Question 1

The fundamental source of monopoly power is

Accepted Answer

A)  barriers to entry.
B)  profit.
C)  increasing average total cost.
D)  a product without close substitutes.

Question 2

The supply curve for a monopolist, in the short run, is defined in the same way as that for a competitive firm: it is the portion of the marginal cost curve above average variable cost.

Accepted Answer

A) True 
 B)False

Question 3

Microsoft's government-granted exclusive right to make and sell the Windows operating system is called a

Accepted Answer

The answer of Microsoft's government-granted exclusive right to make and...

Question 4

A monopolist's supply curve is vertical.

Accepted Answer

A) True 
 B)False

Question 5

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.

Question 6

When a monopolist increases the quantity that it sells, all else equal, total revenue increases, which is called the output effect.

Accepted Answer

A) True 
 B)False

Question 7

Figure 15-2  ​
-Refer to Figure 15-2. The demand curve for a monopoly firm is depicted by curve

Accepted Answer

A)  A.
B)  C.
C)  D.
D)  B.

Question 8

When a monopolist increases the amount of output that it produces and sells, average revenue

Accepted Answer

A)  increases, and marginal revenue increases.
B)  increases, and marginal revenue decreases.
C)  decreases, and marginal revenue increases.
D)  decreases, and marginal revenue decreases.

Question 9

Which of the following is not an example of price discrimination?

Accepted Answer

A)  A zoo charges a lower price for a child's ticket than for an adult's ticket.
B)  A design school rebates part of the cost of tuition in the form of financial aid for underprivileged students.
C)  A local supermarket chain offers a "buy three get one free" deal.
D)  A bakery charges a higher price for brownies than for cookies.

Question 10

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 monopoly

Question 11

The fundamental cause of monopoly is

Accepted Answer

The answer of The fundamental cause of monopoly is...

Question 12

Reduced competition through merging of companies will raise social welfare

Accepted Answer

A)  if the social cost from the synergies exceeds the benefit of increased market power.
B)  if the benefit from the synergies exceeds the social cost of increased market power.
C)  always.
D)  never.

Question 13

Scenario 15-1
A monopoly firm maximizes its profit by producing Q = 500 units of output. At that level of output, its marginal revenue is $40, its average revenue is $80, and its average total cost is $44.
-Refer to Scenario 15-1. At Q = 500, the firm's marginal cost is

Accepted Answer

A)  less than $40.
B)  $40.
C)  $44.
D)  greater than $44.

Question 14

Figure 15-2 4 units of output, then a decrease in output will necessarily cause profit to A) remain unchanged. B) decrease. C) increase if the output is between Q3 and Q4. D) increase regardless of the new level of output." class="answers-bank-image d-inline" rel="preload" > ​
-Refer to Figure 15-2. If the monopoly firm is currently producing Q4 units of output, then a decrease in output will necessarily cause profit to

Accepted Answer

A)  remain unchanged.
B)  decrease.
C)  increase if the output is between Q3 and Q4.
D)  increase regardless of the new level of output.

Question 15

Which of the following is a necessary characteristic of a monopoly?

Accepted Answer

A)  The firm is the sole seller of its product.
B)  The firm's product has many close substitutes.
C)  The firm generates a large economic profit.
D)  The firm is located in a small geographic market.

Question 16

In order for antitrust laws to raise social welfare, the government must

Accepted Answer

A)  disallow synergy benefits from accruing to monopolists.
B)  disallow any mergers from taking place.
C)  be able to determine which mergers are desirable and which are not.
D)  always attempt to keep markets in their most competitive form.

Question 17

Antitrust laws give the Justice Department the authority to challenge potential mergers between companies in an effort to safeguard society from monopoly power.

Accepted Answer

A) True 
 B)False

Question 18

A natural monopoly has economies of scale for most if not all of its range of output.

Accepted Answer

A) True 
 B)False

Question 19

Comparing firms in perfectly competitive markets to monopoly firms, which charges higher prices?

Accepted Answer

The answer of Comparing firms in perfectly competitive markets to...

Question 20

A monopolist produces where P = MC = MR.

Accepted Answer

A) True 
 B)False

Exam 15: Monopoly

Figure 15-2 ​ -Refer to Figure 15-2. The demand curve for a monopoly firm is depicted by curve

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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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In order for antitrust laws to raise social welfare, the government must

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Figure 15-2 ​ -Refer to Figure 15-2. If the monopoly firm is currently producing Q4 units of output, then a decrease in output will necessarily cause profit to

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Which of the following is not an example of price discrimination?

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A natural monopoly has economies of scale for most if not all of its range of output.

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

Correct AnswerverifiedShow Answer

Microsoft's government-granted exclusive right to make and sell the Windows operating system is called a

Correct AnswerverifiedShow Answer

Antitrust laws give the Justice Department the authority to challenge potential mergers between companies in an effort to safeguard society from monopoly power.

Correct AnswerverifiedShow Answer

When a monopolist increases the quantity that it sells, all else equal, total revenue increases, which is called the output effect.

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A monopolist's supply curve is vertical.

Correct AnswerverifiedShow Answer

The supply curve for a monopolist, in the short run, is defined in the same way as that for a competitive firm: it is the portion of the marginal cost curve above average variable cost.

Correct AnswerverifiedShow Answer

A monopolist produces where P = MC = MR.

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Reduced competition through merging of companies will raise social welfare

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The fundamental source of monopoly power is

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When a monopolist increases the amount of output that it produces and sells, average revenue

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Comparing firms in perfectly competitive markets to monopoly firms, which charges higher prices?

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The fundamental cause of monopoly is

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Which of the following is a necessary characteristic of a monopoly?

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Scenario 15-1 A monopoly firm maximizes its profit by producing Q = 500 units of output. At that level of output, its marginal revenue is $40, its average revenue is $80, and its average total cost is $44. -Refer to Scenario 15-1. At Q = 500, the firm's marginal cost is

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Figure 15-2 -Refer to Figure 15-2. The demand curve for a monopoly firm is depicted by curve

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Figure 15-2 -Refer to Figure 15-2. If the monopoly firm is currently producing Q₄ units of output, then a decrease in output will necessarily cause profit to

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