Question 1

Suppose a firm has a monopoly on the sale of widgets and faces a downward-sloping demand curve. When selling the 100th widget, the firm will always receive

Accepted Answer

A)   less marginal revenue on the 100th widget than it received on the 99th widget.
B)   more average revenue on the 100th widget than it received on the 99th widget.
C)   more total revenue on the 100 widgets than it received on the first 99 widgets.
D)   a lower average cost per unit at 100 units of output than at 99 units of output.E) A) and D)
F) C) and D)

Question 2

Goods that do not have close substitutes have downward-sloping demand curves.

Accepted Answer

A) True 
 B)False

Question 3

For a typical natural monopoly, average total cost is

Accepted Answer

A)   rising, often because marginal costs are very large.
B)   rising, often because fixed costs are very large.
C)   declining, often because marginal costs are very large.
D)   declining, often because fixed costs are very large.E) A) and D)
F) A) and C)

Question 4

A monopolist faces a

Accepted Answer

A)   horizontal demand curve.
B)   vertical demand curve.
C)   downward-sloping demand curve.
D)   U-shaped demand curve.E) A) and D)
F) B) and D)

Question 5

Figure 15-3 
-Refer to Figure 15-3. Which of the following statements is correct?

Accepted Answer

A)   Panel C represents the typical demand curve for a perfectly competitive firm, and Panel B represents the typical demand curve for a monopoly.
B)   Panel B represents the typical demand curve for a perfectly competitive firm, and Panel A represents the typical demand curve for a monopoly.
C)   Panel A represents the typical demand curve for a perfectly competitive firm, and Panel C represents the typical demand curve for a monopoly.
D)   Panel C represents the typical demand curve for a perfectly competitive firm, and Panel D represents the typical demand curve for a monopoly.E) A) and B)
F) A) and C)

Question 6

Figure 15-4 
-Refer to Figure 15-4. Profit can always be increased by increasing the level of output by one unit if the monopolist is currently operating at (i)  Q1.
(ii)  Q2.
(iii)  Q3.
(iv)  Q4.

Accepted Answer

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

Question 7

Table 15-9
Consider the following demand and cost information for a monopoly.
 
-Refer to Table 15-9. What is the marginal revenue of the 3rd unit?

Accepted Answer

A)   $4
B)   $12
C)   $20
D)   $28E) All of the above
F) None of the above

Question 8

For a profit-maximizing monopolist,

Accepted Answer

A) P > MR = MC. B) P = MR = MC. C) P > MR > MC. D) MR < MC < P.E) A) and C) F) A) and B)

Question 9

The laws governing patents and copyrights

Accepted Answer

A)   eliminate the need for firms to engage in research and development.
B)   are intended to serve private interests, not the public's interest.
C)   reduce fixed costs for firms that obtain them.
D)   None of the above is correct.E) A) and C)
F) A) and B)

Question 10

Table 15-19
A monopolist faces the following demand curve:
 
-Refer to Table 15-19. If a monopolist faces a constant marginal cost of $1, how much output should the firm produce in order to equate marginal revenue with marginal cost?

Accepted Answer

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

Question 11

Deadweight loss measures the loss in society's welfare that occurs because a monopolist can earn profits without the concern of new firms entering its industry.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

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

Question 13

Table 15-16
A monopolist faces the following demand curve:
 
-Refer to Table 15-16. 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 average total cost is

Accepted Answer

A)   $9.00.
B)   $7.50.
C)   $6.74.
D)   $5.82.E) B) and C)
F) A) and D)

Question 14

If a monopolist has zero marginal costs, it will produce

Accepted Answer

A)   the output at which total revenue is maximized.
B)   in the range in which marginal revenue is still increasing.
C)   at the point at which marginal revenue is at a maximum.
D)   in the range in which marginal revenue is negative.E) A) and D)
F) B) and D)

Question 15

Scenario 15-1
Consider a transportation corporation named Reading's that has just completed the development of a new light rail system in Minneapolis. Currently, there are plenty of seats on the train, and it is never crowded. Its capacity far exceeds the needs of the city. After just a few years of operation, the shareholders of Reading's experienced incredibly high rates of return on their investment due to the profitability of the corporation.
-Refer to Scenario 15-1. Which of the following statements is most likely to be true? (i)  New entrants to the market know they will have a smaller market share than Reading's
Currently has.
(ii)  Reading's is a natural monopoly.
(iii)  Reading's is most likely experiencing increasing average total cost.

Accepted Answer

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

Question 16

If a pharmaceutical company discovers a new drug and successfully patents it, patent law gives the firm

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

Question 17

Which of the following statements is correct?

Accepted Answer

A)   Firms with some degree of monopoly power are common, but firms with substantial monopoly power are rare.
B)   Firms with some degree of monopoly power are rare, as are firms with substantial monopoly power.
C)   Firms with some degree of monopoly power are common, as are firms with substantial monopoly power.
D)   Firms with some degree of monopoly power are rare, but firms with substantial monopoly power are common.E) A) and D)
F) All of the above

Question 18

Which of the following statements is correct?

Accepted Answer

A)   If the monopolist's marginal revenue is greater than its marginal cost, the monopolist can increase profit by selling more units at a lower price per unit.
B)   If the monopolist's marginal revenue is greater than its marginal cost, the monopolist can increase profit by selling fewer units at a higher price per unit.
C)   When a monopolist produces where price equals the minimum of average total cost, it earns a positive economic profit.
D)   If the monopolist is earning a positive economic profit, it must be producing where MR = Md.E) All of the above
F) A) and D)

Question 19

Figure 15-5 
-Refer to Figure 15-5. A profit-maximizing monopoly will charge a price of

Accepted Answer

A)   P1.
B)   P2.
C)   P3.
D)   P4.E) B) and D)
F) None of the above

Question 20

The fundamental source of monopoly power is

Accepted Answer

A)   barriers to entry.
B)   profit.
C)   decreasing average total cost.
D)   a product without close substitutes.E) None of the above
F) A) and B)

Exam 15: Monopoly

If a pharmaceutical company discovers a new drug and successfully patents it, patent law gives the firm

Correct Answer
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The laws governing patents and copyrights

Correct Answer
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Which of the following statements is correct?

Correct Answer
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The fundamental source of monopoly power 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 $1, how much output should the firm produce in order to equate marginal revenue with marginal cost?

Correct Answer
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Deadweight loss measures the loss in society's welfare that occurs because a monopolist can earn profits without the concern of new firms entering its industry.

Correct Answer
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Goods that do not have close substitutes have downward-sloping demand curves.

Correct Answer
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Table 15-16 A monopolist faces the following demand curve: -Refer to Table 15-16. 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 average total cost is

Correct Answer
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Correct Answer
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For a typical natural monopoly, average total cost is

Correct Answer
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Which of the following statements is correct?

Correct Answer
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Table 15-9 Consider the following demand and cost information for a monopoly. -Refer to Table 15-9. What is the marginal revenue of the 3rd unit?

Correct Answer
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Figure 15-5 -Refer to Figure 15-5. A profit-maximizing monopoly will charge a price of

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 the (i) socially-optimal level of output. (ii) market solution for profit-maximizing competitive firms. (iii) market solution for a profit-maximizing monopoly.

Correct Answer
verified

Suppose a firm has a monopoly on the sale of widgets and faces a downward-sloping demand curve. When selling the 100th widget, the firm will always receive

Correct Answer
verified

For a profit-maximizing monopolist,

Correct Answer
verified

Figure 15-4 -Refer to Figure 15-4. Profit can always be increased by increasing the level of output by one unit if the monopolist is currently operating at (i) Q1. (ii) Q2. (iii) Q3. (iv) Q4.

Correct Answer
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Figure 15-3 -Refer to Figure 15-3. Which of the following statements is correct?

Correct Answer
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If a monopolist has zero marginal costs, it will produce

Correct Answer
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A monopolist faces a

Correct Answer
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Exam 15: Monopoly

If a pharmaceutical company discovers a new drug and successfully patents it, patent law gives the firm

Correct AnswerverifiedShow Answer

The laws governing patents and copyrights

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

The fundamental source of monopoly power 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 $1, how much output should the firm produce in order to equate marginal revenue with marginal cost?

Correct AnswerverifiedShow Answer

Deadweight loss measures the loss in society's welfare that occurs because a monopolist can earn profits without the concern of new firms entering its industry.

Correct AnswerverifiedShow Answer

Goods that do not have close substitutes have downward-sloping demand curves.

Correct AnswerverifiedShow Answer

Table 15-16 A monopolist faces the following demand curve: -Refer to Table 15-16. 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 average total cost is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

For a typical natural monopoly, average total cost is

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Which of the following statements is correct?

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Table 15-9 Consider the following demand and cost information for a monopoly. -Refer to Table 15-9. What is the marginal revenue of the 3rd unit?

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Figure 15-5 -Refer to Figure 15-5. A profit-maximizing monopoly will charge a price of

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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 the (i) socially-optimal level of output. (ii) market solution for profit-maximizing competitive firms. (iii) market solution for a profit-maximizing monopoly.

Correct AnswerverifiedShow Answer

Suppose a firm has a monopoly on the sale of widgets and faces a downward-sloping demand curve. When selling the 100th widget, the firm will always receive

Correct AnswerverifiedShow Answer

For a profit-maximizing monopolist,

Correct AnswerverifiedShow Answer

Figure 15-4 -Refer to Figure 15-4. Profit can always be increased by increasing the level of output by one unit if the monopolist is currently operating at (i) Q1. (ii) Q2. (iii) Q3. (iv) Q4.

Correct AnswerverifiedShow Answer

Figure 15-3 -Refer to Figure 15-3. Which of the following statements is correct?

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If a monopolist has zero marginal costs, it will produce

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A monopolist faces a

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