Question 1

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) None of the above
F) All of the above

Question 2

Table 15-18
A monopolist faces the following demand curve:
  Suppose marginal cost is constant at $8 per unit.
-Refer to Table 15-18. The monopolist's total revenue from selling 4 units of output is

Accepted Answer

A)   $4.
B)   $16.
C)   $32.
D)   $48.E) A) and D)
F) B) and C)

Question 3

Which of the following statements is correct? Monopolies are socially inefficient because they i)  charge a price above marginal cost.
Ii)  produce too little output.
Iii)  earn profits at the expense of consumers.
Iv)  maximize the market's total surplus.

Accepted Answer

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

Question 4

Table 15-6
A monopolist faces the following demand curve:
 
-Refer to Table 15-6. What is the marginal revenue from the sale of the 2nd unit?

Accepted Answer

A)   $3
B)  $2
C)  $9
D)  $24E) All of the above
F) A) and B)

Question 5

Figure 15-9 
-Refer to Figure 15-9. To maximize total surplus, a benevolent social planner would choose which of the following outcomes?

Accepted Answer

A)   100 units of output and a price of $20 per unit
B)   150 units of output and a price of $20 per unit
C)   150 units of output and a price of $30 per unit
D)   200 units of output and a price of $20 per unitE) A) and B)
F) A) and C)

Question 6

In both perfectly competitive and monopoly markets, the price per unit of a good is equal to the _______

Accepted Answer

The answer of In both perfectly competitive and monopoly markets,...

Question 7

Table 15-13
The following table gives information on the price, quantity, and total cost of production for a monopolist.
 
-Refer to Table 15-13. How much profit will the firm earn at the profit-maximizing price?

Accepted Answer

A)   $9
B)   $12
C)   $15
D)   $18E) B) and C)
F) A) and C)

Question 8

Figure 15-17 
-Refer to Figure 15-17. Which of the following areas represents the deadweight loss from this profit-maximizing monopolist?

Accepted Answer

A)   ABE
B)   BCFE
C)   EFG
D)   ACGE) A) and B)
F) A) and C)

Question 9

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. Which of the following statements is most likely to be true? i)  New entrants to the market know they will have a smaller market share than PPCo currently has.
Ii)  PPCo is most likely experiencing rising marginal cost.
Iii)  PPCo is a natural monopoly.
Iv)  PPCo is most likely experiencing declining average total cost.

Accepted Answer

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

Question 10

Figure 15-19 
-Refer to Figure 15-19. If the monopoly firm perfectly price discriminates, then consumer surplus amounts to

Accepted Answer

A)   $0.
B)   $1,562.50.
C)   $3,125.
D)   $6,250.E) B) and C)
F) None of the above

Question 11

One problem with government operation of monopolies is that

Accepted Answer

A)   a benevolent government is likely to be interested in generating profits for political gain.
B)   monopolies typically have rising average costs.
C)   the government typically has little incentive to reduce costs.
D)   a government-regulated outcome will increase the profitability of the monopoly.E) All of the above
F) C) and D) C

Question 12

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 D)
F) A) and C)

Question 13

An industry is a natural monopoly when i)  the government assists the firm in maintaining the monopoly.
Ii)  a single firm owns a key resource.
Iii)  a single firm can supply a good or service to an entire market at a smaller cost than could two or more firms.

Accepted Answer

A)   ii)  only
B)   iii)  only
C)   i)  and ii)  only
D)   ii)  and iii)  onlyE) None of the above
F) B) and C)

Question 14

The defining characteristic of a natural monopoly is

Accepted Answer

A)   constant marginal cost over the relevant range of output.
B)   economies of scale over the relevant range of output.
C)   constant returns to scale over the relevant range of output.
D)   diseconomies of scale over the relevant range of output.E) B) and D)
F) None of the above

Question 15

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) None of the above
F) B) and C) A

Question 16

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

Accepted Answer

A)   not in the best interest of society.
B)   one that fails to maximize total economic well-being.
C)   inefficient.
D)   All of the above are correct.E) A) and C)
F) A) and B)

Question 17

Comparing firms in perfectly competitive markets to monopoly firms, which charges a price equal to marginal cost?

Accepted Answer

perfectly ...

Question 18

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) None of the above
F) A) and B)

Question 19

In many countries, the government chooses to "internalize" the monopoly by owning monopoly providers of goods and services. In some cases these firms are "nationalized," and the government actually buys or confiscates firms that operate in monopoly markets). What would be the advantages and disadvantages of such an approach to ensure that the "best interest of society" is promoted in these markets? Explain your answer.

Accepted Answer

As long as the government "owner" pursue...

Question 20

If a monopolist has zero marginal costs, it will produce

Accepted Answer

A)   the output at which total revenue is maximized.
B)   in the range in which marginal revenue is still increasing.
C)   at the point at which marginal revenue is at a maximum.
D)   in the range in which marginal revenue is negative.E) A) and D)
F) A) and C)

Exam 14: Monopoly

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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Table 15-18 A monopolist faces the following demand curve: Suppose marginal cost is constant at $8 per unit. -Refer to Table 15-18. The monopolist's total revenue from selling 4 units of output is

Correct Answer
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Which of the following statements is correct? Monopolies are socially inefficient because they i) charge a price above marginal cost. Ii) produce too little output. Iii) earn profits at the expense of consumers. Iv) maximize the market's total surplus.

Correct Answer
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Table 15-6 A monopolist faces the following demand curve: -Refer to Table 15-6. What is the marginal revenue from the sale of the 2nd unit?

Correct Answer
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Figure 15-9 -Refer to Figure 15-9. To maximize total surplus, a benevolent social planner would choose which of the following outcomes?

Correct Answer
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In both perfectly competitive and monopoly markets, the price per unit of a good is equal to the _______

Correct Answer
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Table 15-13 The following table gives information on the price, quantity, and total cost of production for a monopolist. -Refer to Table 15-13. How much profit will the firm earn at the profit-maximizing price?

Correct Answer
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Figure 15-17 -Refer to Figure 15-17. Which of the following areas represents the deadweight loss from this profit-maximizing monopolist?

Correct Answer
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C

Figure 15-19 -Refer to Figure 15-19. If the monopoly firm perfectly price discriminates, then consumer surplus amounts to

Correct Answer
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One problem with government operation of monopolies is that

Correct Answer
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C

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

Correct Answer
verified

An industry is a natural monopoly when i) the government assists the firm in maintaining the monopoly. Ii) a single firm owns a key resource. Iii) a single firm can supply a good or service to an entire market at a smaller cost than could two or more firms.

Correct Answer
verified

The defining characteristic of a natural monopoly 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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A

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

Correct Answer
verified

Comparing firms in perfectly competitive markets to monopoly firms, which charges a price equal to marginal cost?

Correct Answer
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perfectly ...
View Answer

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

Correct Answer
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Correct Answer
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As long as the government "owner" pursue...
View Answer

If a monopolist has zero marginal costs, it will produce

Correct Answer
verified

Exam 14: Monopoly

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

Table 15-18 A monopolist faces the following demand curve: Suppose marginal cost is constant at $8 per unit. -Refer to Table 15-18. The monopolist's total revenue from selling 4 units of output is

Correct AnswerverifiedShow Answer

Which of the following statements is correct? Monopolies are socially inefficient because they i) charge a price above marginal cost. Ii) produce too little output. Iii) earn profits at the expense of consumers. Iv) maximize the market's total surplus.

Correct AnswerverifiedShow Answer

Table 15-6 A monopolist faces the following demand curve: -Refer to Table 15-6. What is the marginal revenue from the sale of the 2nd unit?

Correct AnswerverifiedShow Answer

Figure 15-9 -Refer to Figure 15-9. To maximize total surplus, a benevolent social planner would choose which of the following outcomes?

Correct AnswerverifiedShow Answer

In both perfectly competitive and monopoly markets, the price per unit of a good is equal to the _______

Correct AnswerverifiedShow Answer

Table 15-13 The following table gives information on the price, quantity, and total cost of production for a monopolist. -Refer to Table 15-13. How much profit will the firm earn at the profit-maximizing price?

Correct AnswerverifiedShow Answer

Figure 15-17 -Refer to Figure 15-17. Which of the following areas represents the deadweight loss from this profit-maximizing monopolist?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedC

Figure 15-19 -Refer to Figure 15-19. If the monopoly firm perfectly price discriminates, then consumer surplus amounts to

Correct AnswerverifiedShow Answer

One problem with government operation of monopolies is that

Correct AnswerverifiedC

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

Correct AnswerverifiedShow Answer

An industry is a natural monopoly when i) the government assists the firm in maintaining the monopoly. Ii) a single firm owns a key resource. Iii) a single firm can supply a good or service to an entire market at a smaller cost than could two or more firms.

Correct AnswerverifiedShow Answer

The defining characteristic of a natural monopoly is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedA

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

Correct AnswerverifiedShow Answer

Comparing firms in perfectly competitive markets to monopoly firms, which charges a price equal to marginal cost?

Correct Answerverifiedperfectly ...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedAs long as the government "owner" pursue...View AnswerShow Answer

If a monopolist has zero marginal costs, it will produce

Correct AnswerverifiedShow Answer

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C

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C

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A

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perfectly ...
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As long as the government "owner" pursue...
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