Question 1

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

Question 2

Because monopoly firms do not have to compete with other firms, the outcome in a market with a monopoly

Accepted Answer

A)  is often not in the best interest of society.
B)  maximizes total economic well-being.
C)  is efficient.
D)  benefits consumers more so than the producer.E) B) and D)
F) A) and D)

Question 3

A market force that can prevent firms from price discriminating is

Accepted Answer

A)  fluctuating resource prices.
B)  arbitrage.
C)  high fixed costs.
D)  marginal-cost pricing.E) A) and C)
F) B) and C)

Question 4

A monopolist faces the following demand curve:  The monopolist has fixed costs of $1,000 and has a constant marginal cost of $2 per unit. If the monopolist were able to perfectly price discriminate, how many units would it sell?

Accepted Answer

A)  400
B)  500
C)  900
D)  4,200E) None of the above
F) C) and D)

Question 5

Splitting up a monopoly is often justified on the grounds that

Accepted Answer

A)  consumers prefer dealing with small firms.
B)  small firms have lower costs.
C)  competition is inherently efficient.
D)  small firms produce higher quality products.E) A) and B)
F) C) and D)

Question 6

Which of the following is not a characteristic of a monopoly?

Accepted Answer

A)  the seller has market power
B)  one seller
C)  free entry and exit
D)  a product without close substitutesE) A) and C)
F) A) and B)

Question 7

Bob's Butcher Shop is the only place within 100 miles that sells bison burgers. Assuming that Bob is maximizing his profit, which of the following statements is true?

Accepted Answer

A)  The price of Bob's bison burgers will be less than Bob's marginal cost.
B)  The price of Bob's bison burgers will exceed Bob's marginal cost.
C)  The price of Bob's bison burgers will equal Bob's marginal cost.
D)  Costs are irrelevant to Bob because he is a monopolist.E) All of the above
F) A) and D)

Question 8

Figure 15-2 
-Refer to Figure 15-2. What type of monopoly is shown in the figure?

Accepted Answer

The answer of Figure 15-2 
-Refer to Figure 15-2. What...

Question 9

Microsoft faces very little competition from other firms for its Windows software. Why isn't the price of the software $1,000 per copy?

Accepted Answer

A)  because the government would not allow such a high price
B)  because stockholders would not allow such a high price
C)  because the company would sell so few copies that they would earn higher profits by selling at a lower price
D)  All of the above are correct.E) A) and B)
F) A) and C)

Question 10

Figure 15-4 
-Refer to Figure 15-4. If a regulator requires this firm to charge a fair return 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 11

The profit-maximization problem for a monopolist differs from that of a competitive firm in which of the following ways?

Accepted Answer

A)  A competitive firm maximizes profit at the point where marginal revenue equals marginal cost; a monopolist maximizes profit at the point where marginal revenue exceeds marginal cost.
B)  A competitive firm maximizes profit at the point where average revenue equals marginal cost; a monopolist maximizes profit at the point where average revenue exceeds marginal cost.
C)  For a competitive firm, marginal revenue at the profit-maximizing level of output is equal to marginal revenue at all other levels of output; for a monopolist, marginal revenue at the profit-maximizing level of output is smaller than it is for larger levels of output.
D)  For a profit-maximizing competitive firm, thinking at the margin is much more important than it is for a profit-maximizing monopolist.E) All of the above
F) B) and C)

Question 12

Figure 15-15 
-Refer to Figure 15-15. To maximize total surplus, a benevolent social planner would choose which of the following outcomes?

Accepted Answer

A)  Q = 30 and P = 30
B)  Q = 30 and P = 60
C)  Q = 45 and P = 45
D)  Q = 60 and P = 30E) A) and B)
F) B) and C)

Question 13

A monopoly market

Accepted Answer

A)  always maximizes total economic well-being.
B)  always minimizes consumer surplus.
C)  generally fails to maximize total economic well-being.
D)  generally fails to maximize producer surplus.E) None of the above
F) A) and D)

Question 14

Reduced competition through merging of companies will raise social welfare

Accepted Answer

A)  if the social cost from the synergies exceeds the benefit of increased market power.
B)  if the benefit from the synergies exceeds the social cost of increased market power.
C)  always.
D)  never.E) C) and D)
F) B) and D)

Question 15

Antitrust laws have economic benefits that outweigh the costs if they

Accepted Answer

A)  prevent mergers that would decrease competition and lower the costs of production.
B)  prevent mergers that would decrease competition and raise the costs of production.
C)  allow mergers that would decrease competition and raise the costs of production.
D)  None of the above is correct because antitrust laws never have economic benefits that outweigh the costs.E) B) and C)
F) A) and B)

Question 16

Scenario 15-8
Mega Media Cable TV is able to purchase an exclusive right to sell a premium sports channel in its market area. Let's assume that Mega Media pays $100,000 a year for the exclusive marketing rights to the sports channel. Since Mega Media has already installed cable to all of the homes in its market area, the marginal cost of delivering the sports channel to subscribers is zero. The manager of Mega Media needs to know what price to charge for the sports channel service to maximize her profit. Before setting price, she hires an economist to estimate demand for the sports channel. The economist discovers that there are two types of subscribers who value premium sporting channels. First are the 3,000 die-hard sports fans who will pay as much as $150 a year for the new channel. Second, the premium sports channel will appeal to 20,000 occasional sports viewers who will pay as much as $25 a year for a subscription to it.
-Refer to Scenario 15-8. How much profit will Mega Media Cable TV earn if it sets the price at $150?

Accepted Answer

A)  $350,000
B)  $450,000
C)  $475,000
D)  $575,000E) None of the above
F) B) and D)

Question 17

Table 15-21
Tommy's Tie Company, a monopolist, has the following cost and revenue information. Assume that Tommy's is able to engage in perfect price discrimination. 
-Refer to Table 15-21. If the monopolist can engage in perfect price discrimination, what is the quantity that maximizes economic profit?

Accepted Answer

A)  5 ties
B)  6 ties
C)  7 ties
D)  8 tiesE) A) and C)
F) A) and B)

Question 18

Explain how a profit-maximizing monopolist chooses its level of output and the price of its goods.

Accepted Answer

A profit-maximizing monopolist produces ...

Question 19

Figure 15-4 
-Refer to Figure 15-4. If the monopoly firm wants to maximize its profit, it should operate at a level of output equal to

Accepted Answer

A)  Q1.
B)  Q2.
C)  Q3.
D)  Q4.E) B) and D)
F) B) and C)

Question 20

Monopoly profit is not a social problem because

Accepted Answer

A)  the size of the economic pie grows when monopoly profits increase.
B)  producers are more efficient than consumers.
C)  the profit represents a transfer from the consumer to the producer with no loss in total surplus.
D)  None of the above are correct.E) A) and B)
F) A) and C)

Exam 15: Monopoly

Figure 15-15 -Refer to Figure 15-15. To maximize total surplus, a benevolent social planner would choose which of the following outcomes?

Correct Answer
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Correct Answer
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Bob's Butcher Shop is the only place within 100 miles that sells bison burgers. Assuming that Bob is maximizing his profit, which of the following statements is true?

Correct Answer
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A monopolist faces the following demand curve: The monopolist has fixed costs of $1,000 and has a constant marginal cost of $2 per unit. If the monopolist were able to perfectly price discriminate, how many units would it sell?

Correct Answer
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Splitting up a monopoly is often justified on the grounds that

Correct Answer
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Which of the following is not a characteristic of a monopoly?

Correct Answer
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Figure 15-4 -Refer to Figure 15-4. If the monopoly firm wants to maximize its profit, it should operate at a level of output equal to

Correct Answer
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Explain how a profit-maximizing monopolist chooses its level of output and the price of its goods.

Correct Answer
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A profit-maximizing monopolist produces ...
View Answer

Figure 15-2 -Refer to Figure 15-2. What type of monopoly is shown in the figure?

Correct Answer
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Correct Answer
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The profit-maximization problem for a monopolist differs from that of a competitive firm in which of the following ways?

Correct Answer
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Microsoft faces very little competition from other firms for its Windows software. Why isn't the price of the software $1,000 per copy?

Correct Answer
verified

A market force that can prevent firms from price discriminating is

Correct Answer
verified

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

Correct Answer
verified

Because monopoly firms do not have to compete with other firms, the outcome in a market with a monopoly

Correct Answer
verified

Antitrust laws have economic benefits that outweigh the costs if they

Correct Answer
verified

Monopoly profit is not a social problem because

Correct Answer
verified

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

Correct Answer
verified

Reduced competition through merging of companies will raise social welfare

Correct Answer
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A monopoly market

Correct Answer
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Exam 15: Monopoly

Figure 15-15 -Refer to Figure 15-15. To maximize total surplus, a benevolent social planner would choose which of the following outcomes?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Bob's Butcher Shop is the only place within 100 miles that sells bison burgers. Assuming that Bob is maximizing his profit, which of the following statements is true?

Correct AnswerverifiedShow Answer

A monopolist faces the following demand curve: The monopolist has fixed costs of $1,000 and has a constant marginal cost of $2 per unit. If the monopolist were able to perfectly price discriminate, how many units would it sell?

Correct AnswerverifiedShow Answer

Splitting up a monopoly is often justified on the grounds that

Correct AnswerverifiedShow Answer

Which of the following is not a characteristic of a monopoly?

Correct AnswerverifiedShow Answer

Figure 15-4 -Refer to Figure 15-4. If the monopoly firm wants to maximize its profit, it should operate at a level of output equal to

Correct AnswerverifiedShow Answer

Explain how a profit-maximizing monopolist chooses its level of output and the price of its goods.

Correct AnswerverifiedA profit-maximizing monopolist produces ...View AnswerShow Answer

Figure 15-2 -Refer to Figure 15-2. What type of monopoly is shown in the figure?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The profit-maximization problem for a monopolist differs from that of a competitive firm in which of the following ways?

Correct AnswerverifiedShow Answer

Microsoft faces very little competition from other firms for its Windows software. Why isn't the price of the software $1,000 per copy?

Correct AnswerverifiedShow Answer

A market force that can prevent firms from price discriminating is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Because monopoly firms do not have to compete with other firms, the outcome in a market with a monopoly

Correct AnswerverifiedShow Answer

Antitrust laws have economic benefits that outweigh the costs if they

Correct AnswerverifiedShow Answer

Monopoly profit is not a social problem because

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Reduced competition through merging of companies will raise social welfare

Correct AnswerverifiedShow Answer

A monopoly market

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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A profit-maximizing monopolist produces ...
View 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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