Question 1

Table 15-4
A monopolist faces the following demand curve:
 
-Refer to Table 15-4. If the monopolist produces 10 units, what is its average revenue?

Accepted Answer

A)   $100
B)   $15
C)   $10
D)   $1E) A) and C)
F) A) and B)

Question 2

A monopoly

Accepted Answer

A)   can set the price it charges for its output and earn unlimited profits.
B)   takes the market price as given and earns small but positive profits.
C)   can set the price it charges for its output but faces a downward-sloping demand curve so it cannot earn unlimited profits.
D)   can set the price it charges for its output but faces a horizontal demand curve so it can earn unlimited profits.E) B) and C)
F) A) and D)

Question 3

Because a monopolist must lower its price in order to sell another unit of output,

Accepted Answer

A)   marginal revenue is less than price.
B)   long-term economic profits will be zero.
C)   total revenue increases as price increases.
D)   average revenue is less than price.E) A) and D)
F) A) and C)

Question 4

Assume that a monopolist decides to maximize revenue rather than profit. How does this operating objective change the size of the deadweight loss? If you are a "benevolent" manager of a monopoly firm and are interested in reducing the deadweight loss of monopoly, should you maximize profits or maximize revenue? Explain your answer.

Accepted Answer

A revenue maximizer operates where MR = ...

Question 5

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

Accepted Answer

A)   John owns the only parcel of lakeside property with a beach that is safe for swimming. He charges admission to neighbors who want to use the beach.
B)   Jackie owns the copyright to a popular song. She receives royalties every time a radio station plays her song.
C)   John Jr. owns the best seafood restaurant in a popular resort area. He charges high prices because the quality of the food is so good.
D)   Caroline owns the patent for a new running shoe. She receives payments from the company who manufactures the shoes.E) A) and C)
F) A) and B)

Question 6

The fundamental source of monopoly power is

Accepted Answer

A)   many buyers and sellers.
B)   low fixed costs.
C)   rising average total costs.
D)   barriers to entry.E) None of the above
F) A) and D)

Question 7

Table 15-21
Tommy's Tie Company, a monopolist, has the following cost and revenue information. Assume that Tommy's is
able to engage in perfect price discrimination.
 
-Refer to Table 15-21. If the monopolist can engage in perfect price discrimination, what is the marginal revenue from selling the 5th tie?

Accepted Answer

A)   $80
B)   $100
C)   $110
D)   $120E) B) and D)
F) B) and C)

Question 8

Figure 15-21 
-Refer to Figure 15-21. Which of the following areas describes the profit of this natural monopolist under socially optimal pricing?

Accepted Answer

A)   ABCE
B)   0HIL
C)   0FGK
D)   None of the above is correct.E) A) and C)
F) B) and C)

Question 9

Figure 15-1 
-Refer to Figure 15-1. The shape of the average total cost curve in the figure suggests an opportunity for a profit- maximizing monopolist to take advantage of

Accepted Answer

A)   economies of scale.
B)   diseconomies of scale.
C)   diminishing marginal product.
D)   increasing marginal cost.E) A) and C)
F) A) and D)

Question 10

Scenario 15-9
Suppose executives at an art museum know that 100 adults are willing to pay $12 for admission to the museum on a weekday. Suppose the executives also know that 200 students are willing to pay $8 for admission on a weekday. The cost of operating the museum on a weekday is $2,000.
-Refer to Scenario 15-9. How much additional profit will the museum earn if it engages in price discrimination compared to charging each customer $8 for admission?

Accepted Answer

A)   $0
B)   $200
C)   $400
D)   $800E) A) and B)
F) None of the above

Question 11

Movie theatres charge different prices to different groups of people based on the differing marginal costs that exist from group to group.

Accepted Answer

A) True 
 B)False

Question 12

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

Question 13

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

Accepted Answer

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

Question 14

Figure 15-3 
-Refer to Figure 15-3. Which panel could represent the demand curve facing the soybean industry?

Accepted Answer

A)   Panel A
B)   Panel B
C)   Panel C
D)   Panel DE) None of the above
F) A) and B)

Question 15

For a monopoly, marginal revenue is often greater than the price it charges for its good.

Accepted Answer

A) True 
 B)False

Question 16

Figure 15-5 
-Refer to Figure 15-5. At the profit-maximizing level of output,

Accepted Answer

A)   marginal revenue is equal to P3.
B)   marginal cost is equal to P3.
C)   average revenue is equal to P2.
D)   average total cost is equal to P6.E) A) and D)
F) A) and B)

Question 17

Marginal revenue for a monopolist is computed as

Accepted Answer

A)   average revenue divided by quantity sold.
B)   average revenue times quantity divided by price.
C)   total revenue divided by quantity sold.
D)   change in total revenue per one unit increase in quantity sold.E) A) and D)
F) All of the above

Question 18

Suppose a monopolist charges a price of $27 for its product and sells 10 units at that price. At 10 units of production the firm has average fixed cost equal to $10 and average variable cost equal to $12. How much total profit is the firm earning at this price?

Accepted Answer

A)   $5
B)   $25
C)   $50
D)   $140E) B) and C)
F) B) and D)

Question 19

A movie theater can increase its profits through price discrimination by charging a higher price to adults and a lower price to children if

Accepted Answer

A)   adults buy more popcorn than children.
B)   the cost of showing a movie to children is less than the cost of showing a movie to adults.
C)   it has some degree of monopoly-pricing power.
D)   All of the above are correct.E) None of the above
F) A) and B)

Question 20

If a monopolist's marginal costs increase by $1 for all levels of output, then the monopoly price will

Accepted Answer

A)   rise by $1.
B)   rise by more than $1.
C)   rise by less than $1.
D)   not change, but profits will decrease.E) All of the above
F) B) and C)

Exam 15: Monopoly

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

Correct Answer
verified

For a monopoly, marginal revenue is often greater than the price it charges for its good.

Correct Answer
verified

Movie theatres charge different prices to different groups of people based on the differing marginal costs that exist from group to group.

Correct Answer
verified

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

Correct Answer
verified

Because a monopolist must lower its price in order to sell another unit of output,

Correct Answer
verified

Correct Answer
verified
A revenue maximizer operates where MR = ...
View Answer

Suppose a monopolist charges a price of $27 for its product and sells 10 units at that price. At 10 units of production the firm has average fixed cost equal to $10 and average variable cost equal to $12. How much total profit is the firm earning at this price?

Correct Answer
verified

Marginal revenue for a monopolist is computed as

Correct Answer
verified

If a monopolist's marginal costs increase by $1 for all levels of output, then the monopoly price will

Correct Answer
verified

The fundamental source of monopoly power is

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

Correct Answer
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Figure 15-1 -Refer to Figure 15-1. The shape of the average total cost curve in the figure suggests an opportunity for a profit- maximizing monopolist to take advantage of

Correct Answer
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Table 15-4 A monopolist faces the following demand curve: -Refer to Table 15-4. If the monopolist produces 10 units, what is its average revenue?

Correct Answer
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Figure 15-3 -Refer to Figure 15-3. Which panel could represent the demand curve facing the soybean industry?

Correct Answer
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A monopoly

Correct Answer
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Figure 15-5 -Refer to Figure 15-5. At the profit-maximizing level of output,

Correct Answer
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A movie theater can increase its profits through price discrimination by charging a higher price to adults and a lower price to children if

Correct Answer
verified

Figure 15-21 -Refer to Figure 15-21. Which of the following areas describes the profit of this natural monopolist under socially optimal pricing?

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

For a monopoly, marginal revenue is often greater than the price it charges for its good.

Correct AnswerverifiedShow Answer

Movie theatres charge different prices to different groups of people based on the differing marginal costs that exist from group to group.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Because a monopolist must lower its price in order to sell another unit of output,

Correct AnswerverifiedShow Answer

Correct AnswerverifiedA revenue maximizer operates where MR = ...View AnswerShow Answer

Suppose a monopolist charges a price of $27 for its product and sells 10 units at that price. At 10 units of production the firm has average fixed cost equal to $10 and average variable cost equal to $12. How much total profit is the firm earning at this price?

Correct AnswerverifiedShow Answer

Marginal revenue for a monopolist is computed as

Correct AnswerverifiedShow Answer

If a monopolist's marginal costs increase by $1 for all levels of output, then the monopoly price will

Correct AnswerverifiedShow Answer

The fundamental source of monopoly power is

Correct AnswerverifiedShow Answer

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

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Figure 15-1 -Refer to Figure 15-1. The shape of the average total cost curve in the figure suggests an opportunity for a profit- maximizing monopolist to take advantage of

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Table 15-4 A monopolist faces the following demand curve: -Refer to Table 15-4. If the monopolist produces 10 units, what is its average revenue?

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Figure 15-3 -Refer to Figure 15-3. Which panel could represent the demand curve facing the soybean industry?

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A monopoly

Correct AnswerverifiedShow Answer

Figure 15-5 -Refer to Figure 15-5. At the profit-maximizing level of output,

Correct AnswerverifiedShow Answer

A movie theater can increase its profits through price discrimination by charging a higher price to adults and a lower price to children if

Correct AnswerverifiedShow Answer

Figure 15-21 -Refer to Figure 15-21. Which of the following areas describes the profit of this natural monopolist under socially optimal pricing?

Correct AnswerverifiedShow Answer

Correct Answer
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A revenue maximizer operates where MR = ...
View Answer

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