Question 1

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

Question 2

Airlines often separate their customers into business travelers and personal travelers by giving a discount to those travelers who stay over a Saturday night.

Accepted Answer

A) True 
 B)False

Question 3

When a monopolist increases the amount of output that it produces and sells,the price of its output

Accepted Answer

A)   stays the same.
B)   increases.
C)   decreases.
D)   may increase or decrease depending on the price elasticity of demand.E) All of the above
F) A) and C)

Question 4

Patent and copyright laws encourage

Accepted Answer

A)   creative activity.
B)   lower prices due to decreasing average total costs.
C)   competition among firms.
D)   All of the above are correct.E) A) and B)
F) A) and C)

Question 5

Which of the following is not correct?

Accepted Answer

A)   The demand curve facing a competitive firm is perfectly elastic.
B)   The demand curve facing a monopolist is the market demand curve.
C)   A monopolist can charge any price and sell any quantity that it chooses.
D)   A monopolist can alter the market price by adjusting the quantity that it produces.E) C) and D)
F) B) and C)

Question 6

Table 15-9
Consider the following demand and cost information for a monopoly.
 
-Refer to Table 15-9.At the profit-maximizing price,how much profit will the monopoly earn?

Accepted Answer

A)   $8
B)   $10
C)   $12
D)   $14E) B) and C)
F) A) and C)

Question 7

Figure 15-6
 
-Refer to Figure 15-6.In order to maximize profits,the monopolist should charge a price of

Accepted Answer

A)   $9.
B)   $12.
C)   $20.
D)   $23.E) B) and D)
F) B) and C)

Question 8

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 9

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 D)
F) A) and C) A

Question 10

Most firms have

Accepted Answer

A)   no monopoly pricing power.
B)   some monopoly pricing power.
C)   absolute monopoly pricing power.
D)   the ability to earn monopoly profits.E) All of the above
F) C) and D)

Question 11

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

Question 12

Competitive firms differ from monopolies in which of the following ways?
(i) Competitive firms do not have to worry about the price effect lowering their total revenue.
(ii) Marginal revenue for a competitive firm equals price,while marginal revenue for a monopoly is less than the price it is able to charge.
(iii) Monopolies must lower their price in order to sell more of their product,while competitive firms do not.

Accepted Answer

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

Question 13

Figure 15-7
 
-Refer to Figure 15-7.What is the socially efficient 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) C) and D)
F) A) and D)

Question 14

Scenario 15-2
Consider a local, privately-owned electrical cooperative named Minny County Megawatts (MCM, LLC) . MCM has just completed a natural-gas-burning electrical power plant in the Midwest. Currently, MCM 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 MCM experienced incredible 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 MCM currently has.
(ii) MCM would experience higher profits if it were government-run.
(iii) MCM is a natural monopoly.

Accepted Answer

A)   (i)  and (ii)  only
B)   (ii)  and (iii)  only
C)   (i)  and (iii)  only
D)   (i) , (ii) , and (iii) E) C) and D)
F) All of the above

Question 15

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 engage in price discrimination?

Accepted Answer

A)   $100,000
B)   $125,000
C)   $150,000
D)   $175,000E) None of the above
F) A) and C)

Question 16

Figure 15-6
 
-Refer to Figure 15-6.A profit-maximizing monopolist would incur total costs of

Accepted Answer

A)   $81.
B)   $120.
C)   $144.
D)   $240.E) B) and C)
F) All of the above B

Question 17

A reduction in a monopolist's fixed costs would

Accepted Answer

A)   decrease the profit-maximizing price and increase the profit-maximizing quantity produced.
B)   increase the profit-maximizing price and decrease the profit-maximizing quantity produced.
C)   not effect the profit-maximizing price or quantity.
D)   possibly increase, decrease or not effect profit-maximizing price and quantity, depending on the elasticity of demand.E) None of the above
F) A) and B)

Question 18

Table 15-16
A monopolist faces the following demand curve:
 
-Refer to Table 15-16.The monopolist has total fixed costs of $40 and a constant marginal cost of $5.At the profit-maximizing level of output,the monopolist's average total cost is

Accepted Answer

A)   $9.00.
B)   $7.50.
C)   $6.74.
D)   $5.82.E) A) and C)
F) B) and C)

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 total revenue from selling 6 pairs of shoes?

Accepted Answer

A)   $100
B)   $600
C)   $625
D)   $660E) C) and D)
F) None of the above

Question 20

When an industry is a natural monopoly,

Accepted Answer

A)   it is characterized by constant returns to scale.
B)   it is characterized by diseconomies of scale.
C)   a larger number of firms may lead to a lower average cost.
D)   a larger number of firms will lead to a higher average cost.E) A) and B)
F) B) and C) D

Exam 15: Monopoly.

Competitive firms have

Correct Answer
verified

Airlines often separate their customers into business travelers and personal travelers by giving a discount to those travelers who stay over a Saturday night.

Correct Answer
verified

When a monopolist increases the amount of output that it produces and sells,the price of its output

Correct Answer
verified

Patent and copyright laws encourage

Correct Answer
verified

Which of the following is not correct?

Correct Answer
verified

Table 15-9 Consider the following demand and cost information for a monopoly. -Refer to Table 15-9.At the profit-maximizing price,how much profit will the monopoly earn?

Correct Answer
verified

Figure 15-6 -Refer to Figure 15-6.In order to maximize profits,the monopolist should charge a price of

Correct Answer
verified

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

A firm that is a natural monopoly

Correct Answer
verified
A

Most firms have

Correct Answer
verified

If a monopolist has zero marginal costs,it will produce

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Figure 15-6 -Refer to Figure 15-6.A profit-maximizing monopolist would incur total costs of

Correct Answer
verified
B

A reduction in a monopolist's fixed costs would

Correct Answer
verified

Table 15-16 A monopolist faces the following demand curve: -Refer to Table 15-16.The monopolist has total fixed costs of $40 and a constant marginal cost of $5.At the profit-maximizing level of output,the monopolist's average total cost is

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 total revenue from selling 6 pairs of shoes?

Correct Answer
verified

When an industry is a natural monopoly,

Correct Answer
verified
D

Exam 15: Monopoly.

Competitive firms have

Correct AnswerverifiedShow Answer

Airlines often separate their customers into business travelers and personal travelers by giving a discount to those travelers who stay over a Saturday night.

Correct AnswerverifiedShow Answer

When a monopolist increases the amount of output that it produces and sells,the price of its output

Correct AnswerverifiedShow Answer

Patent and copyright laws encourage

Correct AnswerverifiedShow Answer

Which of the following is not correct?

Correct AnswerverifiedShow Answer

Table 15-9 Consider the following demand and cost information for a monopoly. -Refer to Table 15-9.At the profit-maximizing price,how much profit will the monopoly earn?

Correct AnswerverifiedShow Answer

Figure 15-6 -Refer to Figure 15-6.In order to maximize profits,the monopolist should charge a price of

Correct AnswerverifiedShow Answer

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

A firm that is a natural monopoly

Correct AnswerverifiedA

Most firms have

Correct AnswerverifiedShow Answer

If a monopolist has zero marginal costs,it will produce

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 15-6 -Refer to Figure 15-6.A profit-maximizing monopolist would incur total costs of

Correct AnswerverifiedB

A reduction in a monopolist's fixed costs would

Correct AnswerverifiedShow Answer

Table 15-16 A monopolist faces the following demand curve: -Refer to Table 15-16.The monopolist has total fixed costs of $40 and a constant marginal cost of $5.At the profit-maximizing level of output,the monopolist's average total cost is

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 total revenue from selling 6 pairs of shoes?

Correct AnswerverifiedShow Answer

When an industry is a natural monopoly,

Correct AnswerverifiedD

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified
A

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
B

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
D