Question 1

Which of the following statements is (are) true of a monopoly? (i) A monopoly has the ability to set the price of its product at whatever level it desires.
(ii) A monopoly's total revenue will always increase when it increases the price of its product.
(iii) A monopoly can earn unlimited profits.

Accepted Answer

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

Question 2

Figure 14-7 
-Refer to Figure 14-7.What area represents the total surplus lost due to monopoly pricing?

Accepted Answer

A)   the rectangle (F-
D)  xA
B)   the triangle 1/2[(F-
D)  x(B-
A)  ]
C)   the triangle 1/2[(F-G) x(B-
A)  ]
D)   the rectangle (F-
D)  xA plus the triangle 1/2[(F-
D)  x(B-
A)  ]E) None of the above
F) A) and D)

Question 3

In a competitive market,a firm's supply curve dictates the amount it will supply.In a monopoly market the

Accepted Answer

A)   same is true.
B)   supply curve conceptually makes sense,but in practice is never used.
C)   supply curve will have limited predictive capacity.
D)   decision about how much to supply is impossible to separate from the demand curve it faces.E) A) and D)
F) B) and C)

Question 4

Scenario 14-8
Mega Media Cable TV is able to purchase an exclusive right to sell a premium sports channel in its market area.Let's assume that Mega Media pays $100,000 a year for the exclusive marketing rights to the sports channel.Since Mega Media has already installed cable to all of the homes in its market area,the marginal cost of delivering the sports channel to subscribers is zero.The manager of Mega Media needs to know what price to charge for the sports channel service to maximize her profit.Before setting price,she hires an economist to estimate demand for the sports channel.The economist discovers that there are two types of subscribers who value premium sporting channels.First are the 3,000 die-hard sports fans who will pay as much as $150 a year for the new channel.Second,the premium sports channel will appeal to 20,000 occasional sports viewers who will pay as much as $25 a year for a subscription to it.
-Refer to Scenario 14-8.How much profit will Mega Media Cable TV earn if it sets the price at $25?

Accepted Answer

A)   $350,000
B)   $450,000
C)   $475,000
D)   $575,000E) A) and B)
F) A) and C)

Question 5

The fundamental cause of monopoly is

Accepted Answer

A)   incompetent management in competitive firms.
B)   the zero-profit feature of long-run equilibrium in competitive markets.
C)   advertising.
D)   barriers to entry.E) B) and C)
F) C) and D)

Question 6

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

Question 7

Which of the following statements is not correct?

Accepted Answer

A)   Consumers will likely benefit in the form of lower prices from buying a product made by a natural monopoly than if the market were served by several firms.
B)   Monopolists typically charge higher prices than competitive firms.
C)   Monopolists typically produce larger quantities of output than competitive firms.
D)   Consumers may benefit from monopolies if the firms invest their higher profits into something that benefits society such as medical research.E) A) and B)
F) B) and C)

Question 8

When regulators use a marginal-cost pricing strategy to regulate a natural monopoly,the regulated monopoly

Accepted Answer

A)   will experience a loss.
B)   will experience a price below average total cost.
C)   may rely on a government subsidy to remain in business.
D)   All of the above are correct.E) B) and D)
F) All of the above

Question 9

The process of buying a good in one market at a low price and selling the good in another market for a higher price in order to profit from the price difference is known as

Accepted Answer

A)   sabotage.
B)   conspiracy.
C)   arbitrage.
D)   collusion.E) C) and D)
F) None of the above

Question 10

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

Question 11

Table 14-1
 
-Refer to Table 14-1.If the monopolist sells 8 units of its product,how much total revenue will it receive from the sale?

Accepted Answer

A)   $14
B)   $40
C)   $112
D)   $164E) A) and B)
F) A) and C)

Question 12

During the holiday season,high-end retailers frequently place a high price on merchandise on weekends and discount the price during the week.They do this because they believe that two groups of customers exist: shoppers with little free time and bargain hunters.Bargain hunters have time to shop around and frequently shop during the week.What do economists call this price strategy used by high-end retailers?

Accepted Answer

A)   oligopoly
B)   price discrimination
C)   compensating differential
D)   in-kind transfersE) None of the above
F) A) and B)

Question 13

A benefit of a monopoly is

Accepted Answer

A)   efficient production.
B)   decreasing long-run marginal costs.
C)   profit that can be invested in research and development.
D)   All of the above are correct.E) A) and B)
F) B) and C)

Question 14

Which of the following statements is correct?

Accepted Answer

A)   Both a competitive firm and a monopolist are price takers.
B)   Both a competitive firm and a monopolist are price makers.
C)   A competitive firm is a price taker,whereas a monopolist is a price maker.
D)   A competitive firm is a price maker,whereas a monopolist is a price taker.E) A) and B)
F) All of the above

Question 15

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

Accepted Answer

Benefits include promoting com...

Question 16

Financial aid to college students,quantity discounts,and senior citizen discounts are all examples of

Accepted Answer

A)   consumer surplus.
B)   deadweight loss.
C)   price discrimination.
D)   nonprofit pricing strategies.E) B) and D)
F) None of the above

Question 17

The George Stigler quote,"...the degree of 'market failure' for the American economy is much smaller than the 'political failure' arising from the imperfections of economic policies ..." illustrates the advantage of which type of public policy toward monopolies?

Accepted Answer

A)   antitrust laws
B)   regulation
C)   public ownership
D)   "do nothing"E) C) and D)
F) A) and D)

Question 18

Scenario 14-5
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.
-Refer to Scenario 14-5.How much additional profit can the airline earn by charging each customer their willingness to pay relative to charging a flat price of $300 per ticket?

Accepted Answer

A)   $10,000
B)   $15,000
C)   $30,000
D)   $45,000E) A) and B)
F) All of the above

Question 19

Which of the following statements is correct?

Accepted Answer

A)   Public ownership is preferred to regulation in order to minimize the deadweight losses associated with natural monopolies.
B)   Antitrust laws are always the best way to limit monopoly power.
C)   It is possible that the best approach to monopolies is for the government to do nothing.
D)   Marginal-cost pricing requires a natural monopoly to earn zero economic profits.E) All of the above
F) A) and D)

Question 20

Sizable economic profits can persist over time under monopoly if the monopolist

Accepted Answer

A)   produces that output where average total cost is at a maximum.
B)   is protected by barriers to entry.
C)   operates as a price taker rather than a price maker.
D)   earns revenues that exceed variable costs.E) B) and C)
F) None of the above

Exam 14: Monopoly

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

Correct Answer
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Which of the following statements is not correct?

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

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

Which of the following statements is correct?

Correct Answer
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In a competitive market,a firm's supply curve dictates the amount it will supply.In a monopoly market the

Correct Answer
verified

Financial aid to college students,quantity discounts,and senior citizen discounts are all examples of

Correct Answer
verified

A benefit of a monopoly is

Correct Answer
verified

Correct Answer
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Which of the following statements is (are) true of a monopoly? (i) A monopoly has the ability to set the price of its product at whatever level it desires. (ii) A monopoly's total revenue will always increase when it increases the price of its product. (iii) A monopoly can earn unlimited profits.

Correct Answer
verified

Correct Answer
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Table 14-1 -Refer to Table 14-1.If the monopolist sells 8 units of its product,how much total revenue will it receive from the sale?

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Figure 14-7 -Refer to Figure 14-7.What area represents the total surplus lost due to monopoly pricing?

Correct Answer
verified

The George Stigler quote,"...the degree of 'market failure' for the American economy is much smaller than the 'political failure' arising from the imperfections of economic policies ..." illustrates the advantage of which type of public policy toward monopolies?

Correct Answer
verified

The process of buying a good in one market at a low price and selling the good in another market for a higher price in order to profit from the price difference is known as

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
verified

When regulators use a marginal-cost pricing strategy to regulate a natural monopoly,the regulated monopoly

Correct Answer
verified

The fundamental cause of monopoly is

Correct Answer
verified

Sizable economic profits can persist over time under monopoly if the monopolist

Correct Answer
verified

Exam 14: Monopoly

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

Correct AnswerverifiedShow Answer

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedBenefits include promoting com...View AnswerShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

In a competitive market,a firm's supply curve dictates the amount it will supply.In a monopoly market the

Correct AnswerverifiedShow Answer

Financial aid to college students,quantity discounts,and senior citizen discounts are all examples of

Correct AnswerverifiedShow Answer

A benefit of a monopoly is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following statements is (are) true of a monopoly? (i) A monopoly has the ability to set the price of its product at whatever level it desires. (ii) A monopoly's total revenue will always increase when it increases the price of its product. (iii) A monopoly can earn unlimited profits.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Table 14-1 -Refer to Table 14-1.If the monopolist sells 8 units of its product,how much total revenue will it receive from the sale?

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

Correct AnswerverifiedShow Answer

Figure 14-7 -Refer to Figure 14-7.What area represents the total surplus lost due to monopoly pricing?

Correct AnswerverifiedShow Answer

The George Stigler quote,"...the degree of 'market failure' for the American economy is much smaller than the 'political failure' arising from the imperfections of economic policies ..." illustrates the advantage of which type of public policy toward monopolies?

Correct AnswerverifiedShow Answer

The process of buying a good in one market at a low price and selling the good in another market for a higher price in order to profit from the price difference is known as

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

When regulators use a marginal-cost pricing strategy to regulate a natural monopoly,the regulated monopoly

Correct AnswerverifiedShow Answer

The fundamental cause of monopoly is

Correct AnswerverifiedShow Answer

Sizable economic profits can persist over time under monopoly if the monopolist

Correct AnswerverifiedShow Answer

Correct Answer
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Benefits include promoting com...
View Answer

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