Question 1

Economists assume that monopolists behave as

Accepted Answer

A)   cost minimizers.
B)   profit maximizers.
C)   price maximizers.
D)   maximizers of social welfare.E) A) and B)
F) B) and C)

Question 2

Figure 15-11 
-Refer to Figure 15-11.If the monopoly firm is not allowed to price discriminate,then the deadweight loss amounts to

Accepted Answer

A)   $50.
B)   $100.
C)   $500.
D)   $1,000.E) All of the above
F) C) and D)

Question 3

For a profit-maximizing monopolist,

Accepted Answer

A) P > MR = MC. B) P = MR = MC. C) P > MR > MC. D) MR < MC < P.E) All of the above F) A) and B)

Question 4

Price discrimination is the business practice of

Accepted Answer

A)   bundling related products to increase total sales.
B)   selling the same good at different prices to different customers.
C)   pricing above marginal cost.
D)   hiring marketing experts to increase consumers' brand loyalty.E) A) and B)
F) All of the above

Question 5

Figure 15-11 
-Refer to Figure 15-11.If there are no fixed costs of production,monopoly profit without price discrimination equals

Accepted Answer

A)   $500.
B)   $1,000.
C)   $2,000.
D)   $4,000.E) All of the above
F) B) and D)

Question 6

A monopolist faces the following demand curve:

The monopolist has total fixed costs of $60 and has a constant marginal cost of $15.What is the profit-maximizing level of production?

Accepted Answer

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

Question 7

A monopolist's average revenue is always

Accepted Answer

A)   equal to marginal revenue.
B)   greater than the price of its product.
C)   equal to the price of its product.
D)   less than the price of its product.E) B) and C)
F) A) and B)

Question 8

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

Question 9

A rational pricing strategy for a profit-maximizing monopolist is

Accepted Answer

A)   price discrimination.
B)   price segregation.
C)   synergy pricing.
D)   average cost pricing.E) A) and B)
F) A) and C)

Question 10

The difference in total surplus between the socially efficient level of production and the monopolist's level of production is

Accepted Answer

A)   offset by regulatory revenues.
B)   called a deadweight loss.
C)   equal to the monopolist's profit.
D)   Both b and c are correct.E) All of the above
F) A) and B)

Question 11

When deciding what price to charge consumers,the monopolist may choose to charge them different prices based on the customers'

Accepted Answer

A)   geographical location.
B)   age.
C)   income.
D)   All of the above are correct.E) A) and C)
F) A) and D)

Question 12

Scenario 15-5
Mega Media Cable TV is able to purchase an exclusive right to sell a premium sports channel in its market area.Let's assume that Mega Media pays $100,000 a year for the exclusive marketing rights to the sports channel.Since Mega Media has already installed cable to all of the homes in its market area,the marginal cost of delivering the sports channel to subscribers is zero.The manager of Mega Media needs to know what price to charge for the sports channel service to maximize her profit.Before setting price,she hires an economist to estimate demand for the sports channel.The economist discovers that there are two types of subscribers who value premium sporting channels.First are the 3,000 die-hard sports fans who will pay as much as $150 a year for the new channel.Second,the premium sports channel will appeal to about 20,000 occasional sports viewers who will pay as much as $25 a year for a subscription to it.
-Refer to Scenario 15-5.What is the deadweight loss associated with the nondiscriminating pricing policy compared to the price discriminating policy?

Accepted Answer

A)   $500,000
B)   $450,000
C)   $400,000
D)   It cannot be determined from the information provided.E) A) and B)
F) C) and D)

Question 13

A monopoly is an inefficient way to produce a product because

Accepted Answer

A)   it can earn both short-run and long-run profits.
B)   it faces a downward-sloping demand curve.
C)   the cost to the monopolist of producing one more unit exceeds the value of that unit to potential buyers.
D)   it produces a smaller level of output than would be produced in a competitive market.E) C) and D)
F) None of the above

Question 14

During the life of a drug patent,the monopoly pharmaceutical firm maximizes profit by producing the quantity at which marginal revenue equals marginal cost.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following statements is (are) true of a monopoly?

Accepted Answer

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

Question 16

A monopolist faces the following demand curve:

The monopolist has fixed costs of $1,000 and has a constant marginal cost of $2 per unit.If the monopolist were able to perfectly price discriminate,how many units would it sell?

Accepted Answer

A)   400
B)   500
C)   900
D)   4,200E) B) and C)
F) A) and D)

Question 17

Which of the following statements is correct?

Accepted Answer

A)   Firms with some degree of monopoly power are common,but firms with substantial monopoly power are rare.
B)   Firms with some degree of monopoly power are rare,as are firms with substantial monopoly power.
C)   Firms with some degree of monopoly power are common,as are firms with substantial monopoly power.
D)   Firms with some degree of monopoly power are rare,but firms with substantial monopoly power are common.E) B) and C)
F) B) and D)

Question 18

Give some examples of the benefits and costs of antitrust laws.

Accepted Answer

Benefits include promoting com...

Question 19

For a monopoly,the socially efficient level of output occurs where

Accepted Answer

A)   marginal revenue equals marginal cost.
B)   average revenue equals marginal cost.
C)   marginal revenue equals average total cost.
D)   average revenue equals average total cost.E) All of the above
F) B) and D)

Question 20

Which of the following strategies is not an effective strategy to reduce monopoly inefficiency?

Accepted Answer

A)   antitrust laws
B)   price discrimination
C)   doing nothing
D)   breaking up a natural monopoly into more than one firmE) A) and D)
F) B) and C)

Exam 15: Monopoly

Correct Answer
verified

A reduction in a monopolist's fixed costs would

Correct Answer
verified

The difference in total surplus between the socially efficient level of production and the monopolist's level of production is

Correct Answer
verified

Which of the following strategies is not an effective strategy to reduce monopoly inefficiency?

Correct Answer
verified

Give some examples of the benefits and costs of antitrust laws.

Correct Answer
verified
Benefits include promoting com...
View Answer

During the life of a drug patent,the monopoly pharmaceutical firm maximizes profit by producing the quantity at which marginal revenue equals marginal cost.

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
verified

For a monopoly,the socially efficient level of output occurs where

Correct Answer
verified

When deciding what price to charge consumers,the monopolist may choose to charge them different prices based on the customers'

Correct Answer
verified

Figure 15-11 -Refer to Figure 15-11.If there are no fixed costs of production,monopoly profit without price discrimination equals

Correct Answer
verified

A monopolist faces the following demand curve: The monopolist has total fixed costs of $60 and has a constant marginal cost of $15.What is the profit-maximizing level of production?

Correct Answer
verified

Price discrimination is the business practice of

Correct Answer
verified

Figure 15-11 -Refer to Figure 15-11.If the monopoly firm is not allowed to price discriminate,then the deadweight loss amounts to

Correct Answer
verified

A monopolist faces the following demand curve: The monopolist has fixed costs of $1,000 and has a constant marginal cost of $2 per unit.If the monopolist were able to perfectly price discriminate,how many units would it sell?

Correct Answer
verified

A rational pricing strategy for a profit-maximizing monopolist is

Correct Answer
verified

A monopolist's average revenue is always

Correct Answer
verified

A monopoly is an inefficient way to produce a product because

Correct Answer
verified

For a profit-maximizing monopolist,

Correct Answer
verified

Economists assume that monopolists behave as

Correct Answer
verified

Which of the following statements is (are) true of a monopoly?

Correct Answer
verified

Exam 15: Monopoly

Correct AnswerverifiedShow Answer

A reduction in a monopolist's fixed costs would

Correct AnswerverifiedShow Answer

The difference in total surplus between the socially efficient level of production and the monopolist's level of production is

Correct AnswerverifiedShow Answer

Which of the following strategies is not an effective strategy to reduce monopoly inefficiency?

Correct AnswerverifiedShow Answer

Give some examples of the benefits and costs of antitrust laws.

Correct AnswerverifiedBenefits include promoting com...View AnswerShow Answer

During the life of a drug patent,the monopoly pharmaceutical firm maximizes profit by producing the quantity at which marginal revenue equals marginal cost.

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

For a monopoly,the socially efficient level of output occurs where

Correct AnswerverifiedShow Answer

When deciding what price to charge consumers,the monopolist may choose to charge them different prices based on the customers'

Correct AnswerverifiedShow Answer

Figure 15-11 -Refer to Figure 15-11.If there are no fixed costs of production,monopoly profit without price discrimination equals

Correct AnswerverifiedShow Answer

A monopolist faces the following demand curve: The monopolist has total fixed costs of $60 and has a constant marginal cost of $15.What is the profit-maximizing level of production?

Correct AnswerverifiedShow Answer

Price discrimination is the business practice of

Correct AnswerverifiedShow Answer

Figure 15-11 -Refer to Figure 15-11.If the monopoly firm is not allowed to price discriminate,then the deadweight loss amounts to

Correct AnswerverifiedShow Answer

A monopolist faces the following demand curve: The monopolist has fixed costs of $1,000 and has a constant marginal cost of $2 per unit.If the monopolist were able to perfectly price discriminate,how many units would it sell?

Correct AnswerverifiedShow Answer

A rational pricing strategy for a profit-maximizing monopolist is

Correct AnswerverifiedShow Answer

A monopolist's average revenue is always

Correct AnswerverifiedShow Answer

A monopoly is an inefficient way to produce a product because

Correct AnswerverifiedShow Answer

For a profit-maximizing monopolist,

Correct AnswerverifiedShow Answer

Economists assume that monopolists behave as

Correct AnswerverifiedShow Answer

Which of the following statements is (are) true of a monopoly?

Correct AnswerverifiedShow Answer

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Benefits include promoting com...
View Answer

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