Question 1

Natural monopolies differ from other forms of monopoly because they are

Accepted Answer

A)   not subject to barriers to entry.
B)   not regulated by government.
C)   unable to sustain long-run profits.
D)   are generally not worried about competition eroding their monopoly position in the market.E) B) and C)
F) None of the above

Question 2

In order to sell more of its product, a monopolist must

Accepted Answer

A)   sell to the government.
B)   sell in international markets.
C)   lower its price.
D)   use its market power to force up the price of complementary products.E) All of the above
F) B) and C)

Question 3

In many countries, the government chooses to "internalize" the monopoly by owning monopoly providers of goods and services. (In some cases these firms are "nationalized," and the government actually buys or confiscates firms that operate in monopoly markets). What would be the advantages and disadvantages of such an approach to ensure that the "best interest of society" is promoted in these markets? Explain your answer.

Accepted Answer

As long as the government "owner" pursues a production and pricing policy that approaches a competitive outcome, social well-being can be enhanced. In this case the government ownership would benefit society. However, in most cases, government owners operate much like private sector monopolists. The political economy of government institutions does not ensure that government owners will pursue socially optimal policy. Also, governments have no incentive to reduce costs or innovate.

Question 4

A common solution to monopoly in European countries is public ownership.

Accepted Answer

A) True 
 B)False

Question 5

Figure 15-7 
-Refer to Figure 15-7. A profit-maximizing monopolist would incur total costs of

Accepted Answer

A)   $81.
B)   $120.
C)   $144.
D)   $240.E) B) and C)
F) A) and B)

Question 6

Figure 15-25 
-Refer to Figure 15-25. If a regulator requires this firm to charge a fair return price, which letter represents the amount of output it will produce?

Accepted Answer

The answer of Figure 15-25 
-Refer to Figure 15-25. If...

Question 7

For a monopoly,

Accepted Answer

A)   average revenue exceeds marginal revenue.
B)   average revenue equals marginal revenue.
C)   average revenue is less than marginal revenue.
D)   price equals marginal revenue.E) All of the above
F) A) and B)

Question 8

For a monopoly firm,

Accepted Answer

A)   price always exceeds average revenue.
B)   price always exceeds marginal revenue.
C)   any price-quantity combination will maximize profits.
D)   All of the above are correct.E) None of the above
F) All of the above

Question 9

Figure 15-17 
-Refer to Figure 15-17. Which of the following areas represents the profit earned by this profit-maximizing monopolist?

Accepted Answer

A)   BCFE
B)   ABE
C)   EFG
D)   CFIHE) A) and B)
F) None of the above

Question 10

Economic welfare is generally measured by (i)  profit.
(ii)  total surplus.
(iii)  the price consumers pay for the product.

Accepted Answer

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

Question 11

A monopoly firm can sell 150 units of output for $10 per unit. Alternatively, it can sell 151 units of output for $9.98 per unit. The marginal revenue of the 151st unit of output is

Accepted Answer

A)   -$6.98.
B)   -$0.02.
C)   $2.45.
D)   $6.98.E) All of the above
F) A) and D)

Question 12

Figure 15-3 
-Refer to Figure 15-3. Which panel could represent the demand curve facing a soybean farmer?

Accepted Answer

A)   Panel A
B)   Panel B
C)   Panel C
D)   Panel DE) A) and D)
F) A) and C)

Question 13

Which of the following is not correct?

Accepted Answer

A)   The demand curve facing a competitive firm is perfectly elastic.
B)   The demand curve facing a monopolist is the market demand curve.
C)   A monopolist can charge any price and sell any quantity that it chooses.
D)   A monopolist can alter the market price by adjusting the quantity that it produces.E) A) and B)
F) All of the above

Question 14

If government regulation sets the maximum price for a natural monopoly equal to its marginal cost, then the natural monopolist will

Accepted Answer

A)   earn economic losses.
B)   earn economic profits.
C)   earn zero economic profits.
D)   produce a lower quantity of output than is socially optimal.E) B) and C)
F) A) and D)

Question 15

Antitrust laws allow the government to

Accepted Answer

A)   collect revenues through the antitrust tax.
B)   break up companies.
C)   purchase privately-held companies through eminent domain.
D)   All of the above are correct.E) A) and B)
F) B) and D) B

Question 16

The profit that a monopolist earns represents a loss to society that is measured through deadweight loss.

Accepted Answer

A) True 
 B)False

Question 17

Figure 15-4 
-Refer to Figure 15-4. The average total cost curve for a monopoly firm is depicted by curve

Accepted Answer

A)   A.
B)   B.
C)   C.
D)   D.E) A) and B)
F) B) and D)

Question 18

The fundamental cause of monopoly is

Accepted Answer

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

Question 19

A monopoly creates a deadweight loss to society because it earns both short-run and long-run positive economic profits.

Accepted Answer

A) True 
 B)False  False

Question 20

A firm cannot price discriminate if

Accepted Answer

A)   its has declining marginal revenue.
B)   it operates in a competitive market.
C)   buyers only reveal the price they are willing to pay for the product.
D)   it has a constant marginal cost.E) B) and C)
F) A) and D)

Exam 15: Monopoly

Natural monopolies differ from other forms of monopoly because they are

Correct Answer
verified

In order to sell more of its product, a monopolist must

Correct Answer
verified

A common solution to monopoly in European countries is public ownership.

Correct Answer
verified

Figure 15-7 -Refer to Figure 15-7. A profit-maximizing monopolist would incur total costs of

Correct Answer
verified

Figure 15-25 -Refer to Figure 15-25. If a regulator requires this firm to charge a fair return price, which letter represents the amount of output it will produce?

Correct Answer
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For a monopoly,

Correct Answer
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For a monopoly firm,

Correct Answer
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Figure 15-17 -Refer to Figure 15-17. Which of the following areas represents the profit earned by this profit-maximizing monopolist?

Correct Answer
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Economic welfare is generally measured by (i) profit. (ii) total surplus. (iii) the price consumers pay for the product.

Correct Answer
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A monopoly firm can sell 150 units of output for $10 per unit. Alternatively, it can sell 151 units of output for $9.98 per unit. The marginal revenue of the 151st unit of output is

Correct Answer
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Figure 15-3 -Refer to Figure 15-3. Which panel could represent the demand curve facing a soybean farmer?

Correct Answer
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Which of the following is not correct?

Correct Answer
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If government regulation sets the maximum price for a natural monopoly equal to its marginal cost, then the natural monopolist will

Correct Answer
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Antitrust laws allow the government to

Correct Answer
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B

The profit that a monopolist earns represents a loss to society that is measured through deadweight loss.

Correct Answer
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Figure 15-4 -Refer to Figure 15-4. The average total cost curve for a monopoly firm is depicted by curve

Correct Answer
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The fundamental cause of monopoly is

Correct Answer
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A monopoly creates a deadweight loss to society because it earns both short-run and long-run positive economic profits.

Correct Answer
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False

A firm cannot price discriminate if

Correct Answer
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Exam 15: Monopoly

Natural monopolies differ from other forms of monopoly because they are

Correct AnswerverifiedShow Answer

In order to sell more of its product, a monopolist must

Correct AnswerverifiedShow Answer

A common solution to monopoly in European countries is public ownership.

Correct AnswerverifiedShow Answer

Figure 15-7 -Refer to Figure 15-7. A profit-maximizing monopolist would incur total costs of

Correct AnswerverifiedShow Answer

Figure 15-25 -Refer to Figure 15-25. If a regulator requires this firm to charge a fair return price, which letter represents the amount of output it will produce?

Correct AnswerverifiedShow Answer

For a monopoly,

Correct AnswerverifiedShow Answer

For a monopoly firm,

Correct AnswerverifiedShow Answer

Figure 15-17 -Refer to Figure 15-17. Which of the following areas represents the profit earned by this profit-maximizing monopolist?

Correct AnswerverifiedShow Answer

Economic welfare is generally measured by (i) profit. (ii) total surplus. (iii) the price consumers pay for the product.

Correct AnswerverifiedShow Answer

A monopoly firm can sell 150 units of output for $10 per unit. Alternatively, it can sell 151 units of output for $9.98 per unit. The marginal revenue of the 151st unit of output is

Correct AnswerverifiedShow Answer

Figure 15-3 -Refer to Figure 15-3. Which panel could represent the demand curve facing a soybean farmer?

Correct AnswerverifiedShow Answer

Which of the following is not correct?

Correct AnswerverifiedShow Answer

If government regulation sets the maximum price for a natural monopoly equal to its marginal cost, then the natural monopolist will

Correct AnswerverifiedShow Answer

Antitrust laws allow the government to

Correct AnswerverifiedB

The profit that a monopolist earns represents a loss to society that is measured through deadweight loss.

Correct AnswerverifiedShow Answer

Figure 15-4 -Refer to Figure 15-4. The average total cost curve for a monopoly firm is depicted by curve

Correct AnswerverifiedShow Answer

The fundamental cause of monopoly is

Correct AnswerverifiedShow Answer

A monopoly creates a deadweight loss to society because it earns both short-run and long-run positive economic profits.

Correct AnswerverifiedFalse

A firm cannot price discriminate if

Correct AnswerverifiedShow Answer

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B

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False

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