Question 1

Which of the following statements is not correct?

Accepted Answer

A)   Two examples of early antitrust laws are the Sherman and Clayton Antitrust Acts.
B)   Antitrust laws automatically prevent mergers between companies that produce similar products.
C)   Antitrust laws give the government power to increase competition.
D)   Antitrust laws can reduce social welfare if they prevent mergers that would lower costs through more efficient joint production.E) A) and D)
F) B) and C)

Question 2

Which of the following is an example of public ownership of a monopoly?

Accepted Answer

A)   DeBeers
B)   Microsoft
C)   U.S. Postal Service
D)   AT&TE) C) and D)
F) A) and B)

Question 3

If a monopolist's marginal costs increase by $1 for all levels of output,then the monopoly price will

Accepted Answer

A)   rise by $1.
B)   rise by more than $1.
C)   rise by less than $1.
D)   not change, but profits will decrease.E) A) and B)
F) A) and C)

Question 4

Which of the following formulas would correctly calculate a monopolist's profit?

Accepted Answer

A)   profit = price - marginal cost
B)   profit = price - average total cost
C)   profit = (price - marginal cost)  * quantity
D)   profit = (price - average total cost)  * quantityE) A) and B)
F) A) and C)

Question 5

During the holiday season,high-end retailers frequently place a high price on merchandise on weekends and discount the price during the week.They do this because they believe that two groups of customers exist: shoppers with little free time and bargain hunters.Bargain hunters have time to shop around and frequently shop during the week.What do economists call this price strategy used by high-end retailers?

Accepted Answer

A)   oligopoly
B)   price discrimination
C)   compensating differential
D)   in-kind transfersE) A) and B)
F) C) and D)

Question 6

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 variable cost of production when Sally produces six pairs of shoes?

Accepted Answer

A)   $100
B)   $295
C)   $600
D)   $620E) All of the above
F) B) and C)

Question 7

Copyrights and patents are examples of barriers to entry that give firms monopoly pricing powers.

Accepted Answer

A) True 
 B)False

Question 8

Monopolies are inefficient because they
(i) eliminate barriers to entry.
(ii) price their product at a level where marginal revenue exceeds marginal cost.
(iii) restrict output below the socially efficient level of production.

Accepted Answer

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

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 $150?

Accepted Answer

A)   $75,000
B)   $100,000
C)   $150,000
D)   $175,000E) A) and D)
F) A) and C)

Question 10

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 D)
F) A) and C)

Question 11

Figure 15-3
 
-Refer to Figure 15-3.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) All of the above
F) A) and D)

Question 12

Which of the following is not an example of a barrier to entry?

Accepted Answer

A)   Mighty Mitch's Mining Company owns a unique plot of land in Tanzania, under which lies the only large deposit of Tanzanite in the world.
B)   A college student starts a part-time tutoring business.
C)   A novelist obtains a copyright for her new book.
D)   A taxi cab driver in New York City obtains a license to legally provide transportation in New York City.E) A) and B)
F) A) and C)

Question 13

The collection of statutes aimed at curbing monopoly power is called

Accepted Answer

A)   the 14th amendment.
B)   the Clayton Act.
C)   the Sherman Act.
D)   antitrust law.E) A) and B)
F) None of the above

Question 14

Some companies merge in order to lower costs through efficient joint production.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following statements is correct for both a monopolist and a perfectly competitive firm? i) 
The firm maximizes profits by equating marginal revenue with marginal cost.
Ii) 
The firm maximizes profits by equating price with marginal cost.
Iii) 
Demand equals marginal revenue.
Iv) 
Average revenue equals price.

Accepted Answer

A)   i) , iii) , and iv)  only
B)   i)  and iv)  only
C)   i) , ii) , and iv)  only
D)   i) , ii) , iii) , and iv) E) None of the above
F) C) and D)

Question 16

Suppose a monopolist charges a price of $27 for its product and sells 10 units at that price.At 10 units of production the firm has average fixed cost equal to $10 and average variable cost equal to $12.How much total profit is the firm earning at this price?

Accepted Answer

A)   $5
B)   $25
C)   $50
D)   $140E) None of the above
F) A) and D)

Question 17

Which of the following strategies is not an effective strategy to reduce monopoly inefficiency?

Accepted Answer

A)   antitrust laws
B)   price discrimination
C)   doing nothing
D)   breaking up a natural monopoly into more than one firmE) A) and B)
F) A) and C)

Question 18

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) B) and D)
F) All of the above

Question 19

If a monopolist can sell 7 units when the price is $4 and 8 units when the price is $3,then marginal revenue of selling the eighth unit is equal to

Accepted Answer

A)   $3.
B)   $4.
C)   $24.
D)   -$4.E) All of the above
F) C) and D)

Question 20

When a monopolist increases the quantity that it sells,all else equal,total revenue increases,which is called the output effect.

Accepted Answer

A) True 
 B)False

Exam 15: Monopoly.

When a monopolist increases the quantity that it sells,all else equal,total revenue increases,which is called the output effect.

Correct Answer
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The collection of statutes aimed at curbing monopoly power is called

Correct Answer
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Some companies merge in order to lower costs through efficient joint production.

Correct Answer
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Which of the following formulas would correctly calculate a monopolist's profit?

Correct Answer
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Correct Answer
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Which of the following is not an example of a barrier to entry?

Correct Answer
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Monopolies are inefficient because they (i) eliminate barriers to entry. (ii) price their product at a level where marginal revenue exceeds marginal cost. (iii) restrict output below the socially efficient level of production.

Correct Answer
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Which of the following is an example of public ownership of a monopoly?

Correct Answer
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If a monopolist's marginal costs increase by $1 for all levels of output,then the monopoly price will

Correct Answer
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A monopolist produces

Correct Answer
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Copyrights and patents are examples of barriers to entry that give firms monopoly pricing powers.

Correct Answer
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Which of the following statements is not correct?

Correct Answer
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Correct Answer
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If a monopolist can sell 7 units when the price is $4 and 8 units when the price is $3,then marginal revenue of selling the eighth unit is equal to

Correct Answer
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Which of the following strategies is not an effective strategy to reduce monopoly inefficiency?

Correct Answer
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Suppose a monopolist charges a price of $27 for its product and sells 10 units at that price.At 10 units of production the firm has average fixed cost equal to $10 and average variable cost equal to $12.How much total profit is the firm earning at this price?

Correct Answer
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Figure 15-3 -Refer to Figure 15-3.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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When the government creates a monopoly,the social loss may include

Correct Answer
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Correct Answer
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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 variable cost of production when Sally produces six pairs of shoes?

Correct Answer
verified

Exam 15: Monopoly.

When a monopolist increases the quantity that it sells,all else equal,total revenue increases,which is called the output effect.

Correct AnswerverifiedShow Answer

The collection of statutes aimed at curbing monopoly power is called

Correct AnswerverifiedShow Answer

Some companies merge in order to lower costs through efficient joint production.

Correct AnswerverifiedShow Answer

Which of the following formulas would correctly calculate a monopolist's profit?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is not an example of a barrier to entry?

Correct AnswerverifiedShow Answer

Monopolies are inefficient because they (i) eliminate barriers to entry. (ii) price their product at a level where marginal revenue exceeds marginal cost. (iii) restrict output below the socially efficient level of production.

Correct AnswerverifiedShow Answer

Which of the following is an example of public ownership of a monopoly?

Correct AnswerverifiedShow Answer

If a monopolist's marginal costs increase by $1 for all levels of output,then the monopoly price will

Correct AnswerverifiedShow Answer

A monopolist produces

Correct AnswerverifiedShow Answer

Copyrights and patents are examples of barriers to entry that give firms monopoly pricing powers.

Correct AnswerverifiedShow Answer

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If a monopolist can sell 7 units when the price is $4 and 8 units when the price is $3,then marginal revenue of selling the eighth unit is equal to

Correct AnswerverifiedShow Answer

Which of the following strategies is not an effective strategy to reduce monopoly inefficiency?

Correct AnswerverifiedShow Answer

Suppose a monopolist charges a price of $27 for its product and sells 10 units at that price.At 10 units of production the firm has average fixed cost equal to $10 and average variable cost equal to $12.How much total profit is the firm earning at this price?

Correct AnswerverifiedShow Answer

Figure 15-3 -Refer to Figure 15-3.If the monopoly firm wants to maximize its profit,it should operate at a level of output equal to

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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 variable cost of production when Sally produces six pairs of shoes?

Correct AnswerverifiedShow Answer

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