Question 1

Scenario 15-1
Consider a transportation corporation named C.R. Evans that has just completed the development of a new subway system in a medium-sized town in the Northwest. Currently, there are plenty of seats on the subway, and it is never crowded. Its capacity far exceeds the needs of the city. After just a few years of operation, the shareholders of C.R. Evans experienced incredible rates of return on their investment, due to the profitability of the corporation.
-Refer to Scenario 15-1.Which of the following statements are most likely to be true? (i) 	New entrants to the market know they will earn a smaller piece of the market than C.R.Evans currently has.
(ii) 	C.R.Evans is most likely experiencing increasing average total cost.
(iii) 	C.R.Evans is a natural monopoly.

Accepted Answer

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

Question 2

Because monopoly firms do not have to compete with other firms,the outcome in a market with a monopoly is often

Accepted Answer

A)  not in the best interest of society.
B)  one that fails to maximize total economic well-being.
C)  inefficient.
D)  All of the above are correct.E) A) and B)
F) None of the above

Question 3

Most markets are not monopolies in the real world because

Accepted Answer

A)  firms usually face downward-sloping demand curves.
B)  supply curves slope upward.
C)  price is usually set equal to marginal cost by firms.
D)  there are reasonable substitutes for most goods.E) B) and C)
F) A) and C)

Question 4

Which of the following is an example of price discrimination?

Accepted Answer

A)  Nabisco provides cents-off coupons for its products.
B)  Amtrak offers a lower price for weekend travel compared to weekday rates on the same routes.
C)  Hotel rates for AAA members are lower than for nonmembers.
D)  All of the above are correct.E) A) and D)
F) A) and B)

Question 5

A monopoly chooses to supply the market with a quantity of goods that is determined by the intersection of the

Accepted Answer

A)  marginal cost and demand curves.
B)  average total cost and demand curves.
C)  marginal revenue and average total cost curves.
D)  marginal revenue and marginal cost curves.E) None of the above
F) A) and D)

Question 6

Like monopolies,competitive firms choose to produce a quantity in which marginal revenue equals marginal cost.

Accepted Answer

A) True 
 B)False

Question 7

Figure 15-3
The figure below illustrates the cost and revenue structure for a monopoly firm.
 
-Refer to Figure 15-3.A profit-maximizing monopoly's total cost is equal to

Accepted Answer

A)  (P₁ - P₀)  × Q₂.
B)  P₀ × Q₁.
C)  P₀ × Q₂.
D)  P₀ × Q₃.E) C) and D)
F) A) and B)

Question 8

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

Question 9

Selling a good at a price determined by the intersection of the demand curve and the marginal cost curve is consistent with (i) 	the socially-optimal level of output.
(ii) 	the market solution for profit-maximizing competitive firms.
(iii) 	the market solution for a profit-maximizing monopoly.

Accepted Answer

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

Question 10

When a firm operates under conditions of monopoly,its price is

Accepted Answer

A)  not constrained.
B)  constrained by marginal cost.
C)  constrained by demand.
D)  constrained only by its social agenda.E) A) and D)
F) None of the above

Question 11

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 cost of the 8th shirt?

Accepted Answer

A)  $50
B)  $60
C)  $90
D)  $110E) None of the above
F) All of the above

Question 12

Table 15-4
Consider the following demand and cost information for a monopoly.
 
-Refer to Table 15-4.The marginal revenue of the second unit is

Accepted Answer

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

Question 13

An industry is a natural monopoly when (i) 	the government assists the firm in maintaining the monopoly.
(ii) 	a single firm owns a key resource.
(iii) 	a single firm can supply a good or service to an entire market at a smaller cost than could two or more firms.

Accepted Answer

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

Question 14

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

Question 15

Figure 15-5
The figure below depicts the demand, marginal revenue and marginal cost curves of a profit-maximizing monopolist.
 
-Refer to Figure 15-5.Which of the following areas represents the deadweight loss due to monopoly pricing?

Accepted Answer

A)  Triangle bde
B)  Triangle bge
C)  Rectangle acdb
D)  Rectangle cfgdE) B) and D)
F) B) and C)

Question 16

When a pharmaceutical company discovers a new drug,patent law gives the monopoly

Accepted Answer

A)  partial ownership of the right to sell the drug for a limited number of years.
B)  partial ownership of the right to sell the drug for an unlimited number of years.
C)  sole ownership of the right to sell the drug for a limited number of years.
D)  sole ownership of the right to sell the drug for an unlimited number of years.E) A) and D)
F) B) and C)

Question 17

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

Question 18

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.How much profit will the airline earn if it sets the price of a ticket at $600?

Accepted Answer

A)  -$5,000
B)  $15,000
C)  $40,000
D)  $70,000E) A) and D)
F) C) and D)

Question 19

A government-created monopoly arises when

Accepted Answer

A)  government spending in a certain industry gives rise to monopoly power.
B)  the government exercises its market control by encouraging competition among sellers.
C)  the government gives a firm the exclusive right to sell some good or service.
D)  Both a and c are correct.E) A) and B)
F) A) and C)

Question 20

Graphically depict the deadweight loss caused by a monopoly.How is this similar to the deadweight loss from taxation?

Accepted Answer

A profit-maximizing monopolist will choo...

Exam 15: Monopoly

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

Correct Answer
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Figure 15-5 The figure below depicts the demand, marginal revenue and marginal cost curves of a profit-maximizing monopolist. -Refer to Figure 15-5.Which of the following areas represents the deadweight loss due to monopoly pricing?

Correct Answer
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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 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
verified

Graphically depict the deadweight loss caused by a monopoly.How is this similar to the deadweight loss from taxation?

Correct Answer
verified
A profit-maximizing monopolist will choo...
View Answer

Figure 15-3 The figure below illustrates the cost and revenue structure for a monopoly firm. -Refer to Figure 15-3.A profit-maximizing monopoly's total cost is equal to

Correct Answer
verified

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 cost of the 8th shirt?

Correct Answer
verified

Because monopoly firms do not have to compete with other firms,the outcome in a market with a monopoly is often

Correct Answer
verified

When a firm operates under conditions of monopoly,its price is

Correct Answer
verified

Correct Answer
verified

Like monopolies,competitive firms choose to produce a quantity in which marginal revenue equals marginal cost.

Correct Answer
verified

A government-created monopoly arises when

Correct Answer
verified

When a pharmaceutical company discovers a new drug,patent law gives the monopoly

Correct Answer
verified

Most markets are not monopolies in the real world because

Correct Answer
verified

Which of the following is an example of price discrimination?

Correct Answer
verified

Table 15-4 Consider the following demand and cost information for a monopoly. -Refer to Table 15-4.The marginal revenue of the second unit is

Correct Answer
verified

Correct Answer
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Selling a good at a price determined by the intersection of the demand curve and the marginal cost curve is consistent with (i) the socially-optimal level of output. (ii) the market solution for profit-maximizing competitive firms. (iii) the market solution for a profit-maximizing monopoly.

Correct Answer
verified

A monopoly chooses to supply the market with a quantity of goods that is determined by the intersection of the

Correct Answer
verified

An industry is a natural monopoly when (i) the government assists the firm in maintaining the monopoly. (ii) a single firm owns a key resource. (iii) a single firm can supply a good or service to an entire market at a smaller cost than could two or more firms.

Correct Answer
verified

Exam 15: Monopoly

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

Correct AnswerverifiedShow Answer

Figure 15-5 The figure below depicts the demand, marginal revenue and marginal cost curves of a profit-maximizing monopolist. -Refer to Figure 15-5.Which of the following areas represents the deadweight loss due to monopoly pricing?

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

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

Correct AnswerverifiedShow Answer

Graphically depict the deadweight loss caused by a monopoly.How is this similar to the deadweight loss from taxation?

Correct AnswerverifiedA profit-maximizing monopolist will choo...View AnswerShow Answer

Figure 15-3 The figure below illustrates the cost and revenue structure for a monopoly firm. -Refer to Figure 15-3.A profit-maximizing monopoly's total cost is equal to

Correct AnswerverifiedShow Answer

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 cost of the 8th shirt?

Correct AnswerverifiedShow Answer

Because monopoly firms do not have to compete with other firms,the outcome in a market with a monopoly is often

Correct AnswerverifiedShow Answer

When a firm operates under conditions of monopoly,its price is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Like monopolies,competitive firms choose to produce a quantity in which marginal revenue equals marginal cost.

Correct AnswerverifiedShow Answer

A government-created monopoly arises when

Correct AnswerverifiedShow Answer

When a pharmaceutical company discovers a new drug,patent law gives the monopoly

Correct AnswerverifiedShow Answer

Most markets are not monopolies in the real world because

Correct AnswerverifiedShow Answer

Which of the following is an example of price discrimination?

Correct AnswerverifiedShow Answer

Table 15-4 Consider the following demand and cost information for a monopoly. -Refer to Table 15-4.The marginal revenue of the second unit is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Selling a good at a price determined by the intersection of the demand curve and the marginal cost curve is consistent with (i) the socially-optimal level of output. (ii) the market solution for profit-maximizing competitive firms. (iii) the market solution for a profit-maximizing monopoly.

Correct AnswerverifiedShow Answer

A monopoly chooses to supply the market with a quantity of goods that is determined by the intersection of the

Correct AnswerverifiedShow Answer

An industry is a natural monopoly when (i) the government assists the firm in maintaining the monopoly. (ii) a single firm owns a key resource. (iii) a single firm can supply a good or service to an entire market at a smaller cost than could two or more firms.

Correct AnswerverifiedShow Answer

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A profit-maximizing monopolist will choo...
View Answer

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