Question 1

Firms that can price discriminate between customers do so to

Accepted Answer

A) increase consumer surplus. 
B) increase employment. 
C) increase economic profit. 
D) decrease the quantity they produce. 
E) increase producer surplus and deadweight loss. 
A) increase consumer surplus. 
B) increase employment. 
C) increase economic profit. 
D) decrease the quantity they produce. 
E) increase producer surplus and deadweight loss.

Question 2

When a monopoly practices price discrimination

Accepted Answer

A) it charges different prices to different consumers and transfers some of the consumer surplus to economic profit. 
B) it produces a smaller quantity than when it is a single-price monopoly which decreases consumer surplus. 
C) new firms enter the industry,so buyers have more goods from which to choose and consumer surplus increases. 
D) consumer surplus increases because the monopoly increases the quantity available for sale. 
E) firms exit the industry and consumer surplus decreases. 
A) it charges different prices to different consumers and transfers some of the consumer surplus to economic profit. 
B) it produces a smaller quantity than when it is a single-price monopoly which decreases consumer surplus. 
C) new firms enter the industry,so buyers have more goods from which to choose and consumer surplus increases. 
D) consumer surplus increases because the monopoly increases the quantity available for sale. 
E) firms exit the industry and consumer surplus decreases.

Question 3

Which one of the following is most likely to be a natural monopoly?

Accepted Answer

A) sandwich shops 
B) printing services 
C) welding services 
D) automotive service 
E) electric utilities 
A) sandwich shops 
B) printing services 
C) welding services 
D) automotive service 
E) electric utilities

Question 4

Use the information below to answer the following questions.
Fact 12.5.1
Cascade Springs Inc.is a natural monopoly that bottles water from a spring high in the Rocky Mountains.The total fixed cost it incurs is $80,000,and its marginal cost is 10 cents a bottle.The demand curve for Cascade Springs bottled water is shown in the following figure:   Figure 12.5.1
-Refer to Figure 12.5.1.Suppose the industry is unregulated.In this case,output is

Accepted Answer

A) 400,000 bottles per year. 
B) 450,000 bottles per year. 
C) 600,000 bottles per year. 
D) 700,000 bottles per year. 
E) 800,000 bottles per year. 
A) 400,000 bottles per year. 
B) 450,000 bottles per year. 
C) 600,000 bottles per year. 
D) 700,000 bottles per year. 
E) 800,000 bottles per year.

Question 5

The creation of a monopoly results in gains to

Accepted Answer

A) producers at no expense to consumers. 
B) consumers at no expense to producers. 
C) producers at the expense of consumers. 
D) consumers at the expense of producers. 
E) producers and consumers at the expense of the government. 
A) producers at no expense to consumers. 
B) consumers at no expense to producers. 
C) producers at the expense of consumers. 
D) consumers at the expense of producers. 
E) producers and consumers at the expense of the government.

Question 6

Use the figure below to answer the following question.   Figure 12.2.4
-Refer to Figure 12.2.4.Grannie's is the only cake bakery on Coastal Island.The graph shows Grannie's demand curve,marginal revenue curve,and marginal cost curve.Grannie's profit-maximizing price is ________ a cake and its profit-maximizing output is ________ cakes a week.

Accepted Answer

A) $28;12 
B) $16;12 
C) $36;2 
D) $16;24 
E) $24;16 
A) $28;12 
B) $16;12 
C) $36;2 
D) $16;24 
E) $24;16

Question 7

Use the figure below to answer the following questions.   Figure 12.4.2
-If a firm practises perfect price discrimination,

Accepted Answer

A) its marginal cost curve is horizontal. 
B) it maximizes total revenue. 
C) it does not produce the quantity at which marginal revenue equals marginal cost. 
D) it produces the quantity at which the marginal revenue curve intersects the average total cost curve. 
E) it produces the quantity at which the marginal cost curve intersects the demand curve. 
A) its marginal cost curve is horizontal. 
B) it maximizes total revenue. 
C) it does not produce the quantity at which marginal revenue equals marginal cost. 
D) it produces the quantity at which the marginal revenue curve intersects the average total cost curve. 
E) it produces the quantity at which the marginal cost curve intersects the demand curve.

Question 8

The capture theory holds that regulations are supplied to maximize

Accepted Answer

A) total sales. 
B) economic profit. 
C) marginal product. 
D) consumer surplus. 
E) marginal revenue. 
A) total sales. 
B) economic profit. 
C) marginal product. 
D) consumer surplus. 
E) marginal revenue.

Question 9

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.How many tickets are sold?

Accepted Answer

A) 20 tickets 
B) 60 tickets 
C) 40 tickets 
D) 100 tickets 
E) 80 tickets 
A) 20 tickets 
B) 60 tickets 
C) 40 tickets 
D) 100 tickets 
E) 80 tickets

Question 10

A monopoly can practise price discrimination when it

Accepted Answer

A) can segment the market according to the different prices the consumers are willing to pay. 
B) is a price taker. 
C) has different marginal costs of production for different output levels. 
D) has decreasing average variables cost. 
E) produces a good with close substitutes. 
A) can segment the market according to the different prices the consumers are willing to pay. 
B) is a price taker. 
C) has different marginal costs of production for different output levels. 
D) has decreasing average variables cost. 
E) produces a good with close substitutes.

Question 11

An average cost pricing rule sets ________ equal to average total cost.An average cost pricing rule is not an efficient way of regulating monopoly because at the quantity produced,________.

Accepted Answer

A) price;marginal benefit exceeds marginal cost 
B) the return on capital;marginal benefit exceeds marginal cost 
C) marginal cost;marginal cost exceeds marginal benefit 
D) price equal to marginal revenue,which in long-run equilibrium is;marginal cost exceeds marginal benefit 
E) marginal cost;marginal benefit exceeds marginal cost 
A) price;marginal benefit exceeds marginal cost 
B) the return on capital;marginal benefit exceeds marginal cost 
C) marginal cost;marginal cost exceeds marginal benefit 
D) price equal to marginal revenue,which in long-run equilibrium is;marginal cost exceeds marginal benefit 
E) marginal cost;marginal benefit exceeds marginal cost

Question 12

A single-price monopolist's demand curve

Accepted Answer

A) is its marginal revenue curve. 
B) shows that demand for the good is perfectly elastic. 
C) is the same as the market demand curve. 
D) shows that demand for the good is perfectly inelastic. 
E) is horizontal. 
A) is its marginal revenue curve. 
B) shows that demand for the good is perfectly elastic. 
C) is the same as the market demand curve. 
D) shows that demand for the good is perfectly inelastic. 
E) is horizontal.

Question 13

A monopoly arises for two key reasons,which are

Accepted Answer

A) barriers to entry and no close substitutes. 
B) franchises and barriers to entry. 
C) barriers to entry and close substitutes. 
D) close substitutes and no barriers to entry. 
E) natural and legal 
A) barriers to entry and no close substitutes. 
B) franchises and barriers to entry. 
C) barriers to entry and close substitutes. 
D) close substitutes and no barriers to entry. 
E) natural and legal

Question 14

Use the figure below to answer the following questions.   Figure 12.3.3
-Consider Figure 12.3.3.If the market is perfectly competitive,which area indicates the deadweight loss?

Accepted Answer

A) ABD 
B) BCD 
C) KDI 
D) ADC 
E) A perfectly competitive market does not have a deadweight loss. 
A) ABD 
B) BCD 
C) KDI 
D) ADC 
E) A perfectly competitive market does not have a deadweight loss.

Question 15

Sue's Surfboards is the sole renter of surfboards on Big Wave Island.Sue does not price discriminate.For Sue's Surfboards,the change in total revenue from each additional surfboard rented is her

Accepted Answer

A) marginal revenue,which is less than the rental price of a surfboard. 
B) marginal cost,which is constant regardless of how many surfboards are rented. 
C) marginal revenue,which is equal to the rental price of a surfboard. 
D) marginal cost,which is greater than the rental price of a surfboard. 
E) marginal revenue,which is equal to average total cost in the long run. 
A) marginal revenue,which is less than the rental price of a surfboard. 
B) marginal cost,which is constant regardless of how many surfboards are rented. 
C) marginal revenue,which is equal to the rental price of a surfboard. 
D) marginal cost,which is greater than the rental price of a surfboard. 
E) marginal revenue,which is equal to average total cost in the long run.

Question 16

An exclusive right granted to a firm to supply a good or service is

Accepted Answer

A) a licence. 
B) a patent. 
C) a public franchise. 
D) the essential characteristic of natural monopoly. 
E) an economy of scale. 
A) a licence. 
B) a patent. 
C) a public franchise. 
D) the essential characteristic of natural monopoly. 
E) an economy of scale.

Question 17

Use the figure below to answer the following questions.   Figure 12.3.1
-Refer to Figure 12.3.1.If this market is perfectly competitive,the output level exceeds the single-price monopoly output level by

Accepted Answer

A) 20 units. 
B) 40 units. 
C) 60 units. 
D) 30 units. 
E) 10 units. 
A) 20 units. 
B) 40 units. 
C) 60 units. 
D) 30 units. 
E) 10 units.

Question 18

Use the figure below to answer the following question.   Figure 12.2.1
-Refer to Figure 12.2.1.This single-price monopoly produces ________ units per day and charges a price of $________ per unit.

Accepted Answer

A) zero;0 
B) 20;75 
C) 30;62.50 
D) 20;50 
E) 30;75 
A) zero;0 
B) 20;75 
C) 30;62.50 
D) 20;50 
E) 30;75

Question 19

If a profit-maximizing monopoly is producing an output at which marginal cost exceeds marginal revenue,it

Accepted Answer

A) raises the price and decreases output to increase economic profit. 
B) lowers the price and increases output to increase economic profit. 
C) lowers the price and decreases output to increase economic profit. 
D) is incurring an economic loss. 
E) is maximizing profit. 
A) raises the price and decreases output to increase economic profit. 
B) lowers the price and increases output to increase economic profit. 
C) lowers the price and decreases output to increase economic profit. 
D) is incurring an economic loss. 
E) is maximizing profit.

Question 20

Which of the following quotes by a store manager describes price discrimination in action?

Accepted Answer

A) "Since bulk goods are cheaper to package,I can offer a lower price." 
B) "I can get a 4-litre jug of milk from the supplier for less than four 1-litre cartons,so I can sell it for less per litre." 
C) "We offer our employees a 10 percent price discount." 
D) "I offer discounts if you buy 12 apple juice cartons in one box,although it costs me the same as if I split it up and sell them separately." 
E) "We set price equal to average variable cost." 
A) "Since bulk goods are cheaper to package,I can offer a lower price." 
B) "I can get a 4-litre jug of milk from the supplier for less than four 1-litre cartons,so I can sell it for less per litre." 
C) "We offer our employees a 10 percent price discount." 
D) "I offer discounts if you buy 12 apple juice cartons in one box,although it costs me the same as if I split it up and sell them separately." 
E) "We set price equal to average variable cost."

Firms that can price discriminate between customers do so to

When a monopoly practices price discrimination

Which one of the following is most likely to be a natural monopoly?

The creation of a monopoly results in gains to

Use the figure below to answer the following questions. Figure 12.4.2 -If a firm practises perfect price discrimination,

The capture theory holds that regulations are supplied to maximize

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.How many tickets are sold?

A monopoly can practise price discrimination when it

An average cost pricing rule sets equal to average total cost.An average cost pricing rule is not an efficient way of regulating monopoly because at the quantity produced,.

A single-price monopolist's demand curve

A monopoly arises for two key reasons,which are

Use the figure below to answer the following questions. Figure 12.3.3 -Consider Figure 12.3.3.If the market is perfectly competitive,which area indicates the deadweight loss?

Sue's Surfboards is the sole renter of surfboards on Big Wave Island.Sue does not price discriminate.For Sue's Surfboards,the change in total revenue from each additional surfboard rented is her

An exclusive right granted to a firm to supply a good or service is

Use the figure below to answer the following questions. Figure 12.3.1 -Refer to Figure 12.3.1.If this market is perfectly competitive,the output level exceeds the single-price monopoly output level by

Use the figure below to answer the following question. Figure 12.2.1 -Refer to Figure 12.2.1.This single-price monopoly produces units per day and charges a price of $ per unit.

If a profit-maximizing monopoly is producing an output at which marginal cost exceeds marginal revenue,it

Which of the following quotes by a store manager describes price discrimination in action?

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

Exam 12: Monopoly

Firms that can price discriminate between customers do so to

When a monopoly practices price discrimination

Which one of the following is most likely to be a natural monopoly?

The creation of a monopoly results in gains to

Use the figure below to answer the following questions. Figure 12.4.2 -If a firm practises perfect price discrimination,

The capture theory holds that regulations are supplied to maximize

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.How many tickets are sold?

A monopoly can practise price discrimination when it

An average cost pricing rule sets ________ equal to average total cost.An average cost pricing rule is not an efficient way of regulating monopoly because at the quantity produced,________.

A single-price monopolist's demand curve

A monopoly arises for two key reasons,which are

Use the figure below to answer the following questions. Figure 12.3.3 -Consider Figure 12.3.3.If the market is perfectly competitive,which area indicates the deadweight loss?

Sue's Surfboards is the sole renter of surfboards on Big Wave Island.Sue does not price discriminate.For Sue's Surfboards,the change in total revenue from each additional surfboard rented is her

An exclusive right granted to a firm to supply a good or service is

Use the figure below to answer the following questions. Figure 12.3.1 -Refer to Figure 12.3.1.If this market is perfectly competitive,the output level exceeds the single-price monopoly output level by

Use the figure below to answer the following question. Figure 12.2.1 -Refer to Figure 12.2.1.This single-price monopoly produces ________ units per day and charges a price of $________ per unit.

If a profit-maximizing monopoly is producing an output at which marginal cost exceeds marginal revenue,it

Which of the following quotes by a store manager describes price discrimination in action?

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

An average cost pricing rule sets equal to average total cost.An average cost pricing rule is not an efficient way of regulating monopoly because at the quantity produced,.

Use the figure below to answer the following question. Figure 12.2.1 -Refer to Figure 12.2.1.This single-price monopoly produces units per day and charges a price of $ per unit.