Question 1

Which of the following statements is correct?

Accepted Answer

A)   The benefits that accrue to a monopoly's owners are equal to the costs that are incurred by consumers of that firm's product.
B)   The deadweight loss that arises in monopoly stems from the fact that the profit-maximizing monopoly firm produces a quantity of output that exceeds the socially-efficient quantity.
C)   The deadweight loss caused by monopoly is similar to the deadweight loss caused by a tax on a product.
D)   The primary social problem caused by monopoly is monopoly profit.E) A) and B)
F) None of the above

Question 2

A market structure with barriers to entry is

Accepted Answer

A)   a monopoly.
B)   oligopolistically competitive.
C)   monopolistically competitive.
D)   perfectly competitive.E) A) and B)
F) A) and C)

Question 3

Figure 15-25 
-Refer to Figure 15-25. If a regulator requires this firm to charge a socially optimal price, how much deadweight loss results?

Accepted Answer

The answer of Figure 15-25 
-Refer to Figure 15-25. If...

Question 4

Table 15-6
A monopolist faces the following demand curve:
 
-Refer to Table 15-6. What is the marginal revenue from the sale of the 4th unit?

Accepted Answer

A)   $3
B)   -$3
C)   $9
D)   $24E) All of the above
F) A) and D)

Question 5

Table 15-19
A monopolist faces the following demand curve:
 
-Refer to Table 15-19. If a monopolist faces a constant marginal cost of $3, how much output should the firm produce?

Accepted Answer

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

Question 6

One characteristic of a monopoly market is that the product is virtually identical to products produced by competing firms.

Accepted Answer

A) True 
 B)False

Question 7

Figure 15-6 
-Refer to Figure 15-6. What price will the monopolist charge?

Accepted Answer

A)   A
B)   C
C)   K
D)   LE) None of the above
F) A) and D)

Question 8

Deadweight loss measures the loss in society's welfare that occurs because a monopolist does not produce the socially efficient level of output.

Accepted Answer

A) True 
 B)False

Question 9

Firms with substantial monopoly power are quite common because many goods are unique.

Accepted Answer

A) True 
 B)False

Question 10

"Monopolists do not worry about efficient production and minimizing costs since they can just pass along any increase in costs to their consumers." This statement is

Accepted Answer

A)   false; price increases will mean fewer sales, which may lower profits.
B)   true; this is the primary reason why economists believe that monopolies result in economic inefficiency.
C)   false; the monopolist is a price taker.
D)   true; consumers in a monopoly market have no substitutes to turn to when the monopolist raises prices.E) B) and D)
F) A) and B)

Question 11

The laws governing patents and copyrights

Accepted Answer

A)   promote monopolies.
B)   are intended to serve private interests, not the public's interest.
C)   have costs but not benefits.
D)   eliminate the need for firms to engage in research and development.E) A) and B)
F) A) and C)

Question 12

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

Question 13

Figure 15-7 
-Refer to Figure 15-7. In order to maximize profits, the monopolist should produce

Accepted Answer

A)   9 units.
B)   12 units.
C)   15 units.
D)   more than 15 units.E) All of the above
F) C) and D)

Question 14

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

Question 15

Generic drugs enter the pharmaceutical drug market once

Accepted Answer

A)   the ingredients to the name brand drug have been discovered.
B)   10 years have passed.
C)   they are patented.
D)   the patent on the name brand drug expires.E) A) and B)
F) B) and C)

Question 16

Figure 15-10 
-Refer to Figure 15-10. What area measures the deadweight loss?

Accepted Answer

A)   (B-F) *K
B)   0.5[(P-O) *(L-O) ]
C)   0.5[(A-H) *(L-J) ]
D)   0.5[(B-F) *(L-K) ]E) A) and B)
F) A) and C)

Question 17

A perfectly competitive firm produces where

Accepted Answer

A)   marginal cost equals price, while a monopolist produces where price exceeds marginal cost.
B)   marginal cost equals price, while a monopolist produces where marginal cost exceeds price.
C)   price exceeds marginal cost, while a monopolist produces where marginal cost equals price.
D)   marginal cost exceeds price, while a monopolist produces where marginal cost equals price.E) A) and B)
F) B) and C)

Question 18

Figure 15-4 
-Refer to Figure 15-4. A profit-maximizing monopoly's total revenue is equal to

Accepted Answer

A)   P5 x Q3.
B)   P4 x Q5.
C)   (P5-P3)  x Q3.
D)   (P5-P4)  x Q3.E) C) and D)
F) None of the above

Question 19

Table 15-20
A monopolist faces the following demand curve:
 
-Refer to Table 15-20. If a monopolist faces a constant marginal cost of $5, how much output should the firm produce in order to maximize profit?

Accepted Answer

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

Question 20

Figure 15-4 
-Refer to Figure 15-4. If the monopoly firm is currently producing Q3 units of output, then a decrease in output will necessarily cause profit to

Accepted Answer

A)   remain unchanged.
B)   decrease.
C)   increase as long as the new level of output is at least Q2.
D)   increase as long as the new level of output is at least Q1.E) C) and D)
F) None of the above

Exam 15: Monopoly

Figure 15-10 -Refer to Figure 15-10. What area measures the deadweight loss?

Correct Answer
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Generic drugs enter the pharmaceutical drug market once

Correct Answer
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A perfectly competitive firm produces where

Correct Answer
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Correct Answer
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A market structure with barriers to entry is

Correct Answer
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"Monopolists do not worry about efficient production and minimizing costs since they can just pass along any increase in costs to their consumers." This statement is

Correct Answer
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Table 15-19 A monopolist faces the following demand curve: -Refer to Table 15-19. If a monopolist faces a constant marginal cost of $3, how much output should the firm produce?

Correct Answer
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Deadweight loss measures the loss in society's welfare that occurs because a monopolist does not produce the socially efficient level of output.

Correct Answer
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Figure 15-4 -Refer to Figure 15-4. A profit-maximizing monopoly's total revenue is equal to

Correct Answer
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Figure 15-6 -Refer to Figure 15-6. What price will the monopolist charge?

Correct Answer
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Firms with substantial monopoly power are quite common because many goods are unique.

Correct Answer
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Figure 15-25 -Refer to Figure 15-25. If a regulator requires this firm to charge a socially optimal price, how much deadweight loss results?

Correct Answer
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The laws governing patents and copyrights

Correct Answer
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Table 15-20 A monopolist faces the following demand curve: -Refer to Table 15-20. If a monopolist faces a constant marginal cost of $5, how much output should the firm produce in order to maximize profit?

Correct Answer
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Figure 15-7 -Refer to Figure 15-7. In order to maximize profits, the monopolist should produce

Correct Answer
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One characteristic of a monopoly market is that the product is virtually identical to products produced by competing firms.

Correct Answer
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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 Answer
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Figure 15-4 -Refer to Figure 15-4. If the monopoly firm is currently producing Q3 units of output, then a decrease in output will necessarily cause profit to

Correct Answer
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Table 15-6 A monopolist faces the following demand curve: -Refer to Table 15-6. What is the marginal revenue from the sale of the 4th unit?

Correct Answer
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Which of the following statements is correct?

Correct Answer
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Exam 15: Monopoly

Figure 15-10 -Refer to Figure 15-10. What area measures the deadweight loss?

Correct AnswerverifiedShow Answer

Generic drugs enter the pharmaceutical drug market once

Correct AnswerverifiedShow Answer

A perfectly competitive firm produces where

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A market structure with barriers to entry is

Correct AnswerverifiedShow Answer

"Monopolists do not worry about efficient production and minimizing costs since they can just pass along any increase in costs to their consumers." This statement 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 $3, how much output should the firm produce?

Correct AnswerverifiedShow Answer

Deadweight loss measures the loss in society's welfare that occurs because a monopolist does not produce the socially efficient level of output.

Correct AnswerverifiedShow Answer

Figure 15-4 -Refer to Figure 15-4. A profit-maximizing monopoly's total revenue is equal to

Correct AnswerverifiedShow Answer

Figure 15-6 -Refer to Figure 15-6. What price will the monopolist charge?

Correct AnswerverifiedShow Answer

Firms with substantial monopoly power are quite common because many goods are unique.

Correct AnswerverifiedShow Answer

Figure 15-25 -Refer to Figure 15-25. If a regulator requires this firm to charge a socially optimal price, how much deadweight loss results?

Correct AnswerverifiedShow Answer

The laws governing patents and copyrights

Correct AnswerverifiedShow Answer

Table 15-20 A monopolist faces the following demand curve: -Refer to Table 15-20. If a monopolist faces a constant marginal cost of $5, how much output should the firm produce in order to maximize profit?

Correct AnswerverifiedShow Answer

Figure 15-7 -Refer to Figure 15-7. In order to maximize profits, the monopolist should produce

Correct AnswerverifiedShow Answer

One characteristic of a monopoly market is that the product is virtually identical to products produced by competing firms.

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 AnswerverifiedShow Answer

Figure 15-4 -Refer to Figure 15-4. If the monopoly firm is currently producing Q3 units of output, then a decrease in output will necessarily cause profit to

Correct AnswerverifiedShow Answer

Table 15-6 A monopolist faces the following demand curve: -Refer to Table 15-6. What is the marginal revenue from the sale of the 4th unit?

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Which of the following statements is correct?

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