Question 1

-In the figure above, the single-price, unregulated monopoly produces

Accepted Answer

A)  less than 19 units per day. 
B)  20 units per day. 
C)  between 21 and 39 units per day. 
D)  40 or more units per day. 
A)  less than 19 units per day. 
B)  20 units per day. 
C)  between 21 and 39 units per day. 
D)  40 or more units per day.

Question 2

Why do some firms practice price discrimination? Relate your answer to the common practice of public colleges charging lower tuition to in-state students and higher tuition to out-of-state students.

Accepted Answer

Price discrimination helps businesses ca

Question 3

In July 2008, the Federal Communications Commission approved the merger of satellite radio providers XM Satellite and Sirius Satellite Radio, establishing a single satellite radio company in America. Under the terms of the deal, the companies agreed not to raise prices for the next three years. Why would the FTC require prices not to increase for three years?

Accepted Answer

A)  Compared to competition, monopolies are always worse for consumers. 
B)  Compared to competition, monopolies restrict output and charge higher prices. 
C)  Compared to competition, monopolies increase prices and output. 
D)  Compared to competition, monopolies restrict output and charge lower prices. 
A)  Compared to competition, monopolies are always worse for consumers. 
B)  Compared to competition, monopolies restrict output and charge higher prices. 
C)  Compared to competition, monopolies increase prices and output. 
D)  Compared to competition, monopolies restrict output and charge lower prices.

Question 4

A single-price monopolist

Accepted Answer

A)  sets its price where its demand is inelastic. 
B)  can always increase its profits by increasing its price. 
C)  has its marginal revenue less than its price. 
D)  is guaranteed an economic profit. 
A)  sets its price where its demand is inelastic. 
B)  can always increase its profits by increasing its price. 
C)  has its marginal revenue less than its price. 
D)  is guaranteed an economic profit.

Question 5

-If a marginal cost pricing rule is imposed on the firm in the figure above, the deadweight loss will be

Accepted Answer

A)  zero. 
B)  $100. 
C)  $200. 
D)  $50. 
A)  zero. 
B)  $100. 
C)  $200. 
D)  $50.

Question 6

In July 2008, the Federal Communications Commission approved the merger of satellite radio providers XM Satellite and Sirius Satellite Radio, establishing a single satellite radio company in America. What do you predict will happen to efficiency in the market for satellite radio?

Accepted Answer

A)  Deadweight loss will increase when an industry moves from competition to monopoly. 
B)  Consumer surplus will increase when an industry moves from competition to monopoly. 
C)  Producer surplus will decrease when an industry moves from competition to monopoly. 
D)  Total surplus will increase when an industry moves from competition to monopoly. 
A)  Deadweight loss will increase when an industry moves from competition to monopoly. 
B)  Consumer surplus will increase when an industry moves from competition to monopoly. 
C)  Producer surplus will decrease when an industry moves from competition to monopoly. 
D)  Total surplus will increase when an industry moves from competition to monopoly.

Question 7

-Natural gas is a natural monopoly. The figure above shows the market for natural gas in the city of Lucknow. When a marginal cost pricing rule regulation is imposed, the price per household per month is ________.

Accepted Answer

A)  $30 and 20,000 household are served 
B)  $10 and 40,000 household are served 
C)  $10 and 20,000 household are served 
D)  $20 and 30,000 households are served 
A)  $30 and 20,000 household are served 
B)  $10 and 40,000 household are served 
C)  $10 and 20,000 household are served 
D)  $20 and 30,000 households are served

Question 8

Define price discrimination. What factors must be present in order for a monopolist to price discriminate? Why do firms price discriminate?

Accepted Answer

Price discrimination is selling a good o

Question 9

Which of the following is true about a perfect price discriminating monopolist?

Accepted Answer

A)  Price is greater than marginal revenue. 
B)  Price always exceeds marginal cost. 
C)  The firm makes zero economic profit. 
D)  The firm produces the efficient level of output. 
A)  Price is greater than marginal revenue. 
B)  Price always exceeds marginal cost. 
C)  The firm makes zero economic profit. 
D)  The firm produces the efficient level of output.

Question 10

An industry in which economies of scale allow one firm to supply the entire market at the lowest possible cost is called a

Accepted Answer

A)  legal monopoly. 
B)  natural monopoly. 
C)  single-price monopoly. 
D)  one-firm monopoly. 
A)  legal monopoly. 
B)  natural monopoly. 
C)  single-price monopoly. 
D)  one-firm monopoly.

Question 11

What is the relationship between the marginal revenue curve and the demand curve for a single-price monopolist?

Accepted Answer

For a single-price monopolist,

Question 12

When natural or legal forces work to protect a firm from potential competitors, the market is said to have ________.

Accepted Answer

A)  non-competitive supply 
B)  non-competitive entry 
C)  barriers to entry 
D)  restricted competition 
A)  non-competitive supply 
B)  non-competitive entry 
C)  barriers to entry 
D)  restricted competition

Question 13

-The figure above shows the demand and cost curves for a single-price monopoly. What economic profit does this firm make?

Accepted Answer

A)  zero 
B)  $600 
C)  $400 
D)  $200 
A)  zero 
B)  $600 
C)  $400 
D)  $200

Question 14

What is an average cost pricing rule? Why do regulatory agencies use it for natural monopolies?

Accepted Answer

Average cost pricing means that the firm

Question 15

Are some monopolies created by government legislation that gives a firm the unique right to produce a good or service?

Accepted Answer

Yes, some monopolies are created by gove

Question 16

What incentive does price cap regulation attempt to give the firm? How does it give the firm this incentive?

Accepted Answer

Price cap regulation is intended to moti

Question 17

-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 consumer 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 18

For a single-price monopolist, as output increases, total revenue

Accepted Answer

A)  initially increases and then decreases. 
B)  initially decreases and then increases. 
C)  increases continually. 
D)  decreases continually. 
A)  initially increases and then decreases. 
B)  initially decreases and then increases. 
C)  increases continually. 
D)  decreases continually.

Question 19

If the demand for its product is inelastic, a monopoly's

Accepted Answer

A)  total revenue increases when the firm lowers its price. 
B)  total revenue is unchanged when the firm lowers its price. 
C)  marginal revenue is negative. 
D)  marginal revenue is equal to zero. 
A)  total revenue increases when the firm lowers its price. 
B)  total revenue is unchanged when the firm lowers its price. 
C)  marginal revenue is negative. 
D)  marginal revenue is equal to zero.

Question 20

A patent grants

Accepted Answer

A)  a guarantee of quality to consumers. 
B)  the right to practice a profession. 
C)  an exclusive right to an inventor of a product. 
D)  control over a unique source or supply of raw materials. 
A)  a guarantee of quality to consumers. 
B)  the right to practice a profession. 
C)  an exclusive right to an inventor of a product. 
D)  control over a unique source or supply of raw materials.

Exam 13: Monopoly

-In the figure above, the single-price, unregulated monopoly produces

Why do some firms practice price discrimination? Relate your answer to the common practice of public colleges charging lower tuition to in-state students and higher tuition to out-of-state students.

A single-price monopolist

-If a marginal cost pricing rule is imposed on the firm in the figure above, the deadweight loss will be

In July 2008, the Federal Communications Commission approved the merger of satellite radio providers XM Satellite and Sirius Satellite Radio, establishing a single satellite radio company in America. What do you predict will happen to efficiency in the market for satellite radio?

-Natural gas is a natural monopoly. The figure above shows the market for natural gas in the city of Lucknow. When a marginal cost pricing rule regulation is imposed, the price per household per month is ________.

Define price discrimination. What factors must be present in order for a monopolist to price discriminate? Why do firms price discriminate?

Which of the following is true about a perfect price discriminating monopolist?

An industry in which economies of scale allow one firm to supply the entire market at the lowest possible cost is called a

What is the relationship between the marginal revenue curve and the demand curve for a single-price monopolist?

When natural or legal forces work to protect a firm from potential competitors, the market is said to have ________.

-The figure above shows the demand and cost curves for a single-price monopoly. What economic profit does this firm make?

What is an average cost pricing rule? Why do regulatory agencies use it for natural monopolies?

Are some monopolies created by government legislation that gives a firm the unique right to produce a good or service?

What incentive does price cap regulation attempt to give the firm? How does it give the firm this incentive?

For a single-price monopolist, as output increases, total revenue

If the demand for its product is inelastic, a monopoly's

A patent grants

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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