Question 1

-The figure above shows the demand and cost curves for a single-price monopoly. The firm will produce ________ units and set a price of ________ per unit.

Accepted Answer

A)  15; $20 
B)  10; $20 
C)  10; $30 
D)  None of the above answers is correct. 
A)  15; $20 
B)  10; $20 
C)  10; $30 
D)  None of the above answers is correct.

Question 2

-The table above shows the demand and costs for a single-price monopolist. The firm will

Accepted Answer

A)  maximize profit by producing 3 units. 
B)  maximize profit by producing 2 units. 
C)  operate on the inelastic portion of its demand curve. 
D)  operate on the unit elastic portion of its demand curve. 
A)  maximize profit by producing 3 units. 
B)  maximize profit by producing 2 units. 
C)  operate on the inelastic portion of its demand curve. 
D)  operate on the unit elastic portion of its demand curve.

Question 3

-If the natural monopoly shown in the figure above is unregulated, it will sell

Accepted Answer

A)  2 million units. 
B)  3 million units. 
C)  4 million units. 
D)  5 million units. 
A)  2 million units. 
B)  3 million units. 
C)  4 million units. 
D)  5 million units.

Question 4

-In the figure above, the single-price, unregulated monopoly sets a price of

Accepted Answer

A)  $80 per unit. 
B)  $60 per unit. 
C)  $40 per unit. 
D)  $0 per unit. 
A)  $80 per unit. 
B)  $60 per unit. 
C)  $40 per unit. 
D)  $0 per unit.

Question 5

Economists are critical of monopoly because

Accepted Answer

A)  monopolists can earn long-run economic profit. 
B)  monopolists can create a deadweight loss. 
C)  the demand for the monopolist's product is the market demand curve. 
D)  economies of scope result in lower average costs. 
A)  monopolists can earn long-run economic profit. 
B)  monopolists can create a deadweight loss. 
C)  the demand for the monopolist's product is the market demand curve. 
D)  economies of scope result in lower average costs.

Question 6

"A profit-maximizing monopoly never produces an output in the inelastic range of its demand curve." True or false? Explain.

Accepted Answer

The statement is True. The profit maximi

Question 7

Which of the following is NOT a legal barrier to entry?

Accepted Answer

A)  public franchise 
B)  government license 
C)  patent 
D)  innovation 
A)  public franchise 
B)  government license 
C)  patent 
D)  innovation

Question 8

-If the monopoly illustrated in the figure above could engage in perfect price discrimination, the deadweight loss would be

Accepted Answer

A)  $0. 
B)  $22.50. 
C)  $90.00. 
D)  $250.00. 
A)  $0. 
B)  $22.50. 
C)  $90.00. 
D)  $250.00.

Question 9

-The unregulated, single-price monopoly shown in the figure above will sell

Accepted Answer

A)  less than 30 tickets. 
B)  30 tickets. 
C)  50 tickets. 
D)  100 tickets. 
A)  less than 30 tickets. 
B)  30 tickets. 
C)  50 tickets. 
D)  100 tickets.

Question 10

Which of the following is ALWAYS true for a profit-maximzing single-price monopolist?

Accepted Answer

A)  P = MC 
B)  P = MR 
C)  MR = MC 
D)  MC = ATC 
A)  P = MC 
B)  P = MR 
C)  MR = MC 
D)  MC = ATC

Question 11

A natural monopoly occurs when

Accepted Answer

A)  one firm owns all the vital resources needed to produce a particular good. 
B)  economies of scale allow one firm to supply the entire market at the lowest possible cost. 
C)  a few firms collude to act as a single firm. 
D)  one firm captures all the consumer surplus. 
A)  one firm owns all the vital resources needed to produce a particular good. 
B)  economies of scale allow one firm to supply the entire market at the lowest possible cost. 
C)  a few firms collude to act as a single firm. 
D)  one firm captures all the consumer surplus.

Question 12

A single-price monopolist maximizes profits by producing the output at which

Accepted Answer

A)  price equals marginal cost. 
B)  price equals marginal revenue. 
C)  marginal revenue equals marginal cost. 
D)  marginal cost equals average cost. 
A)  price equals marginal cost. 
B)  price equals marginal revenue. 
C)  marginal revenue equals marginal cost. 
D)  marginal cost equals average cost.

Question 13

Any attempt to capture a consumer surplus, a producer surplus, or an economic profit is called

Accepted Answer

A)  profit-maximizing. 
B)  rent-seeking. 
C)  price discriminating. 
D)  efficiency gain. 
A)  profit-maximizing. 
B)  rent-seeking. 
C)  price discriminating. 
D)  efficiency gain.

Question 14

A natural monopoly regulated with an average cost pricing rule is ________.

Accepted Answer

A)  efficient and incurs an economic loss 
B)  inefficient and makes zero economic profit 
C)  inefficient and makes an economic profit 
D)  efficient and makes zero economic profit 
A)  efficient and incurs an economic loss 
B)  inefficient and makes zero economic profit 
C)  inefficient and makes an economic profit 
D)  efficient and makes zero economic profit

Question 15

Price discrimination

Accepted Answer

A)  converts consumer surplus into economic profit. 
B)  converts producer surplus into economic profit. 
C)  maximizes the difference between consumer surplus and producer surplus. 
D)  converts deadweight loss into consumer surplus. 
A)  converts consumer surplus into economic profit. 
B)  converts producer surplus into economic profit. 
C)  maximizes the difference between consumer surplus and producer surplus. 
D)  converts deadweight loss into consumer surplus.

Question 16

-The output produced by the single-price, unregulated monopoly in the above figure is

Accepted Answer

A)  efficient because profit is maximized. 
B)  inefficient because less than the efficient quantity is produced. 
C)  efficient because marginal costs equals marginal revenue. 
D)  inefficient because more than the efficient quantity is produced. 
A)  efficient because profit is maximized. 
B)  inefficient because less than the efficient quantity is produced. 
C)  efficient because marginal costs equals marginal revenue. 
D)  inefficient because more than the efficient quantity is produced.

Question 17

-Prime Pharmaceuticals has developed a new asthma medicine, for which is has a patent. An inhaler can be produced at a constant marginal cost of $2/inhaler. The demand curve, marginal revenue curve, and marginal cost curve for this new asthma inhaler are in the figure above. With its patent giving it a monopoly for its new inhaler, if Prime Pharmaceuticals operates as a single-price monopoly, then consumer surplus is ________ and producer surplus is ________.

Accepted Answer

A)  zero; $64 million 
B)  $32 million; $32 million 
C)  $16 million; $32 million 
D)  $16 million; $48 million. 
A)  zero; $64 million 
B)  $32 million; $32 million 
C)  $16 million; $32 million 
D)  $16 million; $48 million.

Question 18

A perfect price discriminating monopoly produces the same quantity of output as a ________.

Accepted Answer

A)  single-price monopoly but charges a higher price 
B)  perfectly competitive market 
C)  perfectly competitive firm 
D)  perfectly competitive market but charges a lower price 
A)  single-price monopoly but charges a higher price 
B)  perfectly competitive market 
C)  perfectly competitive firm 
D)  perfectly competitive market but charges a lower price

Question 19

Donna owns the only dog grooming salon on Lonely Island. If Donna can price discriminate between dog owners who are seniors and those who are not, her economic profit will be ________ than if she does not price discriminate and the number of dog groomings will be ________ than if she does not price discriminate.

Accepted Answer

A)  greater; more 
B)  greater; less 
C)  less; more 
D)  less; less 
A)  greater; more 
B)  greater; less 
C)  less; more 
D)  less; less

Question 20

Which of the following is necessary for a monopolist to price discriminate between groups?

Accepted Answer

A)  The groups are identifiable. 
B)  The groups have different willingness to pay. 
C)  A customer from one group cannot resell to a customer in another group. 
D)  All of the above conditions are necessary for the monopolist to price discriminate. 
A)  The groups are identifiable. 
B)  The groups have different willingness to pay. 
C)  A customer from one group cannot resell to a customer in another group. 
D)  All of the above conditions are necessary for the monopolist to price discriminate.

Exam 13: Monopoly

-The figure above shows the demand and cost curves for a single-price monopoly. The firm will produce ________ units and set a price of ________ per unit.

-The table above shows the demand and costs for a single-price monopolist. The firm will

-If the natural monopoly shown in the figure above is unregulated, it will sell

-In the figure above, the single-price, unregulated monopoly sets a price of

Economists are critical of monopoly because

"A profit-maximizing monopoly never produces an output in the inelastic range of its demand curve." True or false? Explain.

Which of the following is NOT a legal barrier to entry?

-If the monopoly illustrated in the figure above could engage in perfect price discrimination, the deadweight loss would be

-The unregulated, single-price monopoly shown in the figure above will sell

Which of the following is ALWAYS true for a profit-maximzing single-price monopolist?

A natural monopoly occurs when

A single-price monopolist maximizes profits by producing the output at which

Any attempt to capture a consumer surplus, a producer surplus, or an economic profit is called

A natural monopoly regulated with an average cost pricing rule is ________.

Price discrimination

-The output produced by the single-price, unregulated monopoly in the above figure is

A perfect price discriminating monopoly produces the same quantity of output as a ________.

Which of the following is necessary for a monopolist to price discriminate between groups?

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 demand and cost curves for a single-price monopoly. The firm will produce units and set a price of per unit.