Question 1

Table 15-2
Dreher's Designer Shirt Company,a monopolist,has the following cost and revenue information.
 
-Refer to Table 15-2.What is the marginal revenue from selling the 2nd shirt?

Accepted Answer

A)   $140
B)   $150
C)   $160
D)   $170E) A) and B)
F) A) and C)

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

For a monopoly,

Accepted Answer

A)   average revenue exceeds marginal revenue.
B)   average revenue equals marginal revenue.
C)   average revenue is less than marginal revenue.
D)   price equals marginal revenue.E) C) and D)
F) B) and D)

Question 4

A monopolist maximizes profits by

Accepted Answer

A)   producing an output level where marginal revenue equals marginal cost.
B)   charging a price equal to marginal revenue and marginal cost.
C)   charging a price where marginal cost equals average total cost.
D)   Both a and b are correct.E) A) and B)
F) A) and C)

Question 5

Figure 15-1 
-Refer to Figure 15-1.The shape of the average total cost curve reveals information about the nature of the barrier to entry that might exist in a monopoly market.Which of the following monopoly types best coincides with the figure?

Accepted Answer

A)   ownership of a key resource by a single firm
B)   natural monopoly
C)   government-created monopoly
D)   a patent or copyright monopolyE) B) and C)
F) C) and D)

Question 6

As a monopolist increases the quantity of output it sells,the price consumers are willing to pay for the good

Accepted Answer

A)   is unaffected.
B)   decreases.
C)   increases.
D)   There is not enough information given in answer the question.E) B) and C)
F) A) and D)

Question 7

Table 15-5
 
-Refer to Table 15-5.If the monopolist faces a constant marginal cost of $5,how much output should the firm produce?

Accepted Answer

A)   3 units
B)   4 units
C)   5 units
D)   6 unitsE) A) and D)
F) B) and C) A

Question 8

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 D)
F) A) and C)

Question 9

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

Question 10

Round-trip airline tickets are usually cheaper if you stay over a Saturday night before you fly back.What is the reason for this price discrepancy?

Accepted Answer

A)   Airlines are practicing imperfect price discrimination to raise their profits.
B)   Airlines charge a different rate based on the different nature of peoples' travel needs.
C)   Airlines are attempting to charge people based on their willingness to pay.
D)   All of the above are correct.E) None of the above
F) C) and D) D

Question 11

Table 15-4
Consider the following demand and cost information for a monopoly.
 
-Refer to Table 15-4.To maximize profit,the monopolist sets price at

Accepted Answer

A)   $10.
B)   $15.
C)   $20.
D)   $25.E) None of the above
F) A) and B)

Question 12

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

Question 13

Consumers' willingness to pay for a good minus the amount they actually pay for it equals

Accepted Answer

A)   consumer surplus.
B)   consumer benefit.
C)   price discriminant.
D)   deadweight loss.E) A) and D)
F) None of the above

Question 14

For a monopolist,when the price effect is greater than the output effect,marginal revenue is

Accepted Answer

A)   positive.
B)   negative.
C)   zero.
D)   maximized.E) C) and D)
F) A) and B)

Question 15

If a monopolist sells 100 units at $8 per unit and realizes an average total cost of $6 per unit,what is the monopolist's profit?

Accepted Answer

A)   $200
B)   $400
C)   $600
D)   $800E) None of the above
F) All of the above A

Question 16

Antitrust laws allow the government to

Accepted Answer

A)   prevent mergers.
B)   break up companies.
C)   promote competition.
D)   All of the above are correct.E) A) and B)
F) None of the above

Question 17

A benefit to society of the patent and copyright laws is that those laws

Accepted Answer

A)   help to keep prices down.
B)   help to prevent a single firm from acquiring ownership of a key resource.
C)   encourage creative activity.
D)   discourage excessive amounts of output of certain products.E) All of the above
F) None of the above

Question 18

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

Question 19

Price discrimination explains why Ivy League universities often base tuition costs on students'

Accepted Answer

A)   age.
B)   financial resources.
C)   high school GPA.
D)   gender.E) A) and B)
F) B) and C)

Question 20

There has been much discussion of deregulating electricity and natural gas delivery companies in the United States.Discuss the likely effect of deregulation on prices in these two industries.

Accepted Answer

If deregulation leads to increased compe...

Exam 15: Monopoly

Table 15-2 Dreher's Designer Shirt Company,a monopolist,has the following cost and revenue information. -Refer to Table 15-2.What is the marginal revenue from selling the 2nd shirt?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

For a monopoly,

Correct AnswerverifiedShow Answer

A monopolist maximizes profits by

Correct AnswerverifiedShow Answer

Figure 15-1 -Refer to Figure 15-1.The shape of the average total cost curve reveals information about the nature of the barrier to entry that might exist in a monopoly market.Which of the following monopoly types best coincides with the figure?

Correct AnswerverifiedShow Answer

As a monopolist increases the quantity of output it sells,the price consumers are willing to pay for the good

Correct AnswerverifiedShow Answer

Table 15-5 -Refer to Table 15-5.If the monopolist faces a constant marginal cost of $5,how much output should the firm produce?

Correct AnswerverifiedA

A market force that can prevent firms from price discriminating is

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

Round-trip airline tickets are usually cheaper if you stay over a Saturday night before you fly back.What is the reason for this price discrepancy?

Correct AnswerverifiedD

Table 15-4 Consider the following demand and cost information for a monopoly. -Refer to Table 15-4.To maximize profit,the monopolist sets price at

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Consumers' willingness to pay for a good minus the amount they actually pay for it equals

Correct AnswerverifiedShow Answer

For a monopolist,when the price effect is greater than the output effect,marginal revenue is

Correct AnswerverifiedShow Answer

If a monopolist sells 100 units at $8 per unit and realizes an average total cost of $6 per unit,what is the monopolist's profit?

Correct AnswerverifiedA

Antitrust laws allow the government to

Correct AnswerverifiedShow Answer

A benefit to society of the patent and copyright laws is that those laws

Correct AnswerverifiedShow Answer

Competitive firms have

Correct AnswerverifiedShow Answer

Price discrimination explains why Ivy League universities often base tuition costs on students'

Correct AnswerverifiedShow Answer

There has been much discussion of deregulating electricity and natural gas delivery companies in the United States.Discuss the likely effect of deregulation on prices in these two industries.

Correct AnswerverifiedIf deregulation leads to increased compe...View AnswerShow Answer

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If deregulation leads to increased compe...
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