Question 1

Because many good substitutes exist for a competitive firm's product, the demand curve that it faces is

Accepted Answer

A)   unit-elastic.
B)   perfectly inelastic.
C)   perfectly elastic.
D)   inelastic only over a certain region.E) A) and B)
F) A) and C)

Question 2

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?

Accepted Answer

A)   monopoly resources
B)   government regulation
C)   the production process
D)   Both a and b are correct.E) B) and C)
F) All of the above

Question 3

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

Accepted Answer

A)   Mighty Mitch's Mining Company owns a unique plot of land in Tanzania, under which lies the only large deposit of Tanzanite in the world.
B)   A pharmaceutical company obtains a patent for a specific high blood pressure medication.
C)   A musician obtains a copyright for her original song.
D)   An entrepreneur opens a popular new restaurant.E) A) and B)
F) B) and D)

Question 4

Antitrust laws allow the government to

Accepted Answer

A)   prevent mergers.
B)   break up companies.
C)   promote competition.
D)   All of the above are correct.E) B) and C)
F) None of the above

Question 5

University financial aid can be viewed as a type of price discrimination.

Accepted Answer

A) True 
 B)False

Question 6

Figure 15-23 
-Refer to Figure 15-23. If the firm profit-maximizes, how much profit will it earn?

Accepted Answer

The answer of Figure 15-23 
-Refer to Figure 15-23. If...

Question 7

Scenario 15-5
An airline knows that there are two types of travelers: business travelers and vacationers. For a particular flight, there are 100 business travelers who will pay $600 for a ticket while there are 50 vacationers who will pay $300 for a ticket. There are 150 seats available on the plane. Suppose the cost to the airline of providing the flight is $20,000, which includes the cost of the pilots, flight attendants, fuel, etc.
-Refer to Scenario 15-5. How much additional profit can the airline earn by charging each customer their willingness to pay relative to charging a flat price of $600 per ticket?

Accepted Answer

A)   $15,000
B)   $25,000
C)   $40,000
D)   $70,000E) None of the above
F) All of the above

Question 8

Explain how a profit-maximizing monopolist chooses its level of output and the price of its goods.

Accepted Answer

A profit-maximizing monopolist produces ...

Question 9

Figure 15-23 
-Refer to Figure 15-23. If a regulator requires the firm to charge an average cost price, what is the amount of profit or loss earned by the firm?

Accepted Answer

The answer of Figure 15-23 
-Refer to Figure 15-23. If...

Question 10

Which of the following is a characteristic of a monopoly?

Accepted Answer

A)   rising average total costs
B)   one buyer
C)   rising fixed costs
D)   a product without close substitutesE) A) and B)
F) B) and D)

Question 11

Figure 15-23 
-Refer to Figure 15-23. If the firm profit-maximizes, what amount of output will it produce?

Accepted Answer

The answer of Figure 15-23 
-Refer to Figure 15-23. If...

Question 12

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

Accepted Answer

A)   consumer surplus.
B)   deadweight loss.
C)   price discrimination.
D)   nonprofit pricing strategies.E) B) and C)
F) C) and D)

Question 13

When a monopolist increases the quantity that it sells, price decreases, which, all else equal, decreases total revenue; this is called the price effect.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is an example of a barrier to entry?

Accepted Answer

A)   Matthew offers free samples of his latest flavored coffee drink to entice customers to buy a cup.
B)   Mark charges a lower price to students than to faculty for his tattoo services.
C)   Luke charges a higher hourly price to business students than to liberal arts students for his economics tutoring.
D)   John obtained a copyright for the song he wrote and recorded.E) None of the above
F) A) and D)

Question 15

Table 15-11
The following table shows quantity, price, and marginal cost information for a monopoly:
 
-Refer to Table 15-11. What price should the firm charge to maximize its profit?

Accepted Answer

A)   $4
B)   $5
C)   $6
D)   $7E) A) and B)
F) None of the above

Question 16

Which of the following statements is true about patents and copyrights? (i)  They have benefits and costs.
(ii)  They lead to higher prices.
(iii)  They enhance the ability of monopolists to earn above-average profits.

Accepted Answer

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

Question 17

Private ownership of a monopoly may benefit society because the monopoly will have an incentive to

Accepted Answer

A)   charge a price that is consistent with that of a benevolent social planner.
B)   charge a price that prevents some people from buying.
C)   price its good according to the intersection of marginal cost and average revenue.
D)   lower its costs to earn a higher profit.E) All of the above
F) A) and B)

Question 18

Which of the following statements is correct?

Accepted Answer

A)   Two examples of early antitrust laws are the Clinton and Stigler Antitrust Acts.
B)   Antitrust laws automatically prevent mergers between companies that produce similar products.
C)   Antitrust laws reduce the government's power to regulate private companies.
D)   Antitrust laws can reduce social welfare if they prevent mergers that would lower costs through more efficient joint production.E) B) and C)
F) All of the above

Question 19

A monopolist produces where P > MC = MR.

Accepted Answer

A) True 
 B)False

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

Exam 15: Monopoly

Correct Answer
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Which of the following is a characteristic of a monopoly?

Correct Answer
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Which of the following is an example of a barrier to entry?

Correct Answer
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Correct Answer
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Private ownership of a monopoly may benefit society because the monopoly will have an incentive to

Correct Answer
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Because many good substitutes exist for a competitive firm's product, the demand curve that it faces is

Correct Answer
verified

Explain how a profit-maximizing monopolist chooses its level of output and the price of its goods.

Correct Answer
verified
A profit-maximizing monopolist produces ...
View Answer

Which of the following statements is true about patents and copyrights? (i) They have benefits and costs. (ii) They lead to higher prices. (iii) They enhance the ability of monopolists to earn above-average profits.

Correct Answer
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A monopolist produces where P > MC = MR.

Correct Answer
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Table 15-11 The following table shows quantity, price, and marginal cost information for a monopoly: -Refer to Table 15-11. What price should the firm charge to maximize its profit?

Correct Answer
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Antitrust laws allow the government to

Correct Answer
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Figure 15-23 -Refer to Figure 15-23. If a regulator requires the firm to charge an average cost price, what is the amount of profit or loss earned by the firm?

Correct Answer
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University financial aid can be viewed as a type of price discrimination.

Correct Answer
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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?

Correct Answer
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Which of the following statements is correct?

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When a monopolist increases the quantity that it sells, price decreases, which, all else equal, decreases total revenue; this is called the price effect.

Correct Answer
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Figure 15-23 -Refer to Figure 15-23. If the firm profit-maximizes, how much profit will it earn?

Correct Answer
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Figure 15-23 -Refer to Figure 15-23. If the firm profit-maximizes, what amount of output will it produce?

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

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

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Exam 15: Monopoly

Correct AnswerverifiedShow Answer

Which of the following is a characteristic of a monopoly?

Correct AnswerverifiedShow Answer

Which of the following is an example of a barrier to entry?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Private ownership of a monopoly may benefit society because the monopoly will have an incentive to

Correct AnswerverifiedShow Answer

Because many good substitutes exist for a competitive firm's product, the demand curve that it faces is

Correct AnswerverifiedShow Answer

Explain how a profit-maximizing monopolist chooses its level of output and the price of its goods.

Correct AnswerverifiedA profit-maximizing monopolist produces ...View AnswerShow Answer

Which of the following statements is true about patents and copyrights? (i) They have benefits and costs. (ii) They lead to higher prices. (iii) They enhance the ability of monopolists to earn above-average profits.

Correct AnswerverifiedShow Answer

A monopolist produces where P > MC = MR.

Correct AnswerverifiedShow Answer

Table 15-11 The following table shows quantity, price, and marginal cost information for a monopoly: -Refer to Table 15-11. What price should the firm charge to maximize its profit?

Correct AnswerverifiedShow Answer

Antitrust laws allow the government to

Correct AnswerverifiedShow Answer

Figure 15-23 -Refer to Figure 15-23. If a regulator requires the firm to charge an average cost price, what is the amount of profit or loss earned by the firm?

Correct AnswerverifiedShow Answer

University financial aid can be viewed as a type of price discrimination.

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

When a monopolist increases the quantity that it sells, price decreases, which, all else equal, decreases total revenue; this is called the price effect.

Correct AnswerverifiedShow Answer

Figure 15-23 -Refer to Figure 15-23. If the firm profit-maximizes, how much profit will it earn?

Correct AnswerverifiedShow Answer

Figure 15-23 -Refer to Figure 15-23. If the firm profit-maximizes, what amount of output will it produce?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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A profit-maximizing monopolist produces ...
View Answer

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