Question 1

For a monopoly,the socially efficient level of output occurs where

Accepted Answer

A)   marginal revenue equals marginal cost.
B)   average revenue equals marginal cost.
C)   marginal revenue equals average total cost.
D)   average revenue equals average total cost.E) B) and C)
F) None of the above

Question 2

When there are economies of scale over the relevant range of output for a monopoly,the monopoly

Accepted Answer

A)   is a natural monopoly.
B)   is a government-granted monopoly.
C)   has monopoly power due to the ownership of a patent or copyright.
D)   has monopoly power due to the ownership of a key production resource.E) A) and D)
F) A) and C)

Question 3

Competitive firms differ from monopolies in which of the following ways? (i) Competitive firms do not have to worry about the price effect lowering their total revenue.
(ii) Marginal revenue for a competitive firm equals price,while marginal revenue for a monopoly is less than the price it is able to charge.
(iii) Monopolies must lower their price in order to sell more of their product,while competitive firms do not.

Accepted Answer

A)   (i) and (ii) only
B)   (ii) and (iii) only
C)   (i) and (iii) only
D)   (i) ,(ii) ,and (iii) E) All of the above
F) A) and B)

Question 4

A firm that is a natural monopoly

Accepted Answer

A)   is not likely to be concerned about new entrants eroding its monopoly power.
B)   is taking advantage of diseconomies of scale.
C)   would experience a lower average total cost if more firms entered the market.
D)   All of the above are correct.E) A) and B)
F) All of the above

Question 5

When the government creates a monopoly,the social loss may include

Accepted Answer

A)   declining marginal costs.
B)   the cost of lawyers and lobbyists hired to convince lawmakers to continue the monopoly.
C)   excessive monopoly profits.
D)   diminishing marginal revenue.E) None of the above
F) A) and B)

Question 6

The legislation passed by Congress in 1890 to reduce the market power of large and powerful "trusts" was the

Accepted Answer

A)   Morgan Act.
B)   Sherman Act.
C)   Clayton Act.
D)   14th Amendment.E) A) and D)
F) B) and C)

Question 7

Table 14-4
A monopolist faces the following demand curve:
 
-Refer to Table 14-4.If the monopolist produces 10 units,what is its average revenue?

Accepted Answer

A)   $100
B)   $15
C)   $10
D)   $1E) C) and D)
F) All of the above

Question 8

Figure 14-11 
-Refer to Figure 14-11.Which area represents the deadweight loss from monopoly?

Accepted Answer

A)   A+B
B)   C+F
C)   G
D)   A+B+C+FE) A) and B)
F) A) and C)

Question 9

A firm cannot price discriminate if

Accepted Answer

A)   its has declining marginal revenue.
B)   it operates in a competitive market.
C)   buyers only reveal the price they are willing to pay for the product.
D)   it has a constant marginal cost.E) All of the above
F) C) and D)

Question 10

Marginal revenue can become negative for

Accepted Answer

A)   both competitive and monopoly firms.
B)   competitive firms but not for monopoly firms.
C)   monopoly firms but not for competitive firms.
D)   neither competitive nor monopoly firms.E) B) and C)
F) A) and D)

Question 11

For a monopoly,the level of output at which marginal revenue equals zero is also the level of output at which

Accepted Answer

A)   average revenue is zero.
B)   profit is maximized.
C)   total revenue is maximized.
D)   marginal cost is zero.E) A) and B)
F) B) and D)

Question 12

Reduced competition through merging of companies will raise social welfare

Accepted Answer

A)   if the social cost from the synergies exceeds the benefit of increased market power.
B)   if the benefit from the synergies exceeds the social cost of increased market power.
C)   always.
D)   never.E) B) and D)
F) All of the above

Question 13

The key issue in determining the efficiency of public versus private ownership of a monopoly is

Accepted Answer

A)   the tendency for efficient management of publicly owned enterprises.
B)   the inability of private monopolies to get rid of managers that are doing a bad job.
C)   the propensity of private monopolies to generate excessive profits.
D)   how ownership of the firm affects the cost of production.E) B) and C)
F) None of the above

Question 14

Figure 14-6 
-Refer to Figure 14-6.A profit-maximizing monopolist would earn profits of

Accepted Answer

A)   $96.
B)   $117.
C)   $120.
D)   $126.E) A) and D)
F) All of the above

Question 15

In theory,perfect price discrimination

Accepted Answer

A)   decreases the monopolist's profits.
B)   decreases consumer surplus.
C)   increases deadweight loss.
D)   reduces the number of consumers who purchase the monopoly's product.E) A) and B)
F) None of the above

Question 16

Which of the following statements is correct for a monopolist? i) 
The firm maximizes profits by equating marginal revenue with marginal cost.
Ii) 
The firm maximizes profits by equating price with marginal cost.
Iii) 
Demand equals marginal revenue.
Iv) 
Average revenue equals price.

Accepted Answer

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

Question 17

Suppose a firm has a monopoly on the sale of a computer game and faces a downward-sloping demand curve.When selling the 50th game,the firm will always receive

Accepted Answer

A)   less marginal revenue on the 50th game than it received on the 49th game.
B)   more average revenue on the 50th game than it received on the 49th game.
C)   more total revenue on the 50 game than it received on the first 49 game.
D)   Both b) and c) are correct.E) A) and D)
F) None of the above

Question 18

Some companies merge in order to lower costs through efficient joint production.

Accepted Answer

A) True 
 B)False

Question 19

A monopoly is an inefficient way to produce a product because

Accepted Answer

A)   it can earn both short-run and long-run profits.
B)   it faces a downward-sloping demand curve.
C)   the cost to the monopolist of producing one more unit exceeds the value of that unit to potential buyers.
D)   it produces a smaller level of output than would be produced in a competitive market.E) B) and D)
F) A) and D)

Question 20

Scenario 14-8
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 14-8.If Mega Media 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 = $25; profit = $575,000
B)   price = $25; profit = $475,000
C)   price = $150; profit = $450,000
D)   price = $150; profit = $350,000E) A) and C)
F) None of the above

Exam 14: Monopoly

A firm that is a natural monopoly

Correct Answer
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Correct Answer
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A monopoly is an inefficient way to produce a product because

Correct Answer
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The key issue in determining the efficiency of public versus private ownership of a monopoly is

Correct Answer
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Suppose a firm has a monopoly on the sale of a computer game and faces a downward-sloping demand curve.When selling the 50^th game,the firm will always receive

Correct Answer
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Marginal revenue can become negative for

Correct Answer
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A firm cannot price discriminate if

Correct Answer
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Some companies merge in order to lower costs through efficient joint production.

Correct Answer
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Figure 14-11 -Refer to Figure 14-11.Which area represents the deadweight loss from monopoly?

Correct Answer
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For a monopoly,the socially efficient level of output occurs where

Correct Answer
verified

When there are economies of scale over the relevant range of output for a monopoly,the monopoly

Correct Answer
verified

In theory,perfect price discrimination

Correct Answer
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The legislation passed by Congress in 1890 to reduce the market power of large and powerful "trusts" was the

Correct Answer
verified

Reduced competition through merging of companies will raise social welfare

Correct Answer
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Figure 14-6 -Refer to Figure 14-6.A profit-maximizing monopolist would earn profits of

Correct Answer
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Table 14-4 A monopolist faces the following demand curve: -Refer to Table 14-4.If the monopolist produces 10 units,what is its average revenue?

Correct Answer
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Correct Answer
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For a monopoly,the level of output at which marginal revenue equals zero is also the level of output at which

Correct Answer
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Which of the following statements is correct for a monopolist? i) The firm maximizes profits by equating marginal revenue with marginal cost. Ii) The firm maximizes profits by equating price with marginal cost. Iii) Demand equals marginal revenue. Iv) Average revenue equals price.

Correct Answer
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When the government creates a monopoly,the social loss may include

Correct Answer
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Exam 14: Monopoly

A firm that is a natural monopoly

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A monopoly is an inefficient way to produce a product because

Correct AnswerverifiedShow Answer

The key issue in determining the efficiency of public versus private ownership of a monopoly is

Correct AnswerverifiedShow Answer

Suppose a firm has a monopoly on the sale of a computer game and faces a downward-sloping demand curve.When selling the 50th game,the firm will always receive

Correct AnswerverifiedShow Answer

Marginal revenue can become negative for

Correct AnswerverifiedShow Answer

A firm cannot price discriminate if

Correct AnswerverifiedShow Answer

Some companies merge in order to lower costs through efficient joint production.

Correct AnswerverifiedShow Answer

Figure 14-11 -Refer to Figure 14-11.Which area represents the deadweight loss from monopoly?

Correct AnswerverifiedShow Answer

For a monopoly,the socially efficient level of output occurs where

Correct AnswerverifiedShow Answer

When there are economies of scale over the relevant range of output for a monopoly,the monopoly

Correct AnswerverifiedShow Answer

In theory,perfect price discrimination

Correct AnswerverifiedShow Answer

The legislation passed by Congress in 1890 to reduce the market power of large and powerful "trusts" was the

Correct AnswerverifiedShow Answer

Reduced competition through merging of companies will raise social welfare

Correct AnswerverifiedShow Answer

Figure 14-6 -Refer to Figure 14-6.A profit-maximizing monopolist would earn profits of

Correct AnswerverifiedShow Answer

Table 14-4 A monopolist faces the following demand curve: -Refer to Table 14-4.If the monopolist produces 10 units,what is its average revenue?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

For a monopoly,the level of output at which marginal revenue equals zero is also the level of output at which

Correct AnswerverifiedShow Answer

Which of the following statements is correct for a monopolist? i) The firm maximizes profits by equating marginal revenue with marginal cost. Ii) The firm maximizes profits by equating price with marginal cost. Iii) Demand equals marginal revenue. Iv) Average revenue equals price.

Correct AnswerverifiedShow Answer

When the government creates a monopoly,the social loss may include

Correct AnswerverifiedShow Answer

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Correct Answer
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Correct Answer
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Correct Answer
verified

Suppose a firm has a monopoly on the sale of a computer game and faces a downward-sloping demand curve.When selling the 50^th game,the firm will always receive

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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