Question 1

What is a legal barrier to entry?

Accepted Answer

A legal barrier to entry arises when ent

Question 2

-If the firm in the figure above is unregulated, the consumer surplus will be

Accepted Answer

A)  zero. 
B)  $100. 
C)  $400. 
D)  $200. 
A)  zero. 
B)  $100. 
C)  $400. 
D)  $200.

Question 3

When a natural monopoly is regulated using a marginal cost pricing rule, what can you say about the firm's profit and the market's efficiency?

Accepted Answer

Using a marginal cost pricing

Question 4

Demand Schedule Facing a
Perfectly Price Discriminating Firm  
-Using the demand schedule in the table above, the total revenue a perfectly price discriminating monopolist receives from selling 5 units of output is

Accepted Answer

A)  $5. 
B)  $15. 
C)  $18. 
D)  $25. 
A)  $5. 
B)  $15. 
C)  $18. 
D)  $25.

Question 5

-If an average cost pricing rule is imposed on the firm in the figure above, the consumer surplus will be

Accepted Answer

A)  zero. 
B)  $450. 
C)  $400. 
D)  $200. 
A)  zero. 
B)  $450. 
C)  $400. 
D)  $200.

Question 6

-The figure above provides information about Light-U-Up Utilities, which is a natural monopoly that provides electricity. If Light-U-Up is regulated and must follow a marginal cost pricing rule, it will produce ________ and sell at a price of ________.

Accepted Answer

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

Question 7

-If a marginal cost pricing rule is imposed on the firm in the figure above, the total surplus will be

Accepted Answer

A)  zero. 
B)  $800. 
C)  $400. 
D)  $200. 
A)  zero. 
B)  $800. 
C)  $400. 
D)  $200.

Question 8

Monopolists are able to price discriminate because

Accepted Answer

A)  of differing willingness to pay among consumers. 
B)  of differing price elasticities of supply. 
C)  they have constant marginal cost. 
D)  they have constant average cost. 
A)  of differing willingness to pay among consumers. 
B)  of differing price elasticities of supply. 
C)  they have constant marginal cost. 
D)  they have constant average cost.

Question 9

For a monopoly, at the level of output where marginal revenue equals zero, then the

Accepted Answer

A)  firm earns no revenue. 
B)  price elasticity of demand at this amount of output is zero. 
C)  firm has maximized total revenue. 
D)  firm is a price taker. 
A)  firm earns no revenue. 
B)  price elasticity of demand at this amount of output is zero. 
C)  firm has maximized total revenue. 
D)  firm is a price taker.

Question 10

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

Accepted Answer

A)  perfectly inelastic. 
B)  inelastic. 
C)  unit elastic. 
D)  elastic. 
A)  perfectly inelastic. 
B)  inelastic. 
C)  unit elastic. 
D)  elastic.

Question 11

The capture theory holds that regulations are supplied to maximize ________.

Accepted Answer

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

Question 12

A monopoly can price discriminate between two groups of consumers if each group has ________.

Accepted Answer

A)  a large consumer surplus 
B)  a different willingness to pay 
C)  the same willingness to pay 
D)  the ability to resell the good to the other group 
A)  a large consumer surplus 
B)  a different willingness to pay 
C)  the same willingness to pay 
D)  the ability to resell the good to the other group

Question 13

Monopolists

Accepted Answer

A)  maximize revenue, not profits. 
B)  have no short-run fixed costs. 
C)  face downward sloping demand curves. 
D)  are price takers. 
A)  maximize revenue, not profits. 
B)  have no short-run fixed costs. 
C)  face downward sloping demand curves. 
D)  are price takers.

Question 14

-Consider the market for cable television, a natural monopoly, shown in the figure above. If the regulator imposes an average cost pricing rule, the firm provides service to

Accepted Answer

A)  3.5 million households. 
B)  6 million households. 
C)  10.5 million households. 
D)  12.5 million households. 
A)  3.5 million households. 
B)  6 million households. 
C)  10.5 million households. 
D)  12.5 million households.

Question 15

An example of a monopoly is

Accepted Answer

A)  a big city restaurant. 
B)  the stock market. 
C)  the only veterinarian in an isolated farm community. 
D)  a large hospital in a big city. 
A)  a big city restaurant. 
B)  the stock market. 
C)  the only veterinarian in an isolated farm community. 
D)  a large hospital in a big city.

Question 16

Demand Schedule Facing a
Perfectly Price Discriminating Firm  
-Using the demand schedule in the above table, the marginal revenue for a perfectly price discriminating monopolist from the sale of the third unit of output is

Accepted Answer

A)  $3. 
B)  $4. 
C)  $5. 
D)  $6. 
A)  $3. 
B)  $4. 
C)  $5. 
D)  $6.

Question 17

-West Coast Gas, Inc., is a natural gas supplier. The firm faces the demand schedule shown in the table above and cannot price discriminate. The company's fixed cost is $1,000 per month and its marginal cost is constant at $10 per thousand of cubic feet.
a) Draw the demand curve faced by West Coast Gas and the marginal revenue curve. Draw the company's marginal cost and average cost curves.
b) Is West Coast Gas a natural monopoly? Why or why not?
c) What are the firm's profit-maximizing output and price? What is the firm's economic profit per month?
d) If West Coast Gas maximizes its profit, does it also maximize total surplus? Why or why not? What is the deadweight loss (if any)?

Accepted Answer

@#IMG-DLM& a) The figure above shows the demand cu

Question 18

For a single-price monopolist,

Accepted Answer

A)  MR = P. 
B)  MR < P. 
C)  MR first increases and then decreases with the quantity sold. 
D)  MR first decreases and then increases with the quantity sold. 
A)  MR = P. 
B)  MR < P. 
C)  MR first increases and then decreases with the quantity sold. 
D)  MR first decreases and then increases with the quantity sold.

Question 19

What is price discrimination? Give examples of price discrimination.

Accepted Answer

Price discrimination is the practice of

Question 20

The WaveHouse on Mission Beach in San Diego features the Bruticus Maximus, a ten foot wave, which tests the skills of even the most talented surf and wake board riders on the planet. WaveHouse is the only place in San Diego where this service is offered. You can ride B. Max for $40 for the first hour, $33 for the second hour, and $26 for the third hour. Charging a different price for subsequent hours is a form of:

Accepted Answer

A)  Price discrimination among groups of buyers. 
B)  Rent seeking behavior. 
C)  Price discrimination among units of a good. 
D)  Monopoly regulation. 
A)  Price discrimination among groups of buyers. 
B)  Rent seeking behavior. 
C)  Price discrimination among units of a good. 
D)  Monopoly regulation.

Exam 13: Monopoly

What is a legal barrier to entry?

-If the firm in the figure above is unregulated, the consumer surplus will be

When a natural monopoly is regulated using a marginal cost pricing rule, what can you say about the firm's profit and the market's efficiency?

Demand Schedule Facing a Perfectly Price Discriminating Firm -Using the demand schedule in the table above, the total revenue a perfectly price discriminating monopolist receives from selling 5 units of output is

-If an average cost pricing rule is imposed on the firm in the figure above, the consumer surplus will be

-The figure above provides information about Light-U-Up Utilities, which is a natural monopoly that provides electricity. If Light-U-Up is regulated and must follow a marginal cost pricing rule, it will produce ________ and sell at a price of ________.

-If a marginal cost pricing rule is imposed on the firm in the figure above, the total surplus will be

Monopolists are able to price discriminate because

For a monopoly, at the level of output where marginal revenue equals zero, then the

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

The capture theory holds that regulations are supplied to maximize ________.

A monopoly can price discriminate between two groups of consumers if each group has ________.

Monopolists

-Consider the market for cable television, a natural monopoly, shown in the figure above. If the regulator imposes an average cost pricing rule, the firm provides service to

An example of a monopoly is

Demand Schedule Facing a Perfectly Price Discriminating Firm -Using the demand schedule in the above table, the marginal revenue for a perfectly price discriminating monopolist from the sale of the third unit of output is

For a single-price monopolist,

What is price discrimination? Give examples of price discrimination.

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 regulated and must follow a marginal cost pricing rule, it will produce and sell at a price of .