Question 1

Scenario 15-8
Mega Media Cable TV is able to purchase an exclusive right to sell a premium sports channel in its market area. Let's assume that Mega Media pays $100,000 a year for the exclusive marketing rights to the sports channel. Since Mega Media has already installed cable to all of the homes in its market area, the marginal cost of delivering the sports channel to subscribers is zero. The manager of Mega Media needs to know what price to charge for the sports channel service to maximize her profit. Before setting price, she hires an economist to estimate demand for the sports channel. The economist discovers that there are two types of subscribers who value premium sporting channels. First are the 3,000 die-hard sports fans who will pay as much as $150 a year for the new channel. Second, the premium sports channel will appeal to 20,000 occasional sports viewers who will pay as much as $25 a year for a subscription to it.
-Refer to Scenario 15-8. If Mega Media Cable TV is able to price discriminate, what would be the maximum amount of profit it could generate?

Accepted Answer

A)  $950,000
B)  $850,000
C)  $400,000
D)  $350,000E) None of the above
F) B) and D)

Question 2

Table 15-3
Consider the following demand and cost information for a monopoly. 
-Refer to Table 15-3. The marginal revenue of the 2nd unit is

Accepted Answer

A)  $10.
B)  $15.
C)  $20.
D)  $25.E) A) and D)
F) B) and C)

Question 3

The laws governing patents and copyrights

Accepted Answer

A)  promote monopolies.
B)  are intended to serve private interests, not the public's interest.
C)  have costs but not benefits.
D)  eliminate the need for firms to engage in research and development.E) A) and B)
F) A) and C)

Question 4

Table 15-4
A monopolist faces the following demand curve: 
-Refer to Table 15-4. If the monopolist increases production from 2.5 to 5 units, what is its marginal revenue?

Accepted Answer

A)  $100
B)  $37.5
C)  $15
D)  $2.50E) A) and D)
F) B) and D)

Question 5

The deadweight loss for a monopolist equals one-half of its profits for any given level of output.

Accepted Answer

A) True 
 B)False

Question 6

Figure 15-1 
-Refer to Figure 15-1. How much deadweight loss results if this single-price monopolist profit-maximizes?

Accepted Answer

The answer of Figure 15-1 
-Refer to Figure 15-1. How...

Question 7

Table 15-1 
-Refer to Table 15-1. The marginal revenue becomes negative with the production of which unit of output?

Accepted Answer

The answer of Table 15-1 
-Refer to Table 15-1. The...

Question 8

Scenario 15-3
A monopoly firm maximizes its profit by producing Q = 500 units of output. At that level of output, its marginal revenue is $30, its average revenue is $60, and its average total cost is $34.
-Refer to Scenario 15-3. At Q = 500, the firm's profit is

Accepted Answer

A)  $13,000.
B)  $15,000.
C)  $17,000.
D)  $30,000.E) B) and D)
F) A) and D)

Question 9

A monopoly market is characterized by

Accepted Answer

A)  many buyers and sellers.
B)  "natural" products.
C)  barriers to entry.
D)  a Nash equilibrium.E) C) and D)
F) B) and D)

Question 10

When a monopolist reduces the quantity of output it produces and sells, the

Accepted Answer

A)  price of its output increases.
B)  price of its output remains constant.
C)  price of its output decreases.
D)  profits for the firm always decrease.E) A) and D)
F) A) and C)

Question 11

A monopolist maximizes profits by

Accepted Answer

A)  producing an output level where marginal revenue equals marginal cost.
B)  charging a price that is greater than marginal revenue.
C)  earning a profit of (P - M
C)   x Q.
D)  Both a and b are correct.E) B) and C)
F) None of the above

Question 12

Which of the following statements is correct? Monopolies are socially inefficient because they
(i) charge a price above marginal cost.
(ii) produce too little output.
(iii) earn profits at the expense of consumers.
(iv) maximize the market's total surplus.

Accepted Answer

A)  (iii)  only
B)  (iii)  and (iv)  only
C)  (i)  and (ii)  only
D)  (i) , (ii) , (iii) , and (iv) E) All of the above
F) B) and C)

Question 13

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

Accepted Answer

A)  Q = 30 and P = 30
B)  Q = 30 and P = 60
C)  Q = 45 and P = 45
D)  Q = 60 and P = 30E) A) and C)
F) None of the above

Question 14

A firm that is the sole seller of a product without close substitutes is

Accepted Answer

A)  perfectly competitive.
B)  monopolistically competitive.
C)  an oligopolist.
D)  a monopolist.E) All of the above
F) A) and B)

Question 15

A patent gives the inventor monopoly control over the patented good. Patents also

Accepted Answer

A)  ​lead to lower prices for goods.
B)  ​create incentives to develop new products.
C)  lead to an increase in the number of producers of the patented good.
D)  ​lead to increased entry into the market for the patented good.E) B) and C)
F) None of the above

Question 16

​If a monopoly market were to be transformed into a competitive market, the result would be that

Accepted Answer

A)  ​market output would increase.
B)  ​the market would be efficient, once the market reached the competitive output.
C)  ​the deadweight loss from the monopoly would be eliminated.
D)  ​All of the above would be true.E) B) and C)
F) B) and D)

Question 17

Figure 15-7 
-Refer to Figure 15-7. A profit-maximizing monopolist would incur total costs of

Accepted Answer

A)  $81.
B)  $120.
C)  $144.
D)  $240.E) None of the above
F) A) and D)

Question 18

Marginal revenue for a monopolist is computed as

Accepted Answer

A)  average revenue divided by quantity sold.
B)  average revenue times quantity divided by price.
C)  total revenue divided by quantity sold.
D)  change in total revenue per one unit increase in quantity sold.E) B) and C)
F) A) and D)

Question 19

A monopolist's supply curve is vertical.

Accepted Answer

A) True 
 B)False

Question 20

Suppose when a monopolist produces 50 units its average revenue is $8 per unit, its marginal revenue is $4 per unit, its marginal cost is $4 per unit, and its average total cost is $3 per unit. What can we conclude about this monopolist?

Accepted Answer

A)  The monopolist is currently maximizing profits, and its total profits are $200.
B)  The monopolist is currently maximizing profits, and its total profits are $250.
C)  The monopolist is not currently maximizing its profits; it should produce more units and charge a lower price to maximize profit.
D)  The monopolist is not currently maximizing its profits; it should produce fewer units and charger a higher price to maximize profit.E) B) and C)
F) A) and C)

Exam 15: Monopoly

The laws governing patents and copyrights

Correct Answer
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Correct Answer
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Marginal revenue for a monopolist is computed as

Correct Answer
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Scenario 15-3 A monopoly firm maximizes its profit by producing Q = 500 units of output. At that level of output, its marginal revenue is $30, its average revenue is $60, and its average total cost is $34. -Refer to Scenario 15-3. At Q = 500, the firm's profit is

Correct Answer
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A monopoly market is characterized by

Correct Answer
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Suppose when a monopolist produces 50 units its average revenue is $8 per unit, its marginal revenue is $4 per unit, its marginal cost is $4 per unit, and its average total cost is $3 per unit. What can we conclude about this monopolist?

Correct Answer
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If a monopoly market were to be transformed into a competitive market, the result would be that

Correct Answer
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Figure 15-7 -Refer to Figure 15-7. A profit-maximizing monopolist would incur total costs of

Correct Answer
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Table 15-1 -Refer to Table 15-1. The marginal revenue becomes negative with the production of which unit of output?

Correct Answer
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Figure 15-1 -Refer to Figure 15-1. How much deadweight loss results if this single-price monopolist profit-maximizes?

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A monopolist's supply curve is vertical.

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When a monopolist reduces the quantity of output it produces and sells, the

Correct Answer
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Table 15-4 A monopolist faces the following demand curve: -Refer to Table 15-4. If the monopolist increases production from 2.5 to 5 units, what is its marginal revenue?

Correct Answer
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The deadweight loss for a monopolist equals one-half of its profits for any given level of output.

Correct Answer
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A monopolist maximizes profits by

Correct Answer
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Table 15-3 Consider the following demand and cost information for a monopoly. -Refer to Table 15-3. The marginal revenue of the 2nd unit is

Correct Answer
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A patent gives the inventor monopoly control over the patented good. Patents also

Correct Answer
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Which of the following statements is correct? Monopolies are socially inefficient because they (i) charge a price above marginal cost. (ii) produce too little output. (iii) earn profits at the expense of consumers. (iv) maximize the market's total surplus.

Correct Answer
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A firm that is the sole seller of a product without close substitutes is

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

Correct Answer
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Exam 15: Monopoly

The laws governing patents and copyrights

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Marginal revenue for a monopolist is computed as

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Scenario 15-3 A monopoly firm maximizes its profit by producing Q = 500 units of output. At that level of output, its marginal revenue is $30, its average revenue is $60, and its average total cost is $34. -Refer to Scenario 15-3. At Q = 500, the firm's profit is

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A monopoly market is characterized by

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Suppose when a monopolist produces 50 units its average revenue is $8 per unit, its marginal revenue is $4 per unit, its marginal cost is $4 per unit, and its average total cost is $3 per unit. What can we conclude about this monopolist?

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​If a monopoly market were to be transformed into a competitive market, the result would be that

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Figure 15-7 -Refer to Figure 15-7. A profit-maximizing monopolist would incur total costs of

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Table 15-1 -Refer to Table 15-1. The marginal revenue becomes negative with the production of which unit of output?

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Figure 15-1 -Refer to Figure 15-1. How much deadweight loss results if this single-price monopolist profit-maximizes?

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A monopolist's supply curve is vertical.

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When a monopolist reduces the quantity of output it produces and sells, the

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Table 15-4 A monopolist faces the following demand curve: -Refer to Table 15-4. If the monopolist increases production from 2.5 to 5 units, what is its marginal revenue?

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The deadweight loss for a monopolist equals one-half of its profits for any given level of output.

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A monopolist maximizes profits by

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Table 15-3 Consider the following demand and cost information for a monopoly. -Refer to Table 15-3. The marginal revenue of the 2nd unit is

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A patent gives the inventor monopoly control over the patented good. Patents also

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Which of the following statements is correct? Monopolies are socially inefficient because they (i) charge a price above marginal cost. (ii) produce too little output. (iii) earn profits at the expense of consumers. (iv) maximize the market's total surplus.

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A firm that is the sole seller of a product without close substitutes is

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

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If a monopoly market were to be transformed into a competitive market, the result would be that

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