Question 1

Figure 15-17 
-Refer to Figure 15-17. Which of the following areas represents the deadweight loss from this profit-maximizing monopolist?

Accepted Answer

A)   ABE
B)   BCFE
C)   EFG
D)   ACGE) A) and B)
F) None of the above

Question 2

Scenario 15-10
Vincent operates a scenic tour business in Boston. He has one bus which can fit 50 people per tour and each tour lasts 2 hours. His total cost of operating one tour is fixed at $450. Vincent's cost is not reduced if he runs a tour with a partially full bus. While his cost is the same for all tours, Vincent charges each passenger his/her willingness to pay: adults $18 per trip, children $10 per trip, and senior citizens $12 per trip. At those rates, on a typical day Vincent's demand is:  Assume that Vincent's customers are always available for the tour; therefore, he can fill his bus for each tour as long as there is sufficient total demand for the day.
-Refer to Scenario 15-10. What is Vincent's profit on a typical day?

Accepted Answer

A)   $660
B)   $820
C)   $1,350
D)   $2,170E) C) and D)
F) B) and C)

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

Question 4

Figure 15-14 
-Refer to Figure 15-14. 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) B) and C)
F) None of the above

Question 5

Give some examples of the benefits and costs of antitrust laws.

Accepted Answer

Benefits include promoting com...

Question 6

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

Question 7

If a profit-maximizing monopolist faces a downward-sloping market demand curve, its

Accepted Answer

A)   average revenue is less than the price of the product.
B)   average revenue is less than marginal revenue.
C)   marginal revenue is less than the price of the product.
D)   marginal revenue is greater than the price of the product.E) None of the above
F) A) and B)

Question 8

A patent gives a single person or firm the exclusive right to sell some good or service for a specific period of time.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

Table 15-15
A monopolist faces the following demand curve: 
-Refer to Table 15-15. The monopolist has total fixed costs of $40 and a constant marginal cost of $5. At the profit-maximizing level of output, the monopolist's profit is

Accepted Answer

A)   $88.
B)   $8.
C)   $6.
D)   We do not have enough information to determine profit.E) A) and B)
F) A) and C)

Question 11

When a monopolist decreases the price of its good, consumers

Accepted Answer

A)   continue to buy the same amount.
B)   buy more.
C)   buy less.
D)   may buy more or less, depending on the price elasticity of demand.E) A) and B)
F) None of the above

Question 12

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

Accepted Answer

A)   John owns the only parcel of lakeside property with a beach that is safe for swimming. He charges admission to neighbors who want to use the beach.
B)   Jackie owns the copyright to a popular song. She receives royalties every time a radio station plays her song.
C)   John Jr. owns the best seafood restaurant in a popular resort area. He charges high prices because the quality of the food is so good.
D)   Caroline owns the patent for a new running shoe. She receives payments from the company who manufactures the shoes.E) All of the above
F) C) and D)

Question 13

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 additional profit can the concert promoters earn by charging each customer their willingness to pay relative to charging a flat price of $50 per ticket?

Accepted Answer

A)   $25,000
B)   $50,000
C)   $75,000
D)   $100,000E) A) and D)
F) A) and C)

Question 14

One solution to the problems of marginal-cost pricing of a regulated natural monopolist is average cost pricing. In this model, the monopolist is allowed to price its production at average total cost. How does average-cost pricing differ from marginal-cost pricing? Does this solution maximize social well-being?

Accepted Answer

Under average-cost pricing, the monopoli...

Question 15

Table 15-2
Tanya has the following demand curve for selling taffy. Assume that Tanya has a marginal cost of $3 per unit. 
-Refer to Table 15-2. What is Tanya's profit-maximizing price?

Accepted Answer

A)   $2
B)   $4
C)   $6
D)   $8E) A) and C)
F) A) and D)

Question 16

Table 15-19
A monopolist faces the following demand curve: 
-Refer to Table 15-19. If a monopolist faces a constant marginal cost of $9, how much output should the firm produce?

Accepted Answer

A)   2 units
B)   3 units
C)   4 units
D)   5 unitsE) A) and B)
F) A) and C)

Question 17

When a firm experiences continually declining average total costs, the firm is a

Accepted Answer

A)   government-created monopoly.
B)   price taker.
C)   natural monopoly.
D)   revenue maximizer.E) A) and B)
F) C) and D)

Question 18

One method used to control the ability of firms to capture monopoly profit in the United States is through

Accepted Answer

A)   government purchase of products produced by monopolists.
B)   government distribution of a monopolist's excess production.
C)   enforcement of antitrust laws.
D)   regulation of firms in highly competitive markets.E) All of the above
F) None of the above

Question 19

Many movie theaters allow discount tickets to be sold to senior citizens because

Accepted Answer

A)   senior-citizen laws mandate such discounts.
B)   goodwill efforts earn community respect and win loyal patrons.
C)   the theaters are profit maximizers.
D)   senior citizens lobby city councils for lower prices.E) All of the above
F) A) and D)

Question 20

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)

Exam 15: Monopoly

Correct Answer
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Under average-cost pricing, the monopoli...
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What do economists call the business practice of selling the same good at difference prices to different customers?

Correct Answer
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When a monopolist decreases the price of its good, consumers

Correct Answer
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One method used to control the ability of firms to capture monopoly profit in the United States is through

Correct Answer
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Figure 15-17 -Refer to Figure 15-17. Which of the following areas represents the deadweight loss from this profit-maximizing monopolist?

Correct Answer
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Table 15-2 Tanya has the following demand curve for selling taffy. Assume that Tanya has a marginal cost of $3 per unit. -Refer to Table 15-2. What is Tanya's profit-maximizing price?

Correct Answer
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When a monopolist increases the quantity that it sells, price decreases, which, all else equal, decreases total revenue; this is called the price effect.

Correct Answer
verified

If a profit-maximizing monopolist faces a downward-sloping market demand curve, its

Correct Answer
verified

Correct Answer
verified

A patent gives a single person or firm the exclusive right to sell some good or service for a specific period of time.

Correct Answer
verified

Table 15-15 A monopolist faces the following demand curve: -Refer to Table 15-15. The monopolist has total fixed costs of $40 and a constant marginal cost of $5. At the profit-maximizing level of output, the monopolist's profit is

Correct Answer
verified

Table 15-19 A monopolist faces the following demand curve: -Refer to Table 15-19. If a monopolist faces a constant marginal cost of $9, how much output should the firm produce?

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

Correct Answer
verified

Many movie theaters allow discount tickets to be sold to senior citizens because

Correct Answer
verified

Correct Answer
verified

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
verified

Figure 15-14 -Refer to Figure 15-14. A benevolent social planner would have the monopoly operate at an output level

Correct Answer
verified

Competitive firms have

Correct Answer
verified

When a firm experiences continually declining average total costs, the firm is a

Correct Answer
verified

Give some examples of the benefits and costs of antitrust laws.

Correct Answer
verified
Benefits include promoting com...
View Answer

Exam 15: Monopoly

Correct AnswerverifiedUnder average-cost pricing, the monopoli...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

When a monopolist decreases the price of its good, consumers

Correct AnswerverifiedShow Answer

One method used to control the ability of firms to capture monopoly profit in the United States is through

Correct AnswerverifiedShow Answer

Figure 15-17 -Refer to Figure 15-17. Which of the following areas represents the deadweight loss from this profit-maximizing monopolist?

Correct AnswerverifiedShow Answer

Table 15-2 Tanya has the following demand curve for selling taffy. Assume that Tanya has a marginal cost of $3 per unit. -Refer to Table 15-2. What is Tanya's profit-maximizing price?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If a profit-maximizing monopolist faces a downward-sloping market demand curve, its

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A patent gives a single person or firm the exclusive right to sell some good or service for a specific period of time.

Correct AnswerverifiedShow Answer

Table 15-15 A monopolist faces the following demand curve: -Refer to Table 15-15. The monopolist has total fixed costs of $40 and a constant marginal cost of $5. At the profit-maximizing level of output, the monopolist's profit is

Correct AnswerverifiedShow Answer

Table 15-19 A monopolist faces the following demand curve: -Refer to Table 15-19. If a monopolist faces a constant marginal cost of $9, how much output should the firm produce?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Many movie theaters allow discount tickets to be sold to senior citizens because

Correct AnswerverifiedShow Answer

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 15-14 -Refer to Figure 15-14. A benevolent social planner would have the monopoly operate at an output level

Correct AnswerverifiedShow Answer

Competitive firms have

Correct AnswerverifiedShow Answer

When a firm experiences continually declining average total costs, the firm is a

Correct AnswerverifiedShow Answer

Give some examples of the benefits and costs of antitrust laws.

Correct AnswerverifiedBenefits include promoting com...View AnswerShow Answer

Correct Answer
verified
Under average-cost pricing, the monopoli...
View Answer

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Correct Answer
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Benefits include promoting com...
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