Question 1

Monopolists can achieve any level of profit they desire because they have unlimited market power.

Accepted Answer

A) True 
 B)False

Question 2

Scenario 15-1
Vincent operates a scenic tour business in Boston. He has one bus which can fit 50 people per tour and each tour lasts 2 hours. His total cost of operating one tour is fixed at $450. Vincent's cost is not reduced if he runs a tour with a partially full bus. While his cost is the same for all tours, Vincent charges each passenger his/her willingness to pay: adults $18 per trip, children $10 per trip, and senior citizens $12 per trip. At those rates, on a typical day Vincent's demand is:
Passenger Type
Willingness to Pay
Demand per day
Adults
$18
70
Children
$10
25
Senior Citizens
$12
55
Assume that Vincent's customers are always available for the tour; therefore, he can fill his bus for each tour as long as there is sufficient total demand for the day.
-Refer to Scenario 15-1. Vincent uses a pricing practice called

Accepted Answer

price disc...

Question 3

Which of the following statements is not correct?

Accepted Answer

A)  The government may use antitrust laws to break up an existing company to improve competition.
B)  The government may break up a natural monopoly to lower the price charged to customers.
C)  Private ownership is typically preferred to public ownership.
D)  Sometimes the best strategy is for the government to do nothing about monopoly inefficiency because the "fix" may be worse than the problem.E) A) and B)
F) All of the above

Question 4

The deadweight loss associated with a monopoly occurs because the monopolist

Accepted Answer

A)  maximizes profits.
B)  produces an output level less than the socially optimal level.
C)  produces an output level greater than the socially optimal level.
D)  equates marginal revenue with marginal cost.E) A) and C)
F) A) and B)

Question 5

The profit that a monopolist earns represents a loss to society that is measured through deadweight loss.

Accepted Answer

A) True 
 B)False

Question 6

An industry is a natural monopoly when
(i) the government assists the firm in maintaining the monopoly.
(ii) a single firm owns a key resource.
(iii) a single firm can supply a good or service to an entire market at a smaller cost than could two or more firms.

Accepted Answer

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

Question 7

A profit-maximizing monopolist will produce the level of output at which

Accepted Answer

A)  average revenue is equal to average total cost.
B)  average revenue is equal to marginal cost.
C)  marginal revenue is equal to marginal cost.
D)  total revenue is equal to opportunity cost.E) All of the above
F) A) and B)

Question 8

If government officials break up a natural monopoly into four smaller firms, then

Accepted Answer

A)  each firm will be unable to maximize profits due to increased competition.
B)  competition will force firms to produce surplus output, which drives up price.
C)  the average cost of production will increase.
D)  consumers will benefit from lower average total costs.E) B) and D)
F) A) and B)

Question 9

​As long as as a monopolist is able to control the resale of its product, then it can successfully practice price discrimination.

Accepted Answer

A) True 
 B)False

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) None of the above
F) A) and C)

Question 11

Figure 15-9 
-Refer to Figure 15-9. To maximize its profit, a monopolist would choose which of the following outcomes?

Accepted Answer

A)  100 units of output and a price of $20 per unit
B)  100 units of output and a price of $40 per unit
C)  150 units of output and a price of $30 per unit
D)  200 units of output and a price of $40 per unitE) B) and C)
F) A) and B)

Question 12

If a profit-maximizing monopolist faces a downward-sloping market demand curve, its

Accepted Answer

A)  average revenue is less than the price of the product.
B)  average revenue is less than marginal revenue.
C)  marginal revenue is less than the price of the product.
D)  marginal revenue is greater than the price of the product.E) A) and B)
F) All of the above

Question 13

It is difficult in a natural monopoly market for the firm to achieve both efficiency and zero economic profit simultaneously, even with regulation.
​

Accepted Answer

A) True 
 B)False

Question 14

When a single firm can supply a product to an entire market at a lower cost than could two or more firms, the industry is called a

Accepted Answer

A)  resource industry.
B)  exclusive industry.
C)  government monopoly.
D)  natural monopoly.E) A) and B)
F) All of the above

Question 15

Figure 15-1 
-Refer to Figure 15-1. If the monopolist uses perfect price discrimination, what price will it charge?

Accepted Answer

The amount...

Question 16

The assessment by George Stigler concerning the tradeoffs between "market failure" and "political failure" in the American economy provides support for which of the following solutions to the problems of monopolies?

Accepted Answer

A)  public ownership of monopolies
B)  government regulation of monopolies
C)  government incentives to promote competition in monopolized industries
D)  doing nothing at allE) A) and C)
F) All of the above

Question 17

Scenario 15-1
Consider a transportation corporation named Reading's that has just completed the development of a new light rail system in Minneapolis. Currently, there are plenty of seats on the train, and it is never crowded. Its capacity far exceeds the needs of the city. After just a few years of operation, the shareholders of Reading's experienced incredibly high rates of return on their investment due to the profitability of the corporation.
-Refer to Scenario 15-1. Which of the following statements is most likely to be true?
(i) New entrants to the market know they will have a smaller market share than Reading's currently has.
(ii) Reading's is most likely experiencing decreasing average total cost.
(iii) Reading's is a natural monopoly.

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 D)
F) C) and D)

Question 18

A market structure with barriers to entry is

Accepted Answer

A)  a monopoly.
B)  oligopolistically competitive.
C)  monopolistically competitive.
D)  perfectly competitive.E) All of the above
F) A) and C)

Question 19

A monopolist is able to choose whatever price that it wishes and is only constrained by its greed.
​

Accepted Answer

A) True 
 B)False

Question 20

Authors are allowed to be monopolists in the sale of their books in order to

Accepted Answer

A)  encourage authors to write more and better books.
B)  correct for the negative externalities that the Internet and television impose.
C)  satisfy literary advocacy groups that exercise their lobbying power.
D)  promote a society in which people think for themselves and learn from whichever books they please.E) B) and C)
F) All of the above

Exam 15: Monopoly

Correct Answer
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price disc...
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A market structure with barriers to entry is

Correct Answer
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When a single firm can supply a product to an entire market at a lower cost than could two or more firms, the industry is called a

Correct Answer
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Monopolists can achieve any level of profit they desire because they have unlimited market power.

Correct Answer
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A monopolist is able to choose whatever price that it wishes and is only constrained by its greed.

Correct Answer
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A profit-maximizing monopolist will produce the level of output at which

Correct Answer
verified

If a profit-maximizing monopolist faces a downward-sloping market demand curve, its

Correct Answer
verified

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

Correct Answer
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It is difficult in a natural monopoly market for the firm to achieve both efficiency and zero economic profit simultaneously, even with regulation.

Correct Answer
verified

An industry is a natural monopoly when (i) the government assists the firm in maintaining the monopoly. (ii) a single firm owns a key resource. (iii) a single firm can supply a good or service to an entire market at a smaller cost than could two or more firms.

Correct Answer
verified

If government officials break up a natural monopoly into four smaller firms, then

Correct Answer
verified

The deadweight loss associated with a monopoly occurs because the monopolist

Correct Answer
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Figure 15-1 -Refer to Figure 15-1. If the monopolist uses perfect price discrimination, what price will it charge?

Correct Answer
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The amount...
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Figure 15-9 -Refer to Figure 15-9. To maximize its profit, a monopolist would choose which of the following outcomes?

Correct Answer
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Which of the following statements is not correct?

Correct Answer
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Authors are allowed to be monopolists in the sale of their books in order to

Correct Answer
verified

The assessment by George Stigler concerning the tradeoffs between "market failure" and "political failure" in the American economy provides support for which of the following solutions to the problems of monopolies?

Correct Answer
verified

As long as as a monopolist is able to control the resale of its product, then it can successfully practice price discrimination.

Correct Answer
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The profit that a monopolist earns represents a loss to society that is measured through deadweight loss.

Correct Answer
verified

Exam 15: Monopoly

Correct Answerverifiedprice disc...View AnswerShow Answer

A market structure with barriers to entry is

Correct AnswerverifiedShow Answer

When a single firm can supply a product to an entire market at a lower cost than could two or more firms, the industry is called a

Correct AnswerverifiedShow Answer

Monopolists can achieve any level of profit they desire because they have unlimited market power.

Correct AnswerverifiedShow Answer

A monopolist is able to choose whatever price that it wishes and is only constrained by its greed. ​

Correct AnswerverifiedShow Answer

A profit-maximizing monopolist will produce the level of output at which

Correct AnswerverifiedShow Answer

If a profit-maximizing monopolist faces a downward-sloping market demand curve, its

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

It is difficult in a natural monopoly market for the firm to achieve both efficiency and zero economic profit simultaneously, even with regulation. ​

Correct AnswerverifiedShow Answer

An industry is a natural monopoly when (i) the government assists the firm in maintaining the monopoly. (ii) a single firm owns a key resource. (iii) a single firm can supply a good or service to an entire market at a smaller cost than could two or more firms.

Correct AnswerverifiedShow Answer

If government officials break up a natural monopoly into four smaller firms, then

Correct AnswerverifiedShow Answer

The deadweight loss associated with a monopoly occurs because the monopolist

Correct AnswerverifiedShow Answer

Figure 15-1 -Refer to Figure 15-1. If the monopolist uses perfect price discrimination, what price will it charge?

Correct AnswerverifiedThe amount...View AnswerShow Answer

Figure 15-9 -Refer to Figure 15-9. To maximize its profit, a monopolist would choose which of the following outcomes?

Correct AnswerverifiedShow Answer

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

Authors are allowed to be monopolists in the sale of their books in order to

Correct AnswerverifiedShow Answer

The assessment by George Stigler concerning the tradeoffs between "market failure" and "political failure" in the American economy provides support for which of the following solutions to the problems of monopolies?

Correct AnswerverifiedShow Answer

​As long as as a monopolist is able to control the resale of its product, then it can successfully practice price discrimination.

Correct AnswerverifiedShow Answer

The profit that a monopolist earns represents a loss to society that is measured through deadweight loss.

Correct AnswerverifiedShow Answer

Correct Answer
verified
price disc...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

A monopolist is able to choose whatever price that it wishes and is only constrained by its greed.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

It is difficult in a natural monopoly market for the firm to achieve both efficiency and zero economic profit simultaneously, even with regulation.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The amount...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

As long as as a monopolist is able to control the resale of its product, then it can successfully practice price discrimination.

Correct Answer
verified

Correct Answer
verified