Question 1

-Consider the monopolist depicted in the figure above. When it maximizes its profit, a single-price monopolist sets a price of ________ per unit.

Accepted Answer

A)  $4 
B)  $7 
C)  $9 
D)  $11 
A)  $4 
B)  $7 
C)  $9 
D)  $11

Question 2

A legal monopoly is defined as a market where

Accepted Answer

A)  only one lawyer operates. 
B)  a legal barrier to entry exists. 
C)  only one firm could earn a profit. 
D)  entry and exit are legal. 
A)  only one lawyer operates. 
B)  a legal barrier to entry exists. 
C)  only one firm could earn a profit. 
D)  entry and exit are legal.

Question 3

-Interlace, Inc. produces and a unique soda. The company cannot price discriminate. The figure above shows Interlace's demand curve, marginal revenue curve, and marginal cost curve. Interlace's profit maximizing price is ________ per bottle.

Accepted Answer

A)  70 cents 
B)  50 cents 
C)  40 cents 
D)  1 dollar 
A)  70 cents 
B)  50 cents 
C)  40 cents 
D)  1 dollar

Question 4

Compared to a single-price monopoly, the price charged by a perfectly competitive market with the same costs

Accepted Answer

A)  is higher than the monopoly's price. 
B)  is the same as the monopoly's price. 
C)  is lower than the monopoly's price. 
D)  could be higher than, lower than, or the same as the monopoly's price. 
A)  is higher than the monopoly's price. 
B)  is the same as the monopoly's price. 
C)  is lower than the monopoly's price. 
D)  could be higher than, lower than, or the same as the monopoly's price.

Question 5

Under an average cost pricing rule, a regulated natural monopoly ________ and there is ________.

Accepted Answer

A)  makes an economic profit; a deadweight loss 
B)  makes zero economic profit; no deadweight loss 
C)  makes zero economic profit; a deadweight loss. 
D)  incurs an economic loss; no deadweight loss 
A)  makes an economic profit; a deadweight loss 
B)  makes zero economic profit; no deadweight loss 
C)  makes zero economic profit; a deadweight loss. 
D)  incurs an economic loss; no deadweight loss

Question 6

A single-price monopoly causes a deadweight loss because it ________.

Accepted Answer

A)  restricts its output so it is less than the efficient quantity 
B)  increases the amount produced beyond the efficient quantity 
C)  maximizes marginal revenue rather than minimizes marginal cost 
D)  increases marginal cost 
A)  restricts its output so it is less than the efficient quantity 
B)  increases the amount produced beyond the efficient quantity 
C)  maximizes marginal revenue rather than minimizes marginal cost 
D)  increases marginal cost

Question 7

A monopolist, unlike a perfect competitor, has total control in its market because it is the single producer. Why, then, must a single-price monopolist decrease its price if it wants to increase its output?

Accepted Answer

Because the monopolist does control the

Question 8

-If a marginal cost pricing rule is imposed on the natural monopoly in the figure above, then total 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 9

Deadweight loss measures the inefficiency as the loss of

Accepted Answer

A)  consumer surplus only. 
B)  consumer surplus minus producer surplus. 
C)  consumer surplus plus producer surplus. 
D)  producer surplus only. 
A)  consumer surplus only. 
B)  consumer surplus minus producer surplus. 
C)  consumer surplus plus producer surplus. 
D)  producer surplus only.

Question 10

Which of the following occurs with both perfectly price discriminating and single-price monopolies?

Accepted Answer

A)  The amount of output is inefficient. 
B)  All consumer surplus goes to the monopoly. 
C)  Deadweight loss is created. 
D)  There is a redistribution of consumer surplus to the monopoly. 
A)  The amount of output is inefficient. 
B)  All consumer surplus goes to the monopoly. 
C)  Deadweight loss is created. 
D)  There is a redistribution of consumer surplus to the monopoly.

Question 11

-The motel whose costs are given in the table above has total fixed costs equal to

Accepted Answer

A)  $0. 
B)  $100. 
C)  $200. 
D)  $201. 
A)  $0. 
B)  $100. 
C)  $200. 
D)  $201.

Question 12

-In the above figure, if the single-price monopolist charges a price that maximizes its profits, consumer surplus is

Accepted Answer

A)  area hacd. 
B)  area bac. 
C)  area jae. 
D)  area jbce. 
A)  area hacd. 
B)  area bac. 
C)  area jae. 
D)  area jbce.

Question 13

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

Accepted Answer

A)  $2. 
B)  $4. 
C)  $5. 
D)  $6. 
A)  $2. 
B)  $4. 
C)  $5. 
D)  $6.

Question 14

What condition must exist for a monopolist to effectively price discriminate?

Accepted Answer

A)  The monopolist must face consumers with identical willingness to pay. 
B)  The monopolist must produce a good or service that can be resold. 
C)  The monopolist must produce a good that cannot be resold. 
D)  The monopolist must charge the highest price possible. 
A)  The monopolist must face consumers with identical willingness to pay. 
B)  The monopolist must produce a good or service that can be resold. 
C)  The monopolist must produce a good that cannot be resold. 
D)  The monopolist must charge the highest price possible.

Question 15

-The figure above shows a monopoly's total revenue and total cost curves. The monopoly's economic profit is maximized when it produces

Accepted Answer

A)  0 units of output. 
B)  5 units of output. 
C)  15 units of output. 
D)  20 units of output. 
A)  0 units of output. 
B)  5 units of output. 
C)  15 units of output. 
D)  20 units of output.

Question 16

-The table above shows the demand and costs for a single-price monopolist. The firm can maximize its profit by setting its price at

Accepted Answer

A)  $30 per unit. 
B)  $35 per unit. 
C)  $40 per unit. 
D)  $45 per unit. 
A)  $30 per unit. 
B)  $35 per unit. 
C)  $40 per unit. 
D)  $45 per unit.

Question 17

Of the following, consumer surplus is largest for

Accepted Answer

A)  a perfectly competitive industry. 
B)  a single-price monopoly. 
C)  any price-discriminating monopoly. 
D)  a perfectly price-discriminating monopoly. 
A)  a perfectly competitive industry. 
B)  a single-price monopoly. 
C)  any price-discriminating monopoly. 
D)  a perfectly price-discriminating monopoly.

Question 18

A single-price monopolist will produce the output at which ________.

Accepted Answer

A)  marginal revenue equals marginal cost 
B)  demand is perfectly inelastic 
C)  marginal revenue is zero 
D)  demand is inelastic but not perfectly inelastic 
A)  marginal revenue equals marginal cost 
B)  demand is perfectly inelastic 
C)  marginal revenue is zero 
D)  demand is inelastic but not perfectly inelastic

Question 19

-Which area in the above figure shows the consumer surplus at the price and quantity that would be set by a single-price monopoly?

Accepted Answer

A)  A + B 
B)  A + B + C + D + E 
C)  C + D 
D)  C + D + E + F + G + H 
A)  A + B 
B)  A + B + C + D + E 
C)  C + D 
D)  C + D + E + F + G + H

Question 20

Price discrimination

Accepted Answer

A)  eliminates the producer surplus. 
B)  turns consumer surplus into economic profit. 
C)  decreases output below the profit-maximizing level. 
D)  lowers a monopoly's economic profit. 
A)  eliminates the producer surplus. 
B)  turns consumer surplus into economic profit. 
C)  decreases output below the profit-maximizing level. 
D)  lowers a monopoly's economic profit.

Exam 13: Monopoly

-Consider the monopolist depicted in the figure above. When it maximizes its profit, a single-price monopolist sets a price of ________ per unit.

A legal monopoly is defined as a market where

-Interlace, Inc. produces and a unique soda. The company cannot price discriminate. The figure above shows Interlace's demand curve, marginal revenue curve, and marginal cost curve. Interlace's profit maximizing price is ________ per bottle.

Compared to a single-price monopoly, the price charged by a perfectly competitive market with the same costs

Under an average cost pricing rule, a regulated natural monopoly ________ and there is ________.

A single-price monopoly causes a deadweight loss because it ________.

A monopolist, unlike a perfect competitor, has total control in its market because it is the single producer. Why, then, must a single-price monopolist decrease its price if it wants to increase its output?

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

Deadweight loss measures the inefficiency as the loss of

Which of the following occurs with both perfectly price discriminating and single-price monopolies?

-The motel whose costs are given in the table above has total fixed costs equal to

-In the above figure, if the single-price monopolist charges a price that maximizes its profits, consumer surplus is

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

What condition must exist for a monopolist to effectively price discriminate?

-The figure above shows a monopoly's total revenue and total cost curves. The monopoly's economic profit is maximized when it produces

-The table above shows the demand and costs for a single-price monopolist. The firm can maximize its profit by setting its price at

Of the following, consumer surplus is largest for

A single-price monopolist will produce the output at which ________.

-Which area in the above figure shows the consumer surplus at the price and quantity that would be set by a single-price monopoly?

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

Under an average cost pricing rule, a regulated natural monopoly and there is .