Question 1

Patent and copyright laws are major sources of:

Accepted Answer

A)   government-created monopolies
B)   natural monopolies
C)   research and development
D)   innovationE) A) and C)
F) All of the above

Question 2

A significant difference between a competitive firm and a monopoly firm is the ability to select:

Accepted Answer

A)   the price of its output
B)   the level of competition in the market
C)   the level of production
D)   the wages of its workersE) All of the above
F) A) and B)

Question 3

The simplest way for a monopoly to arise is for a single firm to:

Accepted Answer

A)   own a key resource
B)   inflate its prices
C)   cut production to increase demand for a product
D)   collude with the other producers in townE) None of the above
F) A) and C)

Question 4

Airlines often separate their customers into business travellers and personal travellers by giving a discount to those travellers who stay over a Saturday night.

Accepted Answer

A) True 
 B)False

Question 5

A price-maker can charge a price above marginal cost.

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

A)   offer its customers a reward for reading the paper
B)   reduce prices for all customers
C)   price discriminate
D)   gain some pricing power over the other grocery stores in townE) A) and D)
F) None of the above

Question 7

Consider the following diagram of a monopoly.
  
Assuming that the monopoly is at its profit-maximising point, identify the values of its marginal revenue, marginal cost, average revenue and price.

Accepted Answer

The profit maximising point is at point ...

Question 8

Compared to the output in a competitive market, monopoly pricing has the consequence of the market output being:

Accepted Answer

A)   greater than the social optimum
B)   equal to the social optimum
C)   less than the social optimum
D)   all of the above are possibleE) A) and C)
F) A) and D)

Question 9

Graph 15-6
  This graph depicts the demand, marginal-revenue and marginal-cost curves of a profit-maximising monopolist. Use the graph to answer the following question(s) .
-Refer to Graph 15-6. Monopoly profit without price discrimination equals:

Accepted Answer

A)   ABC
B)   BDEC
C)   ADEC
D)   ADFE) B) and D)
F) A) and C)

Question 10

Apple is likely to charge a price above marginal cost for the iPhone.

Accepted Answer

A) True 
 B)False

Question 11

What is the monopolist's profit under the following conditions? The profit-maximising price charged for goods produced is $14. The intersection of the marginal-revenue and marginal-cost curves occurs where output is 15 units and marginal cost is $7.

Accepted Answer

A)   $98
B)   $105
C)   $210
D)   there is not enough information to answer this questionE) A) and B)
F) B) and D)

Question 12

Total economic loss due to monopoly pricing is equal to the loss to producer surplus minus the loss in consumer surplus.

Accepted Answer

A) True 
 B)False

Question 13

Table 15-1
 
-Refer to Table 15-1. If the monopolist sells eight units of its product, how much revenue will it receive from the sale?

Accepted Answer

A)   5
B)   26
C)   208
D)   not enough information is given to answer this questionE) All of the above
F) B) and C)

Question 14

The monopolist's demand curve slopes downwards whenever marginal costs are increasing.

Accepted Answer

A) True 
 B)False

Question 15

A rational pricing strategy for a profit-maximising monopolist is:

Accepted Answer

A)   synergy pricing
B)   price discrimination
C)   price segregation
D)   average cost pricingE) C) and D)
F) A) and B)

Question 16

The profit-maximising level of output for a monopoly firm is where:

Accepted Answer

A)   marginal revenue equals average total cost
B)   marginal revenue equals marginal cost
C)   marginal cost equals average revenue
D)   average total cost equals demandE) B) and C)
F) A) and D)

Question 17

For a monopolist, when does marginal revenue equal demand?

Accepted Answer

A)   when output is less than profit-maximising output
B)   when output is greater than profit-maximising output
C)   when there is a zero output
D)   marginal revenue is never equal to demandE) None of the above
F) All of the above

Question 18

In theory, perfect price discrimination:

Accepted Answer

A)   increases the monopolist's profits
B)   decreases consumer surplus
C)   decreases deadweight loss
D)   does all of the aboveE) B) and C)
F) A) and B)

Question 19

When AT&T had a monopoly on telephones as a result of patents, it:

Accepted Answer

A)   kept prices above the competitive level
B)   created a shift in the demand for telephones
C)   compelled consumers to search for telephone substitutes
D)   compelled consumers to look after their telephonesE) B) and C)
F) A) and D)

Question 20

When a firm operates under conditions of a monopoly, its price is constrained by marginal cost.

Accepted Answer

A) True 
 B)False

Exam 15: Monopoly

Graph 15-6 This graph depicts the demand, marginal-revenue and marginal-cost curves of a profit-maximising monopolist. Use the graph to answer the following question(s) . -Refer to Graph 15-6. Monopoly profit without price discrimination equals:

Correct AnswerverifiedShow Answer

A significant difference between a competitive firm and a monopoly firm is the ability to select:

Correct AnswerverifiedShow Answer

The simplest way for a monopoly to arise is for a single firm to:

Correct AnswerverifiedShow Answer

Total economic loss due to monopoly pricing is equal to the loss to producer surplus minus the loss in consumer surplus.

Correct AnswerverifiedShow Answer

The profit-maximising level of output for a monopoly firm is where:

Correct AnswerverifiedShow Answer

In theory, perfect price discrimination:

Correct AnswerverifiedShow Answer

For a monopolist, when does marginal revenue equal demand?

Correct AnswerverifiedShow Answer

What is the monopolist's profit under the following conditions? The profit-maximising price charged for goods produced is $14. The intersection of the marginal-revenue and marginal-cost curves occurs where output is 15 units and marginal cost is $7.

Correct AnswerverifiedShow Answer

The monopolist's demand curve slopes downwards whenever marginal costs are increasing.

Correct AnswerverifiedShow Answer

A rational pricing strategy for a profit-maximising monopolist is:

Correct AnswerverifiedShow Answer

Compared to the output in a competitive market, monopoly pricing has the consequence of the market output being:

Correct AnswerverifiedShow Answer

Airlines often separate their customers into business travellers and personal travellers by giving a discount to those travellers who stay over a Saturday night.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Consider the following diagram of a monopoly. Assuming that the monopoly is at its profit-maximising point, identify the values of its marginal revenue, marginal cost, average revenue and price.

Correct AnswerverifiedThe profit maximising point is at point ...View AnswerShow Answer

When AT&T had a monopoly on telephones as a result of patents, it:

Correct AnswerverifiedShow Answer

Table 15-1 -Refer to Table 15-1. If the monopolist sells eight units of its product, how much revenue will it receive from the sale?

Correct AnswerverifiedShow Answer

When a firm operates under conditions of a monopoly, its price is constrained by marginal cost.

Correct AnswerverifiedShow Answer

Patent and copyright laws are major sources of:

Correct AnswerverifiedShow Answer

Apple is likely to charge a price above marginal cost for the iPhone.

Correct AnswerverifiedShow Answer

A price-maker can charge a price above marginal cost.

Correct AnswerverifiedShow Answer

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The profit maximising point is at point ...
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