Question 1

Price discrimination

Accepted Answer

A)   is illegal in the United States and Europe.
B)   can occur in both perfectly competitive and monopoly markets.
C)   is illogical because it does not maximize profits.
D)   can maximize profits if the seller can prevent the resale of goods between customers.E) A) and C)
F) A) and B)

Question 2

Which of the following is not one of the ways that antitrust laws promote competition?

Accepted Answer

A)   Antitrust laws allow the government to prevent mergers.
B)   Antitrust laws allow the government to break up companies into smaller ones.
C)   Antitrust laws prevent companies from coordinating their activities in ways that make markets less competitive.
D)   Antitrust laws allow the government to shut down any firm the government believes has monopoly power.E) None of the above
F) A) and D)

Question 3

Which of the following statements is correct?

Accepted Answer

A)   Firms with some degree of monopoly power are common,but firms with substantial monopoly power are rare.
B)   Firms with some degree of monopoly power are rare,as are firms with substantial monopoly power.
C)   Firms with some degree of monopoly power are common,as are firms with substantial monopoly power.
D)   Firms with some degree of monopoly power are rare,but firms with substantial monopoly power are common.E) B) and C)
F) A) and D)

Question 4

For a monopolist,marginal revenue is

Accepted Answer

A)   equal to price,as it is for a perfectly competitive firm.
B)   less than price,as it is for a perfectly competitive firm.
C)   equal to price,whereas marginal revenue is less than price for a perfectly competitive firm.
D)   less than price,whereas marginal revenue is equal to price for a perfectly competitive firm.E) A) and D)
F) A) and B)

Question 5

Even with market power,monopolists cannot achieve any level of profit they desire because they will sell lower quantities at higher prices.

Accepted Answer

A) True 
 B)False

Question 6

Figure 15-15 
-Refer to Figure 15-15.If the monopoly firm is not allowed to price discriminate,then the deadweight loss amounts to

Accepted Answer

A)   $50.
B)   $100.
C)   $500.
D)   $1,000.E) A) and B)
F) A) and D)

Question 7

When a local grocery store offers discount coupons in the Sunday paper it is most likely trying to

Accepted Answer

A)   reduce prices for all customers.
B)   encourage literacy.
C)   encourage arbitrage.
D)   price discriminate.E) All of the above
F) A) and D)

Question 8

Sizable economic profits can persist over time under monopoly if the monopolist

Accepted Answer

A)   produces that output where average total cost is at a maximum.
B)   is protected by barriers to entry.
C)   operates as a price taker rather than a price maker.
D)   earns revenues that exceed variable costs.E) All of the above
F) A) and B)

Question 9

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

Accepted Answer

A)   Average cost exceeds marginal cost over large regions of output.
B)   Increasing the number of firms increases each firm's average total cost.
C)   One firm can supply output at a lower cost than two firms.
D)   All of the above are correct.E) B) and C)
F) A) and B)

Question 10

The social cost of a monopoly is equal to its

Accepted Answer

A)   economic profit.
B)   fixed cost.
C)   dead weight loss.
D)   variable cost.E) All of the above
F) A) and B)

Question 11

The assessment by George Stigler concerning the tradeoffs between "market failure" and "political failure" in the American economy provides support for which of the following solutions to the problems of monopolies?

Accepted Answer

A)   public ownership of monopolies
B)   government regulation of monopolies
C)   government incentives to promote competition in monopolized industries
D)   doing nothing at allE) None of the above
F) A) and C)

Question 12

Table 15-1
A monopolist faces the following demand curve:
  Marginal cost is constant at $8 per unit.
-Refer to Scenario 15-1.How much profit will the museum earn if it charges all customers $8 for admission?

Accepted Answer

A)   $200.
B)   $400.
C)   $800.
D)   $2400.E) A) and C)
F) B) and C)

Question 13

Granting a pharmaceutical company a patent for a new medicine will lead to (i) 
A product that is priced higher than it would be without the exclusive rights.
(ii) 
Incentives for pharmaceutical companies to invest in research and development.
(iii) 
Higher quantities of output than without the patent.

Accepted Answer

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

Question 14

A monopolist produces

Accepted Answer

A)   more than the socially efficient quantity of output but at a higher price than in a competitive market.
B)   less than the socially efficient quantity of output but at a higher price than in a competitive market.
C)   the socially efficient quantity of output but at a higher price than in a competitive market.
D)   possibly more or possibly less than the socially efficient quantity of output,but definitely at a higher price than in a competitive market.E) C) and D)
F) B) and D)

Question 15

Price discrimination

Accepted Answer

A)   forces monopolies to charge a lower price as a result of government regulation.
B)   is an attempt by a monopoly to prevent some customers from purchasing its product by charging a high price.
C)   is an attempt by a monopoly to increases its profit by selling the same good to different customers at different prices.
D)   increases the consumer surplus associated with a monopolistic market.E) A) and D)
F) B) and D)

Question 16

Table 15-1
A monopolist faces the following demand curve:
  Marginal cost is constant at $8 per unit.
-Refer to Table 15-1.The monopolist's marginal revenue is

Accepted Answer

A)   always more than the price of its good.
B)   always equal to the price of its good.
C)   always less than the price of its good.
D)   sometimes more and sometimes less than the price of its good.E) A) and B)
F) B) and C)

Question 17

Which of the following is not an example of price discrimination by a firm?

Accepted Answer

A)   children's meals at a restaurant
B)   a natural gas company charging customers a higher rate in the winter than in the summer
C)   a senior citizens' discount
D)   coupons in the Sunday newspaperE) All of the above
F) None of the above

Question 18

Suppose when a monopolist produces 50 units its average revenue is $8 per unit,its marginal revenue is $4 per unit,its marginal cost is $4 per unit,and its average total cost is $3 per unit.What can we conclude about this monopolist?

Accepted Answer

A)   The monopolist is currently maximizing profits,and its total profits are $200.
B)   The monopolist is currently maximizing profits,and its total profits are $250.
C)   The monopolist is not currently maximizing its profits;it should produce more units and charge a lower price to maximize profit.
D)   The monopolist is not currently maximizing its profits;it should produce fewer units and charger a higher price to maximize profit.E) A) and B)
F) All of the above

Question 19

The first major piece of antitrust legislation was the

Accepted Answer

A)   Clayton Act.
B)   Reagan-Bush Act.
C)   Sherman Act.
D)   Clinton-Gore Act.E) B) and C)
F) A) and B)

Question 20

The government may choose to do nothing to reduce monopoly inefficiency because the "fix" may be worse than the problem.

Accepted Answer

A) True 
 B)False

Exam 15: Monopoly

Which of the following is not one of the ways that antitrust laws promote competition?

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The government may choose to do nothing to reduce monopoly inefficiency because the "fix" may be worse than the problem.

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Price discrimination

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Which of the following statements is correct?

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Even with market power,monopolists cannot achieve any level of profit they desire because they will sell lower quantities at higher prices.

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For a monopolist,marginal revenue is

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Which of the following is not an example of price discrimination by a firm?

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The assessment by George Stigler concerning the tradeoffs between "market failure" and "political failure" in the American economy provides support for which of the following solutions to the problems of monopolies?

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The social cost of a monopoly is equal to its

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Suppose when a monopolist produces 50 units its average revenue is $8 per unit,its marginal revenue is $4 per unit,its marginal cost is $4 per unit,and its average total cost is $3 per unit.What can we conclude about this monopolist?

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Price discrimination

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Table 15-1 A monopolist faces the following demand curve: Marginal cost is constant at $8 per unit. -Refer to Table 15-1.The monopolist's marginal revenue is

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A monopolist produces

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Table 15-1 A monopolist faces the following demand curve: Marginal cost is constant at $8 per unit. -Refer to Scenario 15-1.How much profit will the museum earn if it charges all customers $8 for admission?

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Figure 15-15 -Refer to Figure 15-15.If the monopoly firm is not allowed to price discriminate,then the deadweight loss amounts to

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Sizable economic profits can persist over time under monopoly if the monopolist

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

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When a local grocery store offers discount coupons in the Sunday paper it is most likely trying to

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The first major piece of antitrust legislation was the

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