Question 1

Which of the following are necessary characteristics of a monopoly? (i) 
The firm is the sole seller of its product.
(ii) 
The firm's product does not have close substitutes.
(iii) 
The firm generates a large economic profit.
(iv) 
The firm is located in a small geographic market.

Accepted Answer

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

Question 2

The profit-maximization problem for a monopolist differs from that of a competitive firm in which of the following ways?

Accepted Answer

A)   A competitive firm maximizes profit at the point where marginal revenue equals marginal cost;a monopolist maximizes profit at the point where marginal revenue exceeds marginal cost.
B)   A competitive firm maximizes profit at the point where average revenue equals marginal cost;a monopolist maximizes profit at the point where average revenue exceeds marginal cost.
C)   For a competitive firm,marginal revenue at the profit-maximizing level of output is equal to marginal revenue at all other levels of output;for a monopolist,marginal revenue at the profit-maximizing level of output is smaller than it is for larger levels of output.
D)   For a profit-maximizing competitive firm,thinking at the margin is much more important than it is for a profit-maximizing monopolist.E) None of the above
F) A) and B)

Question 3

Which of the following statements is correct?

Accepted Answer

A)   The demand curve facing a competitive firm is horizontal,as is the demand curve facing a monopolist.
B)   The demand curve facing a competitive firm is downward sloping,whereas the demand curve facing a monopolist is horizontal.
C)   The demand curve facing a competitive firm is horizontal,whereas the demand curve facing a monopolist is downward sloping.
D)   The demand curve facing a competitive firm is downward sloping,as is the demand curve facing a monopolist.E) A) and B)
F) B) and C)

Question 4

Figure 15-14 
-Refer to Scenario 15-4.The profit-maximizing monopolist will earn profits of

Accepted Answer

A)   $6,400.
B)   $3,200.
C)   $1,600.
D)   $800.E) B) and C)
F) A) and D)

Question 5

For a typical natural monopoly,average total cost is

Accepted Answer

A)   falling,and marginal cost is above average total cost.
B)   falling,and marginal cost is below average total cost.
C)   rising,and marginal cost is below average total cost.
D)   rising,and marginal cost is above average total cost.E) All of the above
F) None of the above

Question 6

Figure 15-16 
-Refer to Figure 15-16.If there are no fixed costs of production,monopoly profit without price discrimination equals

Accepted Answer

A)   $0.
B)   $1,562.50.
C)   $3,125.
D)   $6,250.E) A) and C)
F) A) and D)

Question 7

Which of the following is not a reason for the existence of a monopoly?

Accepted Answer

A)   sole ownership of a key resource
B)   patents
C)   copyrights
D)   diseconomies of scaleE) None of the above
F) All of the above

Question 8

Describe how government is involved in creating a monopoly.Why might the government create one? Give an example.

Accepted Answer

The government can create a monopoly by ...

Question 9

Comparing firms in perfectly competitive markets to monopoly firms,which produces more output?

Accepted Answer

perfectly ...

Question 10

Figure 15-4 
-Refer to Figure 15-4.At the profit-maximizing level of output,

Accepted Answer

A)   marginal revenue is equal to P3.
B)   marginal cost is equal to P3.
C)   average revenue is equal to P4.
D)   average total cost is equal to P0.E) A) and B)
F) A) and C)

Question 11

The marginal revenue curve for a monopoly firm starts at the same point on the vertical axis as the (i) 
Average revenue curve.
(ii) 
Marginal cost curve.
(iii) 
Demand curve.

Accepted Answer

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

Question 12

For a monopoly,marginal revenue is often greater than the price it charges for its good.

Accepted Answer

A) True 
 B)False

Question 13

Table 15-18
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 15-18.If the monopolist can engage in perfect price discrimination,what is the marginal revenue from selling the 8th tie?

Accepted Answer

A)   $45
B)   $60
C)   $80
D)   $95E) B) and C)
F) A) and D)

Question 14

Drug companies are allowed to be monopolists in the drugs they discover in order to

Accepted Answer

A)   allow drug companies to charge a price that is equal to their marginal cost.
B)   discourage new firms from entering the drug market.
C)   encourage research.
D)   allow the government to earn patent revenue.E) A) and C)
F) A) and B)

Question 15

A profit-maximizing monopolist charges a price of $14.The intersection of the marginal revenue curve and the marginal cost curve occurs where output is 15 units and marginal cost is $7.What is the monopolist's profit?

Accepted Answer

A)   $90
B)   $105
C)   $180
D)   Not enough information is given to determine the answer.E) A) and D)
F) A) and C)

Question 16

Average revenue for a monopoly is the total revenue divided by the quantity produced.

Accepted Answer

A) True 
 B)False

Question 17

Competitive firms differ from monopolies in which of the following ways? (i) 
Competitive firms do not have to worry about the price effect lowering their total revenue.
(ii) 
Marginal revenue for a competitive firm equals price,while marginal revenue for a monopoly is less than the price it is able to charge.
(iii) 
Monopolies must lower their price in order to sell more of their product,while competitive firms do not.

Accepted Answer

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

Question 18

Figure 15-3 
-Refer to Figure 15-3.If the monopoly firm wants to maximize its profit,it should operate at a level of output equal to

Accepted Answer

A)   Q1.
B)   Q2.
C)   Q3.
D)   Q4.E) B) and C)
F) A) and C)

Question 19

Table 15-11
The following table shows quantity,price,and marginal cost information for a monopoly:
 
-Refer to Table 15-11.What would be the firm's marginal revenue at the profit-maximizing level of output?

Accepted Answer

A)   $7
B)   $6
C)   $5
D)   $1E) B) and C)
F) A) and C)

Question 20

A monopolist faces the following demand curve:  The monopolist has fixed costs of $1,000 and has a constant marginal cost of $2 per unit.If the monopolist were able to perfectly price discriminate,how many units would it sell?

Accepted Answer

A)   400
B)   500
C)   900
D)   4,200E) B) and C)
F) A) and C)

Exam 15: Monopoly

Average revenue for a monopoly is the total revenue divided by the quantity produced.

Correct Answer
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Which of the following statements is correct?

Correct Answer
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Figure 15-3 -Refer to Figure 15-3.If the monopoly firm wants to maximize its profit,it should operate at a level of output equal to

Correct Answer
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The marginal revenue curve for a monopoly firm starts at the same point on the vertical axis as the (i) Average revenue curve. (ii) Marginal cost curve. (iii) Demand curve.

Correct Answer
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A profit-maximizing monopolist charges a price of $14.The intersection of the marginal revenue curve and the marginal cost curve occurs where output is 15 units and marginal cost is $7.What is the monopolist's profit?

Correct Answer
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The profit-maximization problem for a monopolist differs from that of a competitive firm in which of the following ways?

Correct Answer
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Figure 15-14 -Refer to Scenario 15-4.The profit-maximizing monopolist will earn profits of

Correct Answer
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Which of the following are necessary characteristics of a monopoly? (i) The firm is the sole seller of its product. (ii) The firm's product does not have close substitutes. (iii) The firm generates a large economic profit. (iv) The firm is located in a small geographic market.

Correct Answer
verified

Figure 15-4 -Refer to Figure 15-4.At the profit-maximizing level of output,

Correct Answer
verified

Comparing firms in perfectly competitive markets to monopoly firms,which produces more output?

Correct Answer
verified
perfectly ...
View Answer

For a monopoly,marginal revenue is often greater than the price it charges for its good.

Correct Answer
verified

A monopolist faces the following demand curve: The monopolist has fixed costs of $1,000 and has a constant marginal cost of $2 per unit.If the monopolist were able to perfectly price discriminate,how many units would it sell?

Correct Answer
verified

Table 15-18 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 15-18.If the monopolist can engage in perfect price discrimination,what is the marginal revenue from selling the 8th tie?

Correct Answer
verified

Drug companies are allowed to be monopolists in the drugs they discover in order to

Correct Answer
verified

Describe how government is involved in creating a monopoly.Why might the government create one? Give an example.

Correct Answer
verified
The government can create a monopoly by ...
View Answer

Correct Answer
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Which of the following is not a reason for the existence of a monopoly?

Correct Answer
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Table 15-11 The following table shows quantity,price,and marginal cost information for a monopoly: -Refer to Table 15-11.What would be the firm's marginal revenue at the profit-maximizing level of output?

Correct Answer
verified

For a typical natural monopoly,average total cost is

Correct Answer
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Figure 15-16 -Refer to Figure 15-16.If there are no fixed costs of production,monopoly profit without price discrimination equals

Correct Answer
verified

Exam 15: Monopoly

Average revenue for a monopoly is the total revenue divided by the quantity produced.

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Figure 15-3 -Refer to Figure 15-3.If the monopoly firm wants to maximize its profit,it should operate at a level of output equal to

Correct AnswerverifiedShow Answer

The marginal revenue curve for a monopoly firm starts at the same point on the vertical axis as the (i) Average revenue curve. (ii) Marginal cost curve. (iii) Demand curve.

Correct AnswerverifiedShow Answer

A profit-maximizing monopolist charges a price of $14.The intersection of the marginal revenue curve and the marginal cost curve occurs where output is 15 units and marginal cost is $7.What is the monopolist's profit?

Correct AnswerverifiedShow Answer

The profit-maximization problem for a monopolist differs from that of a competitive firm in which of the following ways?

Correct AnswerverifiedShow Answer

Figure 15-14 -Refer to Scenario 15-4.The profit-maximizing monopolist will earn profits of

Correct AnswerverifiedShow Answer

Which of the following are necessary characteristics of a monopoly? (i) The firm is the sole seller of its product. (ii) The firm's product does not have close substitutes. (iii) The firm generates a large economic profit. (iv) The firm is located in a small geographic market.

Correct AnswerverifiedShow Answer

Figure 15-4 -Refer to Figure 15-4.At the profit-maximizing level of output,

Correct AnswerverifiedShow Answer

Comparing firms in perfectly competitive markets to monopoly firms,which produces more output?

Correct Answerverifiedperfectly ...View AnswerShow Answer

For a monopoly,marginal revenue is often greater than the price it charges for its good.

Correct AnswerverifiedShow Answer

A monopolist faces the following demand curve: The monopolist has fixed costs of $1,000 and has a constant marginal cost of $2 per unit.If the monopolist were able to perfectly price discriminate,how many units would it sell?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Drug companies are allowed to be monopolists in the drugs they discover in order to

Correct AnswerverifiedShow Answer

Describe how government is involved in creating a monopoly.Why might the government create one? Give an example.

Correct AnswerverifiedThe government can create a monopoly by ...View AnswerShow Answer

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Which of the following is not a reason for the existence of a monopoly?

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Table 15-11 The following table shows quantity,price,and marginal cost information for a monopoly: -Refer to Table 15-11.What would be the firm's marginal revenue at the profit-maximizing level of output?

Correct AnswerverifiedShow Answer

For a typical natural monopoly,average total cost is

Correct AnswerverifiedShow Answer

Figure 15-16 -Refer to Figure 15-16.If there are no fixed costs of production,monopoly profit without price discrimination equals

Correct AnswerverifiedShow Answer

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perfectly ...
View Answer

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The government can create a monopoly by ...
View Answer

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