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Exam 15: Monopoly.

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Question 111

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Some prescription drugs sell for more in the United States than they do in other countries.Which of the following statements about this issue is most likely to be true?

A) Drug companies are engaging in price discrimination, and this practice certainly reduces global social welfare.
B) Global social welfare could be improved if the price in the United States were reduced to the price charged in other countries.
C) Global social welfare could be improved if the price in the other countries were increased to the price charged in the United States.
D) Drug companies are engaging in price discrimination, but this might improve global social welfare if it gives more people access to the drugs.

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

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Question 112

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When a monopolist increases the number of units it sells,there are two effects on revenue.They are the

A) demand effect and the supply effect.
B) competition effect and the cost effect.
C) competitive effect and the monopoly effect.
D) output effect and the price effect.

E) A) and C)
F) None of the above

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Question 113

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Which of the following is a characteristic of a monopoly?

Table 15-7 Sally owns the only shoe store in town. She has the following cost and revenue information. -Refer to Table 15-7.What is the average revenue when Sally sells 7 pairs of shoes?

A firm that is the sole seller of a product without close substitutes is

Figure 15-6 -Refer to Figure 15-6.A profit-maximizing monopolist would earn profits of

Table 15-4 A monopolist faces the following demand curve: -Refer to Table 15-4.If the monopolist produces 5 units,what is its marginal revenue?

A monopoly firm can sell 150 units of output for $10 per unit.Alternatively,it can sell 151 units of output for $9.95 per unit.The marginal revenue of the 151ˢᵗ unit of output is

A benefit to society of the patent and copyright laws is that those laws

When a firm's average total cost curve continually declines,the firm is a

Table 15-4 A monopolist faces the following demand curve: -Refer to Table 15-4.In order to maximize profits,the monopolist should produce

Suppose a monopolist chooses the price and production level that maximizes its profit.From that point,to increase society's economic welfare,output would need to be increased as long as

Scenario 15-5 An airline knows that there are two types of travelers: business travelers and vacationers. For a particular flight, there are 100 business travelers who will pay $600 for a ticket while there are 50 vacationers who will pay $300 for a ticket. There are 150 seats available on the plane. Suppose the cost to the airline of providing the flight is $20,000, which includes the cost of the pilots, flight attendants, fuel, etc. -Refer to Scenario 15-5.How much profit will the airline earn if it sets the price of each ticket at $300?

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

A monopolist maximizes profits by

The legislation passed by Congress in 1914 to strengthen the government's powers and authorize private lawsuits was the

Figure 15-4 -Refer to Figure 15-4.A profit-maximizing monopoly's total revenue is equal to

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

Explain how a profit-maximizing monopolist chooses its level of output and the price of its goods.

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?