Question 1

Use the following to answer questions:
Figure: Maximize Monopoly Profits 1. B)  P2. C)  P3. D)  P4." class="answers-bank-image d-inline" rel="preload" >
-(Figure: Maximize Monopoly Profits)  Refer to the figure. The monopolist will maximize its profit by charging a price equal to:

Accepted Answer

A)   P1.
B)   P2.
C)   P3.
D)   P4.E) B) and C)
F) All of the above

Question 2

Generating electricity:

Accepted Answer

A)   no longer requires a natural monopoly, but the transmission and distribution of electricity remains a natural monopoly.
B)   requires a natural monopoly, along with the transmission and distribution of electricity.
C)   requires a natural monopoly but not the transmission and distribution of electricity.
D)   and the transmission and distribution of electricity are no longer natural monopolies.E) B) and D)
F) A) and C)

Question 3

To determine the production level, the monopolist sets marginal cost equal to price.

Accepted Answer

A) True 
 B)False

Question 4

What is the deadweight loss due to profit-maximizing monopoly pricing under the following conditions: the price charged for goods produced is $30. The intersection of the marginal revenue and marginal cost curves occurs where output is 300 units and marginal revenue is $10. The socially efficient level of production is 400 units at a price of $20. The demand curve is linear and downward sloping, and the marginal cost curve is linear and upward sloping.

Accepted Answer

See the fo...

Question 5

California's electricity crisis as illustrated in the chapter is partially explained by the fact that generators of electric power:

Accepted Answer

A)   gain market power when demand increases.
B)   gain market power when supply increases.
C)   gain market power when demand decreases.
D)   lose market power when demand increases.E) A) and B)
F) None of the above

Question 6

If the demand curve for a firm is a straight line with negative slope, which of the following is the shortcut to finding the MR?

Accepted Answer

A)   The demand curve starts below the marginal revenue curve and cuts the marginal revenue curve halfway down its length.
B)   The marginal revenue curve starts at the same point as the demand curve and has twice the slope of the demand curve.
C)   The marginal revenue curve is parallel to the demand curve with the same slope.
D)   The marginal revenue curve starts at the same point as the demand curve and has a slope of 0.E) C) and D)
F) All of the above

Question 7

Software development has high fixed costs and marginal costs that are close to zero. What would happen if software firms sold their product for marginal cost?

Accepted Answer

A)   They would have the incentive to produce new software programs.
B)   They would produce better software.
C)   They would increase their profits.
D)   They would not be able to afford their fixed costs and would go out of business.E) A) and B)
F) A) and C)

Question 8

Graphically show that a monopolist facing a market with a relatively inelastic demand curve will impose a higher markup than it will in a market with a relatively elastic demand curve. Explain this behavior using the "You can't take it with you" effect.

Accepted Answer

<img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> In both cases Q is set at the point whe...

Question 9

A firm with no competitors:

Accepted Answer

A)   faces a perfectly inelastic demand curve.
B)   faces a perfectly elastic demand curve.
C)   still faces a downward-sloping demand curve.
D)   has a perfectly elastic supply curve.E) A) and C)
F) B) and C)

Question 10

When a good has relatively few substitutes:

Accepted Answer

A)   demand for the good is elastic.
B)   monopolists will tend to increase their markup for the good.
C)   monopolists will tend to decrease their markup for the good.
D)   producers will be able to "steal" all of the consumer surplus from consumers.E) C) and D)
F) A) and B)

Question 11

The marginal revenue curve is a straight line beginning at the same point on the:

Accepted Answer

A)   horizontal axis as the demand curve but with half of the slope.
B)   vertical axis as the demand curve but with half of the slope.
C)   horizontal axis as the demand curve but with twice the slope.
D)   vertical axis as the demand curve but with twice the slope.E) C) and D)
F) B) and C)

Question 12

Typical evidence for the existence of market power would be market prices:

Accepted Answer

A)   below production costs.
B)   equal to production costs.
C)   above production costs.
D)   varying with market supply and demand conditions.E) C) and D)
F) A) and D)

Question 13

Economic theory suggests that a natural monopoly should be:

Accepted Answer

A)   eliminated whenever it arises.
B)   regulated to take advantage of economies of scale.
C)   left alone to operate with excess capacity.
D)   taken over by the government.E) B) and C)
F) A) and D)

Question 14

Which of the following was the result of government deregulation of cable TV in the 1980s?

Accepted Answer

A)   The price of cable television fell.
B)   The number of cable television stations increased.
C)   The quality of cable television declined dramatically.
D)   Consumers were upset as the price of cable television rose dramatically.E) B) and C)
F) A) and D)

Question 15

GlaxoSmithKline owns a government grant of temporary monopoly rights on the AIDS drug Combivir due to:

Accepted Answer

A)   patents.
B)   laws preventing entry of competitors.
C)   economies of scale.
D)   innovation.E) None of the above
F) All of the above

Question 16

Which of the following is an example of a good with economies of scale?

Accepted Answer

A)   fish oil pills sold in bulk
B)   laptops with Internet access
C)   dog grooming
D)   autosE) None of the above
F) All of the above

Question 17

From an economist's perspective, what are the good and bad results associated with monopoly? Since patents are a source of monopoly power, should the government eliminate or reduce patent protection?

Accepted Answer

Economists are not concerned about the h...

Question 18

With health insurance, medical treatments are often paid by someone other than the patient, which will make consumers with serious diseases relatively:

Accepted Answer

A)   insensitive to the price of pharmaceuticals.
B)   sensitive to the price of pharmaceuticals.
C)   insensitive to the premium of health insurance.
D)   sensitive to the premium of health insurance.E) All of the above
F) B) and D)

Question 19

California's electricity problems were NOT caused by:

Accepted Answer

A)   government price floors that made the demand for electricity quite inelastic.
B)   electricity generating companies exercising market power (i.e., restricting output in an effort to raise price and profit) .
C)   the expiration of patent protection on special equipment used to produce hydro-generated electricity.
D)   All of the answers are correct.E) B) and C)
F) A) and B)

Question 20

Without competition, there is a tendency for a government-run or regulated monopoly to:

Accepted Answer

A)   keep prices constant.
B)   become inefficient by passing higher costs on to consumers.
C)   find ways to decrease costs so as to increase profits.
D)   become a natural monopoly.E) A) and B)
F) None of the above

Exam 13: Monopoly

California's electricity crisis as illustrated in the chapter is partially explained by the fact that generators of electric power:

Correct Answer
verified

A firm with no competitors:

Correct Answer
verified

Typical evidence for the existence of market power would be market prices:

Correct Answer
verified

California's electricity problems were NOT caused by:

Correct Answer
verified

From an economist's perspective, what are the good and bad results associated with monopoly? Since patents are a source of monopoly power, should the government eliminate or reduce patent protection?

Correct Answer
verified
Economists are not concerned about the h...
View Answer

Graphically show that a monopolist facing a market with a relatively inelastic demand curve will impose a higher markup than it will in a market with a relatively elastic demand curve. Explain this behavior using the "You can't take it with you" effect.

Correct Answer
verified
In both cases Q is set at the point whe...
View Answer

When a good has relatively few substitutes:

Correct Answer
verified

GlaxoSmithKline owns a government grant of temporary monopoly rights on the AIDS drug Combivir due to:

Correct Answer
verified

Which of the following is an example of a good with economies of scale?

Correct Answer
verified

If the demand curve for a firm is a straight line with negative slope, which of the following is the shortcut to finding the MR?

Correct Answer
verified

Generating electricity:

Correct Answer
verified

Use the following to answer questions: Figure: Maximize Monopoly Profits -(Figure: Maximize Monopoly Profits) Refer to the figure. The monopolist will maximize its profit by charging a price equal to:

Correct Answer
verified

Software development has high fixed costs and marginal costs that are close to zero. What would happen if software firms sold their product for marginal cost?

Correct Answer
verified

Which of the following was the result of government deregulation of cable TV in the 1980s?

Correct Answer
verified

Correct Answer
verified
See the fo...
View Answer

Economic theory suggests that a natural monopoly should be:

Correct Answer
verified

The marginal revenue curve is a straight line beginning at the same point on the:

Correct Answer
verified

With health insurance, medical treatments are often paid by someone other than the patient, which will make consumers with serious diseases relatively:

Correct Answer
verified

Without competition, there is a tendency for a government-run or regulated monopoly to:

Correct Answer
verified

To determine the production level, the monopolist sets marginal cost equal to price.

Correct Answer
verified

Exam 13: Monopoly

California's electricity crisis as illustrated in the chapter is partially explained by the fact that generators of electric power:

Correct AnswerverifiedShow Answer

A firm with no competitors:

Correct AnswerverifiedShow Answer

Typical evidence for the existence of market power would be market prices:

Correct AnswerverifiedShow Answer

California's electricity problems were NOT caused by:

Correct AnswerverifiedShow Answer

From an economist's perspective, what are the good and bad results associated with monopoly? Since patents are a source of monopoly power, should the government eliminate or reduce patent protection?

Correct AnswerverifiedEconomists are not concerned about the h...View AnswerShow Answer

Graphically show that a monopolist facing a market with a relatively inelastic demand curve will impose a higher markup than it will in a market with a relatively elastic demand curve. Explain this behavior using the "You can't take it with you" effect.

Correct Answerverified In both cases Q is set at the point whe...View AnswerShow Answer

When a good has relatively few substitutes:

Correct AnswerverifiedShow Answer

GlaxoSmithKline owns a government grant of temporary monopoly rights on the AIDS drug Combivir due to:

Correct AnswerverifiedShow Answer

Which of the following is an example of a good with economies of scale?

Correct AnswerverifiedShow Answer

If the demand curve for a firm is a straight line with negative slope, which of the following is the shortcut to finding the MR?

Correct AnswerverifiedShow Answer

Generating electricity:

Correct AnswerverifiedShow Answer

Use the following to answer questions: Figure: Maximize Monopoly Profits -(Figure: Maximize Monopoly Profits) Refer to the figure. The monopolist will maximize its profit by charging a price equal to:

Correct AnswerverifiedShow Answer

Software development has high fixed costs and marginal costs that are close to zero. What would happen if software firms sold their product for marginal cost?

Correct AnswerverifiedShow Answer

Which of the following was the result of government deregulation of cable TV in the 1980s?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedSee the fo...View AnswerShow Answer

Economic theory suggests that a natural monopoly should be:

Correct AnswerverifiedShow Answer

The marginal revenue curve is a straight line beginning at the same point on the:

Correct AnswerverifiedShow Answer

With health insurance, medical treatments are often paid by someone other than the patient, which will make consumers with serious diseases relatively:

Correct AnswerverifiedShow Answer

Without competition, there is a tendency for a government-run or regulated monopoly to:

Correct AnswerverifiedShow Answer

To determine the production level, the monopolist sets marginal cost equal to price.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Economists are not concerned about the h...
View Answer

Correct Answer
verified
In both cases Q is set at the point whe...
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
verified

Correct Answer
verified
See the fo...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified