Question 1

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

Question 2

Declining average total cost with increased production is one of the defining characteristics of a natural monopoly.

Accepted Answer

A) True 
 B)False

Question 3

What do economists call the business practice of selling the same good at difference prices to different customers?

Accepted Answer

A)   price discrimination
B)   collusion
C)   compensating differential
D)   Both a and b are correctE) A) and B)
F) B) and C)

Question 4

Table 15-6
Dreher's Designer Shirt Company,a monopolist,has the following cost and revenue information.Assume that Dreher's is able to engage in perfect price discrimination.
 
-Refer to Table 15-6.If the monopolist can engage in perfect price discrimination,what is total profit at the profit-maximizing quantity?

Accepted Answer

A)   $325
B)   $435
C)   $565
D)   $1000E) All of the above
F) B) and D)

Question 5

Figure 15-5 
-Refer to Figure 15-5.At the profit-maximizing level of output,

Accepted Answer

A)   marginal revenue is equal to P3.
B)   marginal cost is equal to P3.
C)   average revenue is equal to P4.
D)   average total cost is equal to P0.E) None of the above
F) All of the above

Question 6

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

Accepted Answer

A)   distribution pricing.
B)   quality-adjusted pricing.
C)   price differentiation.
D)   price discrimination.E) A) and B)
F) A) and C)

Question 7

Which of the following statements is correct for both a monopolist and a perfectly competitive firm?

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

Question 8

When an industry is a natural monopoly,

Accepted Answer

A)   it is characterized by constant returns to scale.
B)   it is characterized by diseconomies of scale.
C)   a larger number of firms may lead to a lower average cost.
D)   a larger number of firms will lead to a higher average cost.E) None of the above
F) B) and C)

Question 9

A monopolist maximizes profit by producing an output level where marginal cost equals price.

Accepted Answer

A) True 
 B)False

Question 10

The following table provides information on the price,quantity,and average cost for a monopoly.At what price will the firm maximize its profit?

Accepted Answer

A)   $1
B)   $2
C)   $3
D)   $4E) C) and D)
F) A) and B)

Question 11

Which of the following is the preferred strategy for the government to follow to remedy the inefficient allocation of resources associated with monopolies?

Accepted Answer

A)   preventing mergers through antitrust laws
B)   regulating the prices that monopolies can charge
C)   do nothing
D)   None of the above strategies is preferred.Each is a viable strategy.E) A) and C)
F) None of the above

Question 12

The supply curve for the monopolist

Accepted Answer

A)   is horizontal.
B)   is vertical.
C)   is upward sloping.
D)   does not exist.E) All of the above
F) B) and C)

Question 13

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

Question 14

Describe how government is involved in creating a monopoly.Why might the government create one? Give an example.

Accepted Answer

The government can create a monopoly by ...

Question 15

Table 15-5
 
-Refer to Table 15-5.If the monopolist faces a constant marginal cost of $4,how much output should the firm produce?

Accepted Answer

A)   3 units
B)   4 units
C)   5 units
D)   6 unitsE) None of the above
F) A) and B)

Question 16

To maximize total surplus with a monopoly firm,a benevolent social planner would

Accepted Answer

A)   choose the level of output where MR = MC.
B)   choose the level of output where MR intersects the demand curve.
C)   choose the level of output where MC intersects the demand curve.
D)   allow the free market system to determine the level of output.E) A) and B)
F) All of the above

Question 17

Perfect price discrimination

Accepted Answer

A)   increases profits to the firm.
B)   increases total surplus.
C)   decreases consumer surplus.
D)   All of the above are correct.E) B) and C)
F) A) and C)

Question 18

One problem with government operation of monopolies is that

Accepted Answer

A)   a benevolent government is likely to be interested in generating profits for political gain.
B)   monopolies typically have rising average costs.
C)   the government typically has little incentive to reduce costs.
D)   a government-regulated outcome will increase the profitability of the monopoly.E) A) and B)
F) None of the above

Question 19

Figure 15-6 
-Refer to Figure 15-6.A benevolent social planner would have the monopoly operate at an output level

Accepted Answer

A)   less than Q0.
B)   greater than Q0.
C)   equal to Q0.
D)   equal to zero.E) A) and D)
F) B) and D)

Question 20

Scenario 15-6
An airline knows that there are two types of travelers: business travelers and vacationers.For a particular flight,there are 100 business travelers who will pay $600 for a ticket while there are 50 vacationers who will pay $300 for a ticket.There are 150 seats available on the plane.Suppose the cost to the airline of providing the flight is $20,000,which includes the cost of the pilots,flight attendants,fuel,etc.
-Refer to Scenario 15-6.How much profit will the airline earn if it engages in price discrimination?

Accepted Answer

A)   -$5,000
B)   $40,000
C)   $55,000
D)   $75,000E) All of the above
F) B) and C)

Exam 15: Monopoly

Describe how government is involved in creating a monopoly.Why might the government create one? Give an example.

Correct Answer
verified
The government can create a monopoly by ...
View Answer

To maximize total surplus with a monopoly firm,a benevolent social planner would

Correct Answer
verified

Figure 15-5 -Refer to Figure 15-5.At the profit-maximizing level of output,

Correct Answer
verified

The following table provides information on the price,quantity,and average cost for a monopoly.At what price will the firm maximize its profit?

Correct Answer
verified

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

Correct Answer
verified

Which of the following is the preferred strategy for the government to follow to remedy the inefficient allocation of resources associated with monopolies?

Correct Answer
verified

Declining average total cost with increased production is one of the defining characteristics of a natural monopoly.

Correct Answer
verified

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

Correct Answer
verified

One problem with government operation of monopolies is that

Correct Answer
verified

Correct Answer
verified

A monopolist maximizes profit by producing an output level where marginal cost equals price.

Correct Answer
verified

Which of the following statements is correct for both a monopolist and a perfectly competitive firm?

Correct Answer
verified

What do economists call the business practice of selling the same good at difference prices to different customers?

Correct Answer
verified

Figure 15-6 -Refer to Figure 15-6.A benevolent social planner would have the monopoly operate at an output level

Correct Answer
verified

Price discrimination

Correct Answer
verified

When an industry is a natural monopoly,

Correct Answer
verified

Table 15-5 -Refer to Table 15-5.If the monopolist faces a constant marginal cost of $4,how much output should the firm produce?

Correct Answer
verified

The supply curve for the monopolist

Correct Answer
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Correct Answer
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Perfect price discrimination

Correct Answer
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Exam 15: Monopoly

Describe how government is involved in creating a monopoly.Why might the government create one? Give an example.

Correct AnswerverifiedThe government can create a monopoly by ...View AnswerShow Answer

To maximize total surplus with a monopoly firm,a benevolent social planner would

Correct AnswerverifiedShow Answer

Figure 15-5 -Refer to Figure 15-5.At the profit-maximizing level of output,

Correct AnswerverifiedShow Answer

The following table provides information on the price,quantity,and average cost for a monopoly.At what price will the firm maximize its profit?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is the preferred strategy for the government to follow to remedy the inefficient allocation of resources associated with monopolies?

Correct AnswerverifiedShow Answer

Declining average total cost with increased production is one of the defining characteristics of a natural monopoly.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

One problem with government operation of monopolies is that

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A monopolist maximizes profit by producing an output level where marginal cost equals price.

Correct AnswerverifiedShow Answer

Which of the following statements is correct for both a monopolist and a perfectly competitive firm?

Correct AnswerverifiedShow Answer

What do economists call the business practice of selling the same good at difference prices to different customers?

Correct AnswerverifiedShow Answer

Figure 15-6 -Refer to Figure 15-6.A benevolent social planner would have the monopoly operate at an output level

Correct AnswerverifiedShow Answer

Price discrimination

Correct AnswerverifiedShow Answer

When an industry is a natural monopoly,

Correct AnswerverifiedShow Answer

Table 15-5 -Refer to Table 15-5.If the monopolist faces a constant marginal cost of $4,how much output should the firm produce?

Correct AnswerverifiedShow Answer

The supply curve for the monopolist

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Perfect price discrimination

Correct AnswerverifiedShow Answer

Correct Answer
verified
The government can create a monopoly by ...
View Answer

Correct Answer
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Correct Answer
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