Question 1

-If the natural monopoly shown in the figure above is unregulated, then consumer surplus will be

Accepted Answer

A)  $0. 
B)  $4 million. 
C)  $8 million. 
D)  $16 million. 
A)  $0. 
B)  $4 million. 
C)  $8 million. 
D)  $16 million.

Question 2

-The firm shown in the figure above is

Accepted Answer

A)  a natural monopoly because its LRAC curve slopes downward where it intersects the demand curve. 
B)  not a natural monopoly because its LRAC curve slopes downward where it intersects the demand curve. 
C)  not a natural monopoly because its MC curve is horizontal. 
D)  not a natural monopoly because its MC curve is below its LRAC curve. 
A)  a natural monopoly because its LRAC curve slopes downward where it intersects the demand curve. 
B)  not a natural monopoly because its LRAC curve slopes downward where it intersects the demand curve. 
C)  not a natural monopoly because its MC curve is horizontal. 
D)  not a natural monopoly because its MC curve is below its LRAC curve.

Question 3

-The table above shows the demand and total cost schedule for a monopolist hotel. What is the marginal revenue from renting out the fifth room each night?

Accepted Answer

A)  $111 
B)  $141 
C)  $151 
D)  $161 
A)  $111 
B)  $141 
C)  $151 
D)  $161

Question 4

An unregulated monopoly finds that its marginal cost exceeds its marginal revenue. In order to increase its profit, the firm will

Accepted Answer

A)  raise its price and decrease its output. 
B)  lower its price and increase its output. 
C)  raise its price and increase its output. 
D)  continue to produce this level of output because any change will lower its profit. 
A)  raise its price and decrease its output. 
B)  lower its price and increase its output. 
C)  raise its price and increase its output. 
D)  continue to produce this level of output because any change will lower its profit.

Question 5

-The table above gives the demand for a monopolist's output. Between which two quantities is demand elastic?

Accepted Answer

A)  6 and 5 
B)  5 and 4 
C)  4 and 3 
D)  3 and 2 
A)  6 and 5 
B)  5 and 4 
C)  4 and 3 
D)  3 and 2

Question 6

-The figure above shows the costs and demand curves for the Bigshow Cable Company. Bigshow Cable Company incurs an economic loss if the regulator set its price at

Accepted Answer

A)  $8. 
B)  $6. 
C)  $4. 
D)  None of the above prices force Bigshow to incur an economic loss. 
A)  $8. 
B)  $6. 
C)  $4. 
D)  None of the above prices force Bigshow to incur an economic loss.

Question 7

-In the figure above, complete the graph of the electric utility company by adding the marginal revenue and marginal cost curves. Assume the marginal cost is constant at 4¢ per kilowatt-hour. Now discuss the two options regulators have in trying to regulate the firm. Be sure to state the price and quantity that are selected for each option. Also, what price and quantity does the firm select if it is not regulated?

Accepted Answer

@#IMG-DLM& The completed figure is above. The two

Question 8

If the local cable TV company is a natural monopoly and required by regulators to set its price equal to marginal cost, it makes zero profit and produces the efficient level of output.

Accepted Answer

A) True 
 B)False

Question 9

-For the monopoly shown in the figure above, the profit maximizing output is

Accepted Answer

A)  4 units per day. 
B)  5 units per day. 
C)  6 units per day. 
D)  10 units per day. 
A)  4 units per day. 
B)  5 units per day. 
C)  6 units per day. 
D)  10 units per day.

Question 10

How does marginal revenue compare to price for a single-price monopoly?

Accepted Answer

Marginal r

Question 11

A monopoly that can perfectly price discriminate creates no deadweight loss.

Accepted Answer

A) True 
 B)False

Question 12

What does the marginal revenue equal when a monopoly's total revenue is maximized? What is the elasticity of demand when the total revenue is maximized?

Accepted Answer

When the total revenue is at i

Question 13

Rate of return regulation is typically imposed on

Accepted Answer

A)  monopolistically competitive firms. 
B)  an oligopoly. 
C)  a natural monopoly. 
D)  perfectly competitive firms. 
A)  monopolistically competitive firms. 
B)  an oligopoly. 
C)  a natural monopoly. 
D)  perfectly competitive firms.

Question 14

Which of the following is NOT a barrier to entry for a monopoly?

Accepted Answer

A)  economies of scale for the relevant range of output 
B)  a patent on the product being sold 
C)  the ability to charge a price that is above marginal cost 
D)  receiving a public franchise 
A)  economies of scale for the relevant range of output 
B)  a patent on the product being sold 
C)  the ability to charge a price that is above marginal cost 
D)  receiving a public franchise

Question 15

What are the conditions that define a monopoly?

Accepted Answer

There is only one firm produci

Question 16

-The unregulated, single-price monopolist illustrated in the figure above makes an economic profit of

Accepted Answer

A)  zero. 
B)  $8.00 per day. 
C)  $10.00 per day. 
D)  $40.00 per day. 
A)  zero. 
B)  $8.00 per day. 
C)  $10.00 per day. 
D)  $40.00 per day.

Question 17

-For the monopoly shown in the figure above, the economic profit is

Accepted Answer

A)  $0. 
B)  $10. 
C)  $40. 
D)  $100. 
A)  $0. 
B)  $10. 
C)  $40. 
D)  $100.

Question 18

Sue's Surfboards is the sole renter of surfboards on Big Wave Island. If marginal revenue is positive at the number of surfboard rentals made each hour, then Sue's Surfboards

Accepted Answer

A)  must face an elastic demand for surfboard rentals. 
B)  must face an inelastic demand for surfboard rentals. 
C)  can increase its total revenue by increasing the price of rentals. 
D)  must face a unit elastic demand for surfboard rentals. 
A)  must face an elastic demand for surfboard rentals. 
B)  must face an inelastic demand for surfboard rentals. 
C)  can increase its total revenue by increasing the price of rentals. 
D)  must face a unit elastic demand for surfboard rentals.

Question 19

Compared to a single-price monopoly, the output of a perfectly competitive market with the same costs

Accepted Answer

A)  is more than the monopoly's output. 
B)  is the same as the monopoly's output. 
C)  is less than the monopoly's output. 
D)  could be more than, less than, or equal to the monopoly's output. 
A)  is more than the monopoly's output. 
B)  is the same as the monopoly's output. 
C)  is less than the monopoly's output. 
D)  could be more than, less than, or equal to the monopoly's output.

Question 20

-If an average cost pricing rule is imposed on the natural monopoly in the figure above, then the deadweight loss will be

Accepted Answer

A)  $0. 
B)  $1 million. 
C)  $9 million. 
D)  $16 million. 
A)  $0. 
B)  $1 million. 
C)  $9 million. 
D)  $16 million.

Exam 13: Monopoly

-If the natural monopoly shown in the figure above is unregulated, then consumer surplus will be

-The firm shown in the figure above is

-The table above shows the demand and total cost schedule for a monopolist hotel. What is the marginal revenue from renting out the fifth room each night?

An unregulated monopoly finds that its marginal cost exceeds its marginal revenue. In order to increase its profit, the firm will

-The table above gives the demand for a monopolist's output. Between which two quantities is demand elastic?

-The figure above shows the costs and demand curves for the Bigshow Cable Company. Bigshow Cable Company incurs an economic loss if the regulator set its price at

If the local cable TV company is a natural monopoly and required by regulators to set its price equal to marginal cost, it makes zero profit and produces the efficient level of output.

-For the monopoly shown in the figure above, the profit maximizing output is

How does marginal revenue compare to price for a single-price monopoly?

A monopoly that can perfectly price discriminate creates no deadweight loss.

What does the marginal revenue equal when a monopoly's total revenue is maximized? What is the elasticity of demand when the total revenue is maximized?

Rate of return regulation is typically imposed on

Which of the following is NOT a barrier to entry for a monopoly?

What are the conditions that define a monopoly?

-The unregulated, single-price monopolist illustrated in the figure above makes an economic profit of

-For the monopoly shown in the figure above, the economic profit is

Sue's Surfboards is the sole renter of surfboards on Big Wave Island. If marginal revenue is positive at the number of surfboard rentals made each hour, then Sue's Surfboards

Compared to a single-price monopoly, the output of a perfectly competitive market with the same costs

-If an average cost pricing rule is imposed on the natural monopoly in the figure above, then the deadweight loss will be

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

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