Question 1

Figure 14-1 
-Refer to Figure 14-1.Considering the relationship between average total cost and marginal cost,the marginal cost curve for this firm must

Accepted Answer

A)   lie entirely above the average total cost curve.
B)   lie entirely below the average total cost curve.
C)   be U-shaped.
D)   be horizontal.E) All of the above
F) None of the above

Question 2

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.E) B) and C)
F) All of the above

Question 3

Due to the nature of the patent laws on pharmaceuticals,the market for such drugs

Accepted Answer

A)   always remains a competitive market.
B)   always remains a monopolistic market.
C)   switches from competitive to monopolistic once the firm's patent runs out.
D)   switches from monopolistic to competitive once the firm's patent runs out.E) All of the above
F) C) and D)

Question 4

A movie theater can increase its profits through price discrimination by charging a higher price to adults and a lower price to children if

Accepted Answer

A)   adults buy more popcorn than children.
B)   the cost of showing a movie to children is less than the cost of showing a movie to adults.
C)   it has some degree of monopoly-pricing power.
D)   All of the above are correct.E) All of the above
F) C) and D)

Question 5

Price discrimination

Accepted Answer

A)   is illegal in the United States and Europe.
B)   can occur in both perfectly competitive and monopoly markets.
C)   is illogical because it does not maximize profits.
D)   can maximize profits if the seller can prevent the resale of goods between customers.E) A) and D)
F) C) and D)

Question 6

Price discrimination adds to social welfare in the form of (i) increased total surplus.
(ii) reduced costs of production.
(iii) increased consumer surplus.

Accepted Answer

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

Question 7

If the monopolist's linear demand curve intersects the quantity axis at Q = 30,then the monopolist's marginal revenue will be equal to zero at

Accepted Answer

A)   Q = 10.
B)   Q = 15.
C)   Q = 20.
D)   Q = 30.E) B) and C)
F) A) and B)

Question 8

Table 14-7
Sally owns the only shoe store in town.She has the following cost and revenue information.
 
-Refer to Table 14-7.What is the total variable cost of production when Sally produces six pairs of shoes?

Accepted Answer

A)   $100
B)   $295
C)   $600
D)   $620E) A) and B)
F) B) and C)

Question 9

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 $150?

Accepted Answer

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

Question 10

Which of the following would be most likely to have monopoly power?

Accepted Answer

A)   a long-distance telephone service provider
B)   a local cable TV provider
C)   a large department store
D)   a gas stationE) A) and B)
F) B) and D)

Question 11

Table 14-1
 
-Refer to Table 14-1.Assume this monopolist's marginal cost is constant at $12.What quantity of output (Q) will it produce and what price (P) will it charge?

Accepted Answer

A)   Q = 4,P = $29
B)   Q = 4,P = $26
C)   Q = 5,P = $23
D)   Q = 7,P = $17E) B) and D)
F) All of the above

Question 12

A monopolist that can practice perfect price discrimination will not impose a deadweight loss on society.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following statements is true about patents and copyrights? (i) They have benefits and costs.
(ii) They lead to higher prices.
(iii) They enhance the ability of monopolists to earn above-average profits.

Accepted Answer

A)   (i) and (ii) only
B)   (ii) and (iii) only
C)   (ii) only
D)   (i) ,(ii) ,and (iii) E) None of the above
F) All of the above

Question 14

Table 14-15
A monopolist faces the following demand curve:
 
-Refer to Table 14-15.The monopolist has total fixed costs of $40 and a constant marginal cost of $5.At the profit-maximizing level of output,the monopolist's profit is

Accepted Answer

A)   $88.
B)   $8.
C)   $6.
D)   We do not have enough information to determine profit.E) All of the above
F) B) and C)

Question 15

Table 14-18
Tommy's Tie Company,a monopolist,has the following cost and revenue information.Assume that Tommy's is able to engage in perfect price discrimination.
 
-Refer to Table 14-18.If the monopolist can engage in perfect price discrimination,what is the average revenue when 7 ties are sold?

Accepted Answer

A)   $90
B)   $100
C)   $110
D)   $130E) A) and B)
F) A) and C)

Question 16

The economic inefficiency of a monopolist can be measured by the

Accepted Answer

A)   deadweight loss.
B)   value of the unrealized trades that could be made if the monopolist produced the socially-efficient output.
C)   area above marginal cost but beneath demand from the monopoly output to the socially-efficient output.
D)   All of the above are correct.E) A) and C)
F) None of the above

Question 17

Government intervention is always preferable to doing nothing when reducing the social inefficiencies of monopoly.

Accepted Answer

A) True 
 B)False

Question 18

Figure 14-16 
-Refer to Figure 14-16.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) A) and D)
F) A) and C)

Question 19

When a local grocery store offers discount coupons in the Sunday paper it is most likely trying to

Accepted Answer

A)   reduce prices for all customers.
B)   encourage literacy.
C)   encourage arbitrage.
D)   price discriminate.E) All of the above
F) A) and C)

Question 20

Table 14-8
The following table provides information on the price,quantity,and average total cost for a monopoly.
 
-Refer to Table 14-8.What is the maximum profit that the monopolist can earn?

Accepted Answer

A)   $10
B)   $20
C)   $30
D)   $40E) A) and B)
F) None of the above

Exam 14: Monopoly

When a local grocery store offers discount coupons in the Sunday paper it is most likely trying to

Correct Answer
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Price discrimination

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A monopolist that can practice perfect price discrimination will not impose a deadweight loss on society.

Correct Answer
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Which of the following statements is true about patents and copyrights? (i) They have benefits and costs. (ii) They lead to higher prices. (iii) They enhance the ability of monopolists to earn above-average profits.

Correct Answer
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The economic inefficiency of a monopolist can be measured by the

Correct Answer
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Table 14-8 The following table provides information on the price,quantity,and average total cost for a monopoly. -Refer to Table 14-8.What is the maximum profit that the monopolist can earn?

Correct Answer
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If the monopolist's linear demand curve intersects the quantity axis at Q = 30,then the monopolist's marginal revenue will be equal to zero at

Correct Answer
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Table 14-18 Tommy's Tie Company,a monopolist,has the following cost and revenue information.Assume that Tommy's is able to engage in perfect price discrimination. -Refer to Table 14-18.If the monopolist can engage in perfect price discrimination,what is the average revenue when 7 ties are sold?

Correct Answer
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Government intervention is always preferable to doing nothing when reducing the social inefficiencies of monopoly.

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

Correct Answer
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A movie theater can increase its profits through price discrimination by charging a higher price to adults and a lower price to children if

Correct Answer
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Price discrimination adds to social welfare in the form of (i) increased total surplus. (ii) reduced costs of production. (iii) increased consumer surplus.

Correct Answer
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Table 14-15 A monopolist faces the following demand curve: -Refer to Table 14-15.The monopolist has total fixed costs of $40 and a constant marginal cost of $5.At the profit-maximizing level of output,the monopolist's profit is

Correct Answer
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Which of the following would be most likely to have monopoly power?

Correct Answer
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Table 14-1 -Refer to Table 14-1.Assume this monopolist's marginal cost is constant at $12.What quantity of output (Q) will it produce and what price (P) will it charge?

Correct Answer
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Figure 14-1 -Refer to Figure 14-1.Considering the relationship between average total cost and marginal cost,the marginal cost curve for this firm must

Correct Answer
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Table 14-7 Sally owns the only shoe store in town.She has the following cost and revenue information. -Refer to Table 14-7.What is the total variable cost of production when Sally produces six pairs of shoes?

Correct Answer
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Due to the nature of the patent laws on pharmaceuticals,the market for such drugs

Correct Answer
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Figure 14-16 -Refer to Figure 14-16.If there are no fixed costs of production,monopoly profit with perfect price discrimination equals

Correct Answer
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Exam 14: Monopoly

When a local grocery store offers discount coupons in the Sunday paper it is most likely trying to

Correct AnswerverifiedShow Answer

Price discrimination

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A monopolist that can practice perfect price discrimination will not impose a deadweight loss on society.

Correct AnswerverifiedShow Answer

Which of the following statements is true about patents and copyrights? (i) They have benefits and costs. (ii) They lead to higher prices. (iii) They enhance the ability of monopolists to earn above-average profits.

Correct AnswerverifiedShow Answer

The economic inefficiency of a monopolist can be measured by the

Correct AnswerverifiedShow Answer

Table 14-8 The following table provides information on the price,quantity,and average total cost for a monopoly. -Refer to Table 14-8.What is the maximum profit that the monopolist can earn?

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If the monopolist's linear demand curve intersects the quantity axis at Q = 30,then the monopolist's marginal revenue will be equal to zero at

Correct AnswerverifiedShow Answer

Table 14-18 Tommy's Tie Company,a monopolist,has the following cost and revenue information.Assume that Tommy's is able to engage in perfect price discrimination. -Refer to Table 14-18.If the monopolist can engage in perfect price discrimination,what is the average revenue when 7 ties are sold?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Government intervention is always preferable to doing nothing when reducing the social inefficiencies of monopoly.

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

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A movie theater can increase its profits through price discrimination by charging a higher price to adults and a lower price to children if

Correct AnswerverifiedShow Answer

Price discrimination adds to social welfare in the form of (i) increased total surplus. (ii) reduced costs of production. (iii) increased consumer surplus.

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Table 14-15 A monopolist faces the following demand curve: -Refer to Table 14-15.The monopolist has total fixed costs of $40 and a constant marginal cost of $5.At the profit-maximizing level of output,the monopolist's profit is

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Which of the following would be most likely to have monopoly power?

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Table 14-1 -Refer to Table 14-1.Assume this monopolist's marginal cost is constant at $12.What quantity of output (Q) will it produce and what price (P) will it charge?

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Figure 14-1 -Refer to Figure 14-1.Considering the relationship between average total cost and marginal cost,the marginal cost curve for this firm must

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Table 14-7 Sally owns the only shoe store in town.She has the following cost and revenue information. -Refer to Table 14-7.What is the total variable cost of production when Sally produces six pairs of shoes?

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Due to the nature of the patent laws on pharmaceuticals,the market for such drugs

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Figure 14-16 -Refer to Figure 14-16.If there are no fixed costs of production,monopoly profit with perfect price discrimination equals

Correct AnswerverifiedShow Answer

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