Question 1

When the government creates a monopoly, the social loss may include

Accepted Answer

A)  declining marginal costs.
B)  the cost of lawyers and lobbyists hired to convince lawmakers to continue the monopoly.
C)  excessive monopoly profits.
D)  diminishing marginal revenue.E) B) and C)
F) All of the above

Question 2

Table 15-8
The following table provides information on the price, quantity, and average total cost for a monopoly. 
-Refer to Table 15-8. What is the maximum profit that the monopolist can earn?

Accepted Answer

A)  $10
B)  $20
C)  $30
D)  $40E) A) and B)
F) A) and C)

Question 3

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) A) and D)
F) A) and C)

Question 4

Table 15-18
A monopolist faces the following demand curve:  Suppose marginal cost is constant at $8 per unit.
-Refer to Table 15-18. Suppose the firm depicted in the table is selling a prescription drug for which it had a patent, but the patent has expired. As new firms enter the market and sell the generic version of this drug competitively, what quantity will be sold?

Accepted Answer

A)  3 units
B)  4 units
C)  5 units
D)  6 unitsE) None of the above
F) B) and D)

Question 5

Perfect price discrimination

Accepted Answer

A)  increases profits to the firm.
B)  increases total surplus.
C)  decreases consumer surplus.
D)  All of the above are correct.E) A) and B)
F) A) and C)

Question 6

Natural monopolies differ from other forms of monopoly because they are

Accepted Answer

A)  not subject to barriers to entry.
B)  not regulated by government.
C)  unable to sustain long-run profits.
D)  are generally not worried about competition eroding their monopoly position in the market.E) B) and C)
F) All of the above

Question 7

Figure 15-4 
-Refer to Figure 15-4. If a regulator requires this firm to charge a socially optimal price, which letter represents the amount of output it will produce?

Accepted Answer

The answer of Figure 15-4 
-Refer to Figure 15-4. If...

Question 8

​Figure 15-22
The diagram depicts the market situation for a monopoly pastry shop called Bearclaws. 
-Refer to Figure 15-22. Based upon the information shown, what is the deadweight loss created by Bearclaws?​

Accepted Answer

A)  ​$140.
B)  ​$60.
C)  ​$70.
D)  ​$14.E) B) and C)
F) A) and D)

Question 9

Scenario 15-6
The concert promoters of a heavy-metal band, WeR2Loud, know that there are two types of concert-goers: die-hard fans and casual fans. For a particular WeR2Loud concert, there are 1,000 die-hard fans who will pay $150 for a ticket and 500 casual fans who will pay $50 for a ticket. There are 1,500 seats available at the concert venue. Suppose the cost of putting on the concert is $50,000, which includes the cost of the band, lighting, security, etc.
-Refer to Scenario 15-6. How much profit will the concert promoters earn if they set the price of each ticket at $50?

Accepted Answer

A)  $25,000
B)  $75,000
C)  $100,000
D)  $150,000E) B) and C)
F) All of the above

Question 10

Perfect price discrimination describes a situation in which the monopolist

Accepted Answer

A)  knows the exact willingness to pay of each of its customers.
B)  charges exactly two different prices to exactly two different groups of customers.
C)  maximizes consumer surplus.
D)  experiences a zero economic profit.E) A) and B)
F) A) and C)

Question 11

The economic inefficiency of a monopolist can be measured by the

Accepted Answer

A)  deadweight loss.
B)  value of the unrealized trades that could be made if the monopolist produced the socially-efficient output.
C)  area above marginal cost but beneath demand from the monopoly output to the socially-efficient output.
D)  All of the above are correct.E) C) and D)
F) B) and D)

Question 12

It is difficult in a natural monopoly market for the firm to achieve both efficiency and zero economic profit simultaneously, even with regulation.
​

Accepted Answer

A) True 
 B)False

Question 13

A firm that is a natural monopoly

Accepted Answer

A)  is not likely to be concerned about new entrants eroding its monopoly power.
B)  is taking advantage of diseconomies of scale.
C)  would experience a lower average total cost if more firms entered the market.
D)  All of the above are correct.E) A) and C)
F) B) and D)

Question 14

When a monopolist decreases the price of its good, consumers

Accepted Answer

A)  continue to buy the same amount.
B)  buy more.
C)  buy less.
D)  may buy more or less, depending on the price elasticity of demand.E) B) and C)
F) A) and D)

Question 15

Why might economists prefer private ownership of monopolies over public ownership of monopolies?

Accepted Answer

The private monopolist is governed by th...

Question 16

If a monopolist is able to perfectly price discriminate,

Accepted Answer

A)  consumer surplus is always increased.
B)  total surplus is always decreased.
C)  consumer surplus and deadweight losses are transformed into monopoly profits.
D)  the price effect dominates the output effect on monopoly revenue.E) B) and C)
F) None of the above

Question 17

If the monopolist's linear demand curve intersects the quantity axis at Q = 30, then the monopolist's marginal revenue will be equal to zero at

Accepted Answer

A)  Q = 10.
B)  Q = 15.
C)  Q = 20.
D)  Q = 30.E) All of the above
F) B) and D)

Question 18

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 $2,000.

Accepted Answer

A) True 
 B)False

Question 19

When a firm experiences continually declining average total costs, the firm is a

Accepted Answer

A)  government-created monopoly.
B)  price taker.
C)  natural monopoly.
D)  revenue maximizer.E) A) and B)
F) A) and C)

Question 20

A monopoly chooses to supply the market with a quantity of a product that is determined by the intersection of the

Accepted Answer

A)  marginal cost and demand curves.
B)  average total cost and demand curves.
C)  marginal revenue and average total cost curves.
D)  marginal revenue and marginal cost curves.E) None of the above
F) All of the above

Exam 15: Monopoly

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Perfect price discrimination

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If a monopolist is able to perfectly price discriminate,

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Figure 15-4 -Refer to Figure 15-4. If a regulator requires this firm to charge a socially optimal price, which letter represents the amount of output it will produce?

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Natural monopolies differ from other forms of monopoly because they are

Correct Answer
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Figure 15-22 The diagram depicts the market situation for a monopoly pastry shop called Bearclaws. -Refer to Figure 15-22. Based upon the information shown, what is the deadweight loss created by Bearclaws?

Correct Answer
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It is difficult in a natural monopoly market for the firm to achieve both efficiency and zero economic profit simultaneously, even with regulation.

Correct Answer
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If the monopolist's linear demand curve intersects the quantity axis at Q = 30, then the monopolist's marginal revenue will be equal to zero at

Correct Answer
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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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When a firm experiences continually declining average total costs, the firm is a

Correct Answer
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When a monopolist decreases the price of its good, consumers

Correct Answer
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Perfect price discrimination describes a situation in which the monopolist

Correct Answer
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When the government creates a monopoly, the social loss may include

Correct Answer
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The economic inefficiency of a monopolist can be measured by the

Correct Answer
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A firm that is a natural monopoly

Correct Answer
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A monopoly chooses to supply the market with a quantity of a product that is determined by the intersection of the

Correct Answer
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Correct Answer
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Why might economists prefer private ownership of monopolies over public ownership of monopolies?

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The private monopolist is governed by th...
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Table 15-8 The following table provides information on the price, quantity, and average total cost for a monopoly. -Refer to Table 15-8. What is the maximum profit that the monopolist can earn?

Correct Answer
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Exam 15: Monopoly

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Perfect price discrimination

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If a monopolist is able to perfectly price discriminate,

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Figure 15-4 -Refer to Figure 15-4. If a regulator requires this firm to charge a socially optimal price, which letter represents the amount of output it will produce?

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Natural monopolies differ from other forms of monopoly because they are

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​Figure 15-22 The diagram depicts the market situation for a monopoly pastry shop called Bearclaws. -Refer to Figure 15-22. Based upon the information shown, what is the deadweight loss created by Bearclaws?​

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It is difficult in a natural monopoly market for the firm to achieve both efficiency and zero economic profit simultaneously, even with regulation. ​

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If the monopolist's linear demand curve intersects the quantity axis at Q = 30, then the monopolist's marginal revenue will be equal to zero at

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

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When a firm experiences continually declining average total costs, the firm is a

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When a monopolist decreases the price of its good, consumers

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Perfect price discrimination describes a situation in which the monopolist

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When the government creates a monopoly, the social loss may include

Correct AnswerverifiedShow Answer

The economic inefficiency of a monopolist can be measured by the

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A firm that is a natural monopoly

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A monopoly chooses to supply the market with a quantity of a product that is determined by the intersection of the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Why might economists prefer private ownership of monopolies over public ownership of monopolies?

Correct AnswerverifiedThe private monopolist is governed by th...View AnswerShow Answer

Table 15-8 The following table provides information on the price, quantity, and average total cost for a monopoly. -Refer to Table 15-8. What is the maximum profit that the monopolist can earn?

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Figure 15-22 The diagram depicts the market situation for a monopoly pastry shop called Bearclaws. -Refer to Figure 15-22. Based upon the information shown, what is the deadweight loss created by Bearclaws?

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It is difficult in a natural monopoly market for the firm to achieve both efficiency and zero economic profit simultaneously, even with regulation.

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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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The private monopolist is governed by th...
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