Question 1

Since natural monopolies have a declining average cost curve,regulating natural monopolies by setting price equal to marginal cost would

Accepted Answer

A)   cause the monopolist to operate at a loss.
B)   result in a less than optimal total surplus.
C)   maximize producer surplus.
D)   result in higher profits for the monopoly.E) All of the above
F) A) and B)

Question 2

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 C)
F) A) and C)

Question 3

Antitrust laws may

Accepted Answer

A)   enhance the ability of firms to capture profits from a concentration of market power.
B)   enhance the ability of firms to reduce economic losses.
C)   restrict the ability of firms to operate at the socially efficient level of production.
D)   restrict the ability of firms to merge.E) A) and D)
F) A) and C)

Question 4

Figure 15-1 
-Refer to Figure 15-1.If a regulator requires the firm to charge an average cost price,what quantity will the firm produce?

Accepted Answer

The answer of Figure 15-1 
-Refer to Figure 15-1.If a...

Question 5

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 6

University financial aid can be viewed as a type of price discrimination.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is an example of a barrier to entry?

Accepted Answer

A)   Matthew offers free samples of his latest flavored coffee drink to entice customers to buy a cup.
B)   Mark charges a lower price to students than to faculty for his tattoo services.
C)   Luke charges a higher hourly price to business students than to liberal arts students for his economics tutoring.
D)   John obtained a copyright for the song he wrote and recorded.E) B) and C)
F) All of the above

Question 8

A monopolist produces where P > MC = MR.

Accepted Answer

A) True 
 B)False

Question 9

A monopolist's supply curve is horizontal.

Accepted Answer

A) True 
 B)False

Question 10

A profit-maximizing monopolist charges a price of $12.The intersection of the marginal revenue and marginal cost curves occurs where output is 10 units and marginal cost is $6.Average total cost for 10 units of output is $5.What is the monopolist's profit?

Accepted Answer

A)   $60
B)   $70
C)   $100
D)   $120E) B) and D)
F) A) and B)

Question 11

A natural monopoly arises when

Accepted Answer

A)   there are constant returns to scale over the relevant range of output.
B)   there are economies of scale over the relevant range of output.
C)   one firm owns a key natural resource.
D)   the government gives a single firm the exclusive right to produce a particular good or service.E) B) and D)
F) B) and C)

Question 12

Figure 15-7 
-Refer to Figure 15-7.What is the monopoly price and quantity?

Accepted Answer

A)   price = F;quantity = A
B)   price = G;quantity = B
C)   price = G;quantity = A
D)   price = D;quantity = AE) A) and D)
F) All of the above

Question 13

Figure 15-6 
-Refer to Figure 15-6.A profit-maximizing monopolist would earn profits of

Accepted Answer

A)   $96.
B)   $117.
C)   $120.
D)   $126.E) All of the above
F) A) and D)

Question 14

Which of the following statements is true about patents and copyrights? (i) 
They have benefits and costs.
(ii) 
They lead to higher prices.
(iii) 
They enhance the ability of monopolists to earn above-average profits.

Accepted Answer

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

Question 15

If the government regulates the price that a natural monopolist can charge to be equal to the firm's average total cost,the firm will

Accepted Answer

A)   earn zero profits.
B)   earn positive profits,causing other firms to enter the industry.
C)   earn negative profits,causing the firm to exit the industry.
D)   minimize costs in order to lower the price that it charges.E) None of the above
F) All of the above

Question 16

Table 15-17
 
-Refer to Table 15-17.If a monopolist faces a constant marginal cost of $3,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) None of the above
F) B) and C)

Question 17

A firm that is the sole seller of a product without close substitutes is

Accepted Answer

A)   perfectly competitive.
B)   monopolistically competitive.
C)   an oligopolist.
D)   a monopolist.E) B) and C)
F) A) and D)

Question 18

Table 15-17
 
-Refer to Table 15-17.If a monopolist faces a constant marginal cost of $1,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) B) and D)
F) None of the above

Question 19

A perfectly price-discriminating monopolist is able to

Accepted Answer

A)   maximize profit and produce a socially-optimal level of output.
B)   maximize profit,but not produce a socially-optimal level of output.
C)   produce a socially-optimal level of output,but not maximize profit.
D)   exercise illegal preferences regarding the race and/or gender of its employees.E) All of the above
F) A) and B)

Question 20

Figure 15-1 
-Refer to Figure 15-1.If the firm profit-maximizes,what amount of output will it produce?

Accepted Answer

The answer of Figure 15-1 
-Refer to Figure 15-1.If the...

Exam 15: Monopoly

A profit-maximizing monopolist charges a price of $12.The intersection of the marginal revenue and marginal cost curves occurs where output is 10 units and marginal cost is $6.Average total cost for 10 units of output is $5.What is the monopolist's profit?

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A monopolist's supply curve is horizontal.

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Figure 15-7 -Refer to Figure 15-7.What is the monopoly price and quantity?

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Figure 15-1 -Refer to Figure 15-1.If a regulator requires the firm to charge an average cost price,what quantity will the firm produce?

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A monopolist produces where P > MC = MR.

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Since natural monopolies have a declining average cost curve,regulating natural monopolies by setting price equal to marginal cost would

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A natural monopoly arises when

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Antitrust laws may

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Which of the following is an example of a barrier to entry?

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The defining characteristic of a natural monopoly is

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Table 15-17 -Refer to Table 15-17.If a monopolist faces a constant marginal cost of $1,how much output should the firm produce in order to equate marginal revenue with marginal cost?

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Figure 15-1 -Refer to Figure 15-1.If the firm profit-maximizes,what amount of output will it produce?

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With perfect price discrimination the monopoly

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Which of the following statements is true about patents and copyrights? (i) They have benefits and costs. (ii) They lead to higher prices. (iii) They enhance the ability of monopolists to earn above-average profits.

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University financial aid can be viewed as a type of price discrimination.

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A perfectly price-discriminating monopolist is able to

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If the government regulates the price that a natural monopolist can charge to be equal to the firm's average total cost,the firm will

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Figure 15-6 -Refer to Figure 15-6.A profit-maximizing monopolist would earn profits of

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Table 15-17 -Refer to Table 15-17.If a monopolist faces a constant marginal cost of $3,how much output should the firm produce in order to equate marginal revenue with marginal cost?

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A firm that is the sole seller of a product without close substitutes is

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