answer

A) True 
 B)False

Question 6

Comparing firms in perfectly competitive markets to monopoly firms, which charges higher prices?

Accepted Answer

The answer of Comparing firms in perfectly competitive markets to...

Question 7

Consider a profit-maximizing monopoly pricing under the following conditions. The profit-maximizing price charged for goods produced is $12.The intersection of the marginal revenue and marginal cost curves occurs where output is 10 units and marginal cost is $6. The socially efficient level of production is 12 units. The demand curve and marginal cost curves are linear. What is the value of the deadweight loss created by the monopolist?

Accepted Answer

A)  $4
B)  $6
C)  $12
D)  $16E) None of the above
F) C) and D)

Question 8

Describe how government is involved in creating a monopoly. Why might the government create one? Give an example.

Accepted Answer

The government can create a monopoly by ...

Question 9

For a long while, electricity producers were thought to be a classic example of a natural monopoly. People held this view because

Accepted Answer

A)  the average cost of producing units of electricity by one producer in a specific region was lower than if the same quantity were produced by two or more producers in the same region.
B)  the average cost of producing units of electricity by one producer in a specific region was higher than if the same quantity were produced by two or more produced in the same region.
C)  the marginal cost of producing units of electricity by one producer in a specific region was higher than if the same quantity were produced by two or more producers in the same region.
D)  electricity is a special non-excludable good that could never be sold in a competitive market.E) B) and C)
F) A) and B)

Question 10

Figure 15-2 
-Refer to Figure 15-2. If the firm profit-maximizes, what price will it charge?

Accepted Answer

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

Question 11

When there are economies of scale over the relevant range of output for a monopoly, the monopoly

Accepted Answer

A)  is a natural monopoly.
B)  is a government-granted monopoly.
C)  has monopoly power due to the ownership of a patent or copyright.
D)  has monopoly power due to the ownership of a key production resource.E) B) and C)
F) A) and D)

Question 12

Because a monopolist is the sole producer in its market, it can necessarily alter the price of its good
(i) without affecting the quantity sold.
(ii) without affecting its average total cost.
(iii) by adjusting the quantity it supplies to the market.

Accepted Answer

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

Question 13

Figure 15-1 
-Refer to Figure 15-1. Which is more efficient, single price profit maximization or perfect price discrimination?

Accepted Answer

perfect pr...

Question 14

The market demand curve for a monopolist is typically

Accepted Answer

A)  unit price elastic.
B)  downward sloping.
C)  horizontal.
D)  vertical.E) B) and C)
F) A) and D)

Question 15

When a natural monopoly exists, it is

Accepted Answer

A)  always cost effective for government-owned firms to produce the product.
B)  never cost effective for one firm to produce the product.
C)  always cost effective for two or more private firms to produce the product.
D)  never cost effective for two or more private firms to produce the product.E) B) and D)
F) A) and B)

Question 16

What is the shape of the monopolist's marginal revenue curve?

Accepted Answer

A)  a downward-sloping line that is identical to the demand curve
B)  a downward-sloping line that lies below the demand curve
C)  a horizontal line that is identical to the demand curve
D)  a horizontal line that lies below the demand curveE) A) and B)
F) A) and C)

Question 17

For a monopoly firm, which of the following equalities is always true?

Accepted Answer

A)  price = marginal revenue
B)  price = average revenue
C)  price = total revenue
D)  marginal revenue = marginal costE) All of the above
F) B) and C)

Question 18

Figure 15-19 
-Refer to Figure 15-19. If the monopoly firm is not allowed to price discriminate, then consumer surplus amounts to

Accepted Answer

A)  $0.
B)  $1,562.50.
C)  $3,125.
D)  $6,250.E) B) and D)
F) None of the above

Question 19

If a product can be produced by a natural monopoly, society will benefit in the form of lower prices if the monopolist is broken up into several smaller firms.

Accepted Answer

A) True 
 B)False

Question 20

If a monopolist's marginal costs increase by $1 for all levels of output, then the monopoly price will

Accepted Answer

A)  rise by $1.
B)  rise by more than $1.
C)  rise by less than $1.
D)  not change, but profits will decrease.E) B) and D)
F) B) and C)

Exam 15: Monopoly

Figure 15-2 -Refer to Figure 15-2. If the firm profit-maximizes, what price will it charge?

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

If a monopolist's marginal costs increase by $1 for all levels of output, then the monopoly price will

Correct Answer
verified

Comparing firms in perfectly competitive markets to monopoly firms, which charges higher prices?

Correct Answer
verified

What is the shape of the monopolist's marginal revenue curve?

Correct Answer
verified

Because a monopolist is the sole producer in its market, it can necessarily alter the price of its good (i) without affecting the quantity sold. (ii) without affecting its average total cost. (iii) by adjusting the quantity it supplies to the market.

Correct Answer
verified

When we compare economic welfare in a monopoly market to a competitive market, the profits earned by the monopolist represent

Correct Answer
verified

Correct Answer
verified

Figure 15-19 -Refer to Figure 15-19. If the monopoly firm is not allowed to price discriminate, then consumer surplus amounts to

Correct Answer
verified

Describe how government is involved in creating a monopoly. Why might the government create one? Give an example.

Correct Answer
verified
The government can create a monopoly by ...
View Answer

The best solution to the problem of welfare loss from monopoly is public ownership.

Correct Answer
verified

The market demand curve for a monopolist is typically

Correct Answer
verified

For a long while, electricity producers were thought to be a classic example of a natural monopoly. People held this view because

Correct Answer
verified

When there are economies of scale over the relevant range of output for a monopoly, the monopoly

Correct Answer
verified

For a monopoly firm, which of the following equalities is always true?

Correct Answer
verified

Like competitive firms, monopolies charge a price equal to marginal cost.

Correct Answer
verified

If a product can be produced by a natural monopoly, society will benefit in the form of lower prices if the monopolist is broken up into several smaller firms.

Correct Answer
verified

Figure 15-1 -Refer to Figure 15-1. Which is more efficient, single price profit maximization or perfect price discrimination?

Correct Answer
verified
perfect pr...
View Answer

When a natural monopoly exists, it is

Correct Answer
verified

Exam 15: Monopoly

Figure 15-2 -Refer to Figure 15-2. If the firm profit-maximizes, what price will it charge?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If a monopolist's marginal costs increase by $1 for all levels of output, then the monopoly price will

Correct AnswerverifiedShow Answer

Comparing firms in perfectly competitive markets to monopoly firms, which charges higher prices?

Correct AnswerverifiedShow Answer

What is the shape of the monopolist's marginal revenue curve?

Correct AnswerverifiedShow Answer

Because a monopolist is the sole producer in its market, it can necessarily alter the price of its good (i) without affecting the quantity sold. (ii) without affecting its average total cost. (iii) by adjusting the quantity it supplies to the market.

Correct AnswerverifiedShow Answer

When we compare economic welfare in a monopoly market to a competitive market, the profits earned by the monopolist represent

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 15-19 -Refer to Figure 15-19. If the monopoly firm is not allowed to price discriminate, then consumer surplus amounts to

Correct AnswerverifiedShow Answer

Describe how government is involved in creating a monopoly. Why might the government create one? Give an example.

Correct AnswerverifiedThe government can create a monopoly by ...View AnswerShow Answer

The best solution to the problem of welfare loss from monopoly is public ownership.

Correct AnswerverifiedShow Answer

The market demand curve for a monopolist is typically

Correct AnswerverifiedShow Answer

For a long while, electricity producers were thought to be a classic example of a natural monopoly. People held this view because

Correct AnswerverifiedShow Answer

When there are economies of scale over the relevant range of output for a monopoly, the monopoly

Correct AnswerverifiedShow Answer

For a monopoly firm, which of the following equalities is always true?

Correct AnswerverifiedShow Answer

Like competitive firms, monopolies charge a price equal to marginal cost.

Correct AnswerverifiedShow Answer

If a product can be produced by a natural monopoly, society will benefit in the form of lower prices if the monopolist is broken up into several smaller firms.

Correct AnswerverifiedShow Answer

Figure 15-1 -Refer to Figure 15-1. Which is more efficient, single price profit maximization or perfect price discrimination?

Correct Answerverifiedperfect pr...View AnswerShow Answer

When a natural monopoly exists, it is

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The government can create a monopoly by ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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perfect pr...
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Correct Answer
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