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Exam 15: Monopoly

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Question 101

Multiple Choice

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Figure 15-2 -Refer to Figure 15-2. Which of the following reasons describes the fundamental barrier to entry for the monopoly in the figure?

A) monopoly resources
B) government regulation
C) the production process
D) Both a and b are correct.

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

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Question 102

Multiple Choice

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Which of the following is not an example of a barrier to entry?

A) John owns the only parcel of lakeside property with a beach that is safe for swimming. He charges admission to neighbors who want to use the beach.
B) Jackie owns the copyright to a popular song. She receives royalties every time a radio station plays her song.
C) John Jr. owns the best seafood restaurant in a popular resort area. He charges high prices because the quality of the food is so good.
D) Caroline owns the patent for a new running shoe. She receives payments from the company who manufactures the shoes.

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

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Question 103

Multiple Choice

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Table 15-6 A monopolist faces the following demand curve: -Refer to Table 15-6. What is the marginal revenue from the sale of the 3rd unit?

The distribution of water to residents of a town and an infrequently used bridge are examples of

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?

Because a monopolist does not face competition from other firms, the outcome in a market with a monopoly

A movie theater can increase its profits through price discrimination by charging a higher price to adults and a lower price to children if

When a certain monopoly sets its price at $8 it sells 64 units. When the monopoly sets its price at $10 it sells 62 units. The marginal revenue for the firm over this range is

In a market characterized by monopoly, the market demand curve is

A monopolist's profits with price discrimination will be

Table 15-9 Consider the following demand and cost information for a monopoly. -Refer to Table 15-9. What is the marginal cost of the 4th unit?

If a monopolist can sell 7 units when the price is $4 and 8 units when the price is $3, then the marginal revenue of selling the eighth unit is equal to

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

Scenario 15-1 Vincent operates a scenic tour business in Boston. He has one bus which can fit 50 people per tour and each tour lasts 2 hours. His total cost of operating one tour is fixed at $450. Vincent's cost is not reduced if he runs a tour with a partially full bus. While his cost is the same for all tours, Vincent charges each passenger his/her willingness to pay: adults $18 per trip, children $10 per trip, and senior citizens $12 per trip. At those rates, on a typical day Vincent's demand is: Passenger Type Willingness to Pay Demand per day Adults $18 70 Children $10 25 Senior Citizens $12 55 Assume that Vincent's customers are always available for the tour; therefore, he can fill his bus for each tour as long as there is sufficient total demand for the day. -Refer to Scenario 15-1. One of Vincent's friends tells him he would be more profitable if he charged a single price of $18. Assuming no changes in consumer demand, what would Vincent's profit be if he charged every customer $18?

Financial aid to college students, quantity discounts, and senior citizen discounts are all examples of

Generic drugs enter the pharmaceutical drug market once

Table 15-9 Consider the following demand and cost information for a monopoly. -Refer to Table 15-9. What is the monopolist's average total cost of production at the profit-maximizing price?

For a monopolist,

Which of the following would be most likely to have monopoly power?

Figure 15-4 -Refer to Figure 15-4. The demand curve for a monopoly firm is depicted by curve