Question 1

"If a natural monopoly is regulated using a marginal cost pricing rule, the firm makes zero economic profit." Is the previous statement correct or incorrect?

Accepted Answer

The statement is incorrect. If

Question 2

-The above figure represents the cost, demand, and marginal revenue curves for a monopolist.
a) Indicate the price and quantity a single-price monopolist selects by labeling the price Pm and the quantity Qm.
b) In the figure, lightly shade in the area that represents the single-price monopoly's economic profit.
c) Indicate the quantity a perfectly price-discriminating monopolist selects by labeling it Qppd.
d) In the figure, more darkly shade the area that represents the additional economic profit the monopoly earns as a result of the perfect price discrimination.

Accepted Answer

@#IMG-DLM& a) The price is labeled P_m and the quant

Question 3

Which of the following statements regarding an average-cost pricing rule for a natural monopoly is WRONG?

Accepted Answer

A)  It sets price equal to average total cost. 
B)  It is efficient. 
C)  The firm makes zero economic profit. 
D)  More output is produced than if the firm maximized profit. 
A)  It sets price equal to average total cost. 
B)  It is efficient. 
C)  The firm makes zero economic profit. 
D)  More output is produced than if the firm maximized profit.

Question 4

Competition keeps prices lower for consumers. So why do we have patent laws?

Accepted Answer

Patent laws are necessary to promote inn

Question 5

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

Accepted Answer

A)  a. 
B)  b. 
C)  c. 
D)  d. 
A)  a. 
B)  b. 
C)  c. 
D)  d.

Question 6

-The above figure represents the demand and marginal revenue curves for Sue's Seafood, a seller of fresh fish.
a) Over what range of output is demand elastic?
b) Over what range of output is demand inelastic?
c) What price maximizes total revenue?
d) What is the demand elasticity at the revenue maximizing price?

Accepted Answer

a) Demand is elastic from 0 to 20 pounds

Question 7

-In the above figure, if the natural monopoly is regulated with an average cost pricing rule and the firm does not inflate its costs, then the firm will produce

Accepted Answer

A)  8 million units and set a price of $21 per unit. 
B)  12 million units and set a price of $18 per unit. 
C)  16 million units and set a price of $16 per unit. 
D)  nothing unless the government provides subsidies to cover its losses. 
A)  8 million units and set a price of $21 per unit. 
B)  12 million units and set a price of $18 per unit. 
C)  16 million units and set a price of $16 per unit. 
D)  nothing unless the government provides subsidies to cover its losses.

Question 8

Rate of return regulation sets the price at a level that enables the regulated firm to earn a specified target percent return on its

Accepted Answer

A)  total cost. 
B)  sales revenue. 
C)  capital. 
D)  variable cost. 
A)  total cost. 
B)  sales revenue. 
C)  capital. 
D)  variable cost.

Question 9

For a natural monopoly, if price is equal to marginal cost, then

Accepted Answer

A)  the deadweight loss is as large as possible. 
B)  the firm makes zero economic profit. 
C)  there is no deadweight loss. 
D)  there is no deadweight loss and the firm makes a positive economic profit. 
A)  the deadweight loss is as large as possible. 
B)  the firm makes zero economic profit. 
C)  there is no deadweight loss. 
D)  there is no deadweight loss and the firm makes a positive economic profit.

Question 10

Relative to a perfectly competitive market with the same cost and demand, a single-price monopolist produces ________ output and has a ________ price.

Accepted Answer

A)  more; higher 
B)  less ; lower 
C)  more; lower 
D)  less; higher 
A)  more; higher 
B)  less ; lower 
C)  more; lower 
D)  less; higher

Question 11

-The table above gives the demand for a monopolist's output. What is the marginal revenue when output is increased from 2 to 3 units?

Accepted Answer

A)  $18 
B)  $4 
C)  $7 
D)  $6 
A)  $18 
B)  $4 
C)  $7 
D)  $6

Question 12

When a person lobbies Congress to grant the person the exclusive right to sell a particular good, such lobbying activity is called

Accepted Answer

A)  rent seeking. 
B)  revenue abatement. 
C)  profit recovery. 
D)  revenue seeking. 
A)  rent seeking. 
B)  revenue abatement. 
C)  profit recovery. 
D)  revenue seeking.

Question 13

For a single-price monopolist to sell one more unit of a good, it must

Accepted Answer

A)  lower the price on just the last unit sold. 
B)  lower the price on all units sold. 
C)  raise the price on just the last unit sold. 
D)  raise the price on all units sold. 
A)  lower the price on just the last unit sold. 
B)  lower the price on all units sold. 
C)  raise the price on just the last unit sold. 
D)  raise the price on all units sold.

Question 14

A single-price monopoly's demand curve lies

Accepted Answer

A)  below its marginal revenue curve. 
B)  on top of its marginal revenue curve. 
C)  above its marginal revenue curve. 
D)  on top of its total revenue curve. 
A)  below its marginal revenue curve. 
B)  on top of its marginal revenue curve. 
C)  above its marginal revenue curve. 
D)  on top of its total revenue curve.

Question 15

In order to be able to price discriminate and maximize profit, a monopolist must be able to do all of the following EXCEPT

Accepted Answer

A)  identify and separate different buyer types. 
B)  sell a product that cannot be resold. 
C)  identify competitors. 
D)  determine the output where marginal revenue equals marginal cost. 
A)  identify and separate different buyer types. 
B)  sell a product that cannot be resold. 
C)  identify competitors. 
D)  determine the output where marginal revenue equals marginal cost.

Question 16

-An efficient allocation of resources is reached in the figure above when output equals

Accepted Answer

A)  1 million. 
B)  2 million. 
C)  3 million. 
D)  4 million. 
A)  1 million. 
B)  2 million. 
C)  3 million. 
D)  4 million.

Question 17

-Bob's Books is the only bookstore in town. The figure above shows the demand curve for books and Bob's Books' marginal revenue curve and marginal cost curve. Bob's Books maximizes its profit and sets the price of a book equal to ________ and has total annual revenue of ________.

Accepted Answer

A)  $40; $40,000. 
B)  $30; $60,000. 
C)  $20, $60,000. 
D)  $10; $40,000. 
A)  $40; $40,000. 
B)  $30; $60,000. 
C)  $20, $60,000. 
D)  $10; $40,000.

Question 18

Which of the following differs between a perfectly competitive market and a market with a perfectly price discriminating monopoly?

Accepted Answer

A)  The amount of producer surplus 
B)  The quantity produced 
C)  The total surplus 
D)  None of the above because they are all the same in a perfectly competitive market and in a market with a perfectly price discriminating monopoly. 
A)  The amount of producer surplus 
B)  The quantity produced 
C)  The total surplus 
D)  None of the above because they are all the same in a perfectly competitive market and in a market with a perfectly price discriminating monopoly.

Question 19

Price cap regulation is a

Accepted Answer

A)  price ceiling. 
B)  price floor. 
C)  form of marginal cost regulation. 
D)  type of rate of return regulation. 
A)  price ceiling. 
B)  price floor. 
C)  form of marginal cost regulation. 
D)  type of rate of return regulation.

Question 20

-If a marginal 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)  $40 per unit. 
D)  $20 per unit. 
A)  $5 per unit. 
B)  $25 per unit. 
C)  $40 per unit. 
D)  $20 per unit.

Exam 13: Monopoly

"If a natural monopoly is regulated using a marginal cost pricing rule, the firm makes zero economic profit." Is the previous statement correct or incorrect?

Which of the following statements regarding an average-cost pricing rule for a natural monopoly is WRONG?

Competition keeps prices lower for consumers. So why do we have patent laws?

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

-In the above figure, if the natural monopoly is regulated with an average cost pricing rule and the firm does not inflate its costs, then the firm will produce

Rate of return regulation sets the price at a level that enables the regulated firm to earn a specified target percent return on its

For a natural monopoly, if price is equal to marginal cost, then

Relative to a perfectly competitive market with the same cost and demand, a single-price monopolist produces ________ output and has a ________ price.

-The table above gives the demand for a monopolist's output. What is the marginal revenue when output is increased from 2 to 3 units?

When a person lobbies Congress to grant the person the exclusive right to sell a particular good, such lobbying activity is called

For a single-price monopolist to sell one more unit of a good, it must

A single-price monopoly's demand curve lies

In order to be able to price discriminate and maximize profit, a monopolist must be able to do all of the following EXCEPT

-An efficient allocation of resources is reached in the figure above when output equals

-Bob's Books is the only bookstore in town. The figure above shows the demand curve for books and Bob's Books' marginal revenue curve and marginal cost curve. Bob's Books maximizes its profit and sets the price of a book equal to ________ and has total annual revenue of ________.

Which of the following differs between a perfectly competitive market and a market with a perfectly price discriminating monopoly?

Price cap regulation is a

-If a marginal cost pricing rule is imposed on the firm in the figure above, the price 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

Filters

Relative to a perfectly competitive market with the same cost and demand, a single-price monopolist produces output and has a price.

-Bob's Books is the only bookstore in town. The figure above shows the demand curve for books and Bob's Books' marginal revenue curve and marginal cost curve. Bob's Books maximizes its profit and sets the price of a book equal to and has total annual revenue of .