Question 1

The profit-maximization problem for a monopolist differs from that of a competitive firm in which of the following ways?

Accepted Answer

A)   A competitive firm maximizes profit at the point where marginal revenue equals marginal cost; a monopolist maximizes profit at the point where marginal revenue exceeds marginal cost.
B)   A competitive firm maximizes profit at the point where average revenue equals marginal cost; a monopolist maximizes profit at the point where average revenue exceeds marginal cost.
C)   For a competitive firm, marginal revenue at the profit-maximizing level of output is equal to marginal revenue at all other levels of output; for a monopolist, marginal revenue at the profit-maximizing level of output is smaller than it is for larger levels of output.
D)   For a profit-maximizing competitive firm, thinking at the margin is much more important than it is for a profit- maximizing monopolist.E) A) and B)
F) B) and C)

Question 2

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)   do not innovate.
C)   produce a large quantity of waste.
D)   produce less than the socially efficient level of output.E) None of the above
F) A) and B)

Question 3

Figure 15-9 
-Refer to Figure 15-9. The deadweight loss caused by a profit-maximizing monopoly amounts to

Accepted Answer

A)   $250.
B)   $500.
C)   $750.
D)   $1,000.E) A) and C)
F) All of the above

Question 4

Generic drugs enter the pharmaceutical drug market once

Accepted Answer

A)   the ingredients to the name brand drug have been discovered.
B)   10 years have passed.
C)   they are patented.
D)   the patent on the name brand drug expires.E) B) and D)
F) All of the above

Question 5

Figure 15-22 
-Refer to Figure 15-22. If the monopolist uses perfect price discrimination, how much output does the firm produce?

Accepted Answer

The answer of Figure 15-22 
-Refer to Figure 15-22. If...

Question 6

Figure 15-20 
-Refer to Figure 15-20. The deadweight loss caused by a profit-maximizing monopoly amounts to

Accepted Answer

A)   $225.
B)   $450.
C)   $900.
D)   $1,350.E) A) and C)
F) A) and B)

Question 7

Table 15-17
A monopolist faces the following demand curve: 
-Refer to Table 15-17. If the marginal cost of production is constant at $18 per unit, this profit-maximizing monopolist will choose to produce

Accepted Answer

A)   20 units.
B)   30 units.
C)   40 units.
D)   50 units.E) All of the above
F) B) and C)

Question 8

Figure 15-4 
-Refer to Figure 15-4. If the monopoly firm is currently producing Q4 units of output, then a decrease in output will necessarily cause profit to

Accepted Answer

A)   remain unchanged.
B)   decrease.
C)   increase as long as the new level of output is at least Q2.
D)   None of the above is correct. The monopolist currently maximizing profits at Q4.E) A) and D)
F) B) and D)

Question 9

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

Accepted Answer

A)   does not illustrate profit maximization.
B)   is often not in the best interest of society.
C)   is characterized by unlimited profits.
D)   would be improved if the government produced the product rather than a private firm.E) A) and B)
F) C) and D)

Question 10

By selling hardcover books to die-hard fans and paperback books to less enthusiastic readers, the publisher is able to price discriminate and raise its profits.

Accepted Answer

A) True 
 B)False

Question 11

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) All of the above
F) None of the above

Question 12

Scenario 15-1
Consider a transportation corporation named Reading's that has just completed the development of a new light rail system in Minneapolis. Currently, there are plenty of seats on the train, and it is never crowded. Its capacity far exceeds the needs of the city. After just a few years of operation, the shareholders of Reading's experienced incredibly high rates of return on their investment due to the profitability of the corporation.
-Refer to Scenario 15-1. Which of the following statements is most likely to be true? currently has.

Accepted Answer

A)   (i)  and (ii)  only
B)   (ii)  and (iii)  only
C)   (i)  and (iii)  only
D)   (i) , (ii) , and (iii) E) None of the above
F) A) and C)

Question 13

In reality, perfect price discrimination is

Accepted Answer

A)   used by about 75 percent of all monopolies.
B)   used by about 50 percent of all monopolies.
C)   seldom used by monopolies because it leads to lower profits.
D)   rarely possible.E) A) and C)
F) B) and D)

Question 14

The social cost of a monopoly is equal to its

Accepted Answer

A)   economic profit.
B)   fixed cost.
C)   dead weight loss.
D)   variable cost.E) B) and D)
F) B) and C)

Question 15

Splitting up a monopoly is often justified on the grounds that

Accepted Answer

A)   consumers prefer dealing with small firms.
B)   small firms have lower costs.
C)   competition is inherently efficient.
D)   small firms produce higher quality products.E) All of the above
F) A) and C)

Question 16

Price discrimination requires the firm to

Accepted Answer

A)   separate customers according to their willingnesses to pay.
B)   differentiate between different units of its product.
C)   engage in arbitrage.
D)   use coupons.E) A) and B)
F) C) and D)

Question 17

The economic inefficiency of a monopolist can be measured by the

Accepted Answer

A)   deadweight loss.
B)   value of the unrealized trades that could be made if the monopolist produced the socially-efficient output.
C)   area above marginal cost but beneath demand from the monopoly output to the socially-efficient output.
D)   All of the above are correct.E) None of the above
F) All of the above

Question 18

Antitrust laws allow the government to

Accepted Answer

A)   collect revenues through the antitrust tax.
B)   break up companies.
C)   purchase privately-held companies through eminent domain.
D)   All of the above are correct.E) B) and C)
F) A) and D)

Question 19

The practice of selling the same goods to different customers at different prices, but with the same marginal cost, is known as

Accepted Answer

A)   price segregation.
B)   price discrimination.
C)   arbitrage.
D)   monopoly pricing.E) A) and B)
F) A) and C)

Question 20

Scenario 15-8
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 20,000 occasional sports viewers who will pay as much as $25 a year for a subscription to it.
-Refer to Scenario 15-8. How much profit will Mega Media Cable TV earn if it sets the price at $25?

Accepted Answer

A)   $350,000
B)   $450,000
C)   $475,000
D)   $575,000E) None of the above
F) A) and D)

Exam 15: Monopoly

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

Correct Answer
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Correct Answer
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Price discrimination requires the firm to

Correct Answer
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The social cost of a monopoly is equal to its

Correct Answer
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Correct Answer
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Generic drugs enter the pharmaceutical drug market once

Correct Answer
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In reality, perfect price discrimination is

Correct Answer
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Antitrust laws allow the government to

Correct Answer
verified

By selling hardcover books to die-hard fans and paperback books to less enthusiastic readers, the publisher is able to price discriminate and raise its profits.

Correct Answer
verified

The economic inefficiency of a monopolist can be measured by the

Correct Answer
verified

Splitting up a monopoly is often justified on the grounds that

Correct Answer
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Figure 15-9 -Refer to Figure 15-9. The deadweight loss caused by a profit-maximizing monopoly amounts to

Correct Answer
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Many economists criticize monopolists because they

Correct Answer
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Figure 15-20 -Refer to Figure 15-20. The deadweight loss caused by a profit-maximizing monopoly amounts to

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

Correct Answer
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Figure 15-22 -Refer to Figure 15-22. If the monopolist uses perfect price discrimination, how much output does the firm produce?

Correct Answer
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The profit-maximization problem for a monopolist differs from that of a competitive firm in which of the following ways?

Correct Answer
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Table 15-17 A monopolist faces the following demand curve: -Refer to Table 15-17. If the marginal cost of production is constant at $18 per unit, this profit-maximizing monopolist will choose to produce

Correct Answer
verified

Figure 15-4 -Refer to Figure 15-4. If the monopoly firm is currently producing Q4 units of output, then a decrease in output will necessarily cause profit to

Correct Answer
verified

The practice of selling the same goods to different customers at different prices, but with the same marginal cost, is known as

Correct Answer
verified

Exam 15: Monopoly

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Price discrimination requires the firm to

Correct AnswerverifiedShow Answer

The social cost of a monopoly is equal to its

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Generic drugs enter the pharmaceutical drug market once

Correct AnswerverifiedShow Answer

In reality, perfect price discrimination is

Correct AnswerverifiedShow Answer

Antitrust laws allow the government to

Correct AnswerverifiedShow Answer

By selling hardcover books to die-hard fans and paperback books to less enthusiastic readers, the publisher is able to price discriminate and raise its profits.

Correct AnswerverifiedShow Answer

The economic inefficiency of a monopolist can be measured by the

Correct AnswerverifiedShow Answer

Splitting up a monopoly is often justified on the grounds that

Correct AnswerverifiedShow Answer

Figure 15-9 -Refer to Figure 15-9. The deadweight loss caused by a profit-maximizing monopoly amounts to

Correct AnswerverifiedShow Answer

Many economists criticize monopolists because they

Correct AnswerverifiedShow Answer

Figure 15-20 -Refer to Figure 15-20. The deadweight loss caused by a profit-maximizing monopoly amounts to

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 15-22 -Refer to Figure 15-22. If the monopolist uses perfect price discrimination, how much output does the firm produce?

Correct AnswerverifiedShow Answer

The profit-maximization problem for a monopolist differs from that of a competitive firm in which of the following ways?

Correct AnswerverifiedShow Answer

Table 15-17 A monopolist faces the following demand curve: -Refer to Table 15-17. If the marginal cost of production is constant at $18 per unit, this profit-maximizing monopolist will choose to produce

Correct AnswerverifiedShow Answer

Figure 15-4 -Refer to Figure 15-4. If the monopoly firm is currently producing Q4 units of output, then a decrease in output will necessarily cause profit to

Correct AnswerverifiedShow Answer

The practice of selling the same goods to different customers at different prices, but with the same marginal cost, is known as

Correct AnswerverifiedShow Answer

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