Question 1

-Christy's Haircuts, the sole supplier of haircuts in a small town, faces the demand schedule shown in the table above. What is Christy's marginal revenue from the 25th haircut?

Accepted Answer

A)  zero 
B)  $5.00 
C)  $17.50 
D)  $50.00 
A)  zero 
B)  $5.00 
C)  $17.50 
D)  $50.00

Question 2

-The figure above shows the costs and demand curves for the Bigshow Cable Company. If the firm is required to set its price according to an average cost pricing rule, the price is ________ and the quantity produced is ________ million.

Accepted Answer

A)  $8; 1 
B)  $6; 1 
C)  $6; 2 
D)  $4; 3 
A)  $8; 1 
B)  $6; 1 
C)  $6; 2 
D)  $4; 3

Question 3

-Which area in the above figure equals the producer surplus under perfect price discrimination?

Accepted Answer

A)  A + B + C + D + E + F + G + H + I + J + K + L 
B)  A + B + C + D + E + F + G + H + I + J + K 
C)  A + B + C + D + E + F + G + H 
D)  C + D + E + F + G + H 
A)  A + B + C + D + E + F + G + H + I + J + K + L 
B)  A + B + C + D + E + F + G + H + I + J + K 
C)  A + B + C + D + E + F + G + H 
D)  C + D + E + F + G + H

Question 4

According to social interest theory, ________.

Accepted Answer

A)  price regulations are unconstitutional 
B)  regulation helps markets achieve efficiency 
C)  monopoly practices last forever 
D)  unregulated firms try to avoid creating deadweight loss 
A)  price regulations are unconstitutional 
B)  regulation helps markets achieve efficiency 
C)  monopoly practices last forever 
D)  unregulated firms try to avoid creating deadweight loss

Question 5

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

Accepted Answer

A)  $5 per unit. 
B)  $25 per unit. 
C)  $15 per unit. 
D)  $20 per unit. 
A)  $5 per unit. 
B)  $25 per unit. 
C)  $15 per unit. 
D)  $20 per unit.

Question 6

A single-price monopolist is inefficient because

Accepted Answer

A)  MR = MC. 
B)  P > ATC. 
C)  it creates a deadweight loss. 
D)  it increases producer surplus. 
A)  MR = MC. 
B)  P > ATC. 
C)  it creates a deadweight loss. 
D)  it increases producer surplus.

Question 7

In a regulated natural monopoly, a marginal cost pricing rule maximizes

Accepted Answer

A)  total costs. 
B)  producer surplus. 
C)  economic profit. 
D)  total surplus. 
A)  total costs. 
B)  producer surplus. 
C)  economic profit. 
D)  total surplus.

Question 8

-The unregulated, single-price monopolist illustrated in the figure above has a total cost of

Accepted Answer

A)  $8.00 per day. 
B)  $16.00 per day. 
C)  $32.00 per day. 
D)  $40.00 per day. 
A)  $8.00 per day. 
B)  $16.00 per day. 
C)  $32.00 per day. 
D)  $40.00 per day.

Question 9

-Consider the market for cable television, a natural monopoly, shown in the figure above. If the regulator imposes an average cost pricing rule, deadweight loss is equal to

Accepted Answer

A)  $5 million. 
B)  $0 million. 
C)  more than $10 million and less than $20 million.. 
D)  $20 million or more. 
A)  $5 million. 
B)  $0 million. 
C)  more than $10 million and less than $20 million.. 
D)  $20 million or more.

Question 10

-Given the market demand and cost data in the above figure, the existence of two firms equal sized firms producing a total of 8 million cubic feet of natural gas means that the long-run average cost of producing natural gas is

Accepted Answer

A)  10 cents per cubic foot. 
B)  20 cents per cubic foot. 
C)  30 cents per cubic foot. 
D)  40 cents per cubic foot. 
A)  10 cents per cubic foot. 
B)  20 cents per cubic foot. 
C)  30 cents per cubic foot. 
D)  40 cents per cubic foot.

Question 11

A single-price monopoly is characterized by a marginal revenue curve that is

Accepted Answer

A)  upward sloping. 
B)  downward sloping. 
C)  horizontal. 
D)  vertical. 
A)  upward sloping. 
B)  downward sloping. 
C)  horizontal. 
D)  vertical.

Question 12

The fundamental reason a single-price monopoly creates a deadweight loss is that compared to the efficient outcome, the single-price monopoly

Accepted Answer

A)  raises variable cost. 
B)  raises fixed cost. 
C)  restricts output. 
D)  reduces the elasticity of demand. 
A)  raises variable cost. 
B)  raises fixed cost. 
C)  restricts output. 
D)  reduces the elasticity of demand.

Question 13

-The unregulated, single-price monopolist illustrated in the figure above will set a price of

Accepted Answer

A)  $2.00 per unit. 
B)  $6.00 per unit. 
C)  $8.00 per unit. 
D)  $10.00 per unit. 
A)  $2.00 per unit. 
B)  $6.00 per unit. 
C)  $8.00 per unit. 
D)  $10.00 per unit.

Question 14

A monopoly creates no deadweight when it maximizes its profit.

Accepted Answer

A) True 
 B)False

Question 15

What is perfect price discrimination? Is perfect price discrimination efficient? Why or why not?

Accepted Answer

Perfect price discrimination occurs if a

Question 16

Which of the following statements is true?

Accepted Answer

A)  All monopolists are perfect price discriminators. 
B)  All monopolists earn short-run economic profits. 
C)  A monopolist will leave the market if it incurs an economic loss in the long run. 
D)  A monopolist does not need barriers to entry to sustain a long-run economic profit. 
A)  All monopolists are perfect price discriminators. 
B)  All monopolists earn short-run economic profits. 
C)  A monopolist will leave the market if it incurs an economic loss in the long run. 
D)  A monopolist does not need barriers to entry to sustain a long-run economic profit.

Question 17

A profit maximizing single-price monopolist charges a price equal to

Accepted Answer

A)  average total cost. 
B)  marginal revenue. 
C)  the highest price consumers are willing to pay for the profit maximizing quantity. 
D)  the price necessary for the firm to earn a normal return on its investment. 
A)  average total cost. 
B)  marginal revenue. 
C)  the highest price consumers are willing to pay for the profit maximizing quantity. 
D)  the price necessary for the firm to earn a normal return on its investment.

Question 18

-Compared to a competitive industry, a monopoly transfers

Accepted Answer

A)  deadweight loss away from producers to consumers. 
B)  deadweight loss away from consumers to producers. 
C)  producer surplus to consumers. 
D)  consumer surplus to producers. 
A)  deadweight loss away from producers to consumers. 
B)  deadweight loss away from consumers to producers. 
C)  producer surplus to consumers. 
D)  consumer surplus to producers.

Question 19

-In the above figure, if a single-price monopolist charges the profit-maximizing price, the triangle dce represents

Accepted Answer

A)  consumer surplus. 
B)  producer surplus. 
C)  deadweight loss. 
D)  marginal revenue. 
A)  consumer surplus. 
B)  producer surplus. 
C)  deadweight loss. 
D)  marginal revenue.

Question 20

For a natural monopoly, if price is set equal to marginal cost then the firm incurs an economic loss.

Accepted Answer

A) True 
 B)False

Exam 13: Monopoly

-Christy's Haircuts, the sole supplier of haircuts in a small town, faces the demand schedule shown in the table above. What is Christy's marginal revenue from the 25th haircut?

-The figure above shows the costs and demand curves for the Bigshow Cable Company. If the firm is required to set its price according to an average cost pricing rule, the price is ________ and the quantity produced is ________ million.

-Which area in the above figure equals the producer surplus under perfect price discrimination?

According to social interest theory, ________.

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

A single-price monopolist is inefficient because

In a regulated natural monopoly, a marginal cost pricing rule maximizes

-The unregulated, single-price monopolist illustrated in the figure above has a total cost of

-Consider the market for cable television, a natural monopoly, shown in the figure above. If the regulator imposes an average cost pricing rule, deadweight loss is equal to

-Given the market demand and cost data in the above figure, the existence of two firms equal sized firms producing a total of 8 million cubic feet of natural gas means that the long-run average cost of producing natural gas is

A single-price monopoly is characterized by a marginal revenue curve that is

The fundamental reason a single-price monopoly creates a deadweight loss is that compared to the efficient outcome, the single-price monopoly

-The unregulated, single-price monopolist illustrated in the figure above will set a price of

A monopoly creates no deadweight when it maximizes its profit.

What is perfect price discrimination? Is perfect price discrimination efficient? Why or why not?

Which of the following statements is true?

A profit maximizing single-price monopolist charges a price equal to

-Compared to a competitive industry, a monopoly transfers

-In the above figure, if a single-price monopolist charges the profit-maximizing price, the triangle dce represents

For a natural monopoly, if price is set equal to marginal cost then the firm incurs an economic loss.

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 shows the costs and demand curves for the Bigshow Cable Company. If the firm is required to set its price according to an average cost pricing rule, the price is and the quantity produced is million.