Question 1

A barrier to entry is

Accepted Answer

A)  a natural or legal impediment that makes it difficult for new firms to enter a market. 
B)  a necessary condition for perfect competition. 
C)  the result of highly elastic demand. 
D)  a brick wall that a firm places around its corporate headquarters. 
A)  a natural or legal impediment that makes it difficult for new firms to enter a market. 
B)  a necessary condition for perfect competition. 
C)  the result of highly elastic demand. 
D)  a brick wall that a firm places around its corporate headquarters.

Question 2

-The above figure represents the cost and demand curves for a natural monopoly that is regulated using a marginal cost pricing rule.
a) What is the quantity?
b) What price is charged?
c) What area represents the consumer surplus when the firm is regulated using a marginal cost pricing rule?
d) What distance represents the firm's loss per unit when the firm is regulated using a marginal cost pricing rule?

Accepted Answer

a) The quantity is the efficient quantit

Question 3

-Which of the following is true for a profit maximizing monopolist?

Accepted Answer

A)  Marginal cost is always less than average total cost. 
B)  In the long run, the firm's economic profit equals zero. 
C)  In the short run, the firm will shut down if its marginal cost is less than its average variable cost. 
D)  In the short run, the firm can make an economic profit even if its marginal cost is less than its average variable cost. 
A)  Marginal cost is always less than average total cost. 
B)  In the long run, the firm's economic profit equals zero. 
C)  In the short run, the firm will shut down if its marginal cost is less than its average variable cost. 
D)  In the short run, the firm can make an economic profit even if its marginal cost is less than its average variable cost.

Question 4

A market in which competition and entry are restricted by the granting of a public franchise, government license, patent, or copyright is called a

Accepted Answer

A)  legal monopoly. 
B)  natural monopoly. 
C)  single-price monopoly. 
D)  price-discriminating monopoly. 
A)  legal monopoly. 
B)  natural monopoly. 
C)  single-price monopoly. 
D)  price-discriminating monopoly.

Question 5

Compare the consumer surplus in a perfect competition with that of a single-price monopoly and with a price-discriminating monopoly.

Accepted Answer

The consumer surplus in a perfect compet

Question 6

The deadweight loss from a monopoly loss measures the inefficiency created by monopoly.

Accepted Answer

A) True 
 B)False

Question 7

A natural monopoly is any market in which competition and entry are restricted by the granting of a public franchise, government license, patent, or copyright.

Accepted Answer

A) True 
 B)False

Question 8

-A monopolist has the demand and marginal cost schedules given in the above table. If the monopoly can perfectly price discriminate, what is the profit-maximizing level of output and price?

Accepted Answer

As a perfectly price discrimin

Question 9

If a perfectly competitive market becomes a monopoly and the costs do not change, which of the following allocations of costs and benefits applies?

Accepted Answer

A)  The producer benefits, but consumers and society are harmed. 
B)  The producer and society are harmed, but consumers benefit. 
C)  The producer and society benefit, but consumers are harmed. 
D)  The producer is harmed, but consumers and society benefit. 
A)  The producer benefits, but consumers and society are harmed. 
B)  The producer and society are harmed, but consumers benefit. 
C)  The producer and society benefit, but consumers are harmed. 
D)  The producer is harmed, but consumers and society benefit.

Question 10

The demand curve facing the monopolist is

Accepted Answer

A)  the same as the market demand curve. 
B)  more elastic than the market demand curve. 
C)  less elastic than the market demand curve. 
D)  upward sloping. 
A)  the same as the market demand curve. 
B)  more elastic than the market demand curve. 
C)  less elastic than the market demand curve. 
D)  upward sloping.

Question 11

-An unregulated, single-price monopoly is shown in the figure above. If fixed cost is $20, the monopoly's total costs when it is maximizing its profit will be

Accepted Answer

A)  $30. 
B)  $40. 
C)  $80 
D)  $140. 
A)  $30. 
B)  $40. 
C)  $80 
D)  $140.

Question 12

-If the firm in the figure above is unregulated, it will make an economic profit of

Accepted Answer

A)  zero. 
B)  -$240. 
C)  $100. 
D)  $400. 
A)  zero. 
B)  -$240. 
C)  $100. 
D)  $400.

Question 13

-In the above figure, if the natural monopoly is not regulated then consumer surplus is

Accepted Answer

A)  $48 million. 
B)  $60 million. 
C)  $108 million. 
D)  $192 million. 
A)  $48 million. 
B)  $60 million. 
C)  $108 million. 
D)  $192 million.

Question 14

Rent seeking ________.

Accepted Answer

A)  increases consumer surplus 
B)  occurs only when the firm practices perfect price discrimination 
C)  increases deadweight loss 
D)  results in a larger output than a competitive industry would produce 
A)  increases consumer surplus 
B)  occurs only when the firm practices perfect price discrimination 
C)  increases deadweight loss 
D)  results in a larger output than a competitive industry would produce

Question 15

Using average cost pricing to regulate a natural monopoly creates a deadweight loss.

Accepted Answer

A) True 
 B)False

Question 16

-In the figure above, the efficient amount of output is

Accepted Answer

A)  20 units per day. 
B)  40 units per day. 
C)  60 units per day. 
D)  80 units per day. 
A)  20 units per day. 
B)  40 units per day. 
C)  60 units per day. 
D)  80 units per day.

Question 17

When comparing perfect competition to a single-price monopoly with the same costs,

Accepted Answer

A)  both market types use resources efficiently. 
B)  there is a deadweight loss associated with a monopoly. 
C)  the sum of producer and consumer surplus is maximized under a monopoly. 
D)  the sum of producer and consumer surplus is minimized under perfect competition. 
A)  both market types use resources efficiently. 
B)  there is a deadweight loss associated with a monopoly. 
C)  the sum of producer and consumer surplus is maximized under a monopoly. 
D)  the sum of producer and consumer surplus is minimized under perfect competition.

Question 18

-The figure above provides information about Light-U-Up Utilities, which is a natural monopoly that provides electricity. If Light-U-Up is unregulated, it will produce ________ and sell at a price of ________.

Accepted Answer

A)  200 kwh; 10¢ per kwh 
B)  200 kwh; 30¢ per kwh 
C)  300 kwh; 20¢ per kwh 
D)  400 kwh; 10¢ per kwh 
A)  200 kwh; 10¢ per kwh 
B)  200 kwh; 30¢ per kwh 
C)  300 kwh; 20¢ per kwh 
D)  400 kwh; 10¢ per kwh

Question 19

Price discrimination by a monopolist is less effective if the

Accepted Answer

A)  good can be resold. 
B)  good has no substitutes. 
C)  monopolist can identify buyers by willingness to pay. 
D)  good cannot be resold. 
A)  good can be resold. 
B)  good has no substitutes. 
C)  monopolist can identify buyers by willingness to pay. 
D)  good cannot be resold.

Question 20

If marginal revenue is greater than zero, then demand at this level of output is

Accepted Answer

A)  unit elastic. 
B)  elastic. 
C)  inelastic. 
D)  steeper than the marginal revenue curve. 
A)  unit elastic. 
B)  elastic. 
C)  inelastic. 
D)  steeper than the marginal revenue curve.

Exam 13: Monopoly

A barrier to entry is

-Which of the following is true for a profit maximizing monopolist?

A market in which competition and entry are restricted by the granting of a public franchise, government license, patent, or copyright is called a

Compare the consumer surplus in a perfect competition with that of a single-price monopoly and with a price-discriminating monopoly.

The deadweight loss from a monopoly loss measures the inefficiency created by monopoly.

A natural monopoly is any market in which competition and entry are restricted by the granting of a public franchise, government license, patent, or copyright.

-A monopolist has the demand and marginal cost schedules given in the above table. If the monopoly can perfectly price discriminate, what is the profit-maximizing level of output and price?

If a perfectly competitive market becomes a monopoly and the costs do not change, which of the following allocations of costs and benefits applies?

The demand curve facing the monopolist is

-An unregulated, single-price monopoly is shown in the figure above. If fixed cost is $20, the monopoly's total costs when it is maximizing its profit will be

-If the firm in the figure above is unregulated, it will make an economic profit of

-In the above figure, if the natural monopoly is not regulated then consumer surplus is

Rent seeking ________.

Using average cost pricing to regulate a natural monopoly creates a deadweight loss.

-In the figure above, the efficient amount of output is

When comparing perfect competition to a single-price monopoly with the same costs,

-The figure above provides information about Light-U-Up Utilities, which is a natural monopoly that provides electricity. If Light-U-Up is unregulated, it will produce ________ and sell at a price of ________.

Price discrimination by a monopolist is less effective if the

If marginal revenue is greater than zero, then demand at this level of output is

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 figure above provides information about Light-U-Up Utilities, which is a natural monopoly that provides electricity. If Light-U-Up is unregulated, it will produce and sell at a price of .