Question 1

-If the natural monopoly shown in the figure above is unregulated, then the deadweight loss will be

Accepted Answer

A)  $0. 
B)  $2 million. 
C)  $4 million. 
D)  $8 million. 
A)  $0. 
B)  $2 million. 
C)  $4 million. 
D)  $8 million.

Question 2

-The figure above shows the marginal revenue, marginal cost, and demand curves for an airline offering daily flights between Los Angeles and Toronto. If the airline is regulated using a marginal cost pricing rule total surplus will be ________.

Accepted Answer

A)  $100,000 
B)  $60,000 
C)  $80,000 
D)  $20,000 
A)  $100,000 
B)  $60,000 
C)  $80,000 
D)  $20,000

Question 3

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

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

A single-price monopolist

Accepted Answer

A)  can sell as much as it wants at the chosen price because it is the only seller. 
B)  can increase the price and the quantity sold at the same time. 
C)  can increase the price only if it decreases the quantity sold. 
D)  is not restricted by the law of demand. 
A)  can sell as much as it wants at the chosen price because it is the only seller. 
B)  can increase the price and the quantity sold at the same time. 
C)  can increase the price only if it decreases the quantity sold. 
D)  is not restricted by the law of demand.

Question 5

The WaveHouse on Mission Beach in San Diego features the Bruticus Maximus, a ten foot wave, which tests the skills of even the most talented surf and wake board riders on the planet. WaveHouse is the only place in San Diego where this service is offered. If you are a member of WaveHouse, you can ride for half the price that a non-member pays. This is an example of:

Accepted Answer

A)  Price discrimination among groups of buyers. 
B)  Price discrimination among units of a good. 
C)  Rent seeking behavior. 
D)  Monopoly regulation. 
A)  Price discrimination among groups of buyers. 
B)  Price discrimination among units of a good. 
C)  Rent seeking behavior. 
D)  Monopoly regulation.

Question 6

-Christy's Haircuts, the sole supplier of haircuts in a small town, faces the demand schedule shown in the table above. What is Christy's marginal revenue from the 35th haircut?

Accepted Answer

A)  zero 
B)  -$5.00 
C)  $5.00 
D)  $12.50 
A)  zero 
B)  -$5.00 
C)  $5.00 
D)  $12.50

Question 7

-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. When Interlace maximizes its profit, the deadweight loss is

Accepted Answer

A)  zero. 
B)  $15,000. 
C)  $21,000. 
D)  $3,000. 
A)  zero. 
B)  $15,000. 
C)  $21,000. 
D)  $3,000.

Question 8

Sue's Surfboards is the sole renter of surfboards on Big Wave Island. Sue does not price discriminate. For Sue's Surfboards, the change in total revenue from each additional surfboard rented is her

Accepted Answer

A)  marginal revenue and is equal to the rental price of a surfboard. 
B)  marginal cost and is greater than the rental price of a surfboard. 
C)  marginal revenue and is less than the rental price of a surfboard. 
D)  marginal cost and is constant regardless of how many surfboards are rented. 
A)  marginal revenue and is equal to the rental price of a surfboard. 
B)  marginal cost and is greater than the rental price of a surfboard. 
C)  marginal revenue and is less than the rental price of a surfboard. 
D)  marginal cost and is constant regardless of how many surfboards are rented.

Question 9

A monopoly has two key features, which are ________.

Accepted Answer

A)  barriers to entry and no close substitutes 
B)  franchises and barriers to entry 
C)  barriers to entry and close substitutes 
D)  close substitutes and no barriers to entry 
A)  barriers to entry and no close substitutes 
B)  franchises and barriers to entry 
C)  barriers to entry and close substitutes 
D)  close substitutes and no barriers to entry

Question 10

Before summer 2008, if you wanted a cell phone in Bhutan, you only had one choice: B-Mobile, owned and operated by the government. What does Kuenga Gyalthen mean he states that, "Up until now, because of the monopoly, we've all been suffering. So, I mean, it's finally time the consumer actually is king for a little while."?

Accepted Answer

A)  He believes that producer surplus is greater with competition. 
B)  He believes that total surplus is greater with a monopoly. 
C)  He believes that prices are lower with a monopoly. 
D)  He believes that consumer surplus is greater with competition. 
A)  He believes that producer surplus is greater with competition. 
B)  He believes that total surplus is greater with a monopoly. 
C)  He believes that prices are lower with a monopoly. 
D)  He believes that consumer surplus is greater with competition.

Question 11

If the price elasticity of demand is greater than 1, a monopoly's

Accepted Answer

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

Question 12

The primary reason why a monopoly can make a long-run economic profit is the existence of

Accepted Answer

A)  barriers to entry. 
B)  inelastic demand. 
C)  price discrimination. 
D)  many buyers. 
A)  barriers to entry. 
B)  inelastic demand. 
C)  price discrimination. 
D)  many buyers.

Question 13

Which of the following is a characteristic of monopoly in the long run?

Accepted Answer

A)  The firm makes zero economic profit. 
B)  The firm can make an economic profit. 
C)  Price equals marginal cost. 
D)  Price equals marginal revenue. 
A)  The firm makes zero economic profit. 
B)  The firm can make an economic profit. 
C)  Price equals marginal cost. 
D)  Price equals marginal revenue.

Question 14

For a monopoly, the market demand curve is the firm's

Accepted Answer

A)  supply curve. 
B)  marginal revenue curve. 
C)  demand curve. 
D)  profit function. 
A)  supply curve. 
B)  marginal revenue curve. 
C)  demand curve. 
D)  profit function.

Question 15

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

Accepted Answer

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

Question 16

In the case of a perfectly price-discriminating monopoly, there is no

Accepted Answer

A)  transfer of consumer surplus to the producer. 
B)  deadweight loss. 
C)  short-run economic profit. 
D)  long-run economic profit. 
A)  transfer of consumer surplus to the producer. 
B)  deadweight loss. 
C)  short-run economic profit. 
D)  long-run economic profit.

Question 17

-In the figure above, if the market is a single-price monopoly rather than a perfectly competitive industry, the transfer of consumer surplus from consumers to the producer is the area of

Accepted Answer

A)  trapezoid beic. 
B)  triangle abe. 
C)  rectangle begd. 
D)  rectangle befc. 
A)  trapezoid beic. 
B)  triangle abe. 
C)  rectangle begd. 
D)  rectangle befc.

Question 18

Suppose the government breaks up a single-price monopoly and turns it into a perfectly competitive industry. What will happen to price and the quantity produced? What will happen to the monopoly's economic profit and the deadweight loss associated with the monopoly?

Accepted Answer

The price will fall and output will incr

Question 19

Compare and contrast the marginal cost and average cost pricing rules for regulating natural monopolies.

Accepted Answer

Marginal cost pricing sets the price equ

Question 20

Even though a perfect price discriminator can extract all of the consumer surplus, how can it be efficient?

Accepted Answer

Efficiency has nothing to do with who ge

Exam 13: Monopoly

-If the natural monopoly shown in the figure above is unregulated, then the deadweight loss will be

-The figure above shows the marginal revenue, marginal cost, and demand curves for an airline offering daily flights between Los Angeles and Toronto. If the airline is regulated using a marginal cost pricing rule total surplus will be ________.

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

A single-price monopolist

-Christy's Haircuts, the sole supplier of haircuts in a small town, faces the demand schedule shown in the table above. What is Christy's marginal revenue from the 35th haircut?

-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. When Interlace maximizes its profit, the deadweight loss is

Sue's Surfboards is the sole renter of surfboards on Big Wave Island. Sue does not price discriminate. For Sue's Surfboards, the change in total revenue from each additional surfboard rented is her

A monopoly has two key features, which are ________.

If the price elasticity of demand is greater than 1, a monopoly's

The primary reason why a monopoly can make a long-run economic profit is the existence of

Which of the following is a characteristic of monopoly in the long run?

For a monopoly, the market demand curve is the firm's

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

In the case of a perfectly price-discriminating monopoly, there is no

-In the figure above, if the market is a single-price monopoly rather than a perfectly competitive industry, the transfer of consumer surplus from consumers to the producer is the area of

Suppose the government breaks up a single-price monopoly and turns it into a perfectly competitive industry. What will happen to price and the quantity produced? What will happen to the monopoly's economic profit and the deadweight loss associated with the monopoly?

Compare and contrast the marginal cost and average cost pricing rules for regulating natural monopolies.

Even though a perfect price discriminator can extract all of the consumer surplus, how can it be efficient?

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