Question 1

To increase sales from 7 units to 8 units,a single-price monopolist cuts the price from $7 per unit to $6 per unit.What is marginal revenue from selling the 8th unit?

Accepted Answer

A) $48 
B) $6 
C) $1 
D) -$1 
E) $7 
A) $48 
B) $6 
C) $1 
D) -$1 
E) $7

Question 2

Which of the following is true for a perfect price-discriminating monopoly?

Accepted Answer

A) P = MR for each unit sold. 
B) P = ATC for each unit sold. 
C) P = MC for each unit sold. 
D) P > MC for each unit sold. 
E) P > MR for each unit sold. 
A) P = MR for each unit sold. 
B) P = ATC for each unit sold. 
C) P = MC for each unit sold. 
D) P > MC for each unit sold. 
E) P > MR for each unit sold.

Question 3

Use the figure below to answer the following questions.   Figure 12.3.4
-Consider the natural monopoly depicted in Figure 12.3.4.Total surplus is at a maximum when quantity is

Accepted Answer

A) Q1 and price is P1. 
B) Q1 and price is P3. 
C) Q2 and price is P2. 
D) Q3 and price is P0. 
E) Q4 and price is 0. 
A) Q1 and price is P1. 
B) Q1 and price is P3. 
C) Q2 and price is P2. 
D) Q3 and price is P0. 
E) Q4 and price is 0.

Question 4

A monopoly

Accepted Answer

A) faces a perfectly elastic demand. 
B) ignores the demand curve because it is the only seller. 
C) can raise the price it charges only if it decreases the quantity that it sells. 
D) can raise the price it charges and increase the quantity that it sells. 
E) faces a perfectly inelastic demand. 
A) faces a perfectly elastic demand. 
B) ignores the demand curve because it is the only seller. 
C) can raise the price it charges only if it decreases the quantity that it sells. 
D) can raise the price it charges and increase the quantity that it sells. 
E) faces a perfectly inelastic demand.

Question 5

Which one of the following is an example of a natural barrier to entry of new firms into an industry?

Accepted Answer

A) licensing of professions 
B) economies of scale 
C) issuing a patent 
D) a public franchise 
E) ownership of a significant portion of a key resource 
A) licensing of professions 
B) economies of scale 
C) issuing a patent 
D) a public franchise 
E) ownership of a significant portion of a key resource

Question 6

Use the table below to answer the following questions.
Table 12.4.1  
-Refer to Table 12.4.1.If a perfect price-discriminating monopoly faces the demand schedule shown in Table 12.4.1 and if marginal cost is constant at $3,output is

Accepted Answer

A) 2 units. 
B) 3 units. 
C) 4 units. 
D) 5 units. 
E) 6 units. 
A) 2 units. 
B) 3 units. 
C) 4 units. 
D) 5 units. 
E) 6 units.

Question 7

Use the figure below to answer the following questions.   Figure 12.4.6
-Prime Pharmaceuticals has developed a new asthma medicine,for which it has a patent.An inhaler can be produced at a constant marginal cost of $2 per inhaler.The demand curve,marginal revenue curve,and marginal cost curve for this new asthma inhaler are shown in Figure 12.4.6.The patent gives Prime Pharmaceuticals a monopoly for its new inhaler.If Prime Pharmaceuticals can perfectly price discriminate,then it

Accepted Answer

A) sells 16 million inhalers. 
B) charges a price of $2 for each inhaler it sells. 
C) sells inhalers for $6 each. 
D) makes zero economic profit. 
E) Both A and B are correct. 
A) sells 16 million inhalers. 
B) charges a price of $2 for each inhaler it sells. 
C) sells inhalers for $6 each. 
D) makes zero economic profit. 
E) Both A and B are correct.

Question 8

If a monopolist can perfectly price discriminate,then

Accepted Answer

A) price equals average cost for each unit sold. 
B) price equals marginal cost for each unit sold. 
C) price equals marginal cost for the last unit sold. 
D) the firm can ignore the marginal cost curve. 
E) price is greater than marginal revenue for each unit sold. 
A) price equals average cost for each unit sold. 
B) price equals marginal cost for each unit sold. 
C) price equals marginal cost for the last unit sold. 
D) the firm can ignore the marginal cost curve. 
E) price is greater than marginal revenue for each unit sold.

Question 9

A perfect price-discriminating monopoly

Accepted Answer

A) has a demand curve that is also its marginal revenue curve. 
B) maximizes total revenue. 
C) is inefficient. 
D) will produce the quantity at which the marginal cost curve intersects its demand curve. 
E) both A and D 
A) has a demand curve that is also its marginal revenue curve. 
B) maximizes total revenue. 
C) is inefficient. 
D) will produce the quantity at which the marginal cost curve intersects its demand curve. 
E) both A and D

Question 10

Use the figure below to answer the following questions.   Figure 12.2.2
-When the single-price monopoly illustrated in Figure 12.2.2 is maximizing profit,it produces

Accepted Answer

A) 3 units and price is $3 a unit. 
B) 3 units and price is $6 a unit. 
C) 4 units and price is $4 a unit. 
D) 4 units and price is $5 a unit. 
E) 5 units and price is $4 a unit. 
A) 3 units and price is $3 a unit. 
B) 3 units and price is $6 a unit. 
C) 4 units and price is $4 a unit. 
D) 4 units and price is $5 a unit. 
E) 5 units and price is $4 a unit.

Question 11

Use the figure below to answer the following questions.   Figure 12.4.6
-Prime Pharmaceuticals has developed a new asthma inhaler,for which it has a patent.An inhaler can be produced at a constant marginal cost of $2 per inhaler.The demand curve,marginal revenue curve,and marginal cost curve for this new asthma inhaler are shown in Figure 12.4.6.The patent gives Prime Pharmaceuticals a monopoly for its new inhaler.If Prime Pharmaceuticals can perfectly price discriminate,producer surplus is

Accepted Answer

A) $16 million. 
B) zero. 
C) $32 million. 
D) $64 million. 
E) $24 million. 
A) $16 million. 
B) zero. 
C) $32 million. 
D) $64 million. 
E) $24 million.

Question 12

A perfect price-discriminating monopoly is

Accepted Answer

A) less efficient than a single-price monopoly. 
B) more efficient than a single-price monopoly,but less efficient than a perfectly competitive industry. 
C) as efficient as a single-price monopoly. 
D) more efficient than a perfectly competitive industry. 
E) as efficient as a perfectly competitive industry. 
A) less efficient than a single-price monopoly. 
B) more efficient than a single-price monopoly,but less efficient than a perfectly competitive industry. 
C) as efficient as a single-price monopoly. 
D) more efficient than a perfectly competitive industry. 
E) as efficient as a perfectly competitive industry.

Question 13

Capture theory states that

Accepted Answer

A) public officials favour consumers over producers. 
B) regulations promote the attainment of an efficient outcome. 
C) regulations lead to deadweight loss. 
D) regulation eliminates economic profit. 
E) rate of return regulation is best for all parties. 
A) public officials favour consumers over producers. 
B) regulations promote the attainment of an efficient outcome. 
C) regulations lead to deadweight loss. 
D) regulation eliminates economic profit. 
E) rate of return regulation is best for all parties.

Question 14

Use the figure below to answer the following question.   Figure 12.4.4
-Refer to Figure 12.4.4.The light grey area shows consumer surplus and the dark grey area shows producer surplus.Which graph illustrates a perfect price-discriminating monopoly?

Accepted Answer

A) (a) 
B) (b) 
C) (c) 
D) (d) 
E) (a)and (c) 
A) (a) 
B) (b) 
C) (c) 
D) (d) 
E) (a)and (c)

Question 15

Which of the following is a characteristic of a single-price monopoly?

Accepted Answer

A) Many substitutes for the firm's product exist. 
B) Price exceeds marginal revenue. 
C) Demand is perfectly elastic. 
D) The firm is a price taker. 
E) Marginal revenue is greater than marginal cost. 
A) Many substitutes for the firm's product exist. 
B) Price exceeds marginal revenue. 
C) Demand is perfectly elastic. 
D) The firm is a price taker. 
E) Marginal revenue is greater than marginal cost.

Question 16

Use the figure below to answer the following questions.   Figure 12.3.3
-Consider Figure 12.3.3.What is the redistribution of surplus from consumers to the producer with a single-price monopoly,as compared to a perfectly competitive market?

Accepted Answer

A) EADH 
B) EABH 
C) ABD 
D) ACD 
E) EABH - BCD 
A) EADH 
B) EABH 
C) ABD 
D) ACD 
E) EABH - BCD

Question 17

Regulation of a natural monopoly will maximize the sum of consumer surplus and producer surplus if the firm is regulated with

Accepted Answer

A) an average cost pricing rule. 
B) a rate of return regulation. 
C) a price cap. 
D) capture theory. 
E) a marginal cost pricing rule. 
A) an average cost pricing rule. 
B) a rate of return regulation. 
C) a price cap. 
D) capture theory. 
E) a marginal cost pricing rule.

Question 18

Rate of return regulation can end up serving the self-interest of the firm if

Accepted Answer

A) there is a great demand for the good. 
B) there is a competitive struggle to determine which firms will supply the market. 
C) the regulated firm overstates its costs of production. 
D) price is set at average total cost. 
E) the rate is set too low. 
A) there is a great demand for the good. 
B) there is a competitive struggle to determine which firms will supply the market. 
C) the regulated firm overstates its costs of production. 
D) price is set at average total cost. 
E) the rate is set too low.

Question 19

The more perfectly a monopoly can price discriminate,the

Accepted Answer

A) smaller its output and the lower its profit. 
B) smaller its output and the higher its profit. 
C) larger its output and the lower its profit. 
D) larger its output and the higher its profit. 
E) greater is consumer surplus. 
A) smaller its output and the lower its profit. 
B) smaller its output and the higher its profit. 
C) larger its output and the lower its profit. 
D) larger its output and the higher its profit. 
E) greater is consumer surplus.

Question 20

Use the figure below to answer the following questions.   Figure 12.4.2
-Refer to Figure 12.4.2.Assume this monopoly practises perfect price discrimination.Choose the correct statement.

Accepted Answer

A) The monopoly's behaviour is illegal. 
B) One price is charged to young people and a different price to older people. 
C) A different price can be charged to each buyer. 
D) Price rises as the number of buyers increases. 
E) The quantity sold is smaller than the quantity sold by a single-price monopoly. 
A) The monopoly's behaviour is illegal. 
B) One price is charged to young people and a different price to older people. 
C) A different price can be charged to each buyer. 
D) Price rises as the number of buyers increases. 
E) The quantity sold is smaller than the quantity sold by a single-price monopoly.

To increase sales from 7 units to 8 units,a single-price monopolist cuts the price from $7 per unit to $6 per unit.What is marginal revenue from selling the 8th unit?

Which of the following is true for a perfect price-discriminating monopoly?

Use the figure below to answer the following questions. Figure 12.3.4 -Consider the natural monopoly depicted in Figure 12.3.4.Total surplus is at a maximum when quantity is

A monopoly

Which one of the following is an example of a natural barrier to entry of new firms into an industry?

Use the table below to answer the following questions. Table 12.4.1 -Refer to Table 12.4.1.If a perfect price-discriminating monopoly faces the demand schedule shown in Table 12.4.1 and if marginal cost is constant at $3,output is

If a monopolist can perfectly price discriminate,then

A perfect price-discriminating monopoly

Use the figure below to answer the following questions. Figure 12.2.2 -When the single-price monopoly illustrated in Figure 12.2.2 is maximizing profit,it produces

A perfect price-discriminating monopoly is

Capture theory states that

Use the figure below to answer the following question. Figure 12.4.4 -Refer to Figure 12.4.4.The light grey area shows consumer surplus and the dark grey area shows producer surplus.Which graph illustrates a perfect price-discriminating monopoly?

Which of the following is a characteristic of a single-price monopoly?

Use the figure below to answer the following questions. Figure 12.3.3 -Consider Figure 12.3.3.What is the redistribution of surplus from consumers to the producer with a single-price monopoly,as compared to a perfectly competitive market?

Regulation of a natural monopoly will maximize the sum of consumer surplus and producer surplus if the firm is regulated with

Rate of return regulation can end up serving the self-interest of the firm if

The more perfectly a monopoly can price discriminate,the

Use the figure below to answer the following questions. Figure 12.4.2 -Refer to Figure 12.4.2.Assume this monopoly practises perfect price discrimination.Choose the correct statement.

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

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Exam 12: Monopoly

To increase sales from 7 units to 8 units,a single-price monopolist cuts the price from $7 per unit to $6 per unit.What is marginal revenue from selling the 8th unit?

Which of the following is true for a perfect price-discriminating monopoly?

Use the figure below to answer the following questions. Figure 12.3.4 -Consider the natural monopoly depicted in Figure 12.3.4.Total surplus is at a maximum when quantity is

A monopoly

Which one of the following is an example of a natural barrier to entry of new firms into an industry?

Use the table below to answer the following questions. Table 12.4.1 -Refer to Table 12.4.1.If a perfect price-discriminating monopoly faces the demand schedule shown in Table 12.4.1 and if marginal cost is constant at $3,output is

If a monopolist can perfectly price discriminate,then

A perfect price-discriminating monopoly

Use the figure below to answer the following questions. Figure 12.2.2 -When the single-price monopoly illustrated in Figure 12.2.2 is maximizing profit,it produces

A perfect price-discriminating monopoly is

Capture theory states that

Use the figure below to answer the following question. Figure 12.4.4 -Refer to Figure 12.4.4.The light grey area shows consumer surplus and the dark grey area shows producer surplus.Which graph illustrates a perfect price-discriminating monopoly?

Which of the following is a characteristic of a single-price monopoly?

Use the figure below to answer the following questions. Figure 12.3.3 -Consider Figure 12.3.3.What is the redistribution of surplus from consumers to the producer with a single-price monopoly,as compared to a perfectly competitive market?

Regulation of a natural monopoly will maximize the sum of consumer surplus and producer surplus if the firm is regulated with

Rate of return regulation can end up serving the self-interest of the firm if

The more perfectly a monopoly can price discriminate,the

Use the figure below to answer the following questions. Figure 12.4.2 -Refer to Figure 12.4.2.Assume this monopoly practises perfect price discrimination.Choose the correct statement.

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, preferences, and Choices

Output and Costs

Perfect Competition

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Economic Inequality

Filters