Question 1

-The table above shows the demand and costs for a single-price monopolist. The maximum economic profit this firm can make equals

Accepted Answer

A)  $1,390. 
B)  $1,550. 
C)  $1,580. 
D)  $2,400. 
A)  $1,390. 
B)  $1,550. 
C)  $1,580. 
D)  $2,400.

Question 2

-The figure above shows the demand curve (D) faced by Visual, Inc., a cable TV company, and the firm's marginal revenue (MR), marginal cost (MC), and average cost (LRAC) curves. Suppose Visual is regulated according to a price cap rule, with the price cap set at $24 per household per month. The firm will maximize its profit if it serves ________ million households.

Accepted Answer

A)  2 
B)  2.5 
C)  3 
D)  3.5 
A)  2 
B)  2.5 
C)  3 
D)  3.5

Question 3

-If the firm in the figure above is unregulated, it will charge a price of

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.

Question 4

The deadweight loss incurred when the market in the above figure is a single-price monopoly rather than perfectly competitive is the area

Accepted Answer

A)  cab. 
B)  fcd. 
C)  bed. 
D)  fae. 
A)  cab. 
B)  fcd. 
C)  bed. 
D)  fae.

Question 5

While smoking is on the decline in the United States, China is still puffing away madly. That's not because the government is eager to protect its citizens from the hazards of smoking. It's because China is eager to protect its own tobacco industry which is a state monopoly. Why did China announce in 2009 that it won't allow foreign companies to build new cigarette factories or enter joint ventures?

Accepted Answer

A)  Because China is concerned about the negative effects of smoking 
B)  Because China wants to protect the economic profits its state monopoly makes 
C)  Because China wants to protect jobs 
D)  Because China regulates the tobacco industry 
A)  Because China is concerned about the negative effects of smoking 
B)  Because China wants to protect the economic profits its state monopoly makes 
C)  Because China wants to protect jobs 
D)  Because China regulates the tobacco industry

Question 6

Public franchises create monopolies by restricting

Accepted Answer

A)  demand. 
B)  prices. 
C)  entry. 
D)  profit. 
A)  demand. 
B)  prices. 
C)  entry. 
D)  profit.

Question 7

-The table above gives the demand for a monopolist's output. What is the total revenue when 3 units of output are produced?

Accepted Answer

A)  $21 
B)  $20 
C)  $18 
D)  $6 
A)  $21 
B)  $20 
C)  $18 
D)  $6

Question 8

-In the above figure, a single-price monopolist charges a price of ________, resulting in total revenue equal to area ________.

Accepted Answer

A)  $10; hbcd 
B)  $20; fjem 
C)  $10; fbcg 
D)  $30; fbcg 
A)  $10; hbcd 
B)  $20; fjem 
C)  $10; fbcg 
D)  $30; fbcg

Question 9

-The above figure illustrates a single-price unregulated monopolist. If the monopolist maximizes its profit, the deadweight loss equals ________.

Accepted Answer

A)  $10,000 
B)  $20,000 
C)  $45,000 
D)  $40,000 
A)  $10,000 
B)  $20,000 
C)  $45,000 
D)  $40,000

Question 10

-If the monopoly illustrated in the figure above could engage in perfect price discrimination, then when it maximizes its profit the total revenue collected by the firm would be

Accepted Answer

A)  $110. 
B)  $120. 
C)  $210. 
D)  $310. 
A)  $110. 
B)  $120. 
C)  $210. 
D)  $310.

Question 11

-In the figure above, the deadweight loss created if the industry changes from perfectly competitive to a single-price, unregulated monopoly is

Accepted Answer

A)  zero. 
B)  $8.00 per day. 
C)  $24.00 per day. 
D)  $36.00 per day. 
A)  zero. 
B)  $8.00 per day. 
C)  $24.00 per day. 
D)  $36.00 per day.

Question 12

Patents encourage invention by

Accepted Answer

A)  offering subsidies to inventors. 
B)  offering tax breaks to inventors. 
C)  preventing others from copying an invention. 
D)  preventing inventors from working on the same project. 
A)  offering subsidies to inventors. 
B)  offering tax breaks to inventors. 
C)  preventing others from copying an invention. 
D)  preventing inventors from working on the same project.

Question 13

Regulation that specifies that a firm's profits must be shared with its customers if the profit rises above a target level is called

Accepted Answer

A)  rate of return regulation. 
B)  minimum price regulation. 
C)  earnings sharing regulation. 
D)  average cost pricing. 
A)  rate of return regulation. 
B)  minimum price regulation. 
C)  earnings sharing regulation. 
D)  average cost pricing.

Question 14

Compared to a single-price monopoly, a perfectly competitive market with the same costs produces ________ output and has a ________ price.

Accepted Answer

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

Question 15

-Prime Pharmaceuticals has developed a new asthma medicine, for which it 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 could perfectly price discriminate, then producer surplus would equal

Accepted Answer

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

Question 16

"A single-price natural monopoly that is regulated to set price equal to marginal cost incurs an economic loss." True or false? Explain.

Accepted Answer

The statement is True. A natural monopol

Question 17

A marginal cost pricing rule for a natural monopoly sets ________.

Accepted Answer

A)  price equal to marginal cost and greater than average total cost 
B)  marginal revenue equal to marginal cost 
C)  marginal revenue equal to average total cost 
D)  price equal to marginal cost 
A)  price equal to marginal cost and greater than average total cost 
B)  marginal revenue equal to marginal cost 
C)  marginal revenue equal to average total cost 
D)  price equal to marginal cost

Question 18

Marginal revenue for a single-price monopolist is

Accepted Answer

A)  less than price. 
B)  equal to price. 
C)  greater than price. 
D)  equal to zero for all levels of output. 
A)  less than price. 
B)  equal to price. 
C)  greater than price. 
D)  equal to zero for all levels of output.

Question 19

-The figure above shows the cost, demand, and marginal revenue curves for a monopoly. At an output level of ________, demand is ________.

Accepted Answer

A)  20; elastic 
B)  50; unit elastic 
C)  50; elastic 
D)  30; unit elastic 
A)  20; elastic 
B)  50; unit elastic 
C)  50; elastic 
D)  30; unit elastic

Question 20

Rent seeking is devoted to the creation of

Accepted Answer

A)  monopolies. 
B)  competitive industries. 
C)  human capital. 
D)  more elastic demand. 
A)  monopolies. 
B)  competitive industries. 
C)  human capital. 
D)  more elastic demand.

Exam 13: Monopoly

-The table above shows the demand and costs for a single-price monopolist. The maximum economic profit this firm can make equals

-If the firm in the figure above is unregulated, it will charge a price of

The deadweight loss incurred when the market in the above figure is a single-price monopoly rather than perfectly competitive is the area

Public franchises create monopolies by restricting

-The table above gives the demand for a monopolist's output. What is the total revenue when 3 units of output are produced?

-In the above figure, a single-price monopolist charges a price of ________, resulting in total revenue equal to area ________.

-The above figure illustrates a single-price unregulated monopolist. If the monopolist maximizes its profit, the deadweight loss equals ________.

-If the monopoly illustrated in the figure above could engage in perfect price discrimination, then when it maximizes its profit the total revenue collected by the firm would be

-In the figure above, the deadweight loss created if the industry changes from perfectly competitive to a single-price, unregulated monopoly is

Patents encourage invention by

Regulation that specifies that a firm's profits must be shared with its customers if the profit rises above a target level is called

Compared to a single-price monopoly, a perfectly competitive market with the same costs produces ________ output and has a ________ price.

"A single-price natural monopoly that is regulated to set price equal to marginal cost incurs an economic loss." True or false? Explain.

A marginal cost pricing rule for a natural monopoly sets ________.

Marginal revenue for a single-price monopolist is

-The figure above shows the cost, demand, and marginal revenue curves for a monopoly. At an output level of ________, demand is ________.

Rent seeking is devoted to the creation of

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

-In the above figure, a single-price monopolist charges a price of , resulting in total revenue equal to area .

Compared to a single-price monopoly, a perfectly competitive market with the same costs produces output and has a price.

-The figure above shows the cost, demand, and marginal revenue curves for a monopoly. At an output level of , demand is .