Question 1

Which of the following is not an example of a barrier to entry?

Accepted Answer

A)   Mighty Mitch's Mining Company owns a unique plot of land in Tanzania, under which lies the only large deposit of Tanzanite in the world.
B)   A college student starts a part-time tutoring business.
C)   A novelist obtains a copyright for her new book.
D)   A taxi cab driver in New York City obtains a license to legally provide transportation in New York City.

Question 2

Suppose that a professional photographer takes a prize-winning digital photo. She can sell a 5"x7" color print of the photo for $10. She can also sell the digital file for $20. There are 500 people willing to buy the color print and 2,000 people willing to buy the digital file. Assume the costs to the photographer are zero and that the people who purchase the digital file cannot resell the file itself or any prints made from it. What should she do in order to maximize her profits?

Accepted Answer

A)   earn $5,000 by selling only the color prints
B)   earn $40,000 by selling only the digital files
C)   earn $45,000 by selling both the color prints and the digital files at their respective prices
D)   We do not have enough information with which to answer this question.

Question 3

For a monopolist, when the output effect is greater than the price effect, marginal revenue is

Accepted Answer

A)   positive.
B)   negative.
C)   zero.
D)   maximized.

Question 4

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

Accepted Answer

A)   A movie theater charges a lower price for a child's ticket than for an adult's ticket.
B)   A university rebates part of the cost of tuition in the form of financial aid for needy students.
C)   A local pizza chain offers a "buy three get one free" deal.
D)   An ice cream parlor charges a higher price for ice cream than for sherbet.

Question 5

Scenario 15-2
Consider a local, privately-owned electrical cooperative named Poweshiek Power Company (PPCo) . PPCo has just completed a clean-coal-burning electrical power plant in Iowa. Currently, PPCo can meet the electricity needs of all residents in the county. In fact, its capacity far exceeds the needs of the county. After just a few years of operation, the shareholders of PPCo experienced incredibly high rates of return on their investment due to the profitability of the corporation.
-Refer to Scenario 15-2. Which of the following statements is most likely to be true?

Accepted Answer

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

Question 6

Authors are allowed to be monopolists in the sale of their books in order to

Accepted Answer

A)   encourage authors to write more and better books.
B)   correct for the negative externalities that the Internet and television impose.
C)   satisfy literary advocacy groups that exercise their lobbying power.
D)   promote a society in which people think for themselves and learn from whichever books they please.

Question 7

Figure 15-1 
-Refer to Figure 15-1. Considering the relationship between average total cost and marginal cost, the marginal cost curve for this firm

Accepted Answer

A)   must lie entirely above the average total cost curve.
B)   must lie entirely below the average total cost curve.
C)   must be upward sloping.
D)   does not exist.

Question 8

Because a monopolist must lower its price in order to sell another unit of output,

Accepted Answer

A)   marginal revenue is less than price.
B)   long-term economic profits will be zero.
C)   total revenue increases as price increases.
D)   average revenue is less than price.

Question 9

Which of the following statements is correct for a monopolist?

Accepted Answer

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

Question 10

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.

Question 11

The amount that producers receive for a good minus their costs of producing it equals

Accepted Answer

A)   quantity supplied.
B)   supply price.
C)   deadweight loss.
D)   producer surplus.

Question 12

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 13

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 revenue from selling the 2nd pair of shoes?

Accepted Answer

A)   $140
B)   $150
C)   $160
D)   $170

Question 14

When a monopoly increases its output and sales,

Accepted Answer

A)   both the output effect and the price effect work to increase total revenue.
B)   the output effect works to increase total revenue, and the price effect works to decrease total revenue.
C)   the output effect works to decrease total revenue, and the price effect works to increase total revenue.
D)   both the output effect and the price effect work to decrease total revenue.

Question 15

The fundamental cause of monopolies is barriers to entry.

Accepted Answer

A) True 
 B)False

Question 16

State one benefit of government-granted monopolies like patents and copyrights.

Accepted Answer

increased ...

Question 17

Which of the following statements comparing monopoly with competition is correct?

Accepted Answer

A)   A monopolist produces a higher level of output and charges a lower price than a competitive firm would.
B)   With perfect price discrimination, the total surplus under monopoly can be the same as under competition.
C)   With or without price discrimination, the consumer surplus under monopoly is at least as large as it would be under competition.
D)   The deadweight loss associated with monopoly is caused by the positive economic profits of the monopolist; competitive firms do not earn a positive economic profit so there is no deadweight loss under competition.

Question 18

Which of the following statements is correct? Monopolies are socially inefficient because they

Accepted Answer

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

Question 19

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.

Question 20

Figure 15-22 
-Refer to Figure 15-22. How much consumer surplus results if this single-price monopolist profit-maximizes?

Accepted Answer

The answer of Figure 15-22 
-Refer to Figure 15-22. How...

Exam 15: Monopoly

Correct Answer
verified

The amount that producers receive for a good minus their costs of producing it equals

Correct Answer
verified

Which of the following statements is correct? Monopolies are socially inefficient because they

Correct Answer
verified

Figure 15-22 -Refer to Figure 15-22. How much consumer surplus results if this single-price monopolist profit-maximizes?

Correct Answer
verified

When a monopoly increases its output and sales,

Correct Answer
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Figure 15-1 -Refer to Figure 15-1. Considering the relationship between average total cost and marginal cost, the marginal cost curve for this firm

Correct Answer
verified

A perfectly competitive firm produces where

Correct Answer
verified

The fundamental cause of monopolies is barriers to entry.

Correct Answer
verified

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

Correct Answer
verified

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 revenue from selling the 2nd pair of shoes?

Correct Answer
verified

Authors are allowed to be monopolists in the sale of their books in order to

Correct Answer
verified

Correct Answer
verified

State one benefit of government-granted monopolies like patents and copyrights.

Correct Answer
verified
increased ...
View Answer

Which of the following statements is correct for a monopolist?

Correct Answer
verified

Because a monopolist must lower its price in order to sell another unit of output,

Correct Answer
verified

Which of the following statements comparing monopoly with competition is correct?

Correct Answer
verified

Which of the following is not an example of a barrier to entry?

Correct Answer
verified

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

Correct Answer
verified

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
verified

For a monopolist, when the output effect is greater than the price effect, marginal revenue is

Correct Answer
verified

Exam 15: Monopoly

Correct AnswerverifiedShow Answer

The amount that producers receive for a good minus their costs of producing it equals

Correct AnswerverifiedShow Answer

Which of the following statements is correct? Monopolies are socially inefficient because they

Correct AnswerverifiedShow Answer

Figure 15-22 -Refer to Figure 15-22. How much consumer surplus results if this single-price monopolist profit-maximizes?

Correct AnswerverifiedShow Answer

When a monopoly increases its output and sales,

Correct AnswerverifiedShow Answer

Figure 15-1 -Refer to Figure 15-1. Considering the relationship between average total cost and marginal cost, the marginal cost curve for this firm

Correct AnswerverifiedShow Answer

A perfectly competitive firm produces where

Correct AnswerverifiedShow Answer

The fundamental cause of monopolies is barriers to entry.

Correct AnswerverifiedShow Answer

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

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 revenue from selling the 2nd pair of shoes?

Correct AnswerverifiedShow Answer

Authors are allowed to be monopolists in the sale of their books in order to

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

State one benefit of government-granted monopolies like patents and copyrights.

Correct Answerverifiedincreased ...View AnswerShow Answer

Which of the following statements is correct for a monopolist?

Correct AnswerverifiedShow Answer

Because a monopolist must lower its price in order to sell another unit of output,

Correct AnswerverifiedShow Answer

Which of the following statements comparing monopoly with competition is correct?

Correct AnswerverifiedShow Answer

Which of the following is not an example of a barrier to entry?

Correct AnswerverifiedShow Answer

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

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

For a monopolist, when the output effect is greater than the price effect, marginal revenue is

Correct AnswerverifiedShow Answer

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increased ...
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