Question 1

-Consider the monopolist depicted in the figure above. The profit maximizing level of output for a single-price monopolist is

Accepted Answer

A)  7. 
B)  11. 
C)  13. 
D)  22. 
A)  7. 
B)  11. 
C)  13. 
D)  22.

Question 2

-The figure above shows a monopoly firm's demand curve. At point t

Accepted Answer

A)  demand is elastic. 
B)  demand is unit elastic. 
C)  demand is inelastic. 
D)  total revenue is at a minimum. 
A)  demand is elastic. 
B)  demand is unit elastic. 
C)  demand is inelastic. 
D)  total revenue is at a minimum.

Question 3

A monopoly always operates on the elastic portion of its demand curve.

Accepted Answer

A) True 
 B)False

Question 4

What kind of profit can a monopoly make in the short run? In the long run? Explain your answers.

Accepted Answer

In the short run, a monopoly can make an

Question 5

-In the figure above, a single-price unregulated monopoly will produce an amount of output equal to

Accepted Answer

A)  h. 
B)  j. 
C)  k. 
D)  none of the above 
A)  h. 
B)  j. 
C)  k. 
D)  none of the above

Question 6

Price discrimination, where different units of a good are sold for different prices,

Accepted Answer

A)  is impossible because there can only be one market price. 
B)  can be effectively practiced by all monopolists. 
C)  maximizes consumer welfare because each consumer pays only the price he or she is willing to pay. 
D)  is possible if the good cannot be resold. 
A)  is impossible because there can only be one market price. 
B)  can be effectively practiced by all monopolists. 
C)  maximizes consumer welfare because each consumer pays only the price he or she is willing to pay. 
D)  is possible if the good cannot be resold.

Question 7

-The table above gives the demand for a monopolist's output. Between which two quantities is marginal revenue equal to 0?

Accepted Answer

A)  4 and 5 
B)  3 and 4 
C)  2 and 3 
D)  1 and 2 
A)  4 and 5 
B)  3 and 4 
C)  2 and 3 
D)  1 and 2

Question 8

When a firm is regulated so that its price enables it to earn a specified target percent return on its capital, the regulation is called

Accepted Answer

A)  rate of return regulation. 
B)  price cap regulation. 
C)  earnings limited regulation. 
D)  target pricing regulation. 
A)  rate of return regulation. 
B)  price cap regulation. 
C)  earnings limited regulation. 
D)  target pricing regulation.

Question 9

The marginal revenue curve for a single-price monopoly

Accepted Answer

A)  lies below its demand curve. 
B)  coincides with its demand curve. 
C)  lies above its demand curve. 
D)  is horizontal. 
A)  lies below its demand curve. 
B)  coincides with its demand curve. 
C)  lies above its demand curve. 
D)  is horizontal.

Question 10

-If a marginal cost pricing rule is imposed on the natural monopoly 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 11

For a monopoly, the demand for its product is perfectly elastic at the market price.

Accepted Answer

A) True 
 B)False

Question 12

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. What barriers, if any, exist in this market?

Accepted Answer

A)  Natural barriers to entry 
B)  Ownership barrier to entry 
C)  Legal barrier to entry; a government license 
D)  Legal barrier to entry; a public franchise 
A)  Natural barriers to entry 
B)  Ownership barrier to entry 
C)  Legal barrier to entry; a government license 
D)  Legal barrier to entry; a public franchise

Question 13

-The figure above shows the cost, demand, and marginal revenue curves for a monopoly. The firm

Accepted Answer

A)  will make an economic profit of $20. 
B)  will charge a price of $10 per unit. 
C)  will produce 20 units per day. 
D)  is a natural monopoly. 
A)  will make an economic profit of $20. 
B)  will charge a price of $10 per unit. 
C)  will produce 20 units per day. 
D)  is a natural monopoly.

Question 14

-The figure shows the demand for and costs of producing Charlene's Chocolates. If Charlene's Chocolates is a monopoly and charges one price to all customers, then the consumer surplus is ________.

Accepted Answer

A)  $400 
B)  $900 
C)  $0 
D)  $200 
A)  $400 
B)  $900 
C)  $0 
D)  $200

Question 15

The single-price monopolist shown in the above figure could increase its economic profit if

Accepted Answer

A)  it became a price discriminator. 
B)  its costs of production decreased. 
C)  the demand for its good increased. 
D)  any or all the above were to occur. 
A)  it became a price discriminator. 
B)  its costs of production decreased. 
C)  the demand for its good increased. 
D)  any or all the above were to occur.

Question 16

Briefly describe and discuss the different ways a natural monopoly can be regulated: Marginal cost pricing, average cost pricing, rate of return regulation, and price cap regulation.

Accepted Answer

Marginal cost pricing: The regulated pri

Question 17

For a single-price monopoly, marginal revenue is ________ when demand is elastic and is ________ when demand is inelastic.

Accepted Answer

A)  negative; negative 
B)  negative; positive 
C)  positive; negative 
D)  positive; positive 
A)  negative; negative 
B)  negative; positive 
C)  positive; negative 
D)  positive; positive

Question 18

-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. If Visual is regulated according to an average cost pricing rule, there will be

Accepted Answer

A)  a deadweight loss of $6 million per month. 
B)  a deadweight loss of $24 million per month. 
C)  a deadweight loss of $12 million per month. 
D)  no deadweight loss. 
A)  a deadweight loss of $6 million per month. 
B)  a deadweight loss of $24 million per month. 
C)  a deadweight loss of $12 million per month. 
D)  no deadweight loss.

Question 19

-The figure above shows the demand and cost curves for a single-price monopoly. The firm's economic profit equals

Accepted Answer

A)  $0. 
B)  $300. 
C)  $100. 
D)  $50. 
A)  $0. 
B)  $300. 
C)  $100. 
D)  $50.

Question 20

Tris owns the only auto repair shop on Lonely Island. Tris is a single-price monopoly, so Tris operates on the ________ part of the ________ curve.

Accepted Answer

A)  elastic; supply 
B)  inelastic; supply 
C)  inelastic; demand 
D)  elastic; demand 
A)  elastic; supply 
B)  inelastic; supply 
C)  inelastic; demand 
D)  elastic; demand

Exam 13: Monopoly

-Consider the monopolist depicted in the figure above. The profit maximizing level of output for a single-price monopolist is

-The figure above shows a monopoly firm's demand curve. At point t

A monopoly always operates on the elastic portion of its demand curve.

What kind of profit can a monopoly make in the short run? In the long run? Explain your answers.

-In the figure above, a single-price unregulated monopoly will produce an amount of output equal to

Price discrimination, where different units of a good are sold for different prices,

-The table above gives the demand for a monopolist's output. Between which two quantities is marginal revenue equal to 0?

When a firm is regulated so that its price enables it to earn a specified target percent return on its capital, the regulation is called

The marginal revenue curve for a single-price monopoly

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

For a monopoly, the demand for its product is perfectly elastic at the market price.

-The figure above shows the cost, demand, and marginal revenue curves for a monopoly. The firm

-The figure shows the demand for and costs of producing Charlene's Chocolates. If Charlene's Chocolates is a monopoly and charges one price to all customers, then the consumer surplus is ________.

The single-price monopolist shown in the above figure could increase its economic profit if

Briefly describe and discuss the different ways a natural monopoly can be regulated: Marginal cost pricing, average cost pricing, rate of return regulation, and price cap regulation.

For a single-price monopoly, marginal revenue is ________ when demand is elastic and is ________ when demand is inelastic.

-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. If Visual is regulated according to an average cost pricing rule, there will be

-The figure above shows the demand and cost curves for a single-price monopoly. The firm's economic profit equals

Tris owns the only auto repair shop on Lonely Island. Tris is a single-price monopoly, so Tris operates on the ________ part of the ________ curve.

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

For a single-price monopoly, marginal revenue is when demand is elastic and is when demand is inelastic.

Tris owns the only auto repair shop on Lonely Island. Tris is a single-price monopoly, so Tris operates on the part of the curve.