Question 1

Which of the following statements is not correct?

Accepted Answer

A)   Consumers will likely benefit in the form of lower prices from buying a product made by a natural monopoly than if the market were served by several firms.
B)   Monopolists typically charge higher prices than competitive firms.
C)   Monopolists typically produce larger quantities of output than competitive firms.
D)   Consumers may benefit from monopolies if the firms invest their higher profits into something that benefits society such as medical research.E) A) and B)
F) None of the above

Question 2

A patent gives a single person or firm the exclusive right to sell some good or service forever.

Accepted Answer

A) True 
 B)False

Question 3

What happens to the price and quantity sold of a drug when its patent runs out? (i)  The price will fall.
(ii)  The quantity sold will fall.
(iii)  The marginal cost of producing the drug will rise.

Accepted Answer

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

Question 4

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. At Q = 500, the firm's marginal cost is

Accepted Answer

A)   $34.
B)   less than $30.
C)   $30.
B)   greater than $34.C) None of the above
D) A) and B)

Question 5

When we compare economic welfare in a monopoly market to a competitive market, the profits earned by the monopolist represent

Accepted Answer

A)   a transfer of benefits from the consumer to the producer.
B)   a loss in total welfare.
C)   the higher marginal costs incurred by the monopolists in comparison to competitive firms.
D)   the higher marginal revenues gained by the monopolists in comparison to competitive firms.E) A) and B)
F) A) and C)

Question 6

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) B) and C)

Question 7

Accepted Answer

Figure 15-25 -Refer to Figure 15-25. If this firm profit maximizes, which letter represents the price it will charge? ) undefined
 ) undefined

Question 8

Table 15-2
Tanya has the following demand curve for selling taffy. Assume that Tanya has a marginal cost of $3 per unit.
 
-Refer to Table 15-2. What is Tanya's profit-maximizing level of output?

Accepted Answer

A)   1
B)   2
C)   3
D)   4E) A) and B)
F) C) and D)

Question 9

Scenario 15-11
Vincent operates a scenic tour business in Boston. He has one bus which can fit 50 people per tour and each tour lasts 2 hours. His total cost of operating one tour is fixed at $450. Vincent's cost is not reduced if he runs a tour with a partially full bus. While his cost is the same for all tours, Vincent charges each passenger his/her willingness to pay: adults $18 per trip, children $10 per trip, and senior citizens $12 per trip. At those rates, on a typical day Vincent's demand is:
  Assume that Vincent's customers are always available for the tour; therefore, he can fill his bus for each tour as long as there is sufficient total demand for the day.
-Refer to Scenario 15-11. What is Vincent's cost of serving all passengers demanding a tour on a typical day?

Accepted Answer

The answer of Scenario 15-11
Vincent operates a scenic tour business...

Question 10

Table 15-19
A monopolist faces the following demand curve:
 
-Refer to Table 15-19. If a monopolist faces a constant marginal cost of $5, how much output should the firm produce in order to equate marginal revenue with marginal cost?

Accepted Answer

A)   3 units
B)   4 units
C)   5 units
D)   6 unitsE) All of the above
F) C) and D)

Question 11

Scenario 15-2
Consider a local, privately-owned electrical cooperative named Poweshiek Power Company (PPCo) . PPCo has just completed a clean-coal-burning electrical power plant in Iowa. Currently, PPCo can meet the electricity needs of all residents in the county. In fact, its capacity far exceeds the needs of the county. After just a few years of operation, the shareholders of PPCo experienced incredibly high rates of return on their investment due to the profitability of the corporation.
-Refer to Scenario 15-2. PPCo will continue to be a monopolist in the electricity industry only if

Accepted Answer

A)   population growth leads to an increased demand for electricity.
B)   there are no new entrants to the market.
C)   the price of natural gas decreases.
D)   All of the above are correct.E) A) and B)
F) C) and D)

Question 12

Figure 15-23 
-Refer to Figure 15-23. If a regulator requires the firm to charge a marginal 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 13

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 14

When a monopolist increases the amount of output that it produces and sells, average revenue

Accepted Answer

A)   increases, and marginal revenue increases.
B)   increases, and marginal revenue decreases.
C)   decreases, and marginal revenue increases.
D)   decreases, and marginal revenue decreases.E) A) and B)
F) C) and D)

Question 15

Because monopoly firms do not have to compete with other firms, the outcome in a market with a monopoly

Accepted Answer

A)   is often not in the best interest of society.
B)   maximizes total economic well-being.
C)   is efficient.
D)   benefits consumers more so than the producer.E) A) and D)
F) C) and D)

Question 16

Figure 15-1 
-Refer to Figure 15-1. Considering the relationship between average total cost and marginal cost, the marginal cost curve for this firm must

Accepted Answer

A)   lie entirely above the average total cost curve.
B)   lie entirely below the average total cost curve.
C)   be U-shaped.
D)   be horizontal.E) A) and C)
F) A) and D)

Question 17

Scenario 15-10
Vincent operates a scenic tour business in Boston. He has one bus which can fit 50 people per tour and each tour lasts 2 hours. His total cost of operating one tour is fixed at $450. Vincent's cost is not reduced if he runs a tour with a partially full bus. While his cost is the same for all tours, Vincent charges each passenger his/her willingness to pay: adults $18 per trip, children $10 per trip, and senior citizens $12 per trip. At those rates, on a typical day Vincent's demand is:
  Assume that Vincent's customers are always available for the tour; therefore, he can fill his bus for each tour as long as there is sufficient total demand for the day.
-Refer to Scenario 15-10. What is Vincent's total revenue on a typical day?

Accepted Answer

A)   $1,500
B)   $1,800
C)   $2,170
D)   $2,700E) C) and D)
F) A) and B)

Question 18

Which statement best describes the effect(s)  that occur when a monopoly firm reduces the price of its product?

Accepted Answer

A)   The "price effect" causes total revenue to fall.
B)   The "output effect" causes total revenue to rise.
C)   The "revenue effect" causes total revenue to remain constant.
D)   Both a and b are correct.E) B) and D)
F) None of the above

Question 19

A monopolist produces where P = MC = MR.

Accepted Answer

A) True 
 B)False

Question 20

Figure 15-18 
-Refer to Figure 15-18. If the monopoly firm is not allowed to price discriminate, then consumer surplus amounts to

Accepted Answer

A)   $1,000.
B)   $2,000.
C)   $3,000.
D)   $4,000.E) B) and C)
F) A) and D)

Exam 15: Monopoly

Table 15-2 Tanya has the following demand curve for selling taffy. Assume that Tanya has a marginal cost of $3 per unit. -Refer to Table 15-2. What is Tanya's profit-maximizing level of output?

Correct Answer
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Which of the following statements is not correct?

Correct Answer
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Figure 15-1 -Refer to Figure 15-1. Considering the relationship between average total cost and marginal cost, the marginal cost curve for this firm must

Correct Answer
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Which statement best describes the effect(s) that occur when a monopoly firm reduces the price of its product?

Correct Answer
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When we compare economic welfare in a monopoly market to a competitive market, the profits earned by the monopolist represent

Correct Answer
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What happens to the price and quantity sold of a drug when its patent runs out? (i) The price will fall. (ii) The quantity sold will fall. (iii) The marginal cost of producing the drug will rise.

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

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

Correct Answer
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Table 15-19 A monopolist faces the following demand curve: -Refer to Table 15-19. If a monopolist faces a constant marginal cost of $5, how much output should the firm produce in order to equate marginal revenue with marginal cost?

Correct Answer
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Because monopoly firms do not have to compete with other firms, the outcome in a market with a monopoly

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

Correct Answer
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A patent gives a single person or firm the exclusive right to sell some good or service forever.

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. At Q = 500, the firm's marginal cost is

Correct Answer
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Figure 15-18 -Refer to Figure 15-18. If the monopoly firm is not allowed to price discriminate, then consumer surplus amounts to

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

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When a monopolist increases the amount of output that it produces and sells, average revenue

Correct Answer
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Exam 15: Monopoly

Table 15-2 Tanya has the following demand curve for selling taffy. Assume that Tanya has a marginal cost of $3 per unit. -Refer to Table 15-2. What is Tanya's profit-maximizing level of output?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

Figure 15-1 -Refer to Figure 15-1. Considering the relationship between average total cost and marginal cost, the marginal cost curve for this firm must

Correct AnswerverifiedShow Answer

Which statement best describes the effect(s) that occur when a monopoly firm reduces the price of its product?

Correct AnswerverifiedShow Answer

When we compare economic welfare in a monopoly market to a competitive market, the profits earned by the monopolist represent

Correct AnswerverifiedShow Answer

What happens to the price and quantity sold of a drug when its patent runs out? (i) The price will fall. (ii) The quantity sold will fall. (iii) The marginal cost of producing the drug will rise.

Correct AnswerverifiedShow Answer

A monopolist produces where P = MC = MR.

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

Correct AnswerverifiedShow Answer

Table 15-19 A monopolist faces the following demand curve: -Refer to Table 15-19. If a monopolist faces a constant marginal cost of $5, how much output should the firm produce in order to equate marginal revenue with marginal cost?

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Because monopoly firms do not have to compete with other firms, the outcome in a market with a monopoly

Correct AnswerverifiedShow Answer

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

A patent gives a single person or firm the exclusive right to sell some good or service forever.

Correct AnswerverifiedShow Answer

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. At Q = 500, the firm's marginal cost is

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Figure 15-18 -Refer to Figure 15-18. If the monopoly firm is not allowed to price discriminate, then consumer surplus amounts to

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Correct AnswerverifiedShow 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

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When a monopolist increases the amount of output that it produces and sells, average revenue

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