Question 1

When the government protects intellectual property rights, it:

Accepted Answer

A)  can reduce total surplus for society.
B)  never increases total surplus for society.
C)  does not affect total surplus for society.
D)  always increases total surplus for society.E) None of the above
F) B) and C)

Question 2

The monopolist's outcome happens at a _______ the perfectly competitive one.

Accepted Answer

A)  lower price than
B)  higher price than
C)  higher quantity than
D)  quantity that is equal toE) None of the above
F) C) and D)

Question 3

The practice of charging customers different prices for the same good is called:

Accepted Answer

A)  price discrimination.
B)  price marking.
C)  group discounting.
D)  customer discrimination.E) None of the above
F) A) and B)

Question 4

When a monopolist chooses to produce at the level of output where marginal cost equals marginal revenue, price:

Accepted Answer

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

Question 5

The profit-maximizing decision for the monopolist is:

Accepted Answer

A)  to produce at the quantity where marginal cost equals marginal revenue.
B)  the same as that of the perfectly competitive firm.
C)  to choose price according to demand.
D)  All of these are true.E) A) and B)
F) A) and C)

Question 6

DeBeers, a diamond seller, profits the most from the diamond market because it sells ______ diamonds at _______ prices.

Accepted Answer

A)  many; low
B)  few; high
C)  many; high
D)  few; lowE) B) and C)
F) A) and B)

Question 7

The loss of the profit motive by a publicly-owned natural monopoly causes which of the following to happen?

Accepted Answer

A)  Increased pressure from the public to turn a profit
B)  Increased pressure from the public to cut costs
C)  Decreased incentive to improve efficiency
D)  Increased motivation to cut costsE) A) and D)
F) All of the above

Question 8

Price discrimination exists:

Accepted Answer

A)  only in perfectly competitive markets.
B)  because sellers try to exploit differences in customers' willingness to pay.
C)  in all industries, regardless of market structure.
D)  only when demand is inelastic.E) A) and D)
F) All of the above

Question 9

Which of the following is an essential characteristic of a monopoly?

Accepted Answer

A)  The good must have no close substitutes.
B)  There can only be a few sellers in the market.
C)  Only one buyer can exist.
D)  Many buyers must exist.E) None of the above
F) B) and C)

Question 10

Which of the following is an example of a public policy response to a monopoly?

Accepted Answer

A)  Antitrust laws
B)  Public ownership
C)  Doing nothing
D)  All of these are examples of a public policy response to a monopoly.E) A) and B)
F) None of the above

Question 11

When a government owns a natural monopoly and avoids subsidies, it:

Accepted Answer

A)  creates deadweight loss.
B)  sets the price above marginal cost.
C)  recognizes that setting price equal to marginal cost would cause the enterprise to incur losses.
D)  All of these are true.E) B) and D)
F) None of the above

Question 12

A monopoly has:

Accepted Answer

A)  no competition at all.
B)  just a few large competitors.
C)  many competitors.
D)  no ability to set price.E) B) and C)
F) C) and D)

Question 13

Two antitrust acts actively used by the U.S. government to prevent monopoly power in markets are the _______ and the _______.

Accepted Answer

A)  Sherman Antitrust Act; Clayton Act
B)  Bergman Antitrust Act; Clayton Act
C)  Sherman Antitrust Act; Stapleton Act
D)  Bergman Antitrust Act; Stapleton ActE) B) and C)
F) C) and D)

Question 14

The graph shown represents the cost and revenue curves faced by a monopoly.  What is the deadweight loss in this market?

Accepted Answer

A)  $0
B)  $25
C)  $70
D)  $150E) A) and B)
F) A) and C)

Question 15

One way a government might protect monopoly rights is by:

Accepted Answer

A)  granting a patent.
B)  heavily taxing alcohol and cigarettes.
C)  running unsubsidized state-owned enterprises that compete with private firms.
D)  All of these are ways a government protects monopoly rights.E) C) and D)
F) All of the above

Question 16

A perfect monopoly:

Accepted Answer

A)  has no competition at all.
B)  has complete market control.
C)  restricts output to maximize profits.
D)  All of these statements are true.E) None of the above
F) A) and B)

Question 17

When a perfectly competitive firm increases output, total revenue _______ because there is no _______ effect.

Accepted Answer

A)  increases; price
B)  decreases; price
C)  increases; quantity
D)  decreases; quantityE) C) and D)
F) B) and D)

Question 18

Public policy responses to monopolies:

Accepted Answer

A)  aim to break up existing monopolies.
B)  prevent new monopolies from forming.
C)  ease the effect of monopoly power on consumers.
D)  All of these are true.E) A) and C)
F) C) and D)

Question 19

In the real world, price discrimination is difficult to enact because:

Accepted Answer

A)  it is hard to identify and verify different groups.
B)  it is impossible to perfectly know each consumer's willingness to pay.
C)  it can be challenging to prevent the resale of goods from one group to another.
D)  All of these are true.E) B) and C)
F) A) and C)

Question 20

Total revenue decreases as output increases when demand is:

Accepted Answer

A)  downward sloping.
B)  perfectly elastic.
C)  price inelastic.
D)  price elastic.E) A) and B)
F) A) and C)

Exam 14: Monopoly

The monopolist's outcome happens at a _______ the perfectly competitive one.

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When a government owns a natural monopoly and avoids subsidies, it:

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When a monopolist chooses to produce at the level of output where marginal cost equals marginal revenue, price:

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Which of the following is an example of a public policy response to a monopoly?

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Two antitrust acts actively used by the U.S. government to prevent monopoly power in markets are the _______ and the _______.

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DeBeers, a diamond seller, profits the most from the diamond market because it sells ______ diamonds at _______ prices.

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One way a government might protect monopoly rights is by:

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In the real world, price discrimination is difficult to enact because:

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When the government protects intellectual property rights, it:

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Public policy responses to monopolies:

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Which of the following is an essential characteristic of a monopoly?

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A perfect monopoly:

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The loss of the profit motive by a publicly-owned natural monopoly causes which of the following to happen?

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Price discrimination exists:

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The profit-maximizing decision for the monopolist is:

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The graph shown represents the cost and revenue curves faced by a monopoly. What is the deadweight loss in this market?

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The practice of charging customers different prices for the same good is called:

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A monopoly has:

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When a perfectly competitive firm increases output, total revenue _______ because there is no _______ effect.

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Total revenue decreases as output increases when demand is:

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Two antitrust acts actively used by the U.S. government to prevent monopoly power in markets are the _ and the _.

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DeBeers, a diamond seller, profits the most from the diamond market because it sells diamonds at _ prices.

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When a perfectly competitive firm increases output, total revenue _ because there is no _ effect.

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