Question 1

For a single-price monopolist that is maximizing profit, the price is

Accepted Answer

A)  less than marginal revenue. 
B)  equal to marginal revenue. 
C)  equal to marginal cost. 
D)  greater than marginal cost. 
A)  less than marginal revenue. 
B)  equal to marginal revenue. 
C)  equal to marginal cost. 
D)  greater than marginal cost.

Question 2

The social interest theory of regulation suggests that the political process and regulations will ________ and the capture theory of regulation suggests that the political process and regulations will ________.

Accepted Answer

A)  seek to minimize deadweight loss; serve the interests of the producers 
B)  try to maximize the producers' economic profits; seek to minimize deadweight loss 
C)  be unaffected by deadweight loss; increase the firms economic profits 
D)  ignore producers' interests and concentrate on consumers' interests; seek to minimize firms' economic profits 
A)  seek to minimize deadweight loss; serve the interests of the producers 
B)  try to maximize the producers' economic profits; seek to minimize deadweight loss 
C)  be unaffected by deadweight loss; increase the firms economic profits 
D)  ignore producers' interests and concentrate on consumers' interests; seek to minimize firms' economic profits

Question 3

Total revenue equals

Accepted Answer

A)  marginal revenue multiplied by quantity sold. 
B)  price multiplied by quantity sold. 
C)  total cost minus profit. 
D)  the area between the demand curve and the marginal revenue curve. 
A)  marginal revenue multiplied by quantity sold. 
B)  price multiplied by quantity sold. 
C)  total cost minus profit. 
D)  the area between the demand curve and the marginal revenue curve.

Question 4

-The table above shows the demand and costs for a single-price monopolist. The firm can maximize its profit by selling

Accepted Answer

A)  0 units. 
B)  20 units. 
C)  40 units. 
D)  60 units. 
A)  0 units. 
B)  20 units. 
C)  40 units. 
D)  60 units.

Question 5

Often to secure a monopoly, one must erect barriers to entry to obtain a monopoly. What is this activity called in general and what does it entail specifically?

Accepted Answer

Rent seeking is the term used to describ

Question 6

The marginal revenue curve for a single-price monopoly

Accepted Answer

A)  is horizontal. 
B)  is upward sloping. 
C)  lies above the market demand curve. 
D)  lies below the market demand curve. 
A)  is horizontal. 
B)  is upward sloping. 
C)  lies above the market demand curve. 
D)  lies below the market demand curve.

Question 7

If regulators of the local gas and water utility companies require those firms to price their service at marginal cost,

Accepted Answer

A)  there would be a deadweight loss in their markets. 
B)  the firms might require a tax-financed subsidy to survive. 
C)  their customers would enjoy no consumer surplus. 
D)  None of the above answers are correct. 
A)  there would be a deadweight loss in their markets. 
B)  the firms might require a tax-financed subsidy to survive. 
C)  their customers would enjoy no consumer surplus. 
D)  None of the above answers are correct.

Question 8

-Ron's Hamburger Joint is the only restaurant in town. The above figure represents Ron's cost, demand, and marginal revenue curves. Ron operates as a single-price monopoly.
a) How many hamburgers does Ron produce?
b) What price does Ron charge for a hamburger?
c) What is Ron's total revenue?
d) What is his total cost?
e) What is Ron's economic profit?

Accepted Answer

a) Ron produces 20 hamburgers

Question 9

-In the above figure, draw and label the demand and cost curves of a monopoly. Identify the quantity a single-price monopoly will produce by labeling it Qm and identify the price by labeling it Pm.

Accepted Answer

@#IMG-DLM& The compl

Question 10

If the local cable TV company is a natural monopoly and required by regulators to set its price equal to marginal cost, there is a deadweight loss in the market and the firm might need a government subsidy to survive.

Accepted Answer

A) True 
 B)False

Question 11

An unregulated monopoly will

Accepted Answer

A)  flood the market with goods to deter entry. 
B)  produce only where marginal revenue is zero. 
C)  produce in the inelastic range of its demand curve. 
D)  produce in the elastic range of its demand curve. 
A)  flood the market with goods to deter entry. 
B)  produce only where marginal revenue is zero. 
C)  produce in the inelastic range of its demand curve. 
D)  produce in the elastic range of its demand curve.

Question 12

If the regulator had a natural monopoly set its price equal to its marginal cost, that would ensure

Accepted Answer

A)  an economic profit for the firm. 
B)  zero economic profit for the firm. 
C)  an economic loss for the firm. 
D)  an accounting loss for the firms. 
A)  an economic profit for the firm. 
B)  zero economic profit for the firm. 
C)  an economic loss for the firm. 
D)  an accounting loss for the firms.

Question 13

Price discrimination takes place when a firm

Accepted Answer

A)  charges the same price for all the units of its product that it sells. 
B)  charges different prices for different units of its product. 
C)  is discriminated against by consumers. 
D)  None of the above answers is correct. 
A)  charges the same price for all the units of its product that it sells. 
B)  charges different prices for different units of its product. 
C)  is discriminated against by consumers. 
D)  None of the above answers is correct.

Question 14

What factor(s) enable a monopoly to make an economic profit in the long run?

Accepted Answer

Monopolies can make an economi

Question 15

-In the figure above, the elasticity of demand facing the monopoly equals one when it produces ________ units of output.

Accepted Answer

A)  h 
B)  j 
C)  k 
D)  none of the above 
A)  h 
B)  j 
C)  k 
D)  none of the above

Question 16

If a monopolist lowers its price and its demand is inelastic, then its

Accepted Answer

A)  total revenue increases. 
B)  total revenue decreases. 
C)  total revenue does not change. 
D)  total revenue is negative. 
A)  total revenue increases. 
B)  total revenue decreases. 
C)  total revenue does not change. 
D)  total revenue is negative.

Question 17

-The demand schedule for a monopolist is given in the above table. Calculate the marginal revenue.

Accepted Answer

@#IMG-DLM& The compl

Question 18

-In the figure above, what is the loss of consumer surplus if the firm is a perfectly price-discriminating monopoly instead of a perfectly competitive industry?

Accepted Answer

A)  $0 
B)  $22.50 
C)  $45.00 
D)  $90.00 
A)  $0 
B)  $22.50 
C)  $45.00 
D)  $90.00

Question 19

An attempt by a firm to create a monopoly and gain the economic profit from the monopoly is called

Accepted Answer

A)  collusion. 
B)  intrusion. 
C)  profit seeking. 
D)  rent seeking. 
A)  collusion. 
B)  intrusion. 
C)  profit seeking. 
D)  rent seeking.

Question 20

There is no deadweight loss if the regulatory rule for a natural monopoly

Accepted Answer

A)  is an average cost pricing rule. 
B)  sets price at a level that enables the regulated firm to earn a specified rate of return on its capital. 
C)  is a marginal cost pricing rule. 
D)  prevents the firm from engaging in any form of price discrimination. 
A)  is an average cost pricing rule. 
B)  sets price at a level that enables the regulated firm to earn a specified rate of return on its capital. 
C)  is a marginal cost pricing rule. 
D)  prevents the firm from engaging in any form of price discrimination.

Exam 13: Monopoly

For a single-price monopolist that is maximizing profit, the price is

The social interest theory of regulation suggests that the political process and regulations will ________ and the capture theory of regulation suggests that the political process and regulations will ________.

Total revenue equals

-The table above shows the demand and costs for a single-price monopolist. The firm can maximize its profit by selling

Often to secure a monopoly, one must erect barriers to entry to obtain a monopoly. What is this activity called in general and what does it entail specifically?

The marginal revenue curve for a single-price monopoly

If regulators of the local gas and water utility companies require those firms to price their service at marginal cost,

-In the above figure, draw and label the demand and cost curves of a monopoly. Identify the quantity a single-price monopoly will produce by labeling it Qm and identify the price by labeling it Pm.

If the local cable TV company is a natural monopoly and required by regulators to set its price equal to marginal cost, there is a deadweight loss in the market and the firm might need a government subsidy to survive.

An unregulated monopoly will

If the regulator had a natural monopoly set its price equal to its marginal cost, that would ensure

Price discrimination takes place when a firm

What factor(s) enable a monopoly to make an economic profit in the long run?

-In the figure above, the elasticity of demand facing the monopoly equals one when it produces ________ units of output.

If a monopolist lowers its price and its demand is inelastic, then its

-The demand schedule for a monopolist is given in the above table. Calculate the marginal revenue.

-In the figure above, what is the loss of consumer surplus if the firm is a perfectly price-discriminating monopoly instead of a perfectly competitive industry?

An attempt by a firm to create a monopoly and gain the economic profit from the monopoly is called

There is no deadweight loss if the regulatory rule for a natural monopoly

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

Organizing Production

Output and Costs

Perfect Competition

Monopolistic Competition

Oligopoly

Public Choices and Public Goods

Externalities and the Environment

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Extension A: Review

Extension B: Review

Extension C: Review

Extension D: Review

Extension E: Review

Extension F: Review

Filters

The social interest theory of regulation suggests that the political process and regulations will and the capture theory of regulation suggests that the political process and regulations will .

-In the above figure, draw and label the demand and cost curves of a monopoly. Identify the quantity a single-price monopoly will produce by labeling it Q_m and identify the price by labeling it P_m.