Question 1

How could a monopoly offer a lower price than a scenario of intense competition?

Accepted Answer

A)   only if the monopoly was natural
B)   only if the monopoly had a hard to duplicate input
C)   only if the monopoly had a patent
D)   only if the monopoly was backed by government protection

Question 2

To maximize , a monopolist will produce the level of output where:

Accepted Answer

A)   marginal revenue is equal to average cost.
B)   average revenue is equal to marginal cost.
C)   marginal revenue is equal to marginal cost.
D)   average revenue is equal to average cost.

Question 3

Under monopoly, the portion of the outgoing consumer surplus that is not transferred to the monopoly firm or still considered consumer surplus is:

Accepted Answer

A)   known as deadweight loss.
B)   proof that monopolies should not be allowed.
C)   transferred to the government.
D)   available to third parties who benefit from sales of the monopolist's output.

Question 4

From an economist's perspective, what are the good and bad results associated with monopoly? Since patents are a source of monopoly power, should the government eliminate or reduce patent protection?

Accepted Answer

Economists are not concerned about the h...

Question 5

There are three reasons why HIV drugs are priced above cost: (1) monopoly power, (2) the "people before profits" effect, and (3) the "use it or lose it" effect.

Accepted Answer

A) True 
 B)False

Question 6

If the demand curve for a firm is a straight line with negative slope, which of the following is the shortcut to finding the MR?

Accepted Answer

A)   The demand curve starts below the marginal revenue curve and cuts the marginal revenue curve halfway down its length.
B)   The marginal revenue curve starts at the same point as the demand curve and has twice the slope of the demand curve.
C)   The marginal revenue curve is parallel to the demand curve with the same slope.
D)   The marginal revenue curve starts at the same point as the demand curve and has a slope of 0.

Question 7

Figure: Paint Market  What is the profit or loss for this monopoly?

Accepted Answer

A)   -$200,000
B)   $10,000
C)   $100,000
D)   $250,000

Question 8

The "you can't take it with you" and "other people's money" effects give rise to an inelastic demand for pharmaceutical drugs.

Accepted Answer

A) True 
 B)False

Question 9

If the quantity demanded for a hand-carved pineapple is two at a price of $16, and the quantity demanded will increase to three if the seller lowers the price to $14, what is the seller's marginal revenue from selling 3 units of pineapple?

Accepted Answer

A)   $8
B)   $24
C)   $10
D)   $14

Question 10

When comparing a monopoly with a competitive industry, monopoly quantity:

Accepted Answer

A)   and monopoly price will be lower than that of a competitive firm.
B)   will be higher, and monopoly price will be lower, than that of a competitive firm.
C)   will be lower, and monopoly price will be higher, than that of a competitive firm.
D)   and monopoly price will be higher than that of a competitive firm.

Question 11

One source of monopoly power is a patent granted by government.

Accepted Answer

A) True 
 B)False

Question 12

Nobel Prize-winning economic historian Douglass North argues that:

Accepted Answer

A)   monopolies have been the leading cause of slow growth in developing nations.
B)   economic growth was slow until patent laws were created to protect innovation.
C)   economic growth would improve if the government created more natural monopolies.
D)   corruption may actually lead to increases in innovation and development of new products.

Question 13

Use the following to answer questions: Figure: Paint Market 2 
-Which of the following is NOT perceived as a problem with monopolies?

Accepted Answer

A)   They charge too high of prices.
B)   They make too much profit.
C)   The gains to the sellers are greater than the value to buyers.
D)   They create deadweight loss.

Question 14

Use the following to answer questions: Table: Profit-Maximizing Monopolist   Quantity  Price ($)   Total  (Units)   Average  Cost ($)   Average  Cost ($)   Marginal  Revenue ($)   Marginal  Cost ($)   Revenue ($)  11617107199821892371025\begin{array} { c c c c c c c } \hline \begin{array} { c } 	ext { Quantity } \	ext { Price (\$)  }\end{array} & \begin{array} { c } 	ext { Total } \	ext { (Units)  }\end{array} & \begin{array} { c } 	ext { Average } \	ext { Cost (\$)  }\end{array} & \begin{array} { c } 	ext { Average } \	ext { Cost (\$)  }\end{array} & \begin{array} { c } 	ext { Marginal } \	ext { Revenue (\$)  }\end{array} & \begin{array} { c } 	ext { Marginal } \	ext { Cost (\$)  }\end{array} & 	ext { Revenue (\$)  } \\hline 11 & 6 & 17 & & & \10 & 7 & 19 & & & \9 & 8 & 21 & & & \8 & 9 & 23 & & & \7 & 10 & 25 & & & \\hline\end{array} Quantity  Price ($)  ​1110987​ Total  (Units)  ​678910​ Average  Cost ($)  ​1719212325​ Average  Cost ($)  ​​ Marginal  Revenue ($)  ​​ Marginal  Cost ($)  ​​ Revenue ($)  ​ 
-(Table: Profit-Maximizing Monopolist)  Refer to the table. When this monopolist is producing 9 units,:

Accepted Answer

A)   its marginal cost is below the marginal revenue level.
B)   its average revenue is greater than the price it receives for the product.
C)   it could increase its profit by raising the price and selling fewer units.
D)   it is producing at the socially optimal level.

Question 15

A monopolist sells in two different markets and charges the same price of $10 in both markets. In Market A, the demand curve is described by Qd = 50 - 2P. In Market B, the demand curve is described by Qd = 60 - P. If the monopolist lowers prices by $1 in the market with the more elastic demand and raises prices by $1 in the market with the more inelastic demand curve, by how much does its total revenue change?

Accepted Answer

A)   -$27
B)   $459
C)   $767
D)   $308

Question 16

If the Bill and Melinda Gates Foundation were to buy out and destroy the patent for Combivir, which of the following would NOT be one of the effects?

Accepted Answer

A)   Drug companies would have no incentive to create new and better drugs.
B)   The price of Combivir would fall.
C)   The number of people treated with Combivir would rise.
D)   No one would have a monopoly on Combivir.

Question 17

Which of the following correctly defines a monopoly that arises from economies of scale?

Accepted Answer

A)   a single firm operating in a market
B)   a single firm that can supply the market at a lower cost than two or more firms
C)   a single firm that controls the production of a natural resource
D)   a single firm that produces the efficient and socially optimal quantity in a market

Question 18

Use the following to answer questions: Figure: Maximum Willingness to Pay 
-(Figure: Maximum Willingness to Pay)  Refer to the figure. What is the profit-maximizing quantity for this monopolist?

Accepted Answer

A)   125
B)   110
C)   100
D)   75

Question 19

If economies of scale are high and government regulators set prices equal to a monopolist's marginal cost,:

Accepted Answer

A)   the monopolist will still earn a profit, just smaller than with no regulation.
B)   the monopolist will be taking a loss.
C)   there will be more incentive to innovate.
D)   the market will be more efficient than if the government regulators set prices equal to average cost.

Question 20

Do monopolies always reduce social benefits?

Accepted Answer

A)   Yes, but only in the long run
B)   Yes, because they create short-term deadweight loss which deters innovation
C)   No, because monopolies can incentivize innovation
D)   No, because monopolies deter wasteful competition

Exam 13: Monopoly

There are three reasons why HIV drugs are priced above cost: (1) monopoly power, (2) the "people before profits" effect, and (3) the "use it or lose it" effect.

Correct Answer
verified

Nobel Prize-winning economic historian Douglass North argues that:

Correct Answer
verified

From an economist's perspective, what are the good and bad results associated with monopoly? Since patents are a source of monopoly power, should the government eliminate or reduce patent protection?

Correct Answer
verified
Economists are not concerned about the h...
View Answer

When comparing a monopoly with a competitive industry, monopoly quantity:

Correct Answer
verified

Which of the following correctly defines a monopoly that arises from economies of scale?

Correct Answer
verified

The "you can't take it with you" and "other people's money" effects give rise to an inelastic demand for pharmaceutical drugs.

Correct Answer
verified

Correct Answer
verified

To maximize , a monopolist will produce the level of output where:

Correct Answer
verified

Under monopoly, the portion of the outgoing consumer surplus that is not transferred to the monopoly firm or still considered consumer surplus is:

Correct Answer
verified

If the quantity demanded for a hand-carved pineapple is two at a price of $16, and the quantity demanded will increase to three if the seller lowers the price to $14, what is the seller's marginal revenue from selling 3 units of pineapple?

Correct Answer
verified

Use the following to answer questions: Figure: Paint Market 2 -Which of the following is NOT perceived as a problem with monopolies?

Correct Answer
verified

Use the following to answer questions: Figure: Maximum Willingness to Pay -(Figure: Maximum Willingness to Pay) Refer to the figure. What is the profit-maximizing quantity for this monopolist?

Correct Answer
verified

How could a monopoly offer a lower price than a scenario of intense competition?

Correct Answer
verified

Figure: Paint Market What is the profit or loss for this monopoly?

Correct Answer
verified

If the demand curve for a firm is a straight line with negative slope, which of the following is the shortcut to finding the MR?

Correct Answer
verified

Correct Answer
verified

One source of monopoly power is a patent granted by government.

Correct Answer
verified

If the Bill and Melinda Gates Foundation were to buy out and destroy the patent for Combivir, which of the following would NOT be one of the effects?

Correct Answer
verified

Do monopolies always reduce social benefits?

Correct Answer
verified

If economies of scale are high and government regulators set prices equal to a monopolist's marginal cost,:

Correct Answer
verified

Exam 13: Monopoly

There are three reasons why HIV drugs are priced above cost: (1) monopoly power, (2) the "people before profits" effect, and (3) the "use it or lose it" effect.

Correct AnswerverifiedShow Answer

Nobel Prize-winning economic historian Douglass North argues that:

Correct AnswerverifiedShow Answer

From an economist's perspective, what are the good and bad results associated with monopoly? Since patents are a source of monopoly power, should the government eliminate or reduce patent protection?

Correct AnswerverifiedEconomists are not concerned about the h...View AnswerShow Answer

When comparing a monopoly with a competitive industry, monopoly quantity:

Correct AnswerverifiedShow Answer

Which of the following correctly defines a monopoly that arises from economies of scale?

Correct AnswerverifiedShow Answer

The "you can't take it with you" and "other people's money" effects give rise to an inelastic demand for pharmaceutical drugs.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

To maximize , a monopolist will produce the level of output where:

Correct AnswerverifiedShow Answer

Under monopoly, the portion of the outgoing consumer surplus that is not transferred to the monopoly firm or still considered consumer surplus is:

Correct AnswerverifiedShow Answer

If the quantity demanded for a hand-carved pineapple is two at a price of $16, and the quantity demanded will increase to three if the seller lowers the price to $14, what is the seller's marginal revenue from selling 3 units of pineapple?

Correct AnswerverifiedShow Answer

Use the following to answer questions: Figure: Paint Market 2 -Which of the following is NOT perceived as a problem with monopolies?

Correct AnswerverifiedShow Answer

Use the following to answer questions: Figure: Maximum Willingness to Pay -(Figure: Maximum Willingness to Pay) Refer to the figure. What is the profit-maximizing quantity for this monopolist?

Correct AnswerverifiedShow Answer

How could a monopoly offer a lower price than a scenario of intense competition?

Correct AnswerverifiedShow Answer

Figure: Paint Market What is the profit or loss for this monopoly?

Correct AnswerverifiedShow Answer

If the demand curve for a firm is a straight line with negative slope, which of the following is the shortcut to finding the MR?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

One source of monopoly power is a patent granted by government.

Correct AnswerverifiedShow Answer

If the Bill and Melinda Gates Foundation were to buy out and destroy the patent for Combivir, which of the following would NOT be one of the effects?

Correct AnswerverifiedShow Answer

Do monopolies always reduce social benefits?

Correct AnswerverifiedShow Answer

If economies of scale are high and government regulators set prices equal to a monopolist's marginal cost,:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
verified
Economists are not concerned about the h...
View Answer

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