Question 1

Table 15-1
 
-Refer to Table 15-1.What is the marginal revenue for the monopolist for the sixth unit sold?

Accepted Answer

A)   3
B)   5
C)   11
D)   17E) All of the above
F) A) and B)

Question 2

Copyrights and patents are examples of barriers to entry that afford firms monopoly pricing powers.

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

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) All of the above
F) A) and C)

Question 4

One characteristic of a monopoly market is that the product is virtually identical to products produced by competing firms.

Accepted Answer

A) True 
 B)False

Question 5

When a monopolist increases the amount of output that it produces and sells,the price of its output

Accepted Answer

A)   stays the same.
B)   increases.
C)   decreases.
D)   may increase or decrease depending on the price elasticity of demand.E) None of the above
F) B) and C)

Question 6

Figure 15-5 
-Refer to Figure 15-5.A profit-maximizing monopoly will charge a price of

Accepted Answer

A)   P5.
B)   P4.
C)   P3.
D)   P2.E) A) and D)
F) C) and D)

Question 7

Which of the following is an example of price discrimination?

Accepted Answer

A)   Nabisco provides cents-off coupons for its products.
B)   Amtrak offers a lower price for weekend travel compared to weekday rates on the same routes.
C)   Hotel rates for AAA members are lower than for nonmembers.
D)   All of the above are correct.E) B) and C)
F) A) and C)

Question 8

Antitrust laws give the Justice Department the authority to challenge potential mergers between companies in an effort to safeguard society from monopoly power.

Accepted Answer

A) True 
 B)False

Question 9

Monopolies are inefficient because they

Accepted Answer

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

Question 10

Scenario 15-4
Black Box Cable TV is able to purchase an exclusive right to sell a premium movie channel (PMC) in its market area.Let's assume that Black Box Cable pays $150,000 a year for the exclusive marketing rights to PMC.Since Black Box has already installed cable to all of the homes in its market area,the marginal cost of delivering PMC to subscribers is zero.The manager of Black Box needs to know what price to charge for the PMC service to maximize her profit.Before setting price,she hires an economist to estimate demand for the PMC service.The economist discovers that there are two types of subscribers who value premium movie channels.First are the 4,000 die-hard TV viewers who will pay as much as $150 a year for the new PMC premium channel.Second,the PMC channel will appeal to about 20,000 occasional TV viewers who will pay as much as $20 a year for a subscription to PMC.
-Refer to Scenario 15-4.If Black Box Cable TV is unable to price discriminate,what price will it choose to maximize its profit,and what is the amount of the profit?

Accepted Answer

A)   price = $20;profit = $400,000
B)   price = $20;profit = $330,000
C)   price = $150;profit = $450,000
D)   price = $150;profit = $600,000E) A) and C)
F) C) and D)

Question 11

Many economists criticize monopolists because they

Accepted Answer

A)   charge a price that equals marginal cost rather than a price that equals average cost.
B)   don't innovate.
C)   produce a large quantity of waste.
D)   produce less than the socially efficient level of output.E) A) and D)
F) None of the above

Question 12

The defining characteristic of a natural monopoly is

Accepted Answer

A)   constant marginal cost over the relevant range of output.
B)   economies of scale over the relevant range of output.
C)   constant returns to scale over the relevant range of output.
D)   diseconomies of scale over the relevant range of output.E) B) and C)
F) None of the above

Question 13

Table 15-6
Dreher's Designer Shirt Company,a monopolist,has the following cost and revenue information.Assume that Dreher's is able to engage in perfect price discrimination.
 
-Refer to Table 15-6.If the monopolist can engage in perfect price discrimination,what is the total revenue when 7 shirts are sold?

Accepted Answer

A)   $650
B)   $700
C)   $910
D)   $1080E) A) and C)
F) B) and D)

Question 14

In order for a firm to maximize profits through price discrimination,the firm must have some market power and be able to prevent arbitrage.

Accepted Answer

A) True 
 B)False

Question 15

The simplest way for a monopoly to arise is for a single firm to

Accepted Answer

A)   decrease its price below its competitors' prices.
B)   decrease production to increase demand for its product.
C)   make pricing decisions jointly with other firms.
D)   own a key resource.E) None of the above
F) All of the above

Question 16

Which of the following can eliminate the inefficiency inherent in monopoly pricing?

Accepted Answer

A)   arbitrage
B)   cost-plus pricing
C)   price discrimination
D)   regulations that force monopolies to reduce their levels of outputE) None of the above
F) B) and D)

Question 17

If the government regulates the price that a natural monopolist can charge to be equal to the firm's average total cost,the firm will

Accepted Answer

A)   earn zero profits.
B)   earn positive profits,causing other firms to enter the industry.
C)   earn negative profits,causing the firm to exit the industry.
D)   minimize costs in order to lower the price that it charges.E) A) and B)
F) C) and D)

Question 18

In order to sell more of its product,a monopolist must

Accepted Answer

A)   sell to the government.
B)   sell in international markets.
C)   lower its price.
D)   use its market power to force up the price of complementary products.E) B) and C)
F) A) and D)

Question 19

Which of the following statements is true of a monopoly firm?

Accepted Answer

A)   A monopoly firm is a price taker and has no supply curve.
B)   A monopoly firm is a price maker and has no supply curve
C)   A monopoly firm is a price maker and has a downward-sloping supply curve.
D)   A monopoly firm is a price maker and has an upward-sloping supply curve.E) All of the above
F) A) and D)

Question 20

Movie theatres charge different prices to different groups of people based on the differing marginal costs that exist from group to group.

Accepted Answer

A) True 
 B)False

Exam 15: Monopoly

In order to sell more of its product,a monopolist must

Correct Answer
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Which of the following is an example of price discrimination?

Correct Answer
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When a monopolist increases the amount of output that it produces and sells,the price of its output

Correct Answer
verified

Monopolies are inefficient because they

Correct Answer
verified

Copyrights and patents are examples of barriers to entry that afford firms monopoly pricing powers.

Correct Answer
verified

The defining characteristic of a natural monopoly is

Correct Answer
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One characteristic of a monopoly market is that the product is virtually identical to products produced by competing firms.

Correct Answer
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Which of the following can eliminate the inefficiency inherent in monopoly pricing?

Correct Answer
verified

Which of the following statements is true of a monopoly firm?

Correct Answer
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In order for a firm to maximize profits through price discrimination,the firm must have some market power and be able to prevent arbitrage.

Correct Answer
verified

The simplest way for a monopoly to arise is for a single firm to

Correct Answer
verified

Antitrust laws give the Justice Department the authority to challenge potential mergers between companies in an effort to safeguard society from monopoly power.

Correct Answer
verified

Many economists criticize monopolists because they

Correct Answer
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Figure 15-5 -Refer to Figure 15-5.A profit-maximizing monopoly will charge a price of

Correct Answer
verified

Table 15-1 -Refer to Table 15-1.What is the marginal revenue for the monopolist for the sixth unit sold?

Correct Answer
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If the government regulates the price that a natural monopolist can charge to be equal to the firm's average total cost,the firm will

Correct Answer
verified

Movie theatres charge different prices to different groups of people based on the differing marginal costs that exist from group to group.

Correct Answer
verified

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

Correct Answer
verified

Exam 15: Monopoly

In order to sell more of its product,a monopolist must

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is an example of price discrimination?

Correct AnswerverifiedShow Answer

When a monopolist increases the amount of output that it produces and sells,the price of its output

Correct AnswerverifiedShow Answer

Monopolies are inefficient because they

Correct AnswerverifiedShow Answer

Copyrights and patents are examples of barriers to entry that afford firms monopoly pricing powers.

Correct AnswerverifiedShow Answer

The defining characteristic of a natural monopoly is

Correct AnswerverifiedShow Answer

One characteristic of a monopoly market is that the product is virtually identical to products produced by competing firms.

Correct AnswerverifiedShow Answer

Which of the following can eliminate the inefficiency inherent in monopoly pricing?

Correct AnswerverifiedShow Answer

Which of the following statements is true of a monopoly firm?

Correct AnswerverifiedShow Answer

In order for a firm to maximize profits through price discrimination,the firm must have some market power and be able to prevent arbitrage.

Correct AnswerverifiedShow Answer

The simplest way for a monopoly to arise is for a single firm to

Correct AnswerverifiedShow Answer

Antitrust laws give the Justice Department the authority to challenge potential mergers between companies in an effort to safeguard society from monopoly power.

Correct AnswerverifiedShow Answer

Many economists criticize monopolists because they

Correct AnswerverifiedShow Answer

Figure 15-5 -Refer to Figure 15-5.A profit-maximizing monopoly will charge a price of

Correct AnswerverifiedShow Answer

Table 15-1 -Refer to Table 15-1.What is the marginal revenue for the monopolist for the sixth unit sold?

Correct AnswerverifiedShow Answer

If the government regulates the price that a natural monopolist can charge to be equal to the firm's average total cost,the firm will

Correct AnswerverifiedShow Answer

Movie theatres charge different prices to different groups of people based on the differing marginal costs that exist from group to group.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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