Question 1

Figure 15-5 
-Refer to Figure 15-5. A profit-maximizing monopoly's total cost is equal to

Accepted Answer

A)   P2 x Q3.
B)   P4 x Q3.
C)   P5 x Q3.
D)   (P2-P5)  x Q3.E) A) and B)
F) A) and C)

Question 2

The marginal revenue curve for a monopoly firm starts at the same point on the vertical axis as the (i)  average revenue curve.
(ii)  marginal cost curve.
(iii)  demand curve.

Accepted Answer

A)   (i)  only
B)   (i)  and (ii)  only
C)   (i)  and (iii)  only
D)   (iii)  onlyE) A) and C)
F) A) and B)

Question 3

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 C)
F) A) and B)

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 3rd unit?

Accepted Answer

A)   $3
B)   -$3
C)   $9
D)   $24E) A) and B)
F) None of the above

Question 5

The economic inefficiency of a monopolist can be measured by the

Accepted Answer

A)   number of consumers who are unable to purchase the product because of its high price.
B)   excess profit generated by monopoly firms.
C)   poor quality of service offered by monopoly firms.
D)   deadweight loss.E) A) and B)
F) A) and D)

Question 6

Price discrimination is prohibited by antitrust laws.

Accepted Answer

A) True 
 B)False

Question 7

A firm that is the sole seller of a product without close substitutes is

Accepted Answer

A)   perfectly competitive.
B)   monopolistically competitive.
C)   an oligopolist.
D)   a monopolist.E) None of the above
F) A) and B)

Question 8

To maximize total surplus with a monopoly firm, a benevolent social planner would choose the level of output where

Accepted Answer

A)   MR = MC.
B)   MR intersects the demand curve.
C)   MC intersects the demand curve.
D)   MR exceeds MC by the greatest amount.E) B) and D)
F) A) and D)

Question 9

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

Question 10

Figure 15-20 
-Refer to Figure 15-20. The deadweight loss caused by a profit-maximizing monopoly amounts to

Accepted Answer

A)   $225.
B)   $450.
C)   $900.
D)   $1,350.E) All of the above
F) B) and C)

Question 11

A benefit of a monopoly is

Accepted Answer

A)   lower prices.
B)   a wide variety of similar products.
C)   decreasing long-run average total costs.
D)   greater creativity by authors who can copyright their novels.E) A) and C)
F) All of the above

Question 12

Monopoly pricing prevents some mutually beneficial trades from taking place. These unrealized, mutually beneficial trades are

Accepted Answer

A)   not a concern if a market is perfectly competitive.
B)   a deadweight loss to society.
C)   a function of the reduction in the quantity produced by a monopolist in comparison to a competitive market.
D)   All of the above are correct.E) A) and D)
F) A) and B)

Question 13

Figure 15-15 
-Refer to Figure 15-15. To maximize its profit, a monopolist would choose which of the following outcomes?

Accepted Answer

A)   Q = 30 and P = 30
B)   Q = 30 and P = 60
C)   Q = 45 and P = 45
D)   Q = 60 and P = 30E) None of the above
F) A) and D)

Question 14

Scenario 15-4
Suppose a monopolist has a demand curve that can be expressed as P=90-Q. The monopolist's marginal revenue curve can be expressed as MR=90-2Q. The monopolist has constant marginal costs and average total costs of $10.
-Refer to Scenario 15-4. The profit-maximizing monopolist will charge a price of

Accepted Answer

A)   $40.
B)   $50.
C)   $20.
D)   $10.E) None of the above
F) B) and D)

Question 15

Table 15-7
Sally owns the only shoe store in town. She has the following cost and revenue information.
 
-Refer to Table 15-7. What is the marginal cost of the 6th pair of shoes?

Accepted Answer

A)   $44
B)   $46
C)   $55
D)   $60E) C) and D)
F) A) and C)

Question 16

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

Question 17

Table 15-8
The following table provides information on the price, quantity, and average total cost for a monopoly.
 
-Refer to Table 15-8. What is the maximum profit that the monopolist can earn?

Accepted Answer

A)   $10
B)   $20
C)   $30
D)   $40E) A) and B)
F) C) and D)

Question 18

Figure 15-7 
-Refer to Figure 15-7. A profit-maximizing monopolist would earn total revenues of

Accepted Answer

A)   $81.
B)   $144.
C)   $225.
D)   $240.E) C) and D)
F) A) and B)

Question 19

Consider a profit-maximizing monopoly pricing under the following conditions. The profit-maximizing quantity is 40 units, the profit-maximizing price is $160, and the marginal cost of the 40th unit is $120. If the good were produced in a perfectly competitive market, the equilibrium quantity would be 50, and the equilibrium price would be $150. The demand curve and marginal cost curves are linear. What is the value of the deadweight loss created by the monopolist?

Accepted Answer

A)   $40
B)   $100
C)   $200
D)   $400E) All of the above
F) A) and B)

Question 20

The deadweight loss that arises from a monopoly is a consequence of the fact that the monopoly

Accepted Answer

A)   quantity is lower than the socially-optimal quantity.
B)   price equals marginal revenue.
C)   price is the same as average revenue.
D)   earns positive profits.E) B) and D)
F) A) and B)

Exam 15: Monopoly

Figure 15-20 -Refer to Figure 15-20. The deadweight loss caused by a profit-maximizing monopoly amounts to

Correct Answer
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Figure 15-5 -Refer to Figure 15-5. A profit-maximizing monopoly's total cost is equal to

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

Correct Answer
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To maximize total surplus with a monopoly firm, a benevolent social planner would choose the level of output where

Correct Answer
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Figure 15-15 -Refer to Figure 15-15. To maximize its profit, a monopolist would choose which of the following outcomes?

Correct Answer
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Figure 15-7 -Refer to Figure 15-7. A profit-maximizing monopolist would earn total revenues of

Correct Answer
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The deadweight loss that arises from a monopoly is a consequence of the fact that the monopoly

Correct Answer
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Table 15-8 The following table provides information on the price, quantity, and average total cost for a monopoly. -Refer to Table 15-8. What is the maximum profit that the monopolist can earn?

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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A firm that is the sole seller of a product without close substitutes is

Correct Answer
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The marginal revenue curve for a monopoly firm starts at the same point on the vertical axis as the (i) average revenue curve. (ii) marginal cost curve. (iii) demand curve.

Correct Answer
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A benefit of a monopoly is

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 3rd unit?

Correct Answer
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Price discrimination is prohibited by antitrust laws.

Correct Answer
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The economic inefficiency of a monopolist can be measured by the

Correct Answer
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Table 15-7 Sally owns the only shoe store in town. She has the following cost and revenue information. -Refer to Table 15-7. What is the marginal cost of the 6th pair of shoes?

Correct Answer
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Monopoly pricing prevents some mutually beneficial trades from taking place. These unrealized, mutually beneficial trades are

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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Exam 15: Monopoly

Figure 15-20 -Refer to Figure 15-20. The deadweight loss caused by a profit-maximizing monopoly amounts to

Correct AnswerverifiedShow Answer

Figure 15-5 -Refer to Figure 15-5. A profit-maximizing monopoly's total cost is equal to

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

Correct AnswerverifiedShow Answer

To maximize total surplus with a monopoly firm, a benevolent social planner would choose the level of output where

Correct AnswerverifiedShow Answer

Figure 15-15 -Refer to Figure 15-15. To maximize its profit, a monopolist would choose which of the following outcomes?

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Correct AnswerverifiedShow Answer

Figure 15-7 -Refer to Figure 15-7. A profit-maximizing monopolist would earn total revenues of

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The deadweight loss that arises from a monopoly is a consequence of the fact that the monopoly

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Table 15-8 The following table provides information on the price, quantity, and average total cost for a monopoly. -Refer to Table 15-8. What is the maximum profit that the monopolist can earn?

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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?

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Correct AnswerverifiedShow Answer

A firm that is the sole seller of a product without close substitutes is

Correct AnswerverifiedShow Answer

The marginal revenue curve for a monopoly firm starts at the same point on the vertical axis as the (i) average revenue curve. (ii) marginal cost curve. (iii) demand curve.

Correct AnswerverifiedShow Answer

A benefit of a monopoly is

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 3rd unit?

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Price discrimination is prohibited by antitrust laws.

Correct AnswerverifiedShow Answer

The economic inefficiency of a monopolist can be measured by the

Correct AnswerverifiedShow Answer

Table 15-7 Sally owns the only shoe store in town. She has the following cost and revenue information. -Refer to Table 15-7. What is the marginal cost of the 6th pair of shoes?

Correct AnswerverifiedShow Answer

Monopoly pricing prevents some mutually beneficial trades from taking place. These unrealized, mutually beneficial trades are

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?

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