Question 1

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

Accepted Answer

A)   A soybean farmer is the first in her county to use a new brand of fertilizer.
B)   Microsoft obtains a copyright for its Windows operating system.
C)   A pharmaceutical company obtains a patent for a new medication to treat migraine headaches.
D)   A taxi cab driver in New York City obtains a license to legally provide transportation in New York City.E) All of the above
F) A) and B)

Question 2

Goods that do not have close substitutes have downward-sloping demand curves.

Accepted Answer

A) True 
 B)False

Question 3

In a natural monopoly,

Accepted Answer

A)   society would be better off if antitrust laws were used to create many different firms in the market.
B)   the marginal cost curve is positively sloped.
C)   if the government requires marginal cost pricing,it will likely have to subsidize the firm.
D)   the marginal revenue curve is horizontal.E) B) and D)
F) A) and B)

Question 4

A monopolist's profit is equal to (Price - Marginal Cost)* Quantity.

Accepted Answer

A) True 
 B)False

Question 5

Why might economists prefer private ownership of monopolies over public ownership of monopolies?

Accepted Answer

The private monopolist is governed by th...

Question 6

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

Accepted Answer

A)   a national florist
B)   an online bookstore
C)   a local restaurant
D)   a local electrical cooperativeE) B) and C)
F) B) and D)

Question 7

Deadweight loss

Accepted Answer

A)   measures monopoly inefficiency.
B)   exceeds monopoly profits.
C)   equals monopoly profits.
D)   equals monopoly revenues minus profits.E) None of the above
F) A) and D)

Question 8

Table 14-5
A monopolist faces the following demand curve:
 
-Refer to Table 14-5.The monopolist has total fixed costs of $60 and has a constant marginal cost of $15.What is the profit-maximizing level of production?

Accepted Answer

A)   2 units
B)   3 units
C)   4 units
D)   5 unitsE) None of the above
F) B) and D)

Question 9

Table 14-17
 
-Refer to Table 14-17.If a monopolist faces a constant marginal cost of $4,how much output should the firm produce?

Accepted Answer

A)   3 units
B)   4 units
C)   5 units
D)   6 unitsE) A) and B)
F) A) and C)

Question 10

If the government regulates the price that a natural monopolist can charge to be equal to the firm's average total cost,the firm will

Accepted Answer

A)   earn zero profits.
B)   earn positive profits,causing other firms to enter the industry.
C)   earn negative profits,causing the firm to exit the industry.
D)   minimize costs in order to lower the price that it charges.E) A) and D)
F) B) and D)

Question 11

The legislation passed by Congress in 1914 to strengthen the government's powers and authorize private lawsuits was the

Accepted Answer

A)   Morgan Act.
B)   Sherman Act.
C)   Clayton Act.
D)   14th Amendment.E) B) and C)
F) A) and C)

Question 12

When an industry is a natural monopoly,

Accepted Answer

A)   it is characterized by constant returns to scale.
B)   it is characterized by diseconomies of scale.
C)   a larger number of firms may lead to a lower average cost.
D)   a larger number of firms will lead to a higher average cost.E) A) and C)
F) None of the above

Question 13

Many economists criticize monopolists because they

Accepted Answer

A)   charge a price that equals marginal cost rather than a price that equals average cost.
B)   do not innovate.
C)   produce a large quantity of waste.
D)   produce less than the socially efficient level of output.E) A) and D)
F) B) and D)

Question 14

Which of the following statements is correct for both a monopolist and a perfectly competitive firm? i) 
The firm maximizes profits by equating marginal revenue with marginal cost.
Ii) 
The firm maximizes profits by equating price with marginal cost.
Iii) 
Demand equals marginal revenue.
Iv) 
Average revenue equals price.

Accepted Answer

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

Question 15

Table 14-4
A monopolist faces the following demand curve:
 
-Refer to Table 14-4.The monopolist will not produce

Accepted Answer

A)   5 units or fewer under any circumstances.
B)   7.5 units or fewer under any circumstances.
C)   7.5 units or more under any circumstances.
D)   10 units or more under any circumstances.E) All of the above
F) A) and D)

Question 16

The socially efficient quantity is found where the demand curve intersects the marginal cost curve.

Accepted Answer

A) True 
 B)False

Question 17

Price discrimination is the business practice of

Accepted Answer

A)   bundling related products to increase total sales.
B)   selling the same good at different prices to different customers.
C)   pricing above marginal cost.
D)   hiring marketing experts to increase consumers' brand loyalty.E) A) and B)
F) A) and C)

Question 18

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 marginal revenue from selling the 5th tie?

Accepted Answer

A)   $80
B)   $100
C)   $110
D)   $120E) None of the above
F) A) and D)

Question 19

When a monopoly increases its output and sales,

Accepted Answer

A)   both the output effect and the price effect work to increase total revenue.
B)   the output effect works to increase total revenue,and the price effect works to decrease total revenue.
C)   the output effect works to decrease total revenue,and the price effect works to increase total revenue.
D)   both the output effect and the price effect work to decrease total revenue.E) B) and D)
F) All of the above

Question 20

The De Beers Diamond company advertises heavily to promote the sale of all diamonds,not just its own.This is evidence that it has a monopoly position to some degree.

Accepted Answer

A) True 
 B)False

Exam 14: Monopoly

A monopolist's profit is equal to (Price - Marginal Cost)* Quantity.

Correct Answer
verified

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

Correct Answer
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Correct Answer
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Deadweight loss

Correct Answer
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Why might economists prefer private ownership of monopolies over public ownership of monopolies?

Correct Answer
verified
The private monopolist is governed by th...
View Answer

The legislation passed by Congress in 1914 to strengthen the government's powers and authorize private lawsuits was the

Correct Answer
verified

When an industry is a natural monopoly,

Correct Answer
verified

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

Correct Answer
verified

In a natural monopoly,

Correct Answer
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If the government regulates the price that a natural monopolist can charge to be equal to the firm's average total cost,the firm will

Correct Answer
verified

Table 14-4 A monopolist faces the following demand curve: -Refer to Table 14-4.The monopolist will not produce

Correct Answer
verified

The De Beers Diamond company advertises heavily to promote the sale of all diamonds,not just its own.This is evidence that it has a monopoly position to some degree.

Correct Answer
verified

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 marginal revenue from selling the 5th tie?

Correct Answer
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Many economists criticize monopolists because they

Correct Answer
verified

When a monopoly increases its output and sales,

Correct Answer
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The socially efficient quantity is found where the demand curve intersects the marginal cost curve.

Correct Answer
verified

Table 14-5 A monopolist faces the following demand curve: -Refer to Table 14-5.The monopolist has total fixed costs of $60 and has a constant marginal cost of $15.What is the profit-maximizing level of production?

Correct Answer
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Goods that do not have close substitutes have downward-sloping demand curves.

Correct Answer
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Table 14-17 -Refer to Table 14-17.If a monopolist faces a constant marginal cost of $4,how much output should the firm produce?

Correct Answer
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Price discrimination is the business practice of

Correct Answer
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Exam 14: Monopoly

A monopolist's profit is equal to (Price - Marginal Cost)* Quantity.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Deadweight loss

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Why might economists prefer private ownership of monopolies over public ownership of monopolies?

Correct AnswerverifiedThe private monopolist is governed by th...View AnswerShow Answer

The legislation passed by Congress in 1914 to strengthen the government's powers and authorize private lawsuits was the

Correct AnswerverifiedShow Answer

When an industry is a natural monopoly,

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In a natural monopoly,

Correct AnswerverifiedShow Answer

If the government regulates the price that a natural monopolist can charge to be equal to the firm's average total cost,the firm will

Correct AnswerverifiedShow Answer

Table 14-4 A monopolist faces the following demand curve: -Refer to Table 14-4.The monopolist will not produce

Correct AnswerverifiedShow Answer

The De Beers Diamond company advertises heavily to promote the sale of all diamonds,not just its own.This is evidence that it has a monopoly position to some degree.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Many economists criticize monopolists because they

Correct AnswerverifiedShow Answer

When a monopoly increases its output and sales,

Correct AnswerverifiedShow Answer

The socially efficient quantity is found where the demand curve intersects the marginal cost curve.

Correct AnswerverifiedShow Answer

Table 14-5 A monopolist faces the following demand curve: -Refer to Table 14-5.The monopolist has total fixed costs of $60 and has a constant marginal cost of $15.What is the profit-maximizing level of production?

Correct AnswerverifiedShow Answer

Goods that do not have close substitutes have downward-sloping demand curves.

Correct AnswerverifiedShow Answer

Table 14-17 -Refer to Table 14-17.If a monopolist faces a constant marginal cost of $4,how much output should the firm produce?

Correct AnswerverifiedShow Answer

Price discrimination is the business practice of

Correct AnswerverifiedShow Answer

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The private monopolist is governed by th...
View Answer

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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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