Question 1

The task of economic regulation is to

Accepted Answer

A)  protect monopoly profits.
B)  approximate the results of the competitive market.
C)  replace competition with government ownership.
D)  increase competition within the market.E) A) and B)
F) A) and C)

Question 2

Patents, copyrights, and trademarks

Accepted Answer

A)  are examples of government-created monopolies.
B)  are examples of barriers to entry.
C)  allow their owners to charge higher prices.
D)  All of the above are correct.E) A) and D)
F) None of the above

Question 3

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 are Sally's fixed costs?

Accepted Answer

A)  $0
B)  $100
C)  $600
D)  $745E) A) and B)
F) All of the above

Question 4

Allowing an inventor to have the exclusive rights to market her new invention will lead to
(i) a product that is priced higher than it would be without the exclusive rights.
(ii) desirable behavior in the sense that inventors are encouraged to invent.
(iii) higher profits for the inventor.

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) All of the above

Question 5

Table 15-1 
-Refer to Table 15-1. The marginal revenue, when the quantity changes from 30 to 40 units, is

Accepted Answer

The answer of Table 15-1 
-Refer to Table 15-1. The...

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

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 total revenue from selling 6 pairs of shoes?

Accepted Answer

A)  $100
B)  $600
C)  $625
D)  $660E) A) and B)
F) All of the above

Question 8

The price effect describes the situation when a monopolist lowers the price of output and, all else equal, total revenue

Accepted Answer

A)  increases.
B)  decreases.
C)  is unchanged.
D)  is maximized.E) B) and D)
F) All of the above

Question 9

Microsoft faces very little competition from other firms for its Windows software. Why isn't the price of the software $1,000 per copy?

Accepted Answer

A)  because the government would not allow such a high price
B)  because stockholders would not allow such a high price
C)  because the company would sell so few copies that they would earn higher profits by selling at a lower price
D)  All of the above are correct.E) A) and B)
F) A) and C)

Question 10

A natural monopoly arises when

Accepted Answer

A)  there are constant returns to scale over the relevant range of output.
B)  there are economies of scale over the relevant range of output.
C)  one firm owns a key natural resource.
D)  the government gives a single firm the exclusive right to produce a particular good or service.E) A) and B)
F) All of the above

Question 11

Figure 15-19 
-Refer to Figure 15-19. If there are no fixed costs of production, monopoly profit with perfect price discrimination equals

Accepted Answer

A)  $1.
B)  $1,562.5.
C)  $3,125.
D)  $6,250.E) B) and C)
F) A) and C)

Question 12

Table 15-12
The following table provides information on the price, quantity, and average total cost for a monopoly. 
-Refer to Table 15-12. In order to maximize profits, the firm should produce

Accepted Answer

A)  4 units of output.
B)  8 units of output.
C)  12 units of output.
D)  16 units of output.E) A) and D)
F) B) and C)

Question 13

Bob's Butcher Shop is the only place within 100 miles that sells bison burgers. Assuming that Bob is maximizing his profit, which of the following statements is true?

Accepted Answer

A)  The price of Bob's bison burgers will be less than Bob's marginal cost.
B)  The price of Bob's bison burgers will exceed Bob's marginal cost.
C)  The price of Bob's bison burgers will equal Bob's marginal cost.
D)  Costs are irrelevant to Bob because he is a monopolist.E) B) and C)
F) All of the above

Question 14

Table 15-6
A monopolist faces the following demand curve: 
-Refer to Table 15-6. Suppose the monopolist has total fixed costs equal to $5 and a variable cost equal to $4 per unit for all units produced. What would the total profit be if she charged $6 per unit for her product?

Accepted Answer

A)  $1
B)  $3
C)  $8
D)  $15E) B) and C)
F) All of the above

Question 15

A natural monopoly will always operate in the region of the long run average total cost curve where the cost per unit is constant.
​
​

Accepted Answer

A) True 
 B)False

Question 16

Scenario 15-8
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 15-8. How much profit will Mega Media Cable TV earn if it sets the price at $150?

Accepted Answer

A)  $350,000
B)  $450,000
C)  $475,000
D)  $575,000E) A) and B)
F) All of the above

Question 17

For a profit-maximizing monopolist,

Accepted Answer

A) P > MR = MC. B) P = MR = MC. C) P > MR > MC. D) MR < MC < P.E) All of the above F) A) and C)

Question 18

Price discrimination can increase both the monopolist's profits and society's welfare.

Accepted Answer

A) True 
 B)False

Question 19

​Since monopolists that practice price discrimination generally increase market output, compared to a monopoly that charges a single price, practicing price discrimination generally leads to a smaller deadweight loss.

Accepted Answer

A) True 
 B)False

Question 20

In the majority of cases where there is a natural monopoly in the United States, the government usually deals with the problem

Accepted Answer

A)  by splitting the natural monopoly into smaller companies.
B)  through regulation.
C)  by turning the natural monopoly into a public enterprise.
D)  by doing nothing.E) A) and B)
F) B) and D)

Exam 15: Monopoly

Figure 15-19 -Refer to Figure 15-19. If there are no fixed costs of production, monopoly profit with perfect price discrimination equals

Correct Answer
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Table 15-1 -Refer to Table 15-1. The marginal revenue, when the quantity changes from 30 to 40 units, is

Correct Answer
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Microsoft faces very little competition from other firms for its Windows software. Why isn't the price of the software $1,000 per copy?

Correct Answer
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For a profit-maximizing monopolist,

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 total revenue from selling 6 pairs of shoes?

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

Correct Answer
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Table 15-6 A monopolist faces the following demand curve: -Refer to Table 15-6. Suppose the monopolist has total fixed costs equal to $5 and a variable cost equal to $4 per unit for all units produced. What would the total profit be if she charged $6 per unit for her product?

Correct Answer
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A natural monopoly will always operate in the region of the long run average total cost curve where the cost per unit is constant.

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 are Sally's fixed costs?

Correct Answer
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Allowing an inventor to have the exclusive rights to market her new invention will lead to (i) a product that is priced higher than it would be without the exclusive rights. (ii) desirable behavior in the sense that inventors are encouraged to invent. (iii) higher profits for the inventor.

Correct Answer
verified

Bob's Butcher Shop is the only place within 100 miles that sells bison burgers. Assuming that Bob is maximizing his profit, which of the following statements is true?

Correct Answer
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In the majority of cases where there is a natural monopoly in the United States, the government usually deals with the problem

Correct Answer
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A natural monopoly arises when

Correct Answer
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The task of economic regulation is to

Correct Answer
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Patents, copyrights, and trademarks

Correct Answer
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Since monopolists that practice price discrimination generally increase market output, compared to a monopoly that charges a single price, practicing price discrimination generally leads to a smaller deadweight loss.

Correct Answer
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Table 15-12 The following table provides information on the price, quantity, and average total cost for a monopoly. -Refer to Table 15-12. In order to maximize profits, the firm should produce

Correct Answer
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Price discrimination can increase both the monopolist's profits and society's welfare.

Correct Answer
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The price effect describes the situation when a monopolist lowers the price of output and, all else equal, total revenue

Correct Answer
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Correct Answer
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Exam 15: Monopoly

Figure 15-19 -Refer to Figure 15-19. If there are no fixed costs of production, monopoly profit with perfect price discrimination equals

Correct AnswerverifiedShow Answer

Table 15-1 -Refer to Table 15-1. The marginal revenue, when the quantity changes from 30 to 40 units, is

Correct AnswerverifiedShow Answer

Microsoft faces very little competition from other firms for its Windows software. Why isn't the price of the software $1,000 per copy?

Correct AnswerverifiedShow Answer

For a profit-maximizing monopolist,

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 total revenue from selling 6 pairs of shoes?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Table 15-6 A monopolist faces the following demand curve: -Refer to Table 15-6. Suppose the monopolist has total fixed costs equal to $5 and a variable cost equal to $4 per unit for all units produced. What would the total profit be if she charged $6 per unit for her product?

Correct AnswerverifiedShow Answer

A natural monopoly will always operate in the region of the long run average total cost curve where the cost per unit is constant. ​ ​

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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 are Sally's fixed costs?

Correct AnswerverifiedShow Answer

Allowing an inventor to have the exclusive rights to market her new invention will lead to (i) a product that is priced higher than it would be without the exclusive rights. (ii) desirable behavior in the sense that inventors are encouraged to invent. (iii) higher profits for the inventor.

Correct AnswerverifiedShow Answer

Bob's Butcher Shop is the only place within 100 miles that sells bison burgers. Assuming that Bob is maximizing his profit, which of the following statements is true?

Correct AnswerverifiedShow Answer

In the majority of cases where there is a natural monopoly in the United States, the government usually deals with the problem

Correct AnswerverifiedShow Answer

A natural monopoly arises when

Correct AnswerverifiedShow Answer

The task of economic regulation is to

Correct AnswerverifiedShow Answer

Patents, copyrights, and trademarks

Correct AnswerverifiedShow Answer

​Since monopolists that practice price discrimination generally increase market output, compared to a monopoly that charges a single price, practicing price discrimination generally leads to a smaller deadweight loss.

Correct AnswerverifiedShow Answer

Table 15-12 The following table provides information on the price, quantity, and average total cost for a monopoly. -Refer to Table 15-12. In order to maximize profits, the firm should produce

Correct AnswerverifiedShow Answer

Price discrimination can increase both the monopolist's profits and society's welfare.

Correct AnswerverifiedShow Answer

The price effect describes the situation when a monopolist lowers the price of output and, all else equal, total revenue

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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A natural monopoly will always operate in the region of the long run average total cost curve where the cost per unit is constant.

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Since monopolists that practice price discrimination generally increase market output, compared to a monopoly that charges a single price, practicing price discrimination generally leads to a smaller deadweight loss.

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