Question 1

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) C) and D)
F) B) and C)

Question 2

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 games than it received on the first 49 games.
D)   Both b and c are correct.E) A) and B)
F) A) and C)

Question 3

Which of the following is a characteristic of a natural monopoly?

Accepted Answer

A)   Fixed costs are typically a small portion of total costs.
B)   Average total cost declines over large regions of output.
C)   The product sold is a natural resource such as diamonds or water.
D)   All of the above are correct.E) B) and C)
F) A) and C)

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 profit is

Accepted Answer

A)   $13,000.
B)   $15,000.
C)   $17,000.
D)   $30,000.E) A) and C)
F) A) and D)

Question 5

How does a competitive market compare to a monopoly that engages in perfect price discrimination?

Accepted Answer

A)   In both cases, total social welfare is the same.
B)   Total social welfare is higher in the competitive market than with the perfectly price discriminating monopoly.
C)   In both cases, some potentially mutually beneficial trades do not occur.
D)   Consumer surplus is the same in both cases.E) None of the above
F) A) and D)

Question 6

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 4th unit?

Accepted Answer

A)   -$3
B)   $3
C)   $9
D)   $24E) None of the above
F) A) and B)

Question 7

Competitive firms have

Accepted Answer

A)   downward-sloping demand curves, and they can sell as much output as they desire at the market price.
B)   downward-sloping demand curves, and they can sell only a limited quantity of output at each price.
C)   horizontal demand curves, and they can sell as much output as they desire at the market price.
D)   horizontal demand curves, and they can sell only a limited quantity of output at each price.E) B) and C)
F) A) and D)

Question 8

When a single firm can supply a product to an entire market at a lower cost than could two or more firms, the industry is called a

Accepted Answer

A)   resource industry.
B)   exclusive industry.
C)   government monopoly.
D)   natural monopoly.E) All of the above
F) None of the above

Question 9

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

Question 10

A government-created monopoly arises when

Accepted Answer

A)   government spending in a certain industry gives rise to monopoly power.
B)   the government exercises its market control by encouraging competition among sellers.
C)   the government gives a firm the exclusive right to sell some good or service.
D)   Both a and c are correct.E) B) and D)
F) A) and D)

Question 11

The first major piece of antitrust legislation was the

Accepted Answer

A)   Clayton Act.
B)   Obama Care Act.
C)   Sherman Act.
D)   Clinton Act.E) A) and D)
F) B) and D)

Question 12

A benefit to society of the patent and copyright laws is that those laws

Accepted Answer

A)   help to keep prices down.
B)   help to prevent a single firm from acquiring ownership of a key resource.
C)   encourage creative activity.
D)   discourage the production of inefficient products.E) None of the above
F) A) and B)

Question 13

Which of the following statements is not correct?

Accepted Answer

A)   The government may use antitrust laws to break up an existing company to improve competition.
B)   The government may break up a natural monopoly to lower the price charged to customers.
C)   Private ownership is typically preferred to public ownership.
D)   Sometimes the best strategy is for the government to do nothing about monopoly inefficiency because the "fix" may be worse than the problem.E) None of the above
F) All of the above

Question 14

If a monopolist can practice perfect price discrimination, the monopolist will

Accepted Answer

A)   eliminate consumer surplus.
B)   eliminate deadweight loss.
C)   maximize profits.
D)   All of the above are correct.E) B) and D)
F) B) and C)

Question 15

Suppose a profit-maximizing monopolist faces a constant marginal cost of $10, produces an output level of 100 units, and charges a price of $50. The socially efficient level of output is 200 units. Assume that the demand curve and marginal revenue curve are the typical downward-sloping straight lines. The monopoly deadweight loss equals $4,000.

Accepted Answer

A) True 
 B)False

Question 16

In a monopoly market, the socially efficient quantity of output is typically higher than the profit-maximizing quantity of output for the monopolist.

Accepted Answer

A) True 
 B)False

Question 17

Suppose a monopolist chooses the price and production level that maximizes its profit. From that point, to increase society's economic welfare, output would need to be increased as long as

Accepted Answer

A)   average revenue exceeds marginal cost.
B)   average revenue exceeds average total cost.
C)   marginal revenue exceeds marginal cost.
D)   marginal revenue exceeds average total cost.E) A) and C)
F) A) and B)

Question 18

Figure 15-4 
-Refer to Figure 15-4. The average total cost curve for a monopoly firm is depicted by curve

Accepted Answer

A)   A.
B)   B.
C)   C.
D)   D.E) A) and B)
F) None of the above

Question 19

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 marginal revenue from selling the 8th pair of shoes?

Accepted Answer

A)   $10
B)   $20
C)   $40
D)   $90E) C) and D)
F) B) and C)

Question 20

Table 15-18
A monopolist faces the following demand curve:
  Suppose marginal cost is constant at $8 per unit.
-Refer to Table 15-18. When the price effect on revenue is greater than the output effect, marginal revenue is

Accepted Answer

A)   positive. This occurs with the 3rd unit of output.
B)   positive. This occurs with the 4th unit of output.
C)   negative. This occurs with the 5th unit of output.
D)   negative. This occurs with the 6th unit of output.E) A) and C)
F) All of the above

Exam 14: Monopoly

A benefit to society of the patent and copyright laws is that those laws

Correct Answer
verified

Most markets are not monopolies in the real world because

Correct Answer
verified

When a single firm can supply a product to an entire market at a lower cost than could two or more firms, the industry is called a

Correct Answer
verified

How does a competitive market compare to a monopoly that engages in perfect price discrimination?

Correct Answer
verified

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
verified

Suppose a monopolist chooses the price and production level that maximizes its profit. From that point, to increase society's economic welfare, output would need to be increased as long as

Correct Answer
verified

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 profit is

Correct Answer
verified

Table 15-18 A monopolist faces the following demand curve: Suppose marginal cost is constant at $8 per unit. -Refer to Table 15-18. When the price effect on revenue is greater than the output effect, marginal revenue is

Correct Answer
verified

In a monopoly market, the socially efficient quantity of output is typically higher than the profit-maximizing quantity of output for the monopolist.

Correct Answer
verified

Figure 15-4 -Refer to Figure 15-4. The average total cost curve for a monopoly firm is depicted by curve

Correct Answer
verified

A government-created monopoly arises when

Correct Answer
verified

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 4th unit?

Correct Answer
verified

The first major piece of antitrust legislation was the

Correct Answer
verified

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 marginal revenue from selling the 8th pair of shoes?

Correct Answer
verified

Correct Answer
verified

Competitive firms have

Correct Answer
verified

If a monopolist can practice perfect price discrimination, the monopolist will

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 50th game, the firm will always receive

Correct Answer
verified

Which of the following is a characteristic of a natural monopoly?

Correct Answer
verified

Which of the following statements is not correct?

Correct Answer
verified

Exam 14: Monopoly

A benefit to society of the patent and copyright laws is that those laws

Correct AnswerverifiedShow Answer

Most markets are not monopolies in the real world because

Correct AnswerverifiedShow Answer

When a single firm can supply a product to an entire market at a lower cost than could two or more firms, the industry is called a

Correct AnswerverifiedShow Answer

How does a competitive market compare to a monopoly that engages in perfect price discrimination?

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

Suppose a monopolist chooses the price and production level that maximizes its profit. From that point, to increase society's economic welfare, output would need to be increased as long as

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 profit is

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. When the price effect on revenue is greater than the output effect, marginal revenue is

Correct AnswerverifiedShow Answer

In a monopoly market, the socially efficient quantity of output is typically higher than the profit-maximizing quantity of output for the monopolist.

Correct AnswerverifiedShow Answer

Figure 15-4 -Refer to Figure 15-4. The average total cost curve for a monopoly firm is depicted by curve

Correct AnswerverifiedShow Answer

A government-created monopoly arises when

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 4th unit?

Correct AnswerverifiedShow Answer

The first major piece of antitrust legislation was the

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 marginal revenue from selling the 8th pair of shoes?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Competitive firms have

Correct AnswerverifiedShow Answer

If a monopolist can practice perfect price discrimination, the monopolist will

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

Which of the following is a characteristic of a natural monopoly?

Correct AnswerverifiedShow Answer

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

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