Question 1

The monopolist's profit-maximizing quantity of output is determined by the intersection of which of the following two curves?

Accepted Answer

A)   marginal cost and demand
B)   marginal cost and marginal revenue
C)   average total cost and marginal revenue
D)   average variable cost and average revenueE) A) and D)
F) All of the above

Question 2

The deadweight loss for a monopolist equals one-half of its profits for any given level of output.

Accepted Answer

A) True 
 B)False

Question 3

Scenario 15-4
Suppose a monopolist has a demand curve that can be expressed as P=90-Q. The monopolist's marginal revenue curve can be expressed as MR=90-2Q. The monopolist has constant marginal costs and average total costs of $10.
-Refer to Scenario 15-4.The profit-maximizing monopolist will earn profits of

Accepted Answer

A)   $6,400.
B)   $3,200.
C)   $1,600.
D)   $800.E) B) and C)
F) C) and D)

Question 4

Most markets are not monopolies in the real world because

Accepted Answer

A)   firms usually face downward-sloping demand curves.
B)   supply curves slope upward.
C)   firms usually equate price with marginal cost.
D)   there are reasonable substitutes for most goods.E) A) and B)
F) A) and C)

Question 5

Scenario 15-3
A monopoly firm maximizes its profit by producing Q = 500 units of output. At that level of output, its marginal revenue is $30, its average revenue is $60, and its average total cost is $34.
-Refer to Scenario 15-3.The firm's profit-maximizing price is

Accepted Answer

A)   $30.
B)   between $30 and $34.
C)   between $34 and $60.
D)   $60.E) All of the above
F) B) and C)

Question 6

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 $150?

Accepted Answer

A)   $350,000
B)   $450,000
C)   $475,000
D)   $575,000E) A) and D)
F) B) and C)

Question 7

Scenario 15-7
Black Box Cable TV is able to purchase an exclusive right to sell a premium movie channel (PMC)  in its market area. Let's assume that Black Box Cable pays $150,000 a year for the exclusive marketing rights to PMC. Since Black Box has already installed cable to all of the homes in its market area, the marginal cost of delivering PMC to subscribers is zero. The manager of Black Box needs to know what price to charge for the PMC service to maximize her profit. Before setting price, she hires an economist to estimate demand for the PMC service. The economist discovers that there are two types of subscribers who value premium movie channels. First are the 4,000 die-hard TV viewers who will pay as much as $150 a year for the new PMC premium channel. Second, the PMC channel will appeal to 20,000 occasional TV viewers who will pay as much as $20 a year for a subscription to PMC.
-Refer to Scenario 15-7.If Black Box 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 = $20; profit = $400,000
B)   price = $20; profit = $330,000
C)   price = $150; profit = $450,000
D)   price = $150; profit = $600,000E) A) and D)
F) C) and D)

Question 8

With perfect price discrimination the monopoly

Accepted Answer

A)   eliminates all price discrimination by charging each customer the same price.
B)   charges each customer an amount equal to the monopolist's marginal cost of production.
C)   eliminates deadweight loss.
D)   eliminates profits and increases consumer surplus.E) A) and B)
F) None of the above

Question 9

Table 15-12
The following table provides information on the price, quantity, and average total cost for a monopoly.
 
-Refer to Table 15-12.In order to maximize profits,the firm should produce

Accepted Answer

A)   4 units of output.
B)   8 units of output.
C)   12 units of output.
D)   16 units of output.E) A) and B)
F) None of the above

Question 10

Which of the following statements is (are) true of a monopoly?
(i) A monopoly has the ability to set the price of its product at whatever level it desires.
(ii) A monopoly's total revenue will always increase when it increases the price of its product.
(iii) A monopoly can earn unlimited profits.

Accepted Answer

A)   (i)  only
B)   (ii)  only
C)   (i)  and (ii)  only
D)   (ii)  and (iii)  onlyE) A) and B)
F) A) and D)

Question 11

Because a monopolist is the sole producer in its market,it can necessarily alter the price of its good
(i) without affecting the quantity sold.
(ii) without affecting its average total cost.
(iii) by adjusting the quantity it supplies to the market.

Accepted Answer

A)   (ii)  only
B)   (iii)  only
C)   (i)  and (ii)  only
D)   (ii)  and (iii)  onlyE) B) and C)
F) B) and D)

Question 12

The deadweight loss associated with a monopoly occurs because the monopolist

Accepted Answer

A)   maximizes profits.
B)   produces an output level less than the socially optimal level.
C)   produces an output level greater than the socially optimal level.
D)   equates marginal revenue with marginal cost.E) A) and B)
F) C) and D)

Question 13

A monopolist produces where P = MC = MR.

Accepted Answer

A) True 
 B)False

Question 14

Table 15-10
The monopolist faces the following demand curve:
 
-Refer to Table 15-10.If the monopolist has total fixed costs of $40 and a constant marginal cost of $5,what is the profit-maximizing level of output?

Accepted Answer

A)   7 units
B)   16 units
C)   23 units
D)   31 unitsE) All of the above
F) B) and C)

Question 15

Table 15-7
Sally owns the only shoe store in town. She has the following cost and revenue information.
 
-Refer to Table 15-7.What is the total revenue from selling 8 pairs of shoes?

Accepted Answer

A)   $90
B)   $695
C)   $720
D)   $800E) C) and D)
F) A) and C)

Question 16

In the majority of cases where there is a natural monopoly in the United States,the government usually deals with the problem

Accepted Answer

A)   by splitting the natural monopoly into smaller companies.
B)   through regulation.
C)   by turning the natural monopoly into a public enterprise.
D)   by doing nothing.E) A) and D)
F) B) and D)

Question 17

The fundamental cause of monopolies is barriers to entry.

Accepted Answer

A) True 
 B)False

Question 18

Patents,copyrights,and trademarks

Accepted Answer

A)   are examples of government-created monopolies.
B)   are examples of barriers to entry.
C)   allow their owners to charge higher prices.
D)   All of the above are correct.E) A) and D)
F) A) and B)

Question 19

One problem with regulating a monopolist on the basis of cost is that

Accepted Answer

A)   by focusing on costs, the regulators ignore profits.
B)   it does not provide an incentive for the monopolist to reduce its cost.
C)   a monopolist's costs, by definition, are higher than costs of perfectly competitive firms.
D)   a monopolist is still able to generate excessive economic profits.E) A) and D)
F) B) and C)

Question 20

Authors are allowed to be monopolists in the sale of their books in order to

Accepted Answer

A)   encourage authors to write more and better books.
B)   correct for the negative externalities that the Internet and television impose.
C)   satisfy literary advocacy groups that exercise their lobbying power.
D)   promote a society in which people think for themselves and learn from whichever books they please.E) A) and D)
F) B) and D)

Exam 15: Monopoly.

Correct Answer
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One problem with regulating a monopolist on the basis of cost is that

Correct Answer
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Correct Answer
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Because a monopolist is the sole producer in its market,it can necessarily alter the price of its good (i) without affecting the quantity sold. (ii) without affecting its average total cost. (iii) by adjusting the quantity it supplies to the market.

Correct Answer
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The monopolist's profit-maximizing quantity of output is determined by the intersection of which of the following two curves?

Correct Answer
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Table 15-10 The monopolist faces the following demand curve: -Refer to Table 15-10.If the monopolist has total fixed costs of $40 and a constant marginal cost of $5,what is the profit-maximizing level of output?

Correct Answer
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In the majority of cases where there is a natural monopoly in the United States,the government usually deals with the problem

Correct Answer
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Most markets are not monopolies in the real world because

Correct Answer
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Patents,copyrights,and trademarks

Correct Answer
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The fundamental cause of monopolies is barriers to entry.

Correct Answer
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The deadweight loss associated with a monopoly occurs because the monopolist

Correct Answer
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Which of the following statements is (are) true of a monopoly? (i) A monopoly has the ability to set the price of its product at whatever level it desires. (ii) A monopoly's total revenue will always increase when it increases the price of its product. (iii) A monopoly can earn unlimited profits.

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

Correct Answer
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With perfect price discrimination the monopoly

Correct Answer
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Table 15-12 The following table provides information on the price, quantity, and average total cost for a monopoly. -Refer to Table 15-12.In order to maximize profits,the firm should produce

Correct Answer
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Authors are allowed to be monopolists in the sale of their books in order to

Correct Answer
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Scenario 15-3 A monopoly firm maximizes its profit by producing Q = 500 units of output. At that level of output, its marginal revenue is $30, its average revenue is $60, and its average total cost is $34. -Refer to Scenario 15-3.The firm's profit-maximizing price is

Correct Answer
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The deadweight loss for a monopolist equals one-half of its profits for any given level of output.

Correct Answer
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Table 15-7 Sally owns the only shoe store in town. She has the following cost and revenue information. -Refer to Table 15-7.What is the total revenue from selling 8 pairs of shoes?

Correct Answer
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Correct Answer
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Exam 15: Monopoly.

Correct AnswerverifiedShow Answer

One problem with regulating a monopolist on the basis of cost is that

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Because a monopolist is the sole producer in its market,it can necessarily alter the price of its good (i) without affecting the quantity sold. (ii) without affecting its average total cost. (iii) by adjusting the quantity it supplies to the market.

Correct AnswerverifiedShow Answer

The monopolist's profit-maximizing quantity of output is determined by the intersection of which of the following two curves?

Correct AnswerverifiedShow Answer

Table 15-10 The monopolist faces the following demand curve: -Refer to Table 15-10.If the monopolist has total fixed costs of $40 and a constant marginal cost of $5,what is the profit-maximizing level of output?

Correct AnswerverifiedShow Answer

In the majority of cases where there is a natural monopoly in the United States,the government usually deals with the problem

Correct AnswerverifiedShow Answer

Most markets are not monopolies in the real world because

Correct AnswerverifiedShow Answer

Patents,copyrights,and trademarks

Correct AnswerverifiedShow Answer

The fundamental cause of monopolies is barriers to entry.

Correct AnswerverifiedShow Answer

The deadweight loss associated with a monopoly occurs because the monopolist

Correct AnswerverifiedShow Answer

Which of the following statements is (are) true of a monopoly? (i) A monopoly has the ability to set the price of its product at whatever level it desires. (ii) A monopoly's total revenue will always increase when it increases the price of its product. (iii) A monopoly can earn unlimited profits.

Correct AnswerverifiedShow Answer

A monopolist produces where P = MC = MR.

Correct AnswerverifiedShow Answer

With perfect price discrimination the monopoly

Correct AnswerverifiedShow Answer

Table 15-12 The following table provides information on the price, quantity, and average total cost for a monopoly. -Refer to Table 15-12.In order to maximize profits,the firm should produce

Correct AnswerverifiedShow Answer

Authors are allowed to be monopolists in the sale of their books in order to

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Scenario 15-3 A monopoly firm maximizes its profit by producing Q = 500 units of output. At that level of output, its marginal revenue is $30, its average revenue is $60, and its average total cost is $34. -Refer to Scenario 15-3.The firm's profit-maximizing price is

Correct AnswerverifiedShow Answer

The deadweight loss for a monopolist equals one-half of its profits for any given level of output.

Correct AnswerverifiedShow Answer

Table 15-7 Sally owns the only shoe store in town. She has the following cost and revenue information. -Refer to Table 15-7.What is the total revenue from selling 8 pairs of shoes?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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