Question 1

Graph 15-2
 3, reducing output will always cause profit to: A)  increase as long as output is at least Q2 B)  increase as long as output is at least Q1 C)  remain unchanged D)  decrease" class="answers-bank-image d-inline" rel="preload" > This graph reflects the cost and revenue structure for a monopoly firm. Use the graph to answer the following question(s) .
-Refer to Graph 15-2. If the monopoly firm is currently producing output at a level of Q3, reducing output will always cause profit to:

Accepted Answer

A)   increase as long as output is at least Q2
B)   increase as long as output is at least Q1
C)   remain unchanged
D)   decreaseE) A) and C)
F) All of the above

Question 2

Graph 15-3
 3 - P2 B)  P3 - P0 C)  P2 - P1 D)  P2 - P0" class="answers-bank-image d-inline" rel="preload" > This graph reflects the cost and revenue structure for a monopoly firm. Use the graph to answer the following question(s) .
-Refer to Graph 15-3. Profit on a typical unit sold for a profit-maximising monopoly would equal:

Accepted Answer

A)   P3 - P2
B)   P3 - P0
C)   P2 - P1
D)   P2 - P0E) B) and C)
F) B) and D)

Question 3

Suppose a pesticide company discovers and patents a new weed killer. This patent gives the company:

Accepted Answer

A)   a monopoly right to sell the weed killer for an unlimited number of years
B)   a monopoly right to sell the weed killer for a limited number of years
C)   partial ownership of the right to sell the weed killer for a limited number of years
D)   partial ownership of the right to sell the weed killer for an unlimited number of yearsE) B) and C)
F) B) and D)

Question 4

Price discrimination adds to social welfare in the form of which of the following? (i)  increased profits to the monopolist
(ii)  increased consumer surplus
(iii)  increased total surplus

Accepted Answer

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

Question 5

Graph 15-6
  This graph depicts the demand, marginal-revenue and marginal-cost curves of a profit-maximising monopolist. Use the graph to answer the following question(s) .
-Refer to Graph 15-6. Monopoly profit without price discrimination equals:

Accepted Answer

A)   ABC
B)   BDEC
C)   ADEC
D)   ADFE) A) and B)
F) None of the above

Question 6

C.R. Evans, a transportation corporation, has just completed the development of a new subway system in Melbourne. Currently there are plenty of seats on the subway, and it is never crowded. Its capacity well exceeds the needs of the city. After just a few years of operation, the shareholders of C.R. Evans common stock are experiencing incredible rates of return on their investment, due to the profitability of the corporation.
-According to the information provided, which of the following statements are most likely to be true? (i)  C.R. Evans is a natural monopoly
(ii)  new entrants to the market know they will earn a smaller piece of the market than C.R. Evans currently has
(iii)  C.R. Evans is most likely experiencing increasing average total cost

Accepted Answer

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

Question 7

When a monopolist is able to sell its product at different prices, it is engaging in:

Accepted Answer

A)   exploitation of consumers
B)   predatory pricing
C)   price discrimination
D)   price differentiationE) A) and D)
F) None of the above

Question 8

During the life of a drug patent, the monopoly pharmaceutical firm maximises profit by producing the quantity at which marginal revenue is greater than marginal cost.

Accepted Answer

A) True 
 B)False

Question 9

When a monopolist reduces the amount of output that it sells, the price of its output:

Accepted Answer

A)   increases
B)   decreases
C)   stays the same
D)   may increase or decrease, depending on the elasticity of demandE) All of the above
F) B) and C)

Question 10

Average revenue for a monopoly is the marginal revenue divided by the quantity produced.

Accepted Answer

A) True 
 B)False

Question 11

In the market for home heating, consumers typically have several options (e.g. electricity, heating fuel, natural gas, propane, etc.), yet we often think of firms in this industry as behaving like monopolists. Using your understanding of monopoly, discuss the context in which your electricity provider is a monopolist. Is this characterisation universally applicable? Carefully explain your answer.

Accepted Answer

In this case, the firms are monopolists ...

Question 12

The difference in total surplus between a socially efficient level of production and a monopolist's level of production is:

Accepted Answer

A)   offset by regulatory revenues
B)   usually small and insignificant
C)   a deadweight loss
D)   all of the aboveE) All of the above
F) A) and B)

Question 13

If there are no close substitutes for the monopoly's product, the monopoly has increased market power.

Accepted Answer

A) True 
 B)False

Question 14

Graph 15-2
 0 B)  P1 C)  P2 D)  P3" class="answers-bank-image d-inline" rel="preload" > This graph reflects the cost and revenue structure for a monopoly firm. Use the graph to answer the following question(s) .
-Refer to Graph 15-2. Profit will be maximised by charging a price equal to:

Accepted Answer

A)   P0
B)   P1
C)   P2
D)   P3E) B) and D)
F) B) and C)

Question 15

Supply curves tell us how much producers are willing to supply at any given price. Hence monopoly firms have:

Accepted Answer

A)   steeper supply curves than competitive firms
B)   flatter supply curves than competitive firms
C)   vertical supply curves
D)   no supply curvesE) B) and C)
F) A) and D)

Question 16

Discount coupons have the ability to help a grocery store:

Accepted Answer

A)   maximise its profit
B)   price discriminate
C)   target their customers based on their individual willingness to pay
D)   do all of the aboveE) None of the above
F) C) and D)

Question 17

Given that monopoly firms do not have to compete with other firms, the outcome in a monopoly market is best described as:

Accepted Answer

A)   not in the best interest of society
B)   where excessive pollution occurs
C)   efficient, but not equitable
D)   all of the aboveE) A) and B)
F) B) and C)

Question 18

The simplest way for a monopoly to arise is for a single firm to:

Accepted Answer

A)   own a key resource
B)   inflate its prices
C)   cut production to increase demand for a product
D)   collude with the other producers in townE) A) and B)
F) A) and C)

Question 19

Monopoly firms have:

Accepted Answer

A)   horizontal demand curves and can sell only a limited amount at each price
B)   horizontal demand curves and can sell as much as they want at each price
C)   downward-sloping demand curves and can sell as much as they want at each price
D)   downward-sloping demand curves and can sell only a limited amount at each priceE) A) and B)
F) None of the above

Question 20

Graph 15-6
  This graph depicts the demand, marginal-revenue and marginal-cost curves of a profit-maximising monopolist. Use the graph to answer the following question(s) .
-Refer to Graph 15-6. Monopoly profit with perfect price discrimination equals:

Accepted Answer

A)   ABC
B)   BDEC
C)   ADEC
D)   ADFE) None of the above
F) A) and C)

Exam 15: Monopoly

Average revenue for a monopoly is the marginal revenue divided by the quantity produced.

Correct Answer
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Supply curves tell us how much producers are willing to supply at any given price. Hence monopoly firms have:

Correct Answer
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Monopoly firms have:

Correct Answer
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During the life of a drug patent, the monopoly pharmaceutical firm maximises profit by producing the quantity at which marginal revenue is greater than marginal cost.

Correct Answer
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Graph 15-2 This graph reflects the cost and revenue structure for a monopoly firm. Use the graph to answer the following question(s) . -Refer to Graph 15-2. Profit will be maximised by charging a price equal to:

Correct Answer
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Correct Answer
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Suppose a pesticide company discovers and patents a new weed killer. This patent gives the company:

Correct Answer
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The difference in total surplus between a socially efficient level of production and a monopolist's level of production is:

Correct Answer
verified

Discount coupons have the ability to help a grocery store:

Correct Answer
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Graph 15-6 This graph depicts the demand, marginal-revenue and marginal-cost curves of a profit-maximising monopolist. Use the graph to answer the following question(s) . -Refer to Graph 15-6. Monopoly profit with perfect price discrimination equals:

Correct Answer
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When a monopolist reduces the amount of output that it sells, the price of its output:

Correct Answer
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The simplest way for a monopoly to arise is for a single firm to:

Correct Answer
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Graph 15-2 This graph reflects the cost and revenue structure for a monopoly firm. Use the graph to answer the following question(s) . -Refer to Graph 15-2. If the monopoly firm is currently producing output at a level of Q₃, reducing output will always cause profit to:

Correct Answer
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Graph 15-3 This graph reflects the cost and revenue structure for a monopoly firm. Use the graph to answer the following question(s) . -Refer to Graph 15-3. Profit on a typical unit sold for a profit-maximising monopoly would equal:

Correct Answer
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If there are no close substitutes for the monopoly's product, the monopoly has increased market power.

Correct Answer
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Graph 15-6 This graph depicts the demand, marginal-revenue and marginal-cost curves of a profit-maximising monopolist. Use the graph to answer the following question(s) . -Refer to Graph 15-6. Monopoly profit without price discrimination equals:

Correct Answer
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When a monopolist is able to sell its product at different prices, it is engaging in:

Correct Answer
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Price discrimination adds to social welfare in the form of which of the following? (i) increased profits to the monopolist (ii) increased consumer surplus (iii) increased total surplus

Correct Answer
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Correct Answer
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In this case, the firms are monopolists ...
View Answer

Given that monopoly firms do not have to compete with other firms, the outcome in a monopoly market is best described as:

Correct Answer
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Exam 15: Monopoly

Average revenue for a monopoly is the marginal revenue divided by the quantity produced.

Correct AnswerverifiedShow Answer

Supply curves tell us how much producers are willing to supply at any given price. Hence monopoly firms have:

Correct AnswerverifiedShow Answer

Monopoly firms have:

Correct AnswerverifiedShow Answer

During the life of a drug patent, the monopoly pharmaceutical firm maximises profit by producing the quantity at which marginal revenue is greater than marginal cost.

Correct AnswerverifiedShow Answer

Graph 15-2 This graph reflects the cost and revenue structure for a monopoly firm. Use the graph to answer the following question(s) . -Refer to Graph 15-2. Profit will be maximised by charging a price equal to:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose a pesticide company discovers and patents a new weed killer. This patent gives the company:

Correct AnswerverifiedShow Answer

The difference in total surplus between a socially efficient level of production and a monopolist's level of production is:

Correct AnswerverifiedShow Answer

Discount coupons have the ability to help a grocery store:

Correct AnswerverifiedShow Answer

Graph 15-6 This graph depicts the demand, marginal-revenue and marginal-cost curves of a profit-maximising monopolist. Use the graph to answer the following question(s) . -Refer to Graph 15-6. Monopoly profit with perfect price discrimination equals:

Correct AnswerverifiedShow Answer

When a monopolist reduces the amount of output that it sells, the price of its output:

Correct AnswerverifiedShow Answer

The simplest way for a monopoly to arise is for a single firm to:

Correct AnswerverifiedShow Answer

Graph 15-2 This graph reflects the cost and revenue structure for a monopoly firm. Use the graph to answer the following question(s) . -Refer to Graph 15-2. If the monopoly firm is currently producing output at a level of Q3, reducing output will always cause profit to:

Correct AnswerverifiedShow Answer

Graph 15-3 This graph reflects the cost and revenue structure for a monopoly firm. Use the graph to answer the following question(s) . -Refer to Graph 15-3. Profit on a typical unit sold for a profit-maximising monopoly would equal:

Correct AnswerverifiedShow Answer

If there are no close substitutes for the monopoly's product, the monopoly has increased market power.

Correct AnswerverifiedShow Answer

Graph 15-6 This graph depicts the demand, marginal-revenue and marginal-cost curves of a profit-maximising monopolist. Use the graph to answer the following question(s) . -Refer to Graph 15-6. Monopoly profit without price discrimination equals:

Correct AnswerverifiedShow Answer

When a monopolist is able to sell its product at different prices, it is engaging in:

Correct AnswerverifiedShow Answer

Price discrimination adds to social welfare in the form of which of the following? (i) increased profits to the monopolist (ii) increased consumer surplus (iii) increased total surplus

Correct AnswerverifiedShow Answer

Correct AnswerverifiedIn this case, the firms are monopolists ...View AnswerShow Answer

Given that monopoly firms do not have to compete with other firms, the outcome in a monopoly market is best described as:

Correct AnswerverifiedShow Answer

Correct Answer
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Graph 15-2 This graph reflects the cost and revenue structure for a monopoly firm. Use the graph to answer the following question(s) . -Refer to Graph 15-2. If the monopoly firm is currently producing output at a level of Q₃, reducing output will always cause profit to:

Correct Answer
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Correct Answer
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Correct Answer
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In this case, the firms are monopolists ...
View Answer

Correct Answer
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