Question 1

For a monopoly market, total surplus can be defined as the value of the good to

Accepted Answer

A)   producers minus the cost incurred by consumers.
B)   producers plus the cost incurred by consumers.
C)   consumers minus the costs of producing the good.
D)   consumers plus the cost of producing the good.E) A) and B)
F) B) and D)

Question 2

A natural monopolist's ability to price its product is

Accepted Answer

A)   constrained by the market demand curve.
B)   constrained by market supply.
C)   not affected by market demand.
D)   enhanced by regulatory control of the government.E) B) and C)
F) A) and D)

Question 3

Declining average total cost with increased production is one of the defining characteristics of a natural monopoly.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following statements is correct?

Accepted Answer

A)   Firms with some degree of monopoly power are common, but firms with substantial monopoly power are rare.
B)   Firms with some degree of monopoly power are rare, as are firms with substantial monopoly power.
C)   Firms with some degree of monopoly power are common, as are firms with substantial monopoly power.
D)   Firms with some degree of monopoly power are rare, but firms with substantial monopoly power are common.E) A) and B)
F) A) and C)

Question 5

Scenario 15-5
An airline knows that there are two types of travelers: business travelers and vacationers. For a particular flight, there are 100 business travelers who will pay $600 for a ticket while there are 50 vacationers who will pay $300 for a ticket. There are 150 seats available on the plane. Suppose the cost to the airline of providing the flight is $20,000, which includes the cost of the pilots, flight attendants, fuel, etc.
-Refer to Scenario 15-5. How much additional profit can the airline earn by charging each customer their willingness to pay relative to charging a flat price of $600 per ticket?

Accepted Answer

A)   $15,000
B)   $25,000
C)   $40,000
D)   $70,000E) A) and B)
F) None of the above

Question 6

Scenario 15-2
Consider a local, privately-owned electrical cooperative named Poweshiek Power Company PPCo) . PPCo has just completed a clean-coal-burning electrical power plant in Iowa. Currently, PPCo can meet the electricity needs of all residents in the county. In fact, its capacity far exceeds the needs of the county. After just a few years of operation, the shareholders of PPCo experienced incredibly high rates of return on their investment due to the profitability of the corporation.
-Refer to Scenario 15-2. PPCo will continue to be a monopolist in the electricity industry only if

Accepted Answer

A)   population growth leads to an increased demand for electricity.
B)   there are no new entrants to the market.
C)   the price of natural gas decreases.
D)   All of the above are correct.E) A) and D)
F) B) and C)

Question 7

Table 15-8
The following table provides information on the price, quantity, and average total cost for a monopoly.
 
-Refer to Table 15-8. What is the maximum profit that the monopolist can earn?

Accepted Answer

A)   $10
B)   $20
C)   $30
D)   $40E) C) and D)
F) B) and D)

Question 8

When a firm experiences continually declining average total costs,

Accepted Answer

A)   the firm is a price taker.
B)   society is better served by having one firm supply the product.
C)   the firm will earn higher profits than if average total costs are increasing.
D)   All of the above are correct.E) B) and D)
F) B) and C)

Question 9

A perfectly competitive firm produces where

Accepted Answer

A)   marginal cost equals price, while a monopolist produces where price exceeds marginal cost.
B)   marginal cost equals price, while a monopolist produces where marginal cost exceeds price.
C)   price exceeds marginal cost, while a monopolist produces where marginal cost equals price.
D)   marginal cost exceeds price, while a monopolist produces where marginal cost equals price.E) A) and D)
F) All of the above

Question 10

Monopoly profit is not a social problem because

Accepted Answer

A)   the size of the economic pie grows when monopoly profits increase.
B)   producers are more efficient than consumers.
C)   the profit represents a transfer from the consumer to the producer with no loss in total surplus.
D)   None of the above are correct.E) B) and C)
F) A) and D)

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

The government may choose to do nothing to reduce monopoly inefficiency because the "fix" may be worse than the problem.

Accepted Answer

A) True 
 B)False

Question 14

If the government regulates the price a natural monopolist can charge to be equal to the firm's marginal cost, the government will likely need to subsidize the firm.

Accepted Answer

A) True 
 B)False

Question 15

Perfect price discrimination

Accepted Answer

A)   increases profits to the firm.
B)   increases total surplus.
C)   decreases consumer surplus.
D)   All of the above are correct.E) None of the above
F) C) and D)

Question 16

A market force that can prevent firms from price discriminating is

Accepted Answer

A)   fluctuating resource prices.
B)   arbitrage.
C)   high fixed costs.
D)   marginal-cost pricing.E) B) and C)
F) A) and C)

Question 17

As a monopolist increases the quantity of output it sells, the price consumers are willing to pay for the good

Accepted Answer

A)   is unaffected.
B)   decreases.
C)   increases.
D)   There is not enough information given in answer the question.E) B) and C)
F) None of the above

Question 18

Table 15-7
Sally owns the only shoe store in town. She has the following cost and revenue information.
 
-Refer to Table 15-7. What is total profit at the profit-maximizing quantity?

Accepted Answer

A)   $100
B)   $245
C)   $265
D)   $395E) C) and D)
F) B) and D)

Question 19

When we compare economic welfare in a monopoly market to a competitive market, the profits earned by the monopolist represent d. the higher marginal revenues gained by the monopolists in comparison to competitive firms.

Accepted Answer

A)   a transfer of benefits from the consumer to the producer.
B)   a loss in total welfare.
C)   the higher marginal costs incurred by the monopolists in comparison to competitive firms.D) All of the above
E) A) and C)

Question 20

By selling hardcover books to die-hard fans and paperback books to less enthusiastic readers, the publisher is able to price discriminate and raise its profits.

Accepted Answer

A) True 
 B)False

Exam 14: Monopoly

As a monopolist increases the quantity of output it sells, the price consumers are willing to pay for the good

Correct Answer
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Correct Answer
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A natural monopolist's ability to price its product is

Correct Answer
verified

For a monopoly market, total surplus can be defined as the value of the good to

Correct Answer
verified

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

Correct Answer
verified

Perfect price discrimination

Correct Answer
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Declining average total cost with increased production is one of the defining characteristics of a natural monopoly.

Correct Answer
verified

When a firm experiences continually declining average total costs,

Correct Answer
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Table 15-7 Sally owns the only shoe store in town. She has the following cost and revenue information. -Refer to Table 15-7. What is total profit at the profit-maximizing quantity?

Correct Answer
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Table 15-8 The following table provides information on the price, quantity, and average total cost for a monopoly. -Refer to Table 15-8. What is the maximum profit that the monopolist can earn?

Correct Answer
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Monopoly profit is not a social problem because

Correct Answer
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When we compare economic welfare in a monopoly market to a competitive market, the profits earned by the monopolist represent d. the higher marginal revenues gained by the monopolists in comparison to competitive firms.

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
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A perfectly competitive firm produces where

Correct Answer
verified

The government may choose to do nothing to reduce monopoly inefficiency because the "fix" may be worse than the problem.

Correct Answer
verified

By selling hardcover books to die-hard fans and paperback books to less enthusiastic readers, the publisher is able to price discriminate and raise its profits.

Correct Answer
verified

A market force that can prevent firms from price discriminating is

Correct Answer
verified

Correct Answer
verified

If the government regulates the price a natural monopolist can charge to be equal to the firm's marginal cost, the government will likely need to subsidize the firm.

Correct Answer
verified

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

Correct Answer
verified

Exam 14: Monopoly

As a monopolist increases the quantity of output it sells, the price consumers are willing to pay for the good

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A natural monopolist's ability to price its product is

Correct AnswerverifiedShow Answer

For a monopoly market, total surplus can be defined as the value of the good to

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Perfect price discrimination

Correct AnswerverifiedShow Answer

Declining average total cost with increased production is one of the defining characteristics of a natural monopoly.

Correct AnswerverifiedShow Answer

When a firm experiences continually declining average total costs,

Correct AnswerverifiedShow Answer

Table 15-7 Sally owns the only shoe store in town. She has the following cost and revenue information. -Refer to Table 15-7. What is total profit at the profit-maximizing quantity?

Correct AnswerverifiedShow Answer

Table 15-8 The following table provides information on the price, quantity, and average total cost for a monopoly. -Refer to Table 15-8. What is the maximum profit that the monopolist can earn?

Correct AnswerverifiedShow Answer

Monopoly profit is not a social problem because

Correct AnswerverifiedShow Answer

When we compare economic welfare in a monopoly market to a competitive market, the profits earned by the monopolist represent d. the higher marginal revenues gained by the monopolists in comparison to competitive firms.

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

A perfectly competitive firm produces where

Correct AnswerverifiedShow Answer

The government may choose to do nothing to reduce monopoly inefficiency because the "fix" may be worse than the problem.

Correct AnswerverifiedShow Answer

By selling hardcover books to die-hard fans and paperback books to less enthusiastic readers, the publisher is able to price discriminate and raise its profits.

Correct AnswerverifiedShow Answer

A market force that can prevent firms from price discriminating is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If the government regulates the price a natural monopolist can charge to be equal to the firm's marginal cost, the government will likely need to subsidize the firm.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct Answer
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